That the market has not come up with alternatives to file-sharing good enough to make piracy moot is the real problem, and the companies and individuals that have stood in the way of this are the ones who owe content creators an explanation. Extremists on both sides are hailing this as a win, but it’s the majority of us in the middle who continue to lose out.

This was a show trial about money and politics, but most of all it was a sideshow. This argument is over and the entertainment industries should be focusing on the licensing schemes, royalty agreements and the new business models content creators desperately need. Thankfully many more of them are. But this verdict will encourage the ones who are not to continue pretending there is some other way around this problem that involves suing people.

No one should have to accept people “stealing” their work, just as no one should have to accept a company demanding that its business model works when it doesn’t. But we all have to adapt to new market realities. The way we communicate and distribute all kinds of information will continue to change at an alarming pace. Taking hard-line measures against file-sharing in the interests of a handful of large organizations sets a dangerous precedent for the future of privacy, net neutrality and freedom of speech. Intellectual property laws are about striking a balance between the interests of individual IP creators and society as a whole. If the law tips too far in either direction, the whole system will fall. Bad legal decisions on piracy may actually end up doing more damage than the piracy itself.

The Pirate Bay verdict gives lawyers everywhere a mandate to continue chasing shadows. It won’t stop the Pirate Bay, let alone online piracy. The enormous surge in the Pirate Party’s membership that was reported after the trial is just the beginning. Most of the commentary that followed rightly talked of cutting heads off hydras and hitting hornet’s nests, etc. What that really means is anonymity features and non-accountability measures being baked into BitTorrent software, probably in the next six months to a year.

Pirate Bay spokesman Peter Sunde said after the trial that “there’s no difference between us and Google.” The judge thought there was a difference – intent. The Pirate Bay was all about file-sharing and Google is not. But thanks to this trial the next generation of file-sharing sites will be much more secretive. The next mutation of The Pirate Bay will have no subversive rhetoric and won’t mock the labels and studios chasing it. It will be silent. It won’t respond. It wont be nearly as fun as TPB, but there will be no real differences between it and Google. No one will be able to prove intent, making it even more of a threat. Doesn’t exactly sound like a win for anybody in the business of creating content.

The real winners won’t be the ones that come out on top of this long, bitter trial process, appeals and all, which could take five years. It will be the side that develops the new technologies that will render that court decision meaningless before it is even issued. They may be Scandinavian pirates or Hollywood privateers, or some combination of thereof. The file-sharing community is working ten times harder because of this trial. The entertainment industries would be wise to do the same, and wiser to find ways to work with the pirates they continue to fight. The fact that they didn’t do so ten years ago cost a generation of artists billions.

No-one is ever going to trial for that.

–
Matt Mason
Author, The Pirate’s Dilemma
e: matt@thepiratesdilemma.com
w: thepiratesdilemma.com

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

“The musicians who posted their work on Bebo.com are no different from investors in a start-up enterprise. Their investment is the content provided for free while the site has no liquid assets. Now that the business has reaped huge benefits, surely they deserve a dividend.”

“What’s at stake here is more than just the morality of the market. The huge social networking sites that seek to use music as free content are as much to blame for the malaise currently affecting the industry as the music lover who downloads songs for free. Both the corporations and the kids, it seems, want the use of our music without having to pay for it.”

Artists add value to Bebo, but Bragg is over-reaching claiming they deserve a share in Bebo’s sale price. Bebo also adds value to artists who voluntarily post their songs on the site. Does Bragg also think artists who post on Bebo.com should share their concert ticket profits and royalties with the social network?

In the red corner we have Michael Arrington from TechCrunch, making the opposite but no less extreme case that “recorded music is nothing but marketing material to drive awareness of an artist.” He also says “if an artist can’t make a living playing concerts live, then he/she may want to think of it more as a hobby than a way to make a living.”

Arrington reasons that because music can be reproduced at a zero marginal cost, it should be free. But marginal cost does not equal total cost. It still costs something to produce music. It still takes money, time and effort to produce good music, not to mention software, movies and other goods with zero marginal cost. People producing such things need to make money in the end. Zero marginal cost does not mean it should be free. It just means we need a new distribution system.

Bragg’s line of reasoning is skewed, but he makes one good point; creative works like songs and films are worth something, and we have to figure out a way to reward creative people fairly in the age of the Internet.

Arrington’s argument is also flawed, but he’s right to say that Bragg is off the mark, and he’s right to say we should neither “line up file traders and shoot them”, or “give a government subsidy to anyone who calls themselves a musician so that they can pursue their art.”

Fortunately for the rest of us, these are not the only two options. Bragg and Arrington represent the two polar opposites in this ongoing debate, and they’re both wrong.

All the people at the extreme ends of both sides of this debate are wrong. But the truce is coming. Soon enough, there will very likely be a $5-$10 a month voluntary license fee for downloading all the music you want, and most people will be happy to pay it. As long as the money makes its way back to artists, it will help the music business grow.

