Every so often a hue and cry goes up because some TV channel (usually HBO) doesn’t release their shows on iTunes or Amazon or somewhere they can be purchased digitally. There are arguments about the media companies leaving money on the table or “forcing” consumers to get the show illegally. There has been enough written about those arguments as is.
One thing I haven’t heard is not how much money the companies are losing now, but how much they may be losing in the future. The longer popular shows are not available for easy purchasing shortly after airing, the more people will learn how to acquire them illegally (torrents, usenet, etc.). One of the innovations of Apple’s iTunes music store and why it worked so damn well was that it hit a balance of ease of access and price. Songs were 99¢, albums were $9.99 and you could find almost anything on there (with some glaring omissions, any of which have been remedied). How much was that balance influenced by how easy it had become for people to illegally acquire music? How much more could they have charged if less people knew how to fire up LimeWire or Napster or what-have-you and just start downloading music?
I wonder if, by not having popular shows quickly and easily available, if some media companies (such as HBO) are crippling their industry as a whole by dropping the price that will be considered acceptable by customers as more and more of them learn how and where to illegally acquire the shows they want to watch. The price people pay for media is dependent on how irritating it is for them to find and acquire it illegally. The easier illegal downloading becomes and the more widespread the knowledge how to do it becomes, the cheaper legal channels will have to sell those shows to compete. That may not affect the withholding companies immediately, but may affect those who are trying to sell their shows digitally (including the withholders when they decide to do so in the future) by forcing down the acceptable market price for digitally distributed shows.
Right now iTunes and Amazon sell TV shows (what shows are available) for around $3 for HD and $2 for SD and offer an easy way to buy those shows. Netflix has a smaller catalogue but its buffet-style consumption strategy is another approach. What they are selling is ease of access - not shows themselves. The shows are free if you are willing to go through the hassle to torrent them. Paid competes with free by providing a better experience. Not having the popular shows available is the epitome of poor experience1. If customers have to go to non-legal channels to get the shows they want because they aren’t for sale through legal channels2 and find all of the other shows they could buy there as well, why should they go back to the legal store and buy those shows? All of a sudden, the ease of access starts to swing more towards the illegal channels, so the legal channels will have to reduce their prices (or maintain existing prices longer) to compete.
That makes a less profitable environment for all the media companies, both those selling digitally now and those who will have to eventually.