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Plunder, pillage, and profit

A provocative new book suggests big business could learn from piracy and youth culture
By MIKE MILIARD  |  January 16, 2008


When Napster, invented by a Northeastern freshman, threw the music industry into chaos in 1999, Steve Jobs didn’t panic. He saw an opportunity. Nine years later, Apple’s iTunes has sold more than three billion songs — 70 percent of worldwide digital-music sales.

Why can’t everyone think like that? This past month, having seen the volley of lawsuits they unleashed over the past five years do virtually nothing to stanch the flow of file-sharing, the record companies and Hollywood studios shined their shoes, pulled their Windsor knots tight, and went to Washington with hats in hand.

They want the Justice Department to prosecute more people. They want local police to work harder sniffing out online malfeasance. They want to ratchet up the already draconian penalties for copyright infringement. And they want Congress to help them, by passing the Prioritizing Resources and Organization for Intellectual Property Act of 2007, which would create a new federal agency, the sole purpose of which would be to combat copyright crooks.

As the British Royal Navy finally vanquished Caribbean buccaneers in the 1700s, so the RIAA and MPAA are hoping to rout 21st-century Internet pirates. They won’t.

The PR battle was lost long ago. And despite the industry’s bellicose bluster — “to all the pirates out there: you’d better watch out, you’d better not try,” cackled one studio spokesman’s most recent Christmas-greeting press release — it’s hard to deny that piracy is here to stay. As one staff sergeant with the Royal Canadian Mounted Police conceded in November: “Piracy for personal use is no longer targeted. It is too easy to copy these days, and we do not know how to stop it.”

In his smart and thought-provoking new book, Matt Mason has another idea: don’t try to stop it. Learn from piracy. Embrace its ideas. And then go out and compete with it.

Nothing is stopping record labels, after all, from developing a system that monetizes the file-sharing format. Only stubbornness is keeping them from inventing a new business model that’s mutually beneficial to them and their consumers.

Clinging to obsolescence while wasting money on fruitless lawsuits is not smart strategy. Apple knows this. (And apparently so does Jay-Z, who stepped down as CEO of Universal’s Def Jam Records this past month — now rumors are flying that he’ll soon found a record label for Apple.)

In The Pirate’s Dilemma: How Youth Culture Is Reinventing Capitalism (Free Press), Mason, a Brooklyn-via-London writer and entrepreneur — he’s the founding editor of the UK magazine RWD, and a consultant with such brands as adidas, Courvoisier, and Motorola — has crafted a fascinating primer on the intersection of piracy, youth culture, and business.

Whether or not the 29 year old becomes (as his book’s dust jacket proclaims) “the Malcolm Gladwell of the iPod Generation” remains to be seen. But as the RIAA and MPAA continue their un-ending war of attrition, it might behoove them to listen to press pause and listen.

Anarchy in the UK
There are about 150 pirate radio stations in the UK. Mason became a pirate DJ when he was a teenager, secreted away in tower blocks with hidden transmitters, blanketing London with the sounds of dancehall and drum and bass.

“For me, ‘piracy’ and ‘pirate’ always had really positive connotations,” says Mason, over the phone from New York, of London’s DJ culture. “It was the pirates who were my heroes.” On the other hand, his brief employment at Atlantic Records in 1999, just as Napster’s toll was becoming apparent, gave him a look at an opposite culture: the crumbling corporate giant. “I became very disillusioned and didn’t stay very long. I thought, ‘This isn’t the music industry. The things I’ve been doing my whole life — the pirates and the clubs — that’s the music industry.’ ”

No, Mason admits, piracy is “not good for the people who run the stores, and it’s not good for the people who run the labels.” But here’s the thing: it’s good for pretty much everyone else. It offers choice and brings about change. It creates a fairer, more efficient system. As he writes in The Pirate’s Dilemma: “Pirates highlight areas where choice doesn’t exist and demand that it does.”

“People are definitely of two minds about it,” says Mason. “But if you’re in the business of selling intellectual property, it’s something you can’t help but think about.”

Yes, there are instances when fighting piracy is preferable to adapting and adopting. In the final chapter of the book, Mason uses game theory to identify such scenarios. But for the most part, he argues, pirates offer ideas that can lead to betterment and efficiency.

As “the Information Age hits puberty,” with the Web leveraging youthful ingenuity in new and different ways every day, there’s slow-growing acceptance of the pirate’s value to society. Even the co-chair of Disney has declared that “piracy is a business model.” (The irony there, of course, is that Disney became a behemoth thanks to movies based on old fairy tales that had fallen into the public domain. Today, it would like nothing more than to keep Mickey Mouse under copyright protection in perpetuity.)

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