Today, those industry dinosaurs are finally moving from a DRM and litigation-focused approach to grudging participation in new business models adapted to the realities of a networked digital ecosystem. Companies like Pandora, NetFlix, YouTube, Hulu and Amazon's new cloud-based service are breaking new ground. They are transcending the outmoded paradigms of digital content distribution that were based on physical media rather than network file transfer and streaming. These pathfinders are seeking new revenue opportunities rather than clinging to the dead-end approaches of the past.
Unfortunately, the virtual world content creation community seems to be mired in the same type of thinking that led the music and video industries into years of wasted effort and lost opportunity. Pirates are are actually doing us a favor by pointing out that our business models are behind the times and not serving consumers. The future won't be won by chasing after offenders, but through new approaches that better meet consumer needs. The cost of piracy is a drop in the bucket compared to the opportunity cost of the current DRM-hobbled stove-piped system.
Instead of wringing hands over unauthorized copies of virtual goods moving from Second Life to other grids, we should support the creation of transworld marketplaces that make it easy for consumers to purchase goods and use them in the worlds they choose. Instead of obsessing over the fear of theft, we should be thinking creatively about opportunities for new revenue channels and business models such as subscription-based and cross-platform licensing. I can share music, videos and applications I purchase through iTunes on five computers plus mobile devices. Why shouldn't I be able to use my virtual goods in the same manner across platforms?
