[This post was authored by Scott Oranburg]

With all the discussion about intellectual property legislation like SOPA and PIPA, it’s easy to forget why these debates are happening in the first place. The advent of the internet has presented real challenges for business models built on copyright and other forms of intellectual property. Here at FMC, we’re committed to the expansion of a legitimate digital music marketplace where artists are equitably compensated and fans can find the music they want. That’s why we’re curious about business models that could accomplish this goal without the potential for the kind of collateral damage that comes with blunt-instrument approaches to internet policy.

A recent article in ArsTechnica makes an important point often overlooked in debates about creativity and technology: legitimate alternatives are still the surest way to curb unauthorized distribution while avoiding potentially risky legislation. For example, overlooking its recent price hike and Qwikster snafu, the success of the Netflix model proves that people are willing to pay for content — so long as its as easy to obtain as the unauthorized material. Similarly, Spotify’s growth and relatively long-term success in Europe is more evidence that people are still happy to pay for content if it gets to them quickly, easily and at the “right” price.

Now, there is no reason to think that the streaming model spearheaded by Netflix and Spotify cannot also be applicable to downloaded content you get to keep. Spotify’s success is partially attributable to its micro-torrenting technology, which gathers tiny pieces of each track on the fly to provide streaming quality that’s competitive with almost anything accessible illegally. However, iTunes and similar media providers that focus on downloads are sluggish by comparison. If it takes three hours to download a Blu-Ray off Apple’s servers but 30 minutes from a BitTorrent client, the attractiveness of using the faster, but illegal, method is much higher.

Perhaps media providers worried about waning DVD and album sales should spend some of their lobbying and litigation budgets on fast, user-friendly ways for consumers to own their content. That way, they may have another platform to compete with piracy alongside streaming services like Netflix and Spotify.

As the Ars article points out, torrenting could prove valuable in other ways as well. Streaming may seem like the future, but universal high-speed internet is still a long way off. Until we can stream anything we want in the Himalayas, there will be an opportunity to monetize permanent downloads; providers simply need to make owning legitimately preferable to obtaining illegally. And, while vinyl is an exciting niche market, CDs are probably not the answer in a world of Swiss Army Knives with a terabyte of space.

If there is anything we have learned from the last decade, it should be that those obtaining unauthorized content are inventive and will take great pains to find ways around roadblocks, which puts into doubt the effectiveness of heavy-handed enforcement policies. Yet the rise of Netflix and Spotify are the flip side to the access coin: most consumers would rather pay if the product is priced right and actually worth buying.

Copyright in the digital age is sure to involve lots of carrots and maybe a few sticks. Perhaps the Lords of Entertainment should think about getting into the carrot business.