The Pirate’s Dilemma
Written by Ernesto on January 08, 2008Pirates are innovators, they signal market problems and lead the way to new business models. Nevertheless, they are tagged as thieves by many. We invited Matt Mason, author of the book “The Pirate’s Dilemma: How Youth Culture Is Reinventing Capitalism”, to write an article on the “pirate’s dilemma” for TorrentFreak.
The Pirate’s Dilemma: The Problem With Information (and how to fix it)
BY MATT MASON
The same way light confuses scientists by existing as particles and waves at the same time, information increasingly seems to confuse us. Information is getting cheaper and more expensive at the same time, and it appears that many of us, especially those of us who own or control a great deal of it, no longer understand how to observe or use it.
We live in a world where it is legal for a company to patent pigs, or any other living thing except for a full birth human being, but copying a CD you bought onto your hard drive is considered an infringement of someone else’s rights. A place where an average law abiding citizen could owe more than $12 million dollars in fines if they were sued every time they accidentally violated copyright law in a single day. A society where it’s ok for each of us to be hit with 5,000 advertising messages every 24 hours, usually without our permission, but creating a piece of art and placing it in public yourself without permission can land you in prison. This isn’t just about the pros and cons of file sharing - this is about an entire species losing its sense of perspective, failing to understand the potential of one of its most precious (and yet most abundant) resources.
Many of us are confused about whether our ideas should count as information, or property. When we have a new idea, there are two opposing forces at work. At the same time as we are thinking “how can I get this out there?” we’re also asking ourselves “how can I benefit from/monetize this idea?” We want to spread ideas as information, but capitalize on them as intellectual property. This problem with information is something I call The Pirate’s Dilemma.
The first thing we need to understand is that the decision as to how we share “our” information isn’t always “ours” to make alone. If a drug company decides it won’t share malaria and anti-retroviral AIDS drugs with a developing nation for a price the suffering citizens of that country can afford, that country may decide to ignore patent protections and manufacture pirate copies of the drugs anyway in order to save lives. If an industry dependent on physical information, distribution bottlenecks and artificial scarcity decides to ignore more efficient ways of distributing the information it considers its property, pirates will step into the breach and highlight the fact that there is a better way for us to do things.
Some of America’s greatest innovators were thought of as pirates. When Thomas Edison invented the phonographic record player, musicians branded him a pirate out to steal their work and destroy the live music business, until a system was established so everyone could be paid royalties, which we today call the record industry. Edison, in turn, went on to invent filmmaking, and demanded a licensing fee from those making movies with his technology. This caused a band of filmmaking pirates, including a man named William, to flee New York for the then still wild West, where they thrived, unlicensed, until Edison’s patents expired. These pirates continue to operate there, albeit legally now, in the town they founded: Hollywood. William’s last name? Fox.
Piracy is the sharp end of innovation, innovation by any means necessary. Large oligopolies control most of our industries and governments. Six companies control most of what we see and hear. According to The World Bank’s 2007 figures, roughly two-thirds the world’s 150 largest economies aren’t nations, but corporations. We all know the system doesn’t work quite the way it’s supposed to, yet continue to think of this inefficient system we have as “the free market”. Pirates upend inefficient systems – they take order and create short-term chaos, but often the long-term result of piracy on a large scale is a better system - a more efficient way of doing things. Pirates created many of our established orders out of chaos, and now that these industries are becoming inefficient in the face of new technologies, chaos is being created once again.
From CEOs to struggling artists, in everything from health care to entertainment to education, many of us are being challenged by the problem of others sharing and using our intellectual property without permission. This challenge requires a change of attitude, because sometimes piracy isn’t the problem, it’s the solution. You see, piracy is really a market signal - an early warning system, a warning that all too often goes ignored by established industries. Whether we consider ourselves pirates or professionals, we’re all competing in the same space.
When pirates enter our market spaces, we have two choices: We can throw lawsuits at them and hope they go away. Sometimes this is the best thing to do. But what if those pirates are adding value to society in some way? If these pirates are really doing something useful, people support them, and the strong arm of the law won’t work. The pirates will keep coming back and multiplying no matter how many people are sued. And the truth is, if lawsuits become a core component of your business model, then you no longer have a business model (unless you’re a lawyer).
