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Archive for March, 2008

The Trouble with Music

Music is a central part of many of the stories in The Pirate’s Dilemma, so naturally I tend to talk about music a lot in my keynotes. It would be great to use some of the music I mention in my talks, but there is no legal way for me to do this. I would happily pay for this privilege, but it is impossible. I checked with someone I know at ASCAP, I asked my speaking agency – same answer. There is simply no way for this to happen legally.

However if I do decide to use a few snippets of music anyway, there is a huge legal machine that could come after me. Some large organizations make you sign a contract indemnifying them for up to $1m in damages, just in case you do use something you weren’t supposed to. You’re not given an opportunity to pay to use music, but if you do it anyway, it’s possible you’ll pay dearly.

And herein lays the problem with the music business. There can’t be much money in royalties earned from people using music clips in PowerPoint presentations, but there is some. There are a million other ways people use music that the music business would never consider as revenue streams, because they are tiny. But if you use music anyway when legally you’re not supposed to, which all of us do, apparently it’s not too much trouble to punish you.

The future of digital media is not one large revenue stream. Lawsuits cannot control the flow of digital information. People are going to use your stuff anyway. The only thing you can do is give them the option to pay for it.

Live and Direct

Live

I’ve got a lot of public speaking appearances coming up – I’ll get all of them up at some point in a separate section, but in the meantime here are some of the events open to the public that I’ll be at in the next few months:

May 1st – Panel Discussion at On Copyright 2008, New York City

I’ll be on a panel at this event alongside some very cool people, including Tim Wu, one of my favorite journalists, writer Jonathan Lethem, music industry problem solver Jim Griffin, and Suzanne Vega (I’m hoping she’ll be able to tell me if the song Tom’s Diner really is about Tom’s Restaurant in Manhattan which was later in Seinfeld, or the Tom’s Diner at the end of my street in Prospect Heights, Brooklyn – they have a signed copy of the lyrics on the wall that say “I came, I saw, I wrote.” But no one knows if it’s genuine. I’m pulling for Brooklyn…).

May 8th – The Pirate’s Dilemma at the RSA, London, 1-2pm

May 8th – The Pirate’s Dilemma at The London School of Economics, 7-8pm

From May 2nd to May 10th I’ll be in the UK for the launch of the book over there, and I’m doing two lectures which are open to the public, admission free, on the 8th of May. Catch me at lunchtime on the 8th at the RSA, or in the evening at the LSE in The Shaw Library. Seating is limited I’m told, it is first come, first serve. More info on that here.

May 14 – May 17, Keynote Speech at Surf Summit 11, Sheraton Hacienda Del Mar Resort & Spa San Jose del Cabo, Mexico

The Surf Summit is the annual conference put on by the Surf Industry Manufacturers Association (SIMA), and it looks pretty spectacular. The goal of the four-day, three-night Surf Summit is to educate, motivate and inspire those who help shape the future of the surf industry. Previous speakers include Tony Hawk, Robert F. Kennedy and Guy Kawasaki – so some big shoes to fill. I’m really looking forward to this and am told I will be going surfing. SIMA members receive special pricing and first priority to register, details here.

May 21st – Keynote Speech at MESH 08, Toronto

I’ve heard MESH is the best event in Toronto after St Patrick’s Day. MESH is Canada’s premier Web conference, billed as “a chance to connect with people who are as excited about the potential of the Web as you are — people who want to know more about how it is changing the way we live, work and interact with the world.” Also speaking is Mike Masnick of Techdirt, one of my favorite tech writers, and Lane Merrifield, founder of Club Penguin, which my niece spends way too much time playing.

May 22nd – Keynote at IIT Institute of Design Strategy Conference, May 22nd – 23rd, the Museum of Contemporary Art, Chicago

It’s a real honor to be invited to this event, which features a heavy-hitting entourage of business executives and design leaders (check the full line-up here). It’s also my first time in Chi-town. I’m looking forward to finding an Obama t-shirt that can beat this one.

June 22nd – Keynote at SeriousBUSINESS 2008, New Orleans

After another trip back to London and what I’m sure will be a much-needed vacation in France, I’ll be in New Orleans for SeriousBUSINESS 2008, which looks like it’s going to be an amazing event. The theme of this year’s event is how ‘cool’ and ‘caring’ can and should co-exist, something I call Punk Capitalism in the book. There are some really inspiring people speaking at this event, include Mr. Vidal Sassoon.

