The author, and the content industry in general, are misunderstanding basic economics:

Just because there is a cost to produce something does not mean that it has market value.

pg was right in pointing out that the content industry is built on the economics of scarcity, and that this scarcity no longer exists. You could charge someone to see a movie in a theatre when doing so was the only way to see the movie. You could charge for an album when doing so was the only way to hear music on your terms.

That is no longer the case. Scarcity, as far as arrangements of bits is concerned, is over. Period. You can complain about it, you can legislate about it, you can gnash your teeth and prostrate yourself and offer blood sacrifices to your preferred god, but nothing will change this basic fact. If the content industry wishes to persist in this new reality, it will have to adapt to it. That means a business model that is not based on the economics of scarcity.

That does not mean, as the author seems to believe and the content industry threatens, that there will be no money to pay for new content. It means the economic model will have to shift away from one of necessity, to one of value-add.

There is no shortage of cleaning labour. Anyone can pick up a feather duster and go to town. Yet, we have professional cleaners. Why? Because there is an opportunity cost to cleaning. An hour you spend cleaning is an hour that you can't spend doing something else. Too, there is value-add. Perhaps the professional cleans better than you do. Perhaps they clean faster, or clean when you're not home. There is convenience and status involved in having someone clean for you.

All of this adds value to cleaning labour, making it so people can charge for it. Similarly, the content industry can focus on modes of distribution which add value to the content, which is not scarce. The content industry currently pretends it is in the mining business, with large upfront costs to extract a valuable and rare resource then bring it to market. It isn't. It's in the bottled water business. Water's everywhere, and it's free. Yet people buy it bottled. They pay for the convenience, and perhaps they pay for the perceived quality as well.

Just as the water bottlers cannot stop people from getting water for free, so too can the content industry not stop free content. They can only offer it in a better, more convenient form.

Amazon does this incredibly well. I used to download ebook torrents, and read them on my laptop. It sucked, and I stopped. Then I got my Kindle, and started again. It still sucked. The formatting was wrong, it was inconvenient, and the metadata was filled with crap from the rippers that meant it would never sort properly. So I bought an ebook from Amazon.

It was amazing. I got the book I wanted, instantly, in a fantastic format, for cheap. It was a better service than bittorrent, and I paid for it. Gladly. Now, I get all my ebooks this way and I wouldn't think of going back. Certainly, the publishers are pissed at Amazon, but that's because Amazon is rendering them obsolete. So too are studios pissed at Netflix. What they fail to grasp is that Netflix is not the problem, they're just a company that adapted where the studios have not.

There's no going back. The content industry can stamp its feet and huff and puff and sulk all they want, but the genie's out of the bottle.

Time to adapt or die.