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February 21, 2009

The Pirate's Dilemma - SES London Keynote by Matt Mason

By Li Evans

Mike-grehan-matt-mason-ses-london-2009 Matt Mason, author of the Pirate's Dilemma spoke at the opening keynote of SES London. Prior to him speaking I got a chance to speak to him a little and I was really impressed with what a down to earth person Matt really is. That carried through to his presentation as well.

Matt started out by giving the audience some big picture overviews about Piracy by asking the audience how many of us knowingly pirate things and how many don't? Matt went on to point out it's not the piracy laws that we know that we break, but the ones we don't know we break every day. The audience seemed a little bewildered until Matt went on to point out that singing happy birthday in public, forwarding emails and photocopying books are all examples of piracy. If you calculated it all, 4.65 billion a year would be owed by each person for violating laws around piracy.

In the past, information use to flow in one direction but with the changes in society, technology and advancement with the internet, information is now flowing in a lot of directions and decentralization is happening. Piracy is having a great impact on businesses such as fashion, pharmaceuticals, and movies just to name of few industries, and its only just getting started. With the advent of the 3d printer and the fact that these printers are getting extraordinarily cheaper each year( a few years ago they were 21k, this year 1,800) as well as smaller and faster, piracy is becoming more and more a big issues companies face.

Mark Getty commented that Intellectual Property is going to be the "oil"of the 21st century. With that in mind looking at piracy has to have a well rounded view. Pirates aren't just the problem, they also help to create solutions, too. Pirates usually are trying to make things better, easier, faster - more beneficial for themselves. In some cases pirates are grudgingly accepted because businesses realize this is where viable audiences are such as with the pirate radio stations across London and the UK. With these stations, even the the police try to shut them down, they also advertise on the stations, and so does the record industry.

Even countries (SeaLand), and economies (the U.S. during the industrial revolution) owe something to piracy, in fact Americans got the nickname "Jankees" ("Yankees"), the dutch word for pirates during this period of time. The great inventor Thomas Edison had people in an uproar when he invented the phonograph, thinking that the machine would pirate performers and their live performances. Only when he was on the receiving end of piracy did he understand the full impact, with his film invention. Edison wanted to charge licensing fees, those who thought this was ridiculous moved out west to a rather unsuspecting place in the California territories and would escape to Mexico when Edison's lawyers would come calling, only to return to a place we now call Hollywood.

Matt-mason-pirates-dilemma-ses-london-2009 In the 1930's governments across Europe were using radios for propaganda and education purposes, not for entertainment. All save one tiny little country which erected the largest most powerful radio antenna, that little country was Luxembourg. This annoyed most of western Europe because they couldn't do utilize their airwaves for entertainment purposes. In the 50s and 60's the pirate radio era rose, and these radio stations went out into the English Channel to broadcast their entertainment. This insurgence scared the government that they made commercial radio legal. Not long after they made it legal the pirates moved from the channel to land.

Piracy looks for gaps outside the main stream market, creates a vehicle and harnesses the power of their audience. Piracy is actually a market signal, when pirates are adding something to the market space and the audience is listening, the mains stream market industry is missing something. Napster perfect example of this, even Steve Jobs said they should have competed with. Now look at today's world, the generation growing now is spending the most on ring tones.

How should companies respond or fight against piracy? Fight, but only if the pirates are really not adding value, but if there is value suing the pirates really isn't the answer. So what is the answer then? Compete with them! If they are succeeding, you need to analyzing what they are doing, copy them and do it better. A perfect example of this comes from the Pharmaceuticals industry, which has a huge pirate problem, in southeast Asia. One drug company gave away their drug to push the pirates out, and gave both their brand and their other products a giant push, making pirates less of a problem for them.

Don't be afraid of the pirates, let the pirates copy you (remix), and let other people take your stuff. Why?

  • Adds value to original
  • Creates new innovations - video game industry has huge piracy problems ( but remixes are heart of its growth ). Take for example the game Wulfenstien being cracked opened and changed to Smurfenstein, this was huge. When Wulfenstein was bought by Kormac (one of the three kids to crack it when it first came out), he left the levels open and it lead to great extension of game and brand. Now since this has become some what of a standard in the gaming industry people are using games to create movies and music videos within the games (basically as a movie set) and has given birth to a new industry called Machinima.
  • Generates demand - fashion perfect example - no one owns the IP to a 3d product, originals can be copied. This kind of piracy is a huge signal, if the design shows up in Walmart it's a signal to designers to move onto something new

So why doesn't Piracy always take off?

  • convenience - vista vs. linux - linux is free, but vista is more convenient
  • trust - iTunes vs. pirates - a lot of people are never going to trust of bit torrent and also want to give money to the artists
  • experience - bottled water vs from the faucet - there's an 8 billion industry, and sometimes tap water is cleaner than bottled - the bottled water manufacturers make it an experience to drink the bottle water (think Fiji water).
  • Hollywood movies vs. pirate DVD marketer - experience is different with a movie theater, DVD pirates were complaining about loss of rev. cuz of people downloading from the computer, you know its bad when they are complaining!

Matt-mason-ses-london-2009 If pirates are giving you product for free in different ways, then you need to give the audience different and multiple ways to pay for it. Look at Hulu. Hulu is changing the way people get TV online, beating the pirates by doing the same thing. The TV Show Heroes is doing stuff in a very interesting manner. They are giving the audience a total immersed experience by giving them all different ways of consuming Heroes, even the cutting room floor stuff is used online, you find a totally immersive universe - they've created a universal circle of entertainment that pirates cannot compete with.

Don't let legal ruin a good remix without talking to marketing first. Sometimes legal departments don't understand what makes good marketing and what reaches audiences and gets them involved. Guys Night made a video & music that went through the 3 Diehard movies. Legal team at Fox told them to take it down, do to copyright infringement, Guys Night obliged. Later on the marketing team at Fox find out about it, and approached Guys Night asking how much to put it back out there?

In closing Matt tells us, we are all dealing with common thieves, but if you are talking to an exceptional thieves, you need not to worry about them, you need be to copying them.


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Excellent post! Going to check out the rest of your blog, too.

Nice post. Sometimes legal departments don't understand what makes good marketing and what reaches audiences and gets them involved. Thanks for sharing.

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