The "Fair Use Clause" in American copyright law was put in place as a protection, so that consumers need not worry about the legality of doing things like making archival copies for personal use. After all, physical storage mediums no matter what format they may be, have finite life spans. Historically though, actually exercising your rights was often a complicated process, because making archival copies was often either technically challenging or expensive. Today, there are two fundamental changes in the landscape for consumers and media companies. First, actually exercising ones "Fair Use" rights is pretty easy these days. As always, technology is an "enabler" allowing people to do things they otherwise could not. Secondly, a better more efficient and less expensive method of content distribution has come into being. This is that "internet thingy" you've all heard about on TV.

Despite reports to the contrary, media companies have largely ignored the internet and its potential for content distribution until quite recently. Well, it would be more truthful to say that they've avoided it. Plain old fear is the most obvious reason. Let's rewind to the day's of Napster (the original one, not the shadow of it's former self it is today) so you can begin to understand why that fear exists and is justified.

Though not by any stretch of the imagination was it the first way of distributing music files, Napster was the first EASY enabler of sharing music content, and boy was it popular. If you look at historical graphs of record company sales against the history of Napster, it's clearly evident that as Napster's popularity increased, so did record sales. Why is this? Well, during that timeframe CD burners and blank media were rather expensive so many were using it as an avenue to get music on their PC's only. Also during that timeframe, record companies had mostly eliminated the distribution of CD singles and cassette singles because they ate into the sales of higher margin albums. In this sense, Napster filled a gap in consumer need, by satiating the people who wouldn’t buy a whole album for one song, as well as giving people a previewing tool (better than the randomness of radio play) to decide what to buy. While this fact was evident and obvious to many (including many a dissertation at esteemed business schools and countless independent industry studies), it was a fact that just didn't permeate the ivory towers of media giants. Why? If you look at the larger picture, you realize what a scary thing Napster was.

Remember that thing we discussed earlier, called copyright? As a legal tool to enable artists to sell limited rights to content producers and distributors, it has a valid purpose. However, it does nothing to protect content producers and distributors from the inherent inefficiencies of their aging business model. Imagine if you will a comparison between a pay-for-media service on the internet, and the average path of content distribution in traditional business. Bear with the oversimplification. In the case of the internet once media is created you need a server, advertising, and a way to collect money and that's pretty much it. Issues such as format and packaging thus become the problem of the customer to figure out. In the traditional business model, you have factories that press CD's, factories that make the packaging, factories that make the cellophane wrap, design houses that make cover art, warehousing companies, trucking companies, regional distributors, and retailers. All of these involved entities naturally must hire employees to service all of the customers along the supply chain. It's not rocket science to grasp that the first method is easier, with significant potential in reducing overhead cost. It should also be evident that the traditional method is inordinately more complex and more expensive in comparison. Can content distributors afford to make their entire infrastructure nearly obsolete? Obviously they can't.