Because in these cases, what pirates are actually doing is highlighting a better way for us to do things; they find gaps outside the market – and better ways for society to operate. In these situations the only way to fight piracy is legitimize and legalize new innovations by competing with pirates in the marketplace. Once the new market space is legitimized, more opportunities are created for everyone. This is how cable TV started, it’s why many drugs are now sold at prices people in the third world can afford, it’s how many other new opportunities are being created today. Pirates present us with a choice. We can either fight them in the courts, or match them play for play in the marketplace. To compete or not to compete, that is the question; that is The Pirate’s Dilemma.
Matt’s 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 ;).
Previously: Sweden’s Biggest File-Sharing Case Goes to Retrial
Next: BitTorrent, Uncensoring Independent Filmmakers
104 Responses (Add yours or TrackBack)
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[quote comment="258618"]Under developed economies around the world exist in part because of the lack of property laws, the foundation of a sustainable economy. Without property laws, there is no incentive to produce goods, as no form of compensation is guaranteed.
Anyway, I won’t go all macro/micro ecoonomics on you guys, but if you want to get a better idea of the autors perspective, economics is the way to go.[/quote]
Ever been to China? You think Africa is under-developed because people are concerned about piracy? Don’t CVS et al seem to do fine making generic medications? If you are going to go all anything on anyone, throw in some actual information and make a coherent point, don’t just copy out of your econ text book.
Pirates bay! I think we can’t avoid piracy if we still use it..so the main point here is our self, stop using the pirates thing and it will gone forever but for me sometime it is better to have pirates first, so we can know the valuable of certain product before I decide to buy the original one.
PREACH!
Great read.. Thanks for authoring it!
[quote comment="258659"]So, how much did you pay him to write this article? If he wrote it pro-bono then he really is for the people, if he charged then you should probably ransack his home.[/quote]
I wrote it for free, and was glad to do it. But I’d like to point out that I do believe in property laws, they do encourage innovation. The problem is when they become too aggressive and stop people producing culture and sharing information in a way that adds value to society. Piracy can be good, but it can also be bad. Fighting pirates can be the right thing to do, but sometimes competing with them is the way to go - this is the dilemma.
[quote comment="258843"]You can argue about semantics all you like. Theft of intelectual property is still theft, and recent court cases have said that what you consider to be worthless is indeed of value, infact $9000 per track in value. So feel free to carry on deluding yourselves, the only one you are fooling is yourself.
Its no different then me ‘aquiring’ your bank account details and helping myself to your monies. If you want information to be free, why stop at a few mp3’s? You cannot have it both ways. You cannot say that its OK for some information to be free and not other information. You cannot take it upon yourself to decide that someone elses information is of no value but your own is. If its ok for you to take someone elses property, its OK for someone else to take yours. Simple
If you truely feel that information should be free, you must include your own information in that, otherwise you are nothing more that a hypocrite., but then most of you are, its all good as long as it does not affect you personaly. Its all good as long as its not your information thats being shared freely to who ever wants it.[/quote]
How can you say there is no difference between stealing someone’s bank account information and downloading a copy of something like an mp3? That’s a real stretch, and $9000 per track is absolutely ridiculous. Who comes up with a bogus number like that? Money in my bank account isn’t information for one thing (and certainly not intended for public domain like music), the data used to organize it online might be, but it is linked to something physical and finite. If you ‘acquired’ my money, you are not making a copy of it for yourself. You’re literally stealing it and leaving me with nothing. There are no repercussions if you simply copy a file from me.
I don’t think stealing music is necessarily a good thing, but the current system sucks. And the more people here about how it works, the less willing people will be to fund it.
You are seriously being ignorant, “you must include your own information, otherwise you a nothing more than a hypocrite”. Have you heard of youtube, or blip, clipstar, etc?
[quote comment="258843"]You can argue about semantics all you like. Theft of intelectual property is still theft, and recent court cases have said that what you consider to be worthless is indeed of value, infact $9000 per track in value. So feel free to carry on deluding yourselves, the only one you are fooling is yourself.
