CDs are dying, but the music industry is growing. Newspapers are dying, but journalism is thriving. DVD sales are dropping, but movie attendance is rising. Yet for all this, article after article says the music, news, and movie industry is dead or dying.

These industries are only dying if you classify them in ultra-specific and limiting businesses. CDs drop, but the music industry is selling more concert tickets and merchandise. The U.K. music industry’s own study (pdf) shows the music business overall has increased even though sales of record music has plummeted.  Even as newspapers suffer, hundreds of new journalism organizations are popping up producing original news, commentary, and fact-checking, all for a fraction of the cost, manpower, and time it takes traditional newspapers. And does everyone forget television news continues to grow in audience and revenue (well, at least cable news). And movies, well, attendance is up even in a down economy.

Technology and societal changes often causes radical shifts in how businesses do business. The death of selling plastic discs and packets of paper is, yes, dying, and for the time, these were the most effective ways to make money. With better computers and distribution channels, it is incredibly cheaper to make and distribute movies, music, and news articles.  This means more money to do other things. Or better, cheaper costs to consumers leading to a larger market – and then more fans to sell more stuff to.

The movie and music industries particularly have enjoyed monopoly pricing on their products, and without competition, fans paid the high prices. But competition from technology, even when used illegally, is forcing prices down. Originally, plastic discs were a scarce good the content industry could control, but the digital files on the discs are infinite goods now available free online no matter what.

Let’s remember, selling plastic discs (or records) for music is really only about 60-70 years old. Movies only entered home collections in the 1980s (and followed a significant legal battle where the movie industry claimed home video would destroy them). These industries made tons of money before and they can make even more money now by evolving their business models – recognizing they are in the music or movie or news industry, not just in the sell-discs-and-paper industry.

Musicians in the U.K. have been staking out positions for and against a proposed 3-strikes law where after 3-strikes, file-sharers of copyrighted material would be banned from the internet. Lily Allen (a personal favorite of mine) launched a blog in support of the 3-strikes law, but resulted more in a lesson to strong copyright supporters that no longer is copyright just an issue for those creating content.

To summarize the more than week long back-and-forth, Lily Allen began her blog, It’s Not Alright, a few weeks ago arguing file-sharing was stealing and hurting new artists writing “File sharing eats away at opportunity for new artists: by cutting off income at the most crucial, cash-strapped point in their careers and by limiting A&R’s ability to sign new acts outside of the mainstream.”

Allen’s blog quickly gathered a large community of copyleft and copyrighters debating Allen’s arguments and the merits of the laws she endorsed. TorrentFreak pointed out Allen copied an entire post from (another personal favorite) Techdirt without citation or a link. Techdirt’s Michael Masnick explained he didn’t care about the copying, but pointed to how hypocritical Allen’s was being.

A few days later it was revealed that Allen, while a new musician herself, released mixtapes online of her and other artists’ music, music which she did not have the copyright to. These mixtapes were still available on her website – entire songs. Allen defended this as her not understanding copyright law when she made them and that the songs were just excerpts.

Hundred of people commented on her blog and many bloggers posed questions for Allen to justify her position on file-sharing while she herself had no problem copying blog posts and file-sharing songs herself. Further, she used free services like Blogger, MySpace, and Twitter to share her music and connect with fans, turning her from a new artist to a famous artist. And she didn’t respond to questions from Masnick and others asking how Allen balanced her belief that file-sharing was harming music when the U.K.’s music industry’s own study showed the music industry was growing.

Allen discontinued her blog claiming Masnick and other copylefters were bullying and attacking her (one person said Masnick of “leading” his “internet army” to attack her while being angry.

But all this really teaches us that copyright affects more than just musicians. There is a growing fervor among consumers that copyright and the content industry are expanding too far onto individuals and their civil rights. Recording companies keep increasing the penalties for file-sharing, yet file-sharing keeps growing because that’s what technology and the market demands. No amount of government intervention will force people to buy CDs again.

