Piracy/File sharing - Why aren't songs, movies or books given for free?

The simple answer is that they don't think they would make as much money.

In many countries illegally downloading music or movies is getting harder and harder. The recording industry has achieved this by persuading governments to instruct the ISPs to block torrent sites, torrent proxy sites and sites that list proxy sites completely so no one can access them.

Also, a lot of people who illegally download music/movies do it more because of the convenience than the financial advantage. If you own an iphone or ipad, for example, it is much simpler to download what you want from itunes or subscribe to netflix than to find a way to get it illegally.

Finally, your example of cable companies also seems a little odd as you always pay a subscription fee as well as having to watch the ads.

Firstly there are services like this in Spotify, and even radio and tv, but it sounds like you are talking about downloading the material with ads in.

That causes a problem. Revenue from ads relies on giving many ads to many people. Each time you listen to a song the provider needs to be able to provide a new ad. If you download a song or book with ads then those ads are fixed. So you might listen to it 100 times but no advertiser will pay 100x as much because it is not valuable to give the same ad to the same person many times.

Secondly you would need some added security on the files to make it hard to simply remove the ads. That is easily as difficult and expensive as DRM anyway.

The third problem is ads are annoying. I think for many people an ad would be more incentive to pirate than a small cost. Early music DRM eventually failed (in part) because it was to motivate piracy in itself. Xkcd had a nice comic on that idea.

And that leads to the forth point. Much of economics is about equilibria and long run expectation. In reality everything takes time and big bold change is even harder to start. Initially music was DRM protected but they eventually realised most people will pay 99c to avoid the hassle of piracy, but will pirate to avoid DRM Nothing changed in the economics, it just took time for the industry to realise that was a better way yo do things. There may well be a book publisher out there working on an ad supported eReader library, but it will take time.

To put the price of a song in context:

The US median hourly wage is $17.09¹, the median song length of the top 100 iTunes songs is 223 seconds². So 50% of US workers earn $1.06 in the time it takes to play a song.

It's called a Principal-Agent Conflict.

The RIAA/MPAA act as agents on behalf of the people who actually produce content (and consequently end-consumer value).

To maintain relevance to their principals', the RIAA/MPAA must signal value to them (i.e. claim loudly and repeatedly that they do something good for them [regardless of the validity of that claim]).

Firstly, this signaling is demonstrably an example of the Principal-Agent problem, in that it diverts resources away from actually advancing the principals' interests, but more so in that it creates a perverse incentive for lobbying groups to fight imaginary fires.

The impact of piracy on the broad economy is believed to be near zero, so IP laws are effectively just rent-seeking $^{[2]}$ anyway.

Whether or not that particular type of rent-seeking is always a drain on the broad economy (in that it distorts markets producing deadweight loss in excess of the externalities corrected) is up for discussion, though it is known to be possible (insofar as the existence of an optimal tax [or government induced market distortion] is necessarilyy proof of the existence of an excessive tax).

This analysis also ignores non-dollar prices of piracy and the fact that pirated goods are not perfect substitutes for the legitimate good.

In the real world, consumers do not have perfect information and have to spend valuable time searching for pirated media and filtering through versions that no longer work, have no seeders, or are otherwise inadequate (terrible cams, virus laden, mislabelled, etc).

In addition, legitimate media may come with other features such as album artwork and proper metadata. Some consumers may care about this, and replacing this data incurs a cost.

Finally, legitimate goods can be more convenient and allow for immediate gratification. You need to discount the value of a pirated song a few hours from now versus a song right now. Legitimate media is backed by extensive distribution networks and can usually be accessed quickly and while away from a desk (e.g. downloading from Google Play/iTunes on your phone, or more recently streaming services like Spotify/Netflix)

Isn't this mostly an issue of pricing at a level where most people feel it's worth paying to avoid the hassle (and potential legal issues) of piracy?

Take music singles for example: when I was a teenager (late 90's), a CD single cost £3.99 in the UK. When it became possible to download songs for free that someone else had ripped and uploaded, many people started doing that. When iTunes came along and you could legitimately buy the same song for £0.99 (later £0.79 I believe - it may have gone up again since), I had no objection to paying that amount, and managing an iTunes library was all-round easier than random mp3 files on my HDD.

Nowadays I use Spotify, and £9.99 a month seems reasonable considering I stream music for 6+ hours a day at work. But I understand the industry is rallying against Spotify because they aren't getting enough royalties from it (boo hoo).

The issue I have today is that the same price correction has yet to happen for movies and eBooks which are, IMO, way too expensive in digital form. Take Kindle books for example, a new release can still cost £6 or £7 - the same price I could get the printed copy from my local superstore. How can they possibly justify charging the same amount when it simply cannot cost them as much for a digital copy as the printed media?

Movies are even worse: services like Google Play, Apple and Amazon charge (I believe) £5 - 7 to rent an HD movie for 48 hours. In a lot of cases I could buy a physical version of the same film from a shop for £10 that I can play as often as I like. A one-off digital consumption should be significantly cheaper than an unlimited-use physical version.

When movie studios and book publishers realise that their products no longer attract the same premiums they used to, and adjust prices accordingly, I think the number of people prepared to pirate will be pretty small, and limited to those people who will always take free over paid-for, even if there is effort/risk involved. If eBooks were £2-3, or movies £1.99 to rent for 24 hours, I'd probably pay that several times if I wanted to re-watch the film later.