Its no different then me ‘aquiring’ your bank account details and helping myself to your monies. If you want information to be free, why stop at a few mp3’s? You cannot have it both ways. You cannot say that its OK for some information to be free and not other information. You cannot take it upon yourself to decide that someone elses information is of no value but your own is. If its ok for you to take someone elses property, its OK for someone else to take yours. Simple
If you truely feel that information should be free, you must include your own information in that, otherwise you are nothing more that a hypocrite., but then most of you are, its all good as long as it does not affect you personaly. Its all good as long as its not your information thats being shared freely to who ever wants it.[/quote]
How can you say there is no difference between stealing someone’s bank account information and downloading a copy of something like an mp3? That’s a real stretch, and $9000 per track is absolutely ridiculous. Who comes up with a bogus number like that? Money in my bank account isn’t information for one thing (and certainly not intended for public domain like music), the data used to organize it online might be, but it is linked to something physical and finite. If you ‘acquired’ my money, you are not making a copy of it for yourself. You’re literally stealing it and leaving me with nothing. There are no repercussions if you simply copy a file from me.
I don’t think stealing music is necessarily a good thing, but the current system sucks. And the more people here about how it works, the less willing people will be to fund it.
You are seriously being ignorant, “you must include your own information, otherwise you a nothing more than a hypocrite”. Have you heard of youtube, or blip, clipstar, etc?
So… what say you “honest pirates” to the fact that over 70% of the people who downloaded the latest RadioHead album (when given a choice to pay as much or as little as they wanted) did so for nothing? Where were all the honest people who feel that…
“It’s not about getting something for free, it’s about not supporting an enterprise that strips artists of ownership and control over their own productions as the price paid for distribution.”
Lovely words. But as long as there are (apparently) 70% of pirates who just want something for free, your naive idealism goes for naught. I happen to agree that the RIAA is evil, that the studios screw over every musician who signs with them, and that CD prices are way too high, etc, etc.
That being said, as long as people *can* get something for nothing, many (the majority) *will choose to do so*. And that majority hides behind the idealistic talk of social justice and “Freeing the Bits.”
There are two things going on here within the “pirate community” - idealists who genuinely believe that they are righting a social wrong, and people who see no problem with stealing something because they can. And there are a lot more of them.
When every act of art (from blockbuster movie series like LOTR) to the guy busking on the street is reduced to a “tip jar” mentality (pay what you want), it will no longer be possible to make a living at that art (much less do it to an extent as done now).
Although I enjoyed the article I think most people realize this is the “dilemma”. You just stated it more eloquent than most. What I would like hear your thoughts on the solution.
Very well written article, the author gave two examples that i really liked a lot. The first one is “copying a CD you bought onto your hard drive is considered an infringement of someone else’s rights”. and the second is “creating a piece of art and placing it in public yourself without permission can land you in prison”. This is really very true but i never thought of it.
http://www.postonfire.com
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[quote comment="259207"]Although I enjoyed the article I think most people realize this is the “dilemma”. You just stated it more eloquent than most. What I would like hear your thoughts on the solution.[/quote]
I don’t think there is one catch-all solution. Radiohead certainly found one that worked for them, despite 70% of people not paying, there was still a pot of gold at the end of In Rainbows for them, and perhaps the 70 wouldn’t have bought In Rainbows ever, at any price.
But that won’t work for everyone trying to make a living from creative work. If you sell $2,000 women’s shoes, there probably isn’t much value in competing with $25 counterfeit copies, those buying them probably aren’t your target market, the copies are not adding value to the originals(unless you create a bridge line making lower quality versions think Emporio Armani vs Giorgio Armani, but that could damage your flagship brand), so throwing lawsuits at pirates would be advisable.
I think of the solution in terms of game theory because this is a decision people need to make based on how they think others, customers and competitors, will react. If you can see other revenue streams that will grow because you share something, it’s a good idea. If you can’t, hire a lawyer.
In terms of the entertainment industry, I think the answer will be some new royalty-based system that covers all content online, that’s maybe an extra $5 or $10 or $20 a month on a cable bill, divided up among content providers through a mechanism like ASCAP. I would point out that I don’t think this will happen anytime soon, because it’s not in the interests of the powers that be and would require such a monumental shift in so many industries. But it’s not impossible. This is basically what happened with cable TV - for years the networks weren’t getting any money from it. I don’t hear people complaining too much about having to pay for cable or on demand anymore. The problem is these days everyone can be the network, and the cable provider.
We shall see…
[quote comment="259187"]So… what say you “honest pirates” to the fact that over 70% of the people who downloaded the latest RadioHead album (when given a choice to pay as much or as little as they wanted) did so for nothing? Where were all the honest people who feel that…[/quote]
They got paid what their customers thought it was worth, and apparently most thought low-quality mp3s were worth very little, but admiring them for the attempt to break out of the traditional marketing trap people threw them a bone (not that they needed it).
