Exactly, this has happened before, the entertainment industry needs to learn their lesson. Remember when Napster was huge and the music industry was in a big panic for a few years? They finally got it shut down, but by the time they did there were several alternatives out there. The thing that finally made a difference was iTunes downloads. It was a reasonable alternative to piracy and people appreciated that. Instead of trying to insist that people keep buying physical albums they met them halfway. Sure you had to pay, but you could do it all from your own computer, you could pick only the songs you wanted, and there was no risk of malware or sleazy ads that you could get from the illegal services. People will pay if you try to give them what they want, trying to fight these battles legally is a game they will never win.
Not only did they generate very serious incentive to create alternatives, but each one was an escalation of forces!
At the time Napster was running high, something like 40 plus million users were on the thing. Might have been more.
And this is in the dawn of broadband too! Nothing was as huge as Napster was, and it was spreading like wildfire too.
At one point, blanket licensing was discussed. Something like 2+ Billion annually, to be sourced by monthly subscriptions.
Add up that money from that time, and all the pain, etc... through today, and that's one hell of an opportunity cost, and for what?
Only to center in on streaming today? Yeah, that's working, but what did it cost to get there?
Had they taken that deal, much would be different today, and they would have a centeralized source for marketing, huge mindshare, and who knows what else?
iTunes was born out of the basic realizations you mention.
Nobody talks about the cost of actually getting there though.
Similar costs are happening right now for video. Painful.
