By the time the labels grudgingly started licensing their catalogs, they had given illicit file sharing a massive head start. Habits die hard, and free is an especially easy price to acclimate to. So the paid-for online music industry will struggle for many more years to overcome the enormous beachhead that the major labels granted to file sharing. The lesson here is not that digital piracy automatically dooms content industries. The lesson is that you should never, ever give piracy a five-year monopoly on awesomeness—as I argued in this piece in the Wall Street Journal.
I’ll barely make a dime from Random House’s rock-bottom pricing experiment with my novel. But in a digitizing industry, the only way forward is to embrace the chaos. Bold experiments are teaching publishers a lot about price elasticity, “windowing” (what the studios do in marching films from theaters to DVDs to broadcast, etc.), and more. For its part, publishing is thriving several years after e-books went mainstream, in stark contrast to the music industry’s fate.