Because Allen stopped blogging and has ended her career does not mean copyright isn’t working. The music industry in the U.K. has significantly grown as technology has made it easier and cheaper to make and share music. Allen herself took advantage of these free and cheap tools to make herself famous, and only when famous does she change her tune (see what I did there) on copyright. While I’ll be very sad to not have any more of her music, there are thousands of new artists eager for space on my iPod.

Controversy swirled last week on allegations that Last.fm’s parent company CBS gave the RIAA user data for possible use in civil and criminal cases. All those involved in the story have denied these allegations, though Techcrunch stands by the story.

It’s impossible to filter the he-said she-said right now, so instead let’s look at all the good that can come from the RIAA looking at Last.fm’s data. First, it’ll be almost impossible to make any case based on the data – Last.fm shows what music people listen to, but not the source (whether its legal or pirated). Instead, the RIAA could use this massive amount of data on real listening behavior to find new revenue streams and marketing opportunities. The RIAA could see exactly who likes one thing and then listens to another, helping to plan concert schedules and other events (like they already do with piracy data).

What would be even better is if the music industry took this data and used it to find new musicians and bands that fit the listening tastes of music fans (the ones listening). Using actual user actions can be much more efficient than focus groups or other market testing, but rarely is that data available. Of course, this is another benefit of the internet’s cheap and easy distribution – easy market testing. Post a new song to Last.fm or YouTube and see what happens. Do a little self promotion and you might have the next Susan Boyle on your label.

Of course, the RIAA won’t do any this. They’d much rather claim they’ve stopped suing people then continuing on suing. More money there than actually finding new business models.

After my IP class last week, a classmate and I continued our debate.  He said something that stuck with me: “Companies won’t leave money on the table.”  But in many cases, companies do leave money on the table. Sometimes the risk isn’t worth the reward, but sometimes it’s sheer stubbornness.

I mentioned Farhad Manjoo’s article about why there is no iTunes for a movies a few weeks ago.  The reason, according to Manjoo, is there are too many contracts to renegotiate and too many people to get permission from to make an all-you-can-download movie service cost effective.  This is not because it’s actually expensive to make (all those BitTorrent sites seem to manage). It’s because the variety of rights holders demand too much money.  Rights holders over value their copyright (or patent other cases).  They demand more money than someone can make selling another product (like a download service).  Instead of getting paid, nothing gets done or sold, meaning everyone leaves money on the table.

Want a nice, clean consumer example? iTunes introduced variable pricing for music at the demand of the record companies.  Record companies could choose a lower 69 cent price, the regular 99 cent price, and a $1.29. Few chose the lower price, pushing popular and new songs to the higher $1.29.  Early results show the labels are losing money from the decrease in sales – unit sales have dropped to the point where actual revenue is lower than when prices were 99 cents. Don’t say they weren’t warned.

The examples are numerous, from newspapers threatening Google even though its sends them tons of free traffic to monetize to Warner Music demanding more money from YouTube and music games like Guitar Hero, ignoring the huge promotional benefit they get from both.  TV shows like the Wonder Years can’t appear on DVD or TV because of the over-priced music. Other shows have changed the music, from Dawson’s Creek to WKRP in Cincinnati.

In the patent world, having too many patents in one area is called a patent thicket and can make it hard for research because it requires so many different licenses (and too many companies over valuing their intellectual property) that it becomes cost-prohibitive to research either from licensing or lawsuits.  Some companies collect their patents to allow products to be made, but these patent pools often do more harm than good. This is even hampering drug research:

Peter Ringrose, chief scientific officer at Bristol-Myers, has said there are more than 50 proteins possibly involved in cancer that the company was not working on because the patent holders either would not allow it or were demanding unreasonable royalties.

Yes, I went there. You might die because greedy companies refuse to take money.

In all seriousness, intellectual property not only gives monopoly rights to a single entity, but it also comes a sense of entitlement that seems to hurt the rights holder and everyone down the supply chain, including consumers.  This is because rights holders significant over-value their own intellectual property.  Much of the value from content comes from how it reaches the consumer, whether on DVD, TV, or some innovative package.  Pricing yourself out of these products does not make your content more valuable – it devalues it because consumers don’t experience it.  Companies are leaving money on the table, not just from the initial royalties, but from the future revenue made by future sales of products based on new fans or new innovations.