The Pirate's Dilemma: notes

[Cain]

These are notes I've compiled from The Pirate's Dilemma by Matt Mason - a book about how piracy and copyright violation is changing both economics and culture.

I'll try and lay it out as best as possible, but I have a lot written down, so it may take some time to digest.  Its well worth it however, for a view of a much more interesting, better world.

[Cain]

For the last sixty years, capitalism has run a pretty tight ship in the West. But in increasing numbers, pirates are hacking into the hull and holes are starting to appear. Privately owned property, ideas, and priv­ileges are leaking out into the public domain beyond anyone's control.


Pirates are rocking the boat. As a result people, corporations, and governments across the planet are facing a new dilemma—the Pirate's Dilemma: How should we react to the changing conditions on our ship? Are pirates here to scupper us, or save us? Are they a threat to be battled, or innovators we should compete with and learn from? To compete or not to compete—that is the question—perhaps the most important economic and cultural question of the twenty-first century.


The enigma is this: If our property can be infinitely reproduced and instantaneously distributed all over the planet without cost, with­out our knowledge, without its even leaving our possession, how can we protect it? How are we going to get paid for the work we do with our minds? And, if we can't get paid, what will assure the continued creation and distribution of such work?


Disruptive new D.I.Y. tech­nologies are causing unprecedented creative destruction. The history of punk offers us valuable insights into how this new world works. Punk was an angry outburst, a reaction to mass culture, but it offered new ideas about how mass culture could be replaced with a more person­alized, less centralized worldview.

Punk has survived in many incarnations musically—it became new wave, influenced hip-hop, and conceived grunge and the notion of indie bands. But more important, its independent spirit also spurred a do-it-yourself revolution. D.I.Y. encourages us to reject authority and hierarchy, advocating that we can and should produce as much as we consume. Since punk, this idea has been quietly changing the very fab­ric of our economic system, replacing outdated ideas with the twenty-first-century upgrades of Punk Capitalism.


"It's hard to spend your life working for peace, justice and a society rich with opportunities for all" wrote Lee Gomes in The Wall Street Journal. "It's pretty easy, though, to buy a computer and tell yourself that by doing so, you're somehow still helping to fight that good fight. Good deeds become equated with good shopping."


What is interesting is what else is happening; punk capitalists are starting to use the free-market system to their advantage, and are turn­ing the tables by selling real issues back to us through the things we consume.


These new ventures "leave the competition scratching their heads because they don't really aim to compete in the first place," wrote Richard Siklos in The New York Times in 2006. "They would certainly like to cover their costs and maybe make a buck or two, but really, they're not in it for the money. By purely commercial measures, they are illogical. If your name were, say, Rupert or Sumner, they would represent a kind of terror that might keep you up at night: death by smiley face."


Brands and products with a purpose are finally writing checks with their mouths that their wallets can cash. And because more people are being persuaded by these products, their checks are pretty good. Some other examples include the global market for fair-trade products, which increased in 2005 alone by 37 percent, and hybrid car sales, which doubled between January 2005 and January 2006 in the United States, while the rest of the car market stuttered off the starting grid, growing at just 3 percent.


"Punk was about not taking it, not believing what you see on TV or in the newspapers, and I think that definitely carried over, because people get their news from the Internet and don't believe any of the major networks. I don't know if it's necessarily anarchy, but it's definitely thinking for yourself."


A 2004 study for the U.S. Department of Labor on the future of work predicted, "Employees will work in more decentralized, spe­cialized firms, and employer-employee relationships will become less standardized and more individualized. ...We can expect a shift away from more permanent, lifetime jobs toward less permanent, even non­standard employment relationships (e.g., self-employment)."

[Cain]

There is a misconception that all the changes we are experiencing as a society are the result of new technologies, but as Florida and others see it, the real changes are profoundly cultural. As we shift to a D.I.Y. culture that runs on creativity, the implications could be as profound as when society shifted from farming to manufacturing. Managers and CEOs are fast being usurped as the creative emerges as society's new rainmaker. "The creative individual is no longer viewed as an icono­clast," says Florida. "He—or she—is the new mainstream."


