In my last article, written in response to the pirate bay verdict, I suggested that the traditional business models of the music and film industries had passed their best and that if such firms wanted to survive, they would have to come up with something new and better. It's easy to look at their models from outside and point out that they have failed, it's much harder to come up with suggestions for what they should do to fix them.

The starting point has to be what consumers want from the market. The defeatist answer is that they want unlimited free music and films and that whilst this is available they will always choose this over things they have to pay for. As well as being defeatist I think it completely misses the reason people download their music and films rather than going out and buying them, of course cost is an element, but it's by no means the deciding factor.

The deciding factor is convenience. The great thing about The Pirate Bay, or any other torrent site, is that everything is there. Pretty much whatever the tastes of the user, be it pop music, actions films or anime, the odds are that if you type it into the pirate bay, it will be there. But one stop shopping isn't where the convenience ends, a lot of it will also be on Amazon. If you've got a fairly quick internet connection, the TV show you want to watch will there, ready to watch, in less than an hour and a film in less than two. And once it is there, it's there whenever you want to watch it and in a format free from any poorly conceived DRM limitations.

Yes it is also free, and everyone likes getting something for nothing, but people also know at the back of their minds that what they're doing is illegal. I'd be willing to bet that people would be willing to pay – I'll discuss amounts later on – to get the same service along with the peace of mind that they were doing it legally and supporting the artists.

The other big attraction of downloading for free from the internet is that you can watch or listen to new things without the risk of buying something you later find that you don't like. This is one of the points the industry completely misses with their “1 download equates to 1 lost sale” nonsense, a huge proportion of downloads are just people downloading something to see if they like it. Somebody might download every episode of a television series as a torrent because a friend has recommended it to them but the odds are that if it was not available as a torrent, that person wouldn't have gone out and bought the box set, they'd have watched someone else's copy or just never watched it at all.

If the companies in question want to remain competitive they need to come up with a service that can match this. They need to provide a central place consumers can download content of the same quality and they need to allow people to 'pay as they go' or to pay a flat monthly fee which allows them to download as much as they want.

Sadly for them that means both co-operating and accepting a dramatically different way of generating revenue from individual products. Instead of one product giving one revenue stream, the popularity of their pool of content will define how much they will be able to charge for access to it.

It may be difficult and risky making such fundamental changes to an established model but given that their options are a risk of failure if they change and guaranteed failure if they don't, I know which one I'd choose.

Please folow me on twitter (http://twitter.com/bdixon_dxnx ) for updates on this and similar topics

For an excellant analysis of the problems with the situation as is from a more technical economic analysis see here (http://copyrightflop.blogspot.com/2009/04/pirate-bay-not-king-kong-defense.html )

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