Piracy and Profit, Adapt or Die

Is it time for “information based” industries to consider innovative adaptation, rather than legislation and prosecution, as a means of dealing with the hydra-headed beast of online piracy?

The U.S. Supreme Court recently refused to hear a file-sharing case involving a $675,000 verdict against Joel Tennenbaum. While a college student, Tennenbaum illegally downloaded thirty songs and shared them on a peer-to-peer network. In Germany, the Pirate Party has won seats in four state parliaments. They favour a complete overhaul of copyright law, and national level polls put them near 11% of the popular vote. Pirate parties are springing up across the globe, and even the U.S. has seen its share of resistance towards the increasingly combative stance of the media industry. There was a fierce outcry in the States over the now failed SOPA and PIPA. Undoubtedly, there are more surprises awaiting both business and policymakers in the coming years.

Since copyright and patent law require a relatively compartmentalised market for enforcement to be effectual, the appearance of new and chaotic means of distributing pirated material could challenge the core of modern, “information based” business models. The Internet seems to have an uncanny ability to dynamically circumvent most censorship attempts. The Pirate Bay, the largest file-sharing website in the world, has recently published a guide on how its users can bypass court ordered blocks by ISPs. Like water, illegal file-sharing finds a way.

© John Abella

The leakage of pirated information into the public sphere affects more than the media industry. It affects every business model which depends on intellectual property to make a profit. The industrial revolution centralised the means of production away from craftsmen and artisans, but file-sharing has the potential to usher in a new era of decentralized manufacturing. Gadgets and medicine could be reproduced in local 3D printing shops, underground pharmacies, or even in the comfort of your own home, using illegally downloaded formulas and recipes. The day an affordable, medicine producing apparatus finds its way into retail hands, the holders of blue chip names like Johnson & Johnson, Glaxo, and Merck would be wise to unload their stock. Who will pay extortionate prices for life saving medicine when you can pirate molecule structures online?

In the information revolution of our day, multinational corporations play the role of the Luddites; a mob of legal teams wave pamphlets of patent and copyright legislation. One should ask whether “information based” businesses, threatened by a lack of effective copyright enforcement, should seek to adapt themselves to this new force of nature, rather than fight it with huge but leaking dams. By finding ways to lower prices, innovative companies like Spotify, Apple, and Netflix have demonstrated the benefits of initial compromise with the pirates; other companies could find even more radical ways to adapt. As information becomes more readily available, both legally and illegally, it’s increasingly clear that failing to adapt will be failing to survive.