Bottom Line: Many companies were caught unawares by the threat of online music piracy in the 1990s. But the lessons they learned then can teach them how to deal with new technological dangers.
In 1999, the music business was rocked — and not in the Ozzy Osbourne sense of the word — by the debut of Napster. The peer-to-peer (P2P) file-sharing service allowed Internet users to download songs and albums free of charge, upsetting the industry’s traditional business model. The casual theft of companies’ intellectual property (IP) became so widespread that the Recording Industry Association of America reported the legitimate sales of music fell by half, from US$14 billion in 1999 to $7 billion in 2014.
Today, 3D printing may pose a similar risk, but on an even wider scale. The novel technology employs computer-assisted design (CAD) to enable users to build a physical item, typically out of plastic or metal, by printing successive layers of material until the structure is formed. Users can churn out an astonishing array of complex items, from medical equipment to weapons, and the innovative potential is vast: Some researchers are even looking at using 3D printing to reproduce human organs.
Right now the technology is still too expensive for a mass audience — a good unit can cost thousands of dollars — but the history of breakthrough innovations suggests the price will soon drop significantly. Because of its versatility, the technology has the potential to destabilize more industries than just the entertainment sector. But they can all learn something from the music industry’s long struggle against piracy.
Both P2P downloading and 3D printing revolve around computer files packed with intellectual property — performing artists’ copyrighted songs, in the former, or CAD files that contain firms’ industrial blueprints, in the latter. These files are shared and posted all over the Internet. And just as with music, 3D printing is hard to track because it can occur in the privacy of someone’s home or office; requires little manufacturing equipment or investment beyond the device itself; and features a robust, supportive online community that generally doesn’t view the activity in immoral terms.
3D printing is hard to track because it can occur in the privacy of someone’s home or office.
And that’s just the tip of the iceberg, according to a new paper by Matthew Appleyard of Leeds Beckett University (formerly Leeds Metropolitan University). Drawing on legal research, media accounts, and company case studies, Appleyard found five essential lessons from the struggle against piracy that could well apply to 3D printing.
“Consumer expectations are relatively dynamic.” In just a few years, file sharing, portable listening devices, and high-quality headphones fundamentally altered how consumers bought and consumed music. And that’s good news for companies worried about 3D printing, the author writes. Because the technology is still in the embryonic stage, firms have time to manage consumer expectations and ensure they don’t box themselves in with defensive antipiracy strategies. After all, the success of P2P file sharing underscores how willing consumers are to purchase illegal items if they are cheaper and comparable to the real thing. Many of the music industry’s attempts to fight technology with technology (through digital rights management, for example) were viewed as backward steps by consumers, whereas Napster’s appeal lay in its interoperability: It fit in perfectly in the era of expanding hard drives, MP3s, and iPods. Companies must ensure they retain the flexibility to compete with emerging technologies, because consumer expectations are continually in flux.
“Legal recourse can be like using a sledgehammer to crack a nut.” The music industry fought back against piracy largely through legal channels. But in the court of public opinion, many record companies and prominent bands lost big. In particular, Metallica’s lawsuit against Napster in 2000 resulted in a backlash from fans and undercut the rock band’s long-standing iconoclastic image. Given the “expensive, lengthy, and unpredictable” nature of legal action, Appleyard writes, IP owners should think carefully before going this route — and if they do, they must try to make their case plainly and sympathetically in the media.
“You can’t put a genie back in its bottle.” Record companies tried several different tacks to limit the spread of piracy. They asked Internet service providers to target illegal users and released distorted songs on P2P networks. In 2009, the industry finally succeeded in getting some countries to block the prominent P2P website the Pirate Bay. But in reality, proxy sites still give users access to the site’s downloadable torrents.
“Responses can involve multiple tactics, including legal action or competing, but the IP owner must recognize that technology and the advances it brings cannot be subdued,” the author writes. Instead, companies should willingly embrace the new paradigm. Apple’s iTunes program, for example, was a hit with music lovers even in the age of piracy because it provided a highly functional, legal alternative to comparatively unreliable, unauthorized platforms.
“Antipiracy strategy is a cat-and-mouse game.” During the protracted struggle between pirates and music companies, both sides won some and lost some. The most high-profile setback for the industry was probably Sony’s attempt to retroactively add copy protection to recordings, rendering copied files unplayable in a computer drive. Not only did people quickly circumvent the new security — using the decidedly low-tech means of a marker or a piece of tape to cover up the security code — but the technology also caused glitches and crashes for many legitimate users.
DVDs, however, were security-encrypted from their inception, and couldn’t be burned as easily as CDs. Similarly, there’s still time to standardize the copyright protections surrounding the 3D printing process and at least make pirating more technically complex if not outright impossible. But don’t expect the battle to be won overnight.
“Networks work.” Part of the reason for the music industry’s muddled response to piracy was the lack of cooperation between the major players, which tried to come up with their own disparate solutions to the growing threat rather than developing a coordinated plan of defense. But research has shown that networking enables IP owners to stabilize and strengthen their copyright protections by collaborating with other firms, lobbying government agencies, and launching educational or media campaigns about the value of maintaining their products’ integrity. As iTunes shows, consumers don’t necessarily prefer disjointed black-market offerings; they will flock to legal outlets if the price and quality are right.
Essentially, companies should try to control the narrative in the still-nascent era of 3D printing. The technology isn’t going away, but it’s not so well established that consumers’ expectations have been set in stone. Rather than stifling or ignoring 3D printing, the author writes, firms should develop reasoned responses to consumers so that “legal, habitual relationships can be formed before pirate services proliferate.”
Source: “Corporate Responses to Online Music Piracy: Strategic Lessons for the Challenge of Additive Manufacturing,” by Mathew Appleyard (Leeds Beckett University [formerly Leeds Metropolitan University]), Business Horizons, Feb. 2015, vol. 58, no. 1