I can’t wait to see an Internet where incredible music resources like OiNK can exist and artists can prosper at the same time, and that day is coming, hopefully sooner rather than later. But when that happens, another community will suddenly find itself as redundant as the music industry’s lawyers; the pirates.

When peace breaks out in the music business, a lot of people are going to have to find something else to talk about (which is why I cunningly future-proofed The Pirate’s Dilemma by talking about piracy in all businesses…). Music pirates will no longer be the face of the revolution, they will be part of the old regime. Over 500 years ago, Niccolo Machiavelli wrote: “Innovation makes enemies of all those who prospered under the old regime, and only lukewarm support is forthcoming from those, who would prosper under the new.”

Pirates create periods of chaos, then society works out how to make this chaos work for everyone, at which point it is enshrined in law and becomes the new order. Piracy itself is not a long-term solution. The arguments for music piracy as a force for change will become old news when file-sharing is finally legitimized, but the good news is there is still plenty for pirates to rebel against.

The pirate’s job is to push the envelope, while the corporation must play catch up as fast as it can. Both of these communities need each other. But when the corporations do catch up, the pirates need to move on. File-sharing is not so much a movement that needs to survive for its own sake as it is a means to an end. This isn’t a war without end. It’s a negotiation.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Let’s get a couple of things straight ,

1. This proposal was a draft consultation green paper, defined as “a proposal without any commitment to action.” The government receives many of these on a daily basis. They are like junk mail at Number 10 Downing Street. The Prime Minister’s toilet paper is more important than most green papers, and both are usually filed in the same place.

2. This proposal is totally and completely unworkable in the real world. ISPs will not accept liability for the contents of packets (nor should they), and it would be impossible for them to open and check if every single download and upload was legal or not without the entire Internet grinding to halt. This isn’t in the best interests of the government, the ISPs or the voters. Banning customers and exposing yourself to billions in liability isn’t a good business strategy. Criminalizing six million citizens and inconveniencing the rest is not a vote winner.

3. It would be impossible to tell the difference between illegal downloading and legal activities such as downloading software patches, using torrents to share stuff legally, playing online video games, using VoIP, photo sharing, telecommuting, and many others. The resistance from the private sector would be as strong as it would from the general public.

4. The very idea of this goes against the ruling of the European Court, which says EU member states are not obligated to disclose personal information about suspected file sharers. It would also fly in the face of Article 10 of the European freedom of expression laws, which gives every European the “freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.”

5. WiFi piggybacking and encrypted packets make it impossible to tell who is downloading what in the first place. These techniques are only getting more sophisticated, while for the most part, the content industries collectively remain as dumb as a box of hair.

So in summary:

Insert Toilet Flushing Sound FX Here

This idea makes as much sense as trying to ban people from singing ‘Happy Birthday’ to each other over the telephone network, or burning down libraries to protect the publishing industry. But what’s frightening about such ideas is that they are still taken seriously all over the world by powerful decision makers in government and industry who have absolutely no clue about how the Internet actually works, or the damage such laws could do to democracy.

Before there is any more discussion about this, the music and film companies need to definitively prove illegal downloads cost them millions of dollars in lost revenues. CD sales are falling because nobody uses them anymore, and Hollywood is in rude health despite the pirates. There should be no more talk about changing laws and spending tax payer’s money on this ‘problem’ until someone proves there really is one.

Furthermore, if there is a problem, tax payers shouldn’t have to pony up in the first place. The content industries need to stop braying at governments to protect inefficient business models and look at the real solution that’s been staring them in the face for ten years.

For those who are interested, my book: “The Pirate’s Dilemma: How Youth Culture Is Reinventing Capitalism” is out now through Free Press, , and probably soon on a BitTorrent tracker near you ;).

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

ACT I: THE SET-UP

Current system is shot to hell. Heads buried firmly in sand.

A few months ago, the writer and NYU professor Clay Shirky told me he thought DRM was a “nostalgic” idea. Nostalgic is the best adjective I’ve heard to describe how most large entertainment companies think about controlling their content in a digital era. Big media continue to view the situation through rose-tinted spectacles while consumers see red. When being a pirate is the easiest way for people to access the content they want in the format they want it in, then something has gone very, very wrong.

There isn’t a moral defense for stealing in most cases. But there isn’t a moral defense for invading people’s privacy and imposing draconian laws to protect outdated, crumbling business models either. Music and movie piracy is rampant because over the last ten years, the market has utterly failed to provide a wide range of preferable legitimate solutions. If this continues as bandwidth increases and download speeds accelerate, the entertainment industry will be left in ruins. Many think that needs to happen for new business models to form. I think those currently in power simply need to grow a set and confront the reality of the situation.

So far the search for new revenue streams by the big labels and studios has only turned up one that they seem to be comfortable with: the legal department. It’s impossibly difficult and expensive for the average consumer to use music legally in podcasts, on websites, in remixes, or in public speeches for example. But if you do decide to use music illegally, it’s entirely possible that a huge team of lawyers will come at you like a troop of rabid spider-monkeys. Instead of looking at real solutions, all the labels seem to be doing is exacerbating their problems.