It seems that ownership of the means of production—the backbone of capitalism—is falling into the hands of the masses. But soon the notion of "owning" the means of production may itself be redundant.


But the final frontier for punk capitalists, and pos­sibly the final nail in the coffin for mass production, may be just around the corner. The Internet has changed the game for anything that could be transmitted electronically. Now it has the material world in its crosshairs, too. Soon we may be doing the manufacturing ourselves.

Most 3-D printers are still pretty cumbersome, as are their price tags. But the technology is developing at speeds not unlike that of the PC. In the not too distant future, the 3-D printer could be a welcome addition to homes and offices around the world.

If this happens—or rather, when this happens—there will no longer be any boundaries left between producer and consumer. The only thing left will be the creativity and ingenuity of the design itself. A world where anything and everything could be printed out at home is a world full of questions. What would happen to Nike when kids start print­ing out Air Jordans at the rate at which they illegally download music? Will your new ride be printed down at the showroom? Would Christ­mas morning be ruined if the printer jammed and nobody's presents were printed?


Indeed, we may reach a point where there is no "industry" left at all, in its place many vibrant local markets producing value, but not controlled exclusively by big players. This is already happening to the music industry, and it's starting to happen with anything that can be transmitted electronically. But soon this may also happen in the world of physical goods. "We have reached a point in history where our most advanced technology is dirt cheap," Bowyer continues. "I want to make it an order of magnitude cheaper yet so that poor peo­ple can exploit rich people's toys to raise themselves up." If we learn to copy everything like we did with MP3 files, the fate of the music industry may have been the canary in the coal mine, an omen for the end of mass production as we know it.

[Cain]

Punk Capitalists are creating change using three separate ideas that came directly from the philosophy of punk rock:

1. Do It Yourself

Punk refused to take its cues from the mass market, and cre­ated a vibrant cultural movement as a result. Now a critical mass of punk capitalists is removing the associative barriers that held them back. They are working for themselves, setting up businesses, and finding ways to produce as much as they con­sume, laying the foundations for a wealth of new markets and business models. D.I.Y. is changing our labor markets, and cre­ativity is becoming our most valuable currency.

2. Resist Authority

Punk resisted authority and saw anarchy as the path to a brighter future. Punk capitalists are resisting authority, too—by leveraging new D.I.Y. technologies and the power of individu­als connecting and working together as equals. This twin engine of the new economy is creating new ways all of us can live and work, leaving old systems for dust. Technology + Democracy = Punk Capitalism.

3. Combine Altruism with Self-Interest

Punk had high ideals—it looked aggressive and scary, but through its angry critique of society and subversion of it, it sought to change the world for the better. Punk capitalists are using the same techniques, subverting a world full of empty cor­porate gestures, manufacturing businesses and products with meanings that attempt to inject substance back into style. Punk injected altruism into entrepreneurship, a motivator of people long overlooked by neoclassical economics. Not only that, punk made the idea of putting purpose before profit seem cool to an entire generation. It manufactured new meaning in an area where it was really needed.

[Cain]

In fact, pirates have been the architects of new societies for cen­turies: they have established new genres of film and music and created new types of media, often operating anonymously and always— initially, at least—outside the law. They overthrow governments, birth new industries, and win wars. Pirates create positive social and eco­nomic changes, and understanding piracy today is more important than ever, because now that we all can copy and broadcast whatever we want; we can all become pirates.

So who exactly is a pirate?

A. That guy who sells bootleg DVDs on the corner;
B. Some dude with a beard and a parrot who might mug you if yougo boating;
C. A guardian of free speech who promotes efficiency, innovation, and creativity, and who has been doing so for centuries.

The correct answer is all of the above. A pirate is essentially any­one who broadcasts or copies someone else's creative property without paying for it or obtaining permission.


First things first: some acts of piracy are quite simply theft. Every year industry loses billions to piracy. Companies suffer, artists and cre­ators lose earnings, and people lose their jobs.


But although intellectual property rights seem right and piracy clearly seems wrong, the opposite also can be true. One man's copy­right terrorist is another's creative freedom fighter: many forms of piracy transform society for the better.