If you are in favour of market capitalism why are you railing against its essential operation? I’ll say again, Radiohead gave people the opportunity to pay what they felt a low-quality copy was worth, and they did just that.. and according to you 70% recognized it for what it was, a sales pitch they shouldn’t have to pay for. If you disagree with the average person so strongly, by all means give them $200 for those low-quality mp3s and make up for everyone else if it gets you off, but don’t try to use your preconcieved attitudes about others to colour my argument.
[quote comment="259187"]When every act of art (from blockbuster movie series like LOTR) to the guy busking on the street is reduced to a “tip jar” mentality (pay what you want), it will no longer be possible to make a living at that art (much less do it to an extent as done now).[/quote]
That’s simply ridiculous. Art as a commodity has always had its value determined by what people were willing to pay for it: it is the very essence of supply and demand capitalism. Your argument also completely fails because mp3s and digital copies are objects of no real worth (look it up). You really should read Walter Benjammin’s essay “The Work of Art in the Age of Mechanical Reproduction”, I think your views on art and property are in for a real shock. I know it certainly did alot to get my head around to the side of true artistic freedom anyways…
And I’m not even going to address whatever’s slackjawed comments about personal information and digital privace. Clearly a troll not due any further attention…
I dug all of this, but the paragraph on famous innovators is the hottest thing I’ve seen today. I would take that paragraph to the prom, by which I mean back seat. Yeahhhh.
Hiro, you bring up some interesting points. I will go read that essay, thank you for the recommendation (seriously, thank you).
I understand that mp3s and other digital copies have no “real worth” - an mp3 file is an encoded series of ones and zeros. Were I so inclined, I could rearrange those ones and zeros into a pdf file or a jpg representation of Whistler’s mother. I get that.
The problem as I see it is that there *is* work of real value - original art produced by original artists. As an artist myself (a musician of little real talent ;-) it confounds me how I could possibly make a living at it in a future as you envision (particularly if I don’t have the time or inclination to tour or play live).
I love the story about Edison in this article - it brings up a wonderful parallel about the current debate. However, the barrier for copying and distributing copies (and copies of copies) has historically never been lower.
As far as “In Rainbows,” Radiohead stated that they were disappointed with the results (but hey, they had the means to do it so why not?).
That being said, I find your statement about the mp3s being of low quality to be a bit intellectually dishonest… Maybe they were of low quality, but even if they had posted the original digital masters my bet is that the stealing rate would have been about the same (if not slightly higher).
There’s one more aspect about this that’s slightly interesting - there *is* a cost associated with downloads (even for “free”). There’s the amortized cost of the computer, the cost of the internet connection, electricity, etc. So at the end of the day, when you download a movie or mp3, you are implicitly admitting that it’s worth something. What’s wrong about that is that the money you pay to your ISP and electrical company just goes to them, not to support the artists who created the work.
I’m not expecting a lot of sympathy here ;-), but I appreciate your response. I’m a bit new to this debate, so I’m going to go read the Walter Benjamin essay.
[quote comment="258560"][quote comment="258545"]this analogy’s been used before, but i’m gonna bring it up again.
If i buy a newspaper and leave it on the table for the next person to read, that’s considered stealing because didn’t pay for that newspaper. They have no legal right to posses that newspaper. Do we go to jail because of reading newspapers that people leave behind? No.
Ontop of that, it’s the same for music. I can buy a CD at the store and use some of the songs from the CD on my website (myspace,blog,etc. etc.). The people who are listening to the music are stealing, hell they didn’t pay for the music, why are they allowed to listen to it? Just because they’re not downloading it or they don’t physically have a copy of it saved on their harddrive doesn’t mean they’re not stealing.
When you go to a store to buy a CD, you have to pay for it. If you take it without paying for it, it’s stealing. So why do people that visit websites that have music on them don’t go to jail?[/quote]
Not buying something does not qualify as theft as nothing of value is taken[/quote]
There isn’t really much of value in whats released by the film and music industry now days anyway.
People will always spend what they can afford to pay for what they want or need. That never changes, what changes is the amount they get for their money.
Mass distribution is a capital intensive enterprise. Innovation is very upsetting to it.
Think of it this way, If you spend a million making a way to manufacture widgets and someone else finds a way to make just as many that are just as good for a thousand you are broke and out of business.
In nature you would have starved or been eaten. For us humans it is just a lesson in intelligence, innovation always outdoes resources in the long run.