Pretending the current laws or legitimate options for consuming movies and music online are in some way going to stop piracy from turning the entire entertainment business into a giant anarchic swap-meet is like pretending recycling plastic water bottles will single-handedly end global warming. The problem is the entertainment business doesn’t recognize the giant anarchic swap-meet for what it really is; a great way for them to make a ton of money.

ACT II: CONFRONTATION

Licenses replace sales. Labels accept reality, or die.

CD sales are in freefall, (the arrival of the Mac Book Air this week was perhaps the final death knell for the format) and the legal department is clearly not a viable long-term revenue stream. A more efficient way to monetize how we consume music online (and other goods with zero marginal production costs) is not to think about monetizing them in terms of sales, but instead in terms of licenses.

This is already beginning to happen. Deals like the “Comes With Music” partnership struck between Universal and Nokia last month may feel like “one step forward, two steps back“, but at least we’re finally heading in the right direction. And the fact that all the majors are starting to work with legitimate file-sharing models like iMeem is encouraging.

The solution we are slowly moving towards is a voluntary collective license for music, which consumers could choose to pay, or not. It needs to work all over the world. National boundaries don’t apply to this kind of information anymore. To pretend they do is as nostalgic a notion as DRM.

Organizations such as ASCAP or the BMI could fulfill this role. This system wouldn’t be a tax; there would be no cap on the amount of money an artist or label could earn, innovation would not be stifled. Bennet Lincoff wrote a paper this time last year which I believe could be the answer. The EFF is also supportive of a similar solution, which they outlined in a 2004 paper:

“The concept is simple: the music industry forms a collecting society, which then offers file-sharing music fans the opportunity to “get legit” in exchange for a reasonable regular payment, say $5 per month. So long as they pay, the fans are free to keep doing what they are going to do anyway—share the music they love using whatever software they like on whatever computer platform they prefer—without fear of lawsuits. The money collected gets divided among rights-holders based on the popularity of their music.

“In exchange, file-sharing music fans will be free to download whatever they like, using whatever software works best for them. The more people share, the more money goes to rights-holders. The more competition in applications, the more rapid the innovation and improvement. The more freedom to fans to publish what they care about, the deeper the catalog.”

Under this system, the internet would work exactly as broadcast radio does. As the EFF proposal points out, “songwriters originally viewed radio exactly the way the music industry today views KaZaA users—as pirates. After trying to sue radio out of existence, the songwriters ultimately got together to form ASCAP (and later BMI and SESAC). Radio stations interested in broadcasting music stepped up, paid a fee, and in return got to play whatever music they liked, using whatever equipment worked best.”

We have a system where infringement by many pirates affects the ability of rights holders to license music legally to the few media companies that can afford it. What we need is a model where infringement by a few pirates will not affect the ability for rights holders to license music to the many law abiding broadcasters who want to use it.
Sure, there is good money in making it very difficult to license music, and charging a few people a lot for the privilege. But it’s likely there is a lot more money in making it very easy to license music to a lot of people for very little.

This wouldn’t just allow individual users to share songs legally – it would create new opportunities for a lot of sites to start selling music, which is a good thing. The entertainment industry has made it very clear it would prefer not to be beholden to a small handful of stores like iTunes, an anti-competitive situation which isn’t great for consumers either. It’s a monumental task, but it would create jobs and wealth and probably a lot of opportunities we can’t even see yet.

ACT III: RESOLUTION

A viable entertainment industry unfolds. New revenue streams spring forth.

The truth is we still need middlemen in the entertainment business. It’s just they stopped doing their jobs properly, so we decided to stop paying them. But if the industry embraces the way millions of people have been consuming their products for the last decade, there will be no longer be a reason for consumers to defend piracy. There will be more money for artists. There will be more commercial opportunities to distribute wider varieties of content. Publishing will grow. There will be a larger entertainment industry with more revenue streams, making more money than it does now. Once the benefits of sharing content in a more liberal fashion are widely understood, our definition of fair use will likely change as well, meaning a wealth of new non-profit driven content and culture will be created at the same time. I think that definition will look something like Tim Wu’s: “It is time to recognize a simpler principle for fair use: work that adds to the value of the original, as opposed to substituting for the original, is fair use. In my view that’s a principle already behind the traditional lines.”

Confronting the reality of where the traditional lines really are, and where the new ones have been drawn by the consumers (the people who really make the rules) is the only long-term solution to the pirate’s dilemma the entertainment industry faces. It is, in this instance, the only way the industry will ever stop piracy. It is the right thing to do, and it will force the rest of us to start doing the right thing too. When the entertainment industry decides to grow up about file sharing, the rest of us will have no choice but to do the same.

For those who are interested, my book: “The Pirate’s Dilemma: How Youth Culture Is Reinventing Capitalism” is out now through Free Press, and probably soon on a BitTorrent tracker near you ;).

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.