Another pirate nation that began in a fashion similar to Sealand is the United States of America. During the nineteenth-century Indus­trial Revolution, the Founding Fathers pursued a policy of counter­feiting European inventions, ignoring global patents, and stealing intellectual property wholesale. "Lax enforcement of the intellectual property laws was the primary engine of the American economic mir­acle," writes Doron S. Ben-Atar in Trade Secrets. "The United States employed pirated know-how to industrialize." Americans were so well known as bootleggers, Europeans began referring to them with the Dutch word "Janke," then slang for pirate, which is today pro­nounced "Yankee."*


When Edison invented the  phonographic record, musicians branded him a pirate out to steal their work, until a system was created for paying them royalties.


If copyright laws had stopped these pirates in their tracks, today we might live in a world where America looked more like a giant Amish farm. We would have no recorded music, no cable TV, and a selection of films on a par with an economy airline seat. The pirates were on the wrong side of the law, but as Lawrence Lessig expounds upon in his book Free Culture, in hindsight it's clear their acts were important. By refusing to conform to regulations they deemed unfair, pirates have created industries from nothing. Because traditionally society has cut these pirates some slack and accepted that they were adding value to our lives, compromises were reached and enshrined in law, and as a result new industries blossomed.


"With a pirate, none of the pressures we have are there," program­ming director Simon Long told me in 2003. "You can play what you want to smaller groups of people and you have complete freedom; that's why pirates will always be the breeding ground for new tal­ent.. . . That's why at Kiss we're determined to make sure talented and passionate young DJs have a chance to make it onto legal airwaves." The BBC and the United Kingdom's many commercial stations also recruit directly from urban pirates today, which act as a minor league, feeding the major corporate stations the hottest DJs and sounds, already tried, tested, and approved by the pirate listeners. Piracy is tol­erated by the radio industry because pirate stations make our music better.


Pirates highlight areas where choice doesn't exist and demand that it does. And this mentality transcends media formats, technological changes, and business models. It is a powerful tool that once under­stood, can be applied anywhere.

Successful pirates adapt quickly to social and technological changes, but this is true of all entrepreneurs. What pirates do differently is cre­ate new spaces where different ideas and methods run the show.

[Cain]

Power is moving away from the old elite in our industry, the editors, the chief executives, and let's face it, the proprietors. A new generation of media consumers has risen demanding content delivered when they want it, how they want it, and very much as they want it."

The difference is that this generation is not a posse of outlaws on the run from the authorities, but normal people who would never think of themselves as pirates in the first place. But without realizing it, when society went online, it became dominated by the pirate mentality. And nothing illustrates this better than the rise of the blog.



Cassette tapes and video recorders both brought the film and recording industries hugely lucrative new revenue streams once they had stopped fighting the new formats and started figuring out how to make money from them.



"Copyright has been said to be necessary for the creation of cul­ture, and patents have been said to be necessary for innovation to hap­pen," declares the Pirate Party's website. "This has been repeated so often, that nobody questions it. We do, and we say that it's just a myth, perpetuated by those who have something to gain from pre­venting new culture and technology. When push comes to shove, copyright PREVENTS a lot of new culture, and patents PREVENT a lot of innovation. Above all, today's copyright laws has [sic] no bal­ance at all between the creator's economic interests and society's cul­tural interests."

The party's position may seem extreme, but given the history of pirates we've taken in, they have a point. Piracy has generated innova­tion throughout its history. In a world where a paranoid entertainment industry is criminalizing citizens even for legal file-sharing, spying on people through their PCs and forcing them to pay fines far higher than if they actually were stealing CDs or DVDs from a store, some might say it was about time governments pushed back on behalf of their people—the people copyright laws and patents were initially designed to protect.



"Pirates compete the same way we do - through quality, price, and availability," said Disney's cochair Anne Sweeney in a 2006 keynote address. "We understand now that piracy is a business model.* . . . The digital revolution has unleashed a con­sumer coup. We have to not only make in-demand content but make it on-demand. This power shift changes the way we think about our business, industry, and our viewers. We have to build our businesses around their behavior and their interests," she said. "All of us have to continually renew our business in order to renew our brands because audiences have the upper hand and show no sign of giving it back." Steve Jobs of Apple backed up Disney's sentiment, telling Newsweek, "If you want to stop piracy, the way to stop it is by competing with it."



