GnuMusiq/threat history
A Brief History of Threats to the Music Industry
1990s
In the late 1990s, the music industry became threatened as never before by a new technology -- the ability to quickly and cheaply copy music over the internet.
But this has all happened before -- and each time, the industry has adapted and expanded as a result.
1960s
Back in the late 1960s1, the music industry was threatened as never before by a new technology: the cassette. People were making cassette collections of their favorite songs and giving them to each other for free without paying royalties to the copyright owners. This obviously represented a terrible loss of income which would soon destroy the business.
After much fussing and fighting, some concessions were made here and there and all was well once again. Nobody complained about all the copying that was still going on because (presumably) it was generally realized that most copying fell into two categories: (1) professional bootleggers, who are relatively easy to find and prosecute and anyhow cassettes weren't that huge a boon to them; many of them make bootleg vinyl as well; (2) small-time petty criminals making tapes to give their friends – which, it was further realized, is a really good way for music to promote itself; if you really like a song or an album, you're going to want vinyl or (later) a CD, because of the higher quality. Music sales soared, and (to exaggerate and oversimplify only slightly) everyone was happy.
1930s
Back in the 1930s, the music industry was threatened as never before by a new technology: radio. Why would anyone buy music, said the established industry, if they can hear it for free on the radio? This will ruin us!2
Harsh words were exchanged, and a boycott ensued: radio would play only works in the public domain. Radio listeners became familiar with low-budget classical music and the works of Stephen Foster.
A new licensing agency, Broadcast Music Inc. (BMI) was created in response to this situation. BMI offered better rates than ASCAP, and granted memberships to many artists who had been repeatedly rebuffed by ASCAP (which up to that point had had a virtual monopoly on music publishing, tightly controlled by the film industry; BMI's policy was open-door).
Presumably, at some point ASCAP realized that radio "spins" (playing a song on the air) did not represent a lost sale; it represented advertising of that song. There were no "lost sales". Radio airplay was, in fact, the key to driving sales by 1957; radio was a prime factor in the expansion of the music industry during the 1940s through the 1960s. To exaggerate and oversimplify no more than usual, everybody was happy.
Early 1900s
Back in the early 1900s, the sheet-music industry was threatened as never before by a new technology: the audio recording. (I think you get the idea.)
The Point
The current deadly threat to the music industry (mainly the internet, and various software for distributing media over it) is causing the usual reaction: the established interests are digging in their heels and trying to use their weight to keep things the way they always have been.
What they don't seem to have realized yet is that this has happened before, and the results will be much the same: the playing field will shift around again and become more level, everyone's choices will broaden because of easier content distribution, and there will be even more money to be made.
The real fear, of course, is not that money won't be made, but that the current big players will be unable to adapt and will not have a place on the new playing field. This kind of reaction is inevitable, and not a good reason to suppress new ideas. Any new system doesn't need to be perfect; it just needs to work better than the old system -- and the measure I would use is to ask what percentage of those with musical talent are able to make a living at their craft. This is a very low bar.
Footnotes
1 Actually, it wasn't until the late 70s that the cassette caught on in the U.S.; before that, the U.S. had 8-track cartridges, which were difficult to record on and generally impractical, and cassettes were only used in the rest of the world, which apparently didn't matter enough to be much of a threat. Go figure.
2 This is actually a bit of an oversimplification... in the 1920s, radio was a niche market and ASCAP allowed airplay of its properties in exchange for a flat percentage of advertising revenue. The problem came in the late 1930s when, in the face of radio's increasing popularity, ASCAP decided to raise the percentage to compensate for what they apparently thought of as "lost sales".