Proposed American censorship legislation, sponsored by the entertainment industry, has sparked a terrific debate about piracy (a problematic metaphor but I’ll use it in this post) and business models. Much of the debate is happening in the United States where the threat to the infrastructure that underlies the Internet has focused minds on underlying challenges and possible solutions. One of the more spirited debates I listened to was on This Week in Tech 332 between tech journalist and podcast innovator, Leo Laporte, and Nilay Patel, formerly a practicing lawyer and, more recently, one of The Verge‘s founders. You can watch the episode below. The debate kicks off near the beginning of the episode and while Leo and Nilay skirt around what I believe are stronger points, its a terrific introduction to many of the issues:
This debate sparked a post by Trey Ratcliff on Google+ titled “Five Reasons Why I Don’t Care if My Stuff is Pirated – A New Way of Thinking“. Ratcliff mentions considerations which are not novel but are increasingly important as content creators explore alternatives to conventional thinking that locking content down is essential to successfully exploiting that content commercially. This new thinking has been illustrated time and time again in the music industry with artists like Nine Inch Nails, in the book publishing industry by authors like Paulo Coehlo and, locally, photographers like Catherine Scott who recently revealed her Creative Commons-based strategy for promoting her work.
The entertainment industry’s focus tends to be regimented licensing arrangements which appear to be designed to protect a business model which developed before the Internet went mainstream and which is designed to protect entrenched distribution channels. The industry has made excellent use of metaphors like “pirate” and “piracy” to malign consumers who obtain and share content illegally and without making use of existing, yet inconvenient and overly restrictive, distribution channels. As the Internet increasingly becomes a part of our daily lives and sharing our lives more frictionless, consumers expect to be able to obtain their content just as easily. Rather than making a concerted effort to change its business models and embrace the Internet and the opportunities it presents, the entertainment industry has adopted a protectionist strategy and has lobbied legislative bodies to clamp down on consumers who defy the industry. Those consumers are labelled pirates and branded criminals and yet anecdotal evidence is that consumers will generally pay for content they can conveniently obtain at a reasonable price. I believe this is why so many South Africans create US iTunes accounts to buy content from the iTunes store even though the official iTunes store isn’t available in South Africa.
Of course, consumers who are intent on downloading content with no intention of paying for it will do that anyway. The true criminals will never pay for content as long as there are effective channels available to them. New channels open up just as the entertainment industry closes off old ones. Napster and similar peer to peer file sharing sites were put out of business and consumers co-opted BitTorrent for their content downloads. When consumers tormenting content discovered their activities can be tracked, they discovered a wealth of content in newsgroups at faster download speeds and the added benefit of SSL encryption which disguises their activities. Unfortunately the so-called Copyright Wars just escalated at each step to the point where the entertainment industry is playing a losing game of Whac-A-Mole, constantly several steps behind savvier consumers.
Although the entertainment industry shows no signs of relenting in its efforts to stop what it regards as content piracy (and becomes one of the most significant threats to human rights and innovation in human history), creators are embracing a different model that embraces piracy as yet another distribution and promotional tool. Ratcliff describes this very nicely in his Google+ post when he states the following:
3) The “pirates” are part of my community. Not everyone in the community has equal means. Pirates are not cretins riddled with immoral behavior in every part of their life. These are all generally good people who would gladly support me, their friendly local neighborhood artist, if they could easily afford it. They can’t now, but they will be able to some day… I give them something now, and they will give me something later. For example, 24 years ago in high school, I used to pirate Sid Meier games on my Amiga (including a game called Pirates). Now that I have money, I buy every single game that Sid Meier puts out.
4) Pirates have friends that have money. It’s still word-of-mouth, the most effective friend-to-friend marketing in the world. If pirates like what you do, they’ll tell their friends. Not everyone is so handy with bittorrent and this sort of thing. Since I make purchases simple on my website at http://www.StuckInCustoms.com , many will come make the purchase because it is easier than pirating.
Of course the proof is in the pudding, as the saying goes. Its all well and good to accept piracy and release content under liberal licenses like Creative Commons licenses but an important reason for creating that content in the first place is to make money. When Nine Inch Nails released Ghosts I-IV under a Creative Commons license (it was freely available through torrents and free downloads elsewhere with Trent Reznor’s blessing), the band sold all 2 500 limited edition premium bundle priced at $300 in a matter of days, despite the albums themselves being freely available. More recently, popular American comedian Louis CK distributed a new release digitally online and, allowing for piracy (which he acknowledged and apparently accepted), he made in excess of $1 million in 12 days through his website. He produced and directed the production independently. The following paragraph from Louis CK’s 13 December 2011 statement is revealing:
The show went on sale at noon on Saturday, December 10th. 12 hours later, we had over 50,000 purchases and had earned $250,000, breaking even on the cost of production and website. As of Today, we’ve sold over 110,000 copies for a total of over $500,000. Minus some money for PayPal charges etc, I have a profit around $200,000 (after taxes $75.58). This is less than I would have been paid by a large company to simply perform the show and let them sell it to you, but they would have charged you about $20 for the video. They would have given you an encrypted and regionally restricted video of limited value, and they would have owned your private information for their own use. They would have withheld international availability indefinitely. This way, you only paid $5, you can use the video any way you want, and you can watch it in Dublin, whatever the city is in Belgium, or Dubai. I got paid nice, and I still own the video (as do you). You never have to join anything, and you never have to hear from us again.
These successes are not limited to well known artists. Smaller artists are similarly successful in their efforts to promote themselves outside the conventional entertainment industry model, albeit on a smaller but still meaningful scale. Catherine Scott wrote about her experiences as follows:
I get a lot more commissioned work – which ends up more lucrative for me. I never have to worry about selling an image – or frankly theft of an image, and so far, have been wonderfully busy, with a varied audience and client base.
Ratcliff seems to be enjoying substantial success in spite of the piracy he is both aware of and accepts:
5) Last, and most important, as soon as I opened everything up, our business has grown and grown. Our team now of about 10 people are happy and everything is profitable. It is strange to see a chart over time that shows an increase in revenues and an increase in piracy. Now, piracy is not the reason that revenues are increasing, but they are not hurting revenues.
On the other side of the fence, artists who aspire to be signed to labels and publishers have found that their rewards have been less than expected and they often lose their rights to their content and control over its release in the process. When the entertainment industry talks about harm suffered by artists due to piracy, they really should refer to the harm to the industry’s profitability. Artists rarely feature as stakeholders. The entertainment industry probably does more harm to creative expression than pirates through its approach to content licensing, both from artists and to consumers.
I really like Ratcliff’s approach to his work and to so-called pirates. His point that these consumers like his content enough to take it, albeit without paying, is a terrific one. Consumers wouldn’t bother to pirate content if it didn’t appeal to them and, like Ratcliff and many other creators, I believe that fans will support the content creators they love and while some won’t pay for that content, those who can, will. The fact that there is so much casual content piracy has more to do with the entertainment industry’s attitudes than it does with consumers’ dubious intentions. In a sense, the entertainment industry created a pirate culture and its come hime to roost.