Adaptation will always lead the way in any fight. Look at the automotive and some other unions, NECESSARY! in their day, now just as bloated and ineffective as the industry they at one time helped rein in. (Not referring to the writers strike, those lazy fat cats at the studios just want to be pirates themselves. The writers just want to be paid whether the product is a tape or DVD or download. Arguably the download should be worth more to the writers because there are no other packaging costs associated.)
What those unions who went bad did was give high wages to a small group and hence raised prices for the rest of us. In my area unions represented one fifth of the workforce and almost half the wages, many of us had trouble keeping a roof over our heads and food on the table. The studios are doing the same thing with artists in their collusion with the radio stations and big chain music stores which keeps music prices artificially high.
I hope they go bust soon and let the artists compete fairly with concerts being where they make most of their money and have album sales as little more than loss leader advertising.
The little history background about Hollywood is brilliant! Great article, hope it get into more hands.
[quote comment="259187"]So… what say you “honest pirates” to the fact that over 70% of the people who downloaded the latest RadioHead album (when given a choice to pay as much or as little as they wanted) did so for nothing?[/quote]
I can’t believe this keeps being dragged out as an example of disappointing results / dishonesty / failure.
If your song were played on the radio, and 30% of the people who heard it went out and bought the single — “only” 30% — would you be let down?
Hell no; in fact, that would be PHENOMENAL.
Have some perspective. If the 30% paid figure is true, Radiohead’s experiment was a runaway success.
To Matt Mason:
Thanks for posting this and even braving the comments section. Your writing is quite classy by the standards of this very populist website :)
I’m disappointed, though, that your book is not available as a free pdf. Given your message, I expected the book would be, and was actually thinking, “Awesome, I’m going to go out and buy this.” That enthusiasm dullened when I found out you aren’t sharing it with the pirates on the internet.
The fact is, I like to make purchases that support people who are pro-sharing. Contrary to that, I dislike buying from people who may smugly feel that they’ve MADE me pay them; the purchase feels as though I’m saying, “Yes, I agree that the only proper way to read your words is to pay for some paper and ink.” But I don’t agree with that. Your decision not to share your writing for free has actually cost you my money (at least for now).
This counterintuitive decision-making was covered in a TF article a few days ago, if you’re interested (http://torrentfreak.com/when-pirates-pay-they-pay-good-080105/). The psychological concept of “reactance” (http://en.wikipedia.org/wiki/Reactance_%28psychology%29) may be the root cause of why people feel this way, even if they’re not consciously activist.
I remain hopeful that you’ll release a free pdf in the future. It would not only be generous to the internet community; I really think it would increase your sales. If your publisher doesn’t like the idea, then rather than a single-file download, maybe you could convince them to let you put the book up on the web in plain HTML (a la http://birdflubook.com); this has the additional benefit that people Googling the relevant issues will come across your book.
Give it some thought, Matt. Thanks again for stopping by these parts :)
William Fox, the Godfather of motion picture piracy. Gotta love it :)
I’m part of running an indie record label. As well as being a producer, recording & mixing engineer and occaisional musician, I also fund or help fund alot of our releases. That means when we want some “name” singer on one of our records, its usually someting out of my pocket.
We sell vinyl records and digital downloads, but our stuff always ends up on the russian mp3 sale sites and torrent sites, often before we get our product into full distribution. If the numbers those sites report are true, we’d be selling tens of thousands of copies. Our tracks also end up on alot of DJ mix CDs. I see kids buying em just down the street from our studio.
The truth is we’ve never manufactured more than 1,000 units of any release, usually only 500 and dont have distributors lining up for re-orders.
The russians sure arent going to pay us any more than the downloaders or the mixtape guys. Most of the time we break even or dont loose much. When we get lucky with a release we make enough to cover maintenance on our studio gear.
I’m posting this as “Anonymous” because What label we run or what songs weve done isnt the point. Theres lots of small labels out there just like ours. For all the kids thinking they are getting over on “The Man”, try to remember theres still alot of us out there who work full time jobs and still put in the hours to try and bring you something besides corporate pop. Sometimes maybe you could actually buy our tunes instead of downloading them for nothing?
Thanks for reading.
Great thoughts… in fact thought provoking thoughts… Are patents really a big problem for companies. Big companies and swallowing mid sized and little ones like a sharks. Is it ethical? Everything has become fair to earn more and more.
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