If suing customers for consuming pirate copies becomes central to a company or industry's business model, then the truth is that that com­pany or industry no longer has a competitive business model. A company's or individual's ability to make money should be based on their ability to innovate and create value, not file lawsuits.



In August 2005 Monsanto filed patents in 160 countries, claiming ownership of the rights to pigs, and any and all future offspring those pigs may produce.



Patent trolls going after human gene sequences have already cost us lives. "Companies raced to beat the Human Genome Project in order to patent genes such as that associated with breast cancer," writes Nobel Prize–winning economist Joseph E. Stiglitz. "The value of these efforts was minimal: the knowledge was produced just a little sooner than it would have been otherwise. But the cost to society was enor­mous: the high price that Myriad, the patent holder, places on genetic tests (between $3,000 and $4,000) may well mean that thousands of women who would otherwise have been tested, discovered that they were at risk, and taken appropriate remediation, will die instead."



Western drug companies don't sell many AIDS drugs in developing countries because more than 90 percent of the people in the world suf­fering from HIV/AIDS can't afford to pay inflated Western prices. And because these companies make a profit only when they have the monopoly, measures are taken by drug companies to extend the life of these patents for as long as possible, preventing cheap generic drugs from entering their foreign or domestic markets. The drugs do work, but the patents don't. As a result, according to the World Health Orga­nization, some three million people die every year.

Never before has an industry needed piracy so badly. And one such pirate who is making major waves is Dr. Yusef Hamied of the Mumbai pharmaceutical company Cipla. When his company produces generic drugs for the West, they are thought of as a legitimate and well-respected organization. But when Dr. Hamied began producing anti-HIV drugs for the developing world in the year 2000 for as little as $1 a day* com­pared to Western prices of more than $27 a day, he was branded by the former head of GlaxoSmithKline as a "pirate and a thief."



Pirates are forcing decision makers to reconsider the use of patents, and now the idea of a prize system is getting support, not just for devel­oping countries, but also for Western markets. "Under a drug prize system," wrote Forbes magazine in April 2006, "the U.S. government would simply pay cash for the rights to any drug that wins FDA approval, then put the U.S. rights in the public domain. Voilà! a free market in the manufacture and sale of new drugs. Generic drugs ("generic" being another way of saying the rights are in the public domain) already do a wonderful job of keeping prices down. While the price of patent-protected drugs has been rising at roughly twice the rate of inflation, the real price of generics has fallen in four of the last five years."

[Cain]

OK, that should give you enough to chew on, for now.

Please do not turn this into a "I am a moron who thinks I should be able to download music for free/I am an unpaid shill for the big 4 music companies and think the current system is hunky-dory" argument, kthanxbai

[Kai]

I am so going to start using the word yankee to refer to pirates now.

[Requia ☣]

Brands and products with a purpose are finally writing checks with their mouths that their wallets can cash. And because more people are being persuaded by these products, their checks are pretty good. Some other examples include the global market for fair-trade products, which increased in 2005 alone by 37 percent, and hybrid car sales, which doubled between January 2005 and January 2006 in the United States, while the rest of the car market stuttered off the starting grid, growing at just 3 percent.

Have the music industry implement fair trade music, where the artists get payed a decent amount?  It would probably cost more than piracy does though.

[Jesrad]

"Intellectual property" ain't. In fact, copyright is an abuse of other people's property, because you get to use the State's might to force people into using their own property (their own computer, their own CDs, their own brains) in a restricted way.

Information ain't a private good because it's not rival. We can't both use the same car to go different directions at the same time, but we sure as hell can use the same recipe in different ways at the same time. Thus there's nothing taken from you when information is transmitted.

The Proper Capitalistic Way is that of the natural disclosure monopoly, which says you better get your efforts paid for the first time you disclose your original information, because you ain't going to make such an easy profit after other people have access to it. It's the model where only possession of information matters, and you get to spread it to anyone under the conditions you think best. A model where creation of original work is where the profit resides, and distribution of it just scrapes the margin.

