From Change This: For nearly a century, industry executives have relied on the same script: use industry experience and gut feel to pick the right products; sell these products to customers in a series of staggered release windows; and hope to win by creating blockbusters. For movies, this meant first selling high-priced tickets for single viewings of films in the theaters; then selling DVDs three months later that could be watched repeatedly at home; and then, six months to two years after that, licensing films to cable TV, where they could seemingly be watched for free. This method of selling content wasn’t arbitrary. In an analog world it represented the most profitable way of make money from consumers who placed very different values on the movie.
In recent years, however, a perfect storm of technological change has hit the entertainment industries. It involves the convergence of user-generated content, long-tail markets, and digital piracy, and it has diminished the profitability of the industries’ traditional business model.”