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(originally published by Booz & Company)


We Are All Pirates

Author Matt Mason takes a hard look at how established companies should face the growing threat of copyright piracy.

Given his support of the ascendancy of pirate culture, it should come as no surprise that Matt Mason began his career as a pirate. “I grew up in London, where pirate radio stations — which broadcast illegally or without a license, sometimes from offshore ships and oil rigs — were in abundance,” he said in a recent telephone interview with strategy+business, “and I was a DJ on pirate radio for many years. So I always had this very different idea about what piracy meant and what piracy could be, and the kind of value it could add to society.” In Mason's view, piracy has gone far beyond teenagers illegally downloading copyrighted music to become a part of our culture and a successful business model in its own right, one that legitimate businesses would do well to learn from.

Since his radio days, Mason completed a degree in economics and economic history at the University of Bristol in the U.K., worked for Atlantic Records in the press department and in advertising at Saatchi & Saatchi, and then founded the urban music magazine RWD (pronounced “rewind”). His first book, The Pirate’s Dilemma: How Youth Culture Is Reinventing Capitalism (Free Press, 2008), examines how interconnected cultural pursuits such as piracy, hip hop, remixing music to make new songs, graffiti, and open source have transformed how we think about using and reusing information.

Mason’s premise: Thanks in great part to the Internet, piracy is becoming more firmly established in our culture and economy. Consequently, it is incumbent on every industry — not just media and entertainment — to come to terms with that reality or at least to try to understand how piracy delivers value, in order to compete with or perhaps even benefit from it.

S+B: In your book, you quote the co-chair of Disney as saying, “Piracy is just another business model.” What does that mean?
MASON: Look at the DVD pirates on Manhattan’s Canal Street. They release films on DVD for US$5 just as Hollywood releases the films in theaters. That business model is in direct opposition to the way Hollywood set up the system. Hollywood’s model depends on exclusive release of films to theaters, followed months later by a DVD release. Yet despite the activity of the pirates, the summer of 2007 was Hollywood’s biggest ever, with movies taking in $4 billion at the box office. That doesn’t add up; if piracy is such a problem, then you would think it would have a negative impact on the box office. Hollywood has simply refused to acknowledge the idea of simultaneous release because they’re so worried about the effect it will have on theater revenues. But according to the evidence, movies in the theater and movies on DVD are two different products. That tells me that if Hollywood accepted the presence of the pirates’ business model, as Disney’s co-chair seems to have, the movie companies could actually learn how to compete with them.

Every company is capable of having its business model turned upside down by piracy, but every business is also capable of competing with that model. The people I refer to as pirates in the book are all people who use information in really unconventional ways. So rather than thinking about how we can stop piracy, let’s consider how we can come up with better ideas by thinking in the same way as the pirates.

S+B: You have said that there are going to be more and more instances of companies encouraging us to share, use, and disseminate information and content more freely. But why should companies be willing to allow people to share?
MASON: The kind of boundaries that used to exist in capitalism are breaking down. Capitalism used to be about whoever owns the means of production calls the tune. Now, it’s about the quality of the ideas you produce. It’s about creativity. That fact is causing a shift whereby companies are reluctantly starting to compete with piracy because they have to. As more people do that, I believe the benefits of making content more freely available and working out other ways to make consumers pay for it are going to become more obvious.

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  1. From Major to Minor,” the Economist, January 10, 2008: On the trials and tribulations of the music industry.
  2. Kal Raustiala and Christopher Sprigman, “The Piracy Paradox: Innovation and Intellectual Property in Fashion Design (PDF),” Virginia Law Review, vol. 92, no. 8, December 2006: Another legal take on the issues surrounding the legality and value of copying — this one concerning the fashion industry.
  3. John Tehranian, “Et Tu, Fair Use? The Triumph of Natural-Law Copyright(PDF),” University of California Davis Law Review, vol. 38, no. 2, February 2005: An in-depth analysis of the long history, legal merit, and social value of the concept of “fair use.”
  4. The Pirate’s Dilemma Web site: Information about Matt Mason and his book, including a useful Weblog on issues pertaining to intellectual property, copyright, and piracy.
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