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When did we reach a point piracy has better service than paying?
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I would say it reached a better service position in the early 2000s with the rise of broadband (1.5Mbps to 3.0Mbps) internet speeds.
Prior to that, you still had IRC and BBS, but there was a divide between filesize and your ability to download that filesize within reason. There also existed a divide between what was accessible to technical users vs everyone else. Non-technical users might copy 3.5 floppies or cassettes but weren't present in the internet space. Broadband opened the door for services like Napster, Kazaa, and Limewire which granted everyone access.
That service model was so successful to the point that it completely altered the music industry and how people bought music (ex. iTunes).