"kill the income, kill the production of new content"
I don't think that's true, and I don't think it's relevant; I'll address those in turn. Obviously, prediction is difficult, especially where the future is concerned; all I can hope for is a combination of analogy, reasonable extrapolation and logic. For the most part, I don't know what will happen; at best, I can give educated guesses of what might happen, and how it would not be the end of civilisation.
The grand analogy is among music, movies and microcode (software); microcode is furthest along the path to Free, movies the least. Their common theme is that today, they can be perfectly copied for negligible cost. Traditionally, they require large investments of money and effort for the fixed costs, especially movies and the larger sorts of software (compilers, operating systems, databases).
Microcode is the furthest along the path to Free, with a well-developed model of how it's produced — Open Source. No one can really claim any more that the production of new content has been killed in that field, or that the new content is somehow significantly inferior to the traditional method. That is perhaps the best reason for optimism.
Music is roughly at the stage where microcode was a couple of decades ago. It's already obvious that non-professional internet-mediated production is possible, but there's no clear business model. Most of the proposals sound very much like the GNU Manifesto of 23 years ago: for the joy of creation, for less money, paid for by a collecting society — mostly, though, nobody is really sure. The model for music that sounds most plausible is as publicity for live work.
Alternatively, some sort of collaborative music model might arise, by analogy with Open Source and wiki text editing; that would come closest to producing the content for zero cost, by spreading the costs among many people each of whom does no more than they might have done for pleasure.
Movies are even further back: non-professional production is currently very poor. There are YouTube clips, and there is machinima, but that's about it. We can already tell stories with these, sometimes compelling stories, but they won't even start to resemble traditionally-produced movies for decades.
Then there's whether the question is even relevant. The Internet with its cheap, ubiquitous copying is here. We can't stuff the genie back into the bottle without doing vast damage to ourselves, our society and civilisation. So, any business model from now on more or less has to accept the fact that copying happens.
It also has to accept that there will be Free stuff out there. It's said that if you wrap the Internet around every brain on the planet and spin the planet, software flows in the network. It seems plausible that this would apply much more strongly to the more human activities of telling stories, singing songs. Ninety percent will be crud, of course, maybe ninety-nine, but storage is cheap and filtering is doable. So any business model has to compete with Free.
Finally, the new, digital versions don't wear out. They may go out of fashion, or become objectively dated, but still — once you have 80 linear years of music or video, how much more do you really need? Beyond that, quantity doesn't really increase, only the quality (if you can solve the filtering problem, but the Internet does OK at that). So any business model has to compete with its own back-catalogue.
High-speed pizza delivery, of course, leads to an obesity epidemic.
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