The magicians' world works a bit like this already: they don't give shit about "I invented this so you don't get to use it in your spectacle", instead they reward contributing new stuff with unrestricted access to the others' stuff. Whole industries work like this too, there are companies out there (like Michelin in the tire-making business) not giving a shit about patents and intellectual property because, to them, it's a worthless system and they make more money treating ideas like valuable secrets that one has the right to do whatever they want with and thus should pay the good price outright to get them in the first place. The world of fast-subbing works like this too, where dozens of competing distribution networks race to feed their audience the newest episode of whatever-anime-is-hot-these-days as quickly and with the highest quality as is possible.

There's a whole other world of intellectual work creation waiting. And the pirates are making it come to us.

[Cain]

I wont argue that it needs to be weakened in many, if not the majority of cases.  Some economists have argued that there is an inventors advantage which confers a natural business advantage on a company who invents (for the purpose of this argument) a certain drug.  Others have suggested reducing it, or bringing in blanket fees for distribution, such as where federal agencies pay a company a certain amount, and then they distribute the drugs in whatever way they see fit.

In fact, distribution is a major issue, I would argue.  In the music industry, with e-books, with drugs and technology, its not so much the ownership as the exclusive right to produce and distribute that is the issue.  And when that is actually causing people to die, as it is in India, for example, where generic drug pirates are being prosecuted for producing drugs the poor can afford (never mind the companies they steal those drug designs from charge too high for the poor to afford), then we are in an area where profit is being put well above peoples lives.

[Cain]

1. Look Outside of the Market

Entrepreneurs look for gaps in the market. Pirates look for gaps outside of the market. There was no market for Holly­wood films before William Fox and friends. There was no mar­ket for commercial radio in Europe before pirate DJs. Pirates have proved that just because the market won't do something, it doesn't mean it's a bad idea.

2. Create a Vehicle

Once pirates find a space the market has ignored, they park a new vehicle in it and begin transmitting. Sometimes this new vehicle becomes more important, or as Marshall McLuhan put it, the medium becomes the message. The platform that pirate DJs created was more important than rock 'n' roll. The idea of the "blog" had a much greater impact than the picture of Cary Grant dropping acid on Justin's Home Page.

3. Harness Your Audience

When pirates do something valuable in society, citizens sup­port them, discussion starts, and laws change. It is the supporters that pirates attract that enable them and their ideas to go legit. Kiss FM got a license thanks to its listeners. Roh Moo­hyun became president thanks to citizens using the pirate mentality on his behalf. Entire nation-states are supporting pill  pirates to save lives.

The phenomenon known as "the remix" is different. It is a con­scious process used to innovate and create. In fact, it's no exaggeration to say that the cut-'n'-paste culture born out of sampling and remixing has revolutionized the way we interpret the world. As Nelson George said in Hip Hop America, the remix "raises questions about the nature of creativity and originality . . . it changes the relationship of the past to the present in ways conventional historians might take notice of. What is the past now?"

Our Han Solo in this epic story is Arthur "Duke" Reid. When he and his wife, Lucille, won some money in the Jamaican national lottery, the Reids spent their winnings on a Kingston liquor store, the Treasure Isle. Reid installed his own sound system in the store to entice customers (the two industries have long been linked, most sound systems made their money by selling alcohol at clashes).

In essence the remix is a creative mental process. It requires you to do nothing more than change the way you look at something. Albert Einstein once said, "No problem can be solved from the same con­sciousness that created it"; the remix is that mind-set crystallized. It's about shifting your perception of something and taking in other ele­ments and influences. It requires you to think of chunks of the past as building blocks for the future.

[Cain]

The DreamWorks case is interesting, because as Lawrence Lessig points out in his excellent book on copyright Free Culture, "It is Mike Myers and only Mike Myers who is free to sample. Any general free­dom to build upon the film archive of our culture, a freedom in other contexts presumed for us all, is now a privilege reserved for the funny and famous—and presumably rich." But history, as we saw in chap­ter 2, suggests that pirates will continue pushing the copyright enve­lope until these laws are changed.



