Not Pirates but Disillusioned Potential Customers

28 Jan 2012

 

It will never happen but what if all the industries moaning about pirates- films, TV, music, etc.- instead started thinking and talking about them as DPCs (Disillusioned Potential Customers)? Or, we the people, substitute that word mentally whenever these industries trot out the next made-up number of the enormous losses they are suffering from the Internet?

The practice of labelling the infringement of exclusive rights in creative works as ‘piracy’ predates statutory copyright law, all the way back to 1603. Since then it has been firmly enshrined in law and trade agreements. Of course that works for these industries to deliberately continue calling copyright infringement ‘theft’ and ‘piracy’ while labelling people ‘pirates’. (In fact, the Recording Industry Association of America actually believes that ‘piracy’ is “too benign of a term to adequately describe the toll that music theft takes”.)

Pirate

Frame the debate and mindset

Piracy and pirates are emotionally-loaded terms. It sets out who the ‘bad guys’ are. The debate then isn’t about right and wrong but the means by which the bad guys are stopped.

Justify government intervention and laws

It makes it much easier to call for government intervention to stop pirates rather than disillusioned potential customers. Violations now become a criminal matter rather than a business problem. The full force of the government is co-opted to stamp out piracy.

Expand the scope of trade treaties

By equating copyright violation with counterfeit drugs, trade treaties have now expanded to cover intellectual property laws in partner countries. Reducing the number of people killed by counterfeit drugs is a good and valuable goal. Putting copyright violation at the same level gives it a sense of legitimacy and urgency that justifies bypassing multilateral international institutions (WTO) to have more targeted plurilateral negotiations (ACTA and TPPA).

Over the years, in particular with TRIPS, enforcement of copyright infringement has shifted from copyright holders to judicial processes. Now with ACTA, the onus is being put on active policing by government. In addition, while traditionally the term piracy was associated with intentional financial gain, the term is now sought to be applied to every type of copyright infringement.

 

Disillusioned Potential Customers

What’s really happening is that these industries have potential customers who are disillusioned and not buying from them. The questions shouldn’t be, “How do we get more laws passed and get governments around the world to put pirates in jail?” It should be, “How do we give people what, when, and how they want our products at a price they are willing to pay?”

The success of Netflix and iTunes are just too obvious to ignore. And, yes, Megaupload and Megavideo too.

What if they don’t want to pay?

No matter what these industries do, they are always going to be some people who are not willing to pay anything. Zero. The number of such people can be reduced as described above but, realistically, these industries have to accept that some people aren’t going to pay anything at all.

Inspiration from other industries

Accepting some people won’t pay doesn’t mean they can’t make money. Instead, they need to come up with innovative answers to the question, “How do we give people what, when, and how they want our products at a zero price?”

The answers are there but it takes effort, attention, and good ideas. Let’s take an example from another industry, the software industry.

Zero cost software

How do you make money from software without charging anything for it? It’s not simple but several models exist. For example, there’s the upgrade or “freemium” model (charge for extra features or functionality); the services model (charge for allied services, e.g. design or support or tools); the donation or funded model (customer pays what they can or want to, before or after the software is developed); the loss-leader model (gain popularity to sell other software); the advertising model (money made from advertisers); etc.

How can this be applied? Just ask Justin Bieber how he got his break. Or, read this great article in The Guardian about Gorillaz as well as the one in GigaOM where author Neil Gaiman talks about how he is selling more books in countries where his books are pirated.

 

Megabox

A good example of innovative thinking is Megabox, the now-dead service that was being developed by Kim Schmitz (aka Kim Dotcom of Megaupload) prior to his arrest. The service was based on disintermediation of the all-powerful music distribution moguls.

One business model was to provide free music to people. The consequent popularity would lead to significant advertising revenue which would go mostly to the musician. MegaBox would clip the ticket, understood to be a relatively modest 10%. A classic win-win model making money with people paying nothing at all. All perfectly legal. Called the “Megakey’ model, it is believed to have been tested with a million customers and proven successful.

There were other business models too, such as allowing musicians to charge for their music in a flexible, adaptive way. This then opens up other revenue opportunities such as cross-selling deals, for example selling tickets at reduced prices for concerts.

 

Hijacking the ‘pirate’ symbolism

In a twist on the use of the piracy language by copyright holders and the law, websites like The Pirate Bay and political movements like pirate parties have responded by embracing and making the language their own. After all, it’s hard not to like the swashbuckling image of Johnny Depp.

 

Tough love

It’s time to not only stop further laws that enhance the protection to copyright-dependent industries but to re-balance existing copyright law so that it is fit for the future. There will be lots of pain but the end result will benefit those that copyright laws are meant to benefit in the first place- the artists, authors, creatives, etc.- and society as a whole.

The very success of the copyright-dependent industries, of which the ‘piracy’ mindset is a prime example, means that they will need a dose of tough love to break them out of their protective bubble.