Note: I accidentally posted this before I finished, which is why you might have seen it before.

It surprises me at how chronically we ask the wrong questions regarding the music/movie industry’s failure to adapt, a failure that has marred its business efforts since its inception (for more on this, check out the excellent Setting the Record Straight by Colin Symes).

Usually, the problem is with the music/movie industry, which asks the wrong questions about consumer behavior and how it should respond to new distribution methods, etc. The latest wrong question, however, has been asked by /. editors when they titled a semi-recent post about cheaper DVD prices “Is Piracy In the Consumers’ Best Interests?.”

What is in the consumers’ best interest is for the industry to provide individuals with what they want. That is, industries are convenient because they (should) provide an easy delivery mechanism for desired goods, as well as a certain degree of quality control (e.g., you know the files/discs will work; that when the album says R. Kelley, it is the R. Kelley you, not me, knows and loves).

It is not in the consumers best interest for a black market (i.e., piracy) to exist, especially when both the government and industries are doing their best to expand what that black market encompasses through new/expanded intellectual property/copyright regimes (with the intentional side effect of criminalizing as many people as possible).

With black markets/piracy decidedly not in the consumers best interest, it makes more sense to ask whether piracy benefits the music/movie industry. The answer is, it does, and not in the conventional sense.

The conventional sense is that filesharing leads to increased sales. This is a standard argument with a great deal of controversy surrounding it.

An alternative argument is that piracy serves as an inexpensive test to identify consumer preferences and new business models. The music/movie industry has piggybacked on the labor of programmers and been able to observe how people download and interact for music. As a result, they have had an early and cheap beta phase for their numerous online/downloadable-music stores, such as iTunes and Napster.

It required zero market research on the industry’s part, zero cost in developing software, etc. Had they adopted the method earlier, rather than waiting, waiting, and then sueing everyone in sight, they would have also been spared legal costs and also the majority of the costs they claim come from piracy.

Piracy, therefore, serves as an enormous gift to the industry in that it has refined a new/adjusted business model, and yet the industry fails to accept the gift.

If you are not satisfied with that question, try asking whether Piracy Funds Terrorism.