The implications of this approach to making videos, movies, and games are staggering. With current copyright laws being what they are, only companies with the muscle of MTV can do this on a grand scale without being litigated into oblivion, but anyone with the know-how and a decent PC can have a go.



Bestselling video games made of noth­ing but sampled film footage are a possibility. DVDs packaged with several remixable story lines, characters, and locations are not far off. The possibilities of this approach to creating new content are literally endless. This could lead to an unimaginably accessible new chapter in culture as we know it, with, as journalist Wagner James Au puts it, "no real barriers between creator and audience, or producer and con­sumer. They would be collaborators in the same imaginative space, and working as equals, they'd create a new medium, together."



Freedom to copy other people's designs is taken for granted in the world of fashion, which makes it unusual, but it's also the reason it's so successful. Haute couture designs are copied, sampled, and modi­fied, gradually trickling down until there are versions of last season's catwalk designs in bargain basements everywhere. The view that remixing or sampling a design is a serious threat to business is not one held by the fashion industry.* There are rarely objections from design houses when an idea is copied; in fact, it's almost encouraged. This is an industry where as soon as a high-priced designer garment becomes a trend, there are factories full of copies and knockoff designs compet­ing at lower prices.

In "The Piracy Paradox: Innovation and Intellectual Property in Fashion Design," Raustiala and Sprigman make the case that the remix stimulates growth in the industry. Because designs are copied quickly and styles diffuse down to the mass market, the original luxury items lose their allure, creating demand for new trends, and this pirate-induced demand drives the entire business forward. Raustiala and Sprigman call this process "induced obsolescence," arguing that copy­ing in fashion is "paradoxically advantageous for the industry. IP [intellectual property] rules providing for free appropriation of fashion designs accelerate the diffusion of designs and styles....If copying were illegal, the fashion cycle would occur very slowly."

[Cain]

Copyright laws have expanded dramatically in the past few years, partly as a defensive reaction to illegal downloading, and partly because of corporations having an increasing influence on political decision making. While file-sharing and piracy clearly need to be reg­ulated, copyright laws, like patent laws, are becoming so overbearing they now stifle the creative processes they were initially designed to protect.
Copyright periods are being extended by governments, and the entertainment industry continues to push that they be extended even further. Like the patent trolls fighting with pirates, there are also sam­ple trolls out there, acquiring the copyrights to old songs (often very dubiously) and suing artists who have sampled them. Jay-Z is one of many artists who have been sued by sample trolls for millions of dollars.



part of the reason why illegal downloading became so prevalent, as we shall see, was because the music industry failed to respond to this new technology and offer legal alternatives quickly enough. More than one million games of the Half Life mod Counter-Strike are played each day online, but you can play it only if you have a legal copy of the original Half Life game. This system is policed by modders and players alike, who respect the rights of the game's designers to earn money from their original creation.



In the United Kingdom, the BBC has introduced the Creative Archive, a copyright-free library of video and audio available for any­one to use for noncommercial purposes. In 2006 the United Kingdom's (then) chancellor of the exchequer, Gordon Brown, recognizing the value of the remix as a tool of innovation, proposed new U.K. copy­right laws that would give artists more creative freedom to remix the material of others while protecting everybody's rights as well.



Creative Commons presents itself as the happy medium between total anarchy and total control, creating new, remixed copyright licenses that allow artists to grant some rights to the public without being exploited. Their "some rights reserved" model is becoming increasingly popular, with forty-six countries and counting now part of the initiative. Creative Commons doesn't do any­thing to roll back existing copyright periods or change the unlimited, unconstitutional powers being exerted on the public domain, but it does let creators legally share their work with others in a variety of ways, and indirectly it's attracting attention to the issue.

[LMNO]

Good thoughts, these.

But while the DIY anti-capitalistic punk ethos eschews the "we're in it to make money," there are quite a few artists who would actually enjoy the opportunity to buy their food and pay their rent purely from their creativity and hard work.

While the current copyright system isn't a very good way to do this currently, the Pirate Culture advocates aren't really offering an alternative.