I’m going to be up and down the country plenty in between all this, watch this space for more dates. If you want to contact me about speaking, do drop The Leigh Bureau a line.

If you’re in any of the places above and want to set up a meeting, grab a coffee, talk about the Chin ramp, or anything else – give me a shout!

Piracy is a Negotiation, not a Fight

The sale of Bebo.com to AOL for $850 million last week sparked a fresh wave of opining about music piracy, with Billy Bragg and Michael Arrington both stepping into the ring. The problem is, they are both wrong.

Torrent Freak Logo

This piece was originally written for TorrentFreak

In the blue corner we have musician Billy Bragg, who sees people like Bebo founder Michael Birch as another type of pirate, or profiteer, earning millions by leveraging other people’s intellectual property, and sharing none of it. He writes in The New York Times:

“The musicians who posted their work on Bebo.com are no different from investors in a start-up enterprise. Their investment is the content provided for free while the site has no liquid assets. Now that the business has reaped huge benefits, surely they deserve a dividend.

“What’s at stake here is more than just the morality of the market. The huge social networking sites that seek to use music as free content are as much to blame for the malaise currently affecting the industry as the music lover who downloads songs for free. Both the corporations and the kids, it seems, want the use of our music without having to pay for it.”

Artists add value to Bebo, but Bragg is over-reaching claiming they deserve a share in Bebo’s sale price. Bebo also adds value to artists who voluntarily post their songs on the site. Does Bragg also think artists who post on Bebo.com should share their concert ticket profits and royalties with the social network?

In the red corner we have Michael Arrington from TechCrunch, making the opposite but no less extreme case that “recorded music is nothing but marketing material to drive awareness of an artist.” He also says “if an artist can’t make a living playing concerts live, then he/she may want to think of it more as a hobby than a way to make a living.”

Arrington reasons that because music can be reproduced at a zero marginal cost, it should be free. But marginal cost does not equal total cost. It still costs something to produce music. It still takes money, time and effort to produce good music, not to mention software, movies and other goods with zero marginal cost. People producing such things need to make money in the end. Zero marginal cost does not mean it should be free. It just means we need a new distribution system.

Bragg’s line of reasoning is skewed, but he makes one good point; creative works like songs and films are worth something, and we have to figure out a way to reward creative people fairly in the age of the Internet.

Arrington’s argument is also flawed, but he’s right to say that Bragg is off the mark, and he’s right to say we should neither “line up file traders and shoot them”, or “give a government subsidy to anyone who calls themselves a musician so that they can pursue their art.”

Fortunately for the rest of us, these are not the only two options. Bragg and Arrington represent the two polar opposites in this ongoing debate, and they’re both wrong.

All the people at the extreme ends of both sides of this debate are wrong. But the truce is coming. Soon enough, there will very likely be a $5-$10 a month voluntary license fee for downloading all the music you want, and most people will be happy to pay it. As long as the money makes its way back to artists, it will help the music business grow.

I can’t wait to see an Internet where incredible music resources like OiNK can exist and artists can prosper at the same time, and that day is coming, hopefully sooner rather than later. But when that happens, another community will suddenly find itself as redundant as the music industry’s lawyers; the pirates.

When peace breaks out in the music business, a lot of people are going to have to find something else to talk about (which is why I cunningly future-proofed The Pirate’s Dilemma by talking about piracy in all businesses…). Music pirates will no longer be the face of the revolution, they will be part of the old regime. Over 500 years ago, Niccolo Machiavelli wrote: “Innovation makes enemies of all those who prospered under the old regime, and only lukewarm support is forthcoming from those, who would prosper under the new.”

Pirates create periods of chaos, then society works out how to make this chaos work for everyone, at which point it is enshrined in law and becomes the new order. Piracy itself is not a long-term solution. The arguments for music piracy as a force for change will become old news when file-sharing is finally legitimized, but the good news is there is still plenty for pirates to rebel against.

The pirate’s job is to push the envelope, while the corporation must play catch up as fast as it can. Both of these communities need each other. But when the corporations do catch up, the pirates need to move on. File-sharing is not so much a movement that needs to survive for its own sake as it is a means to an end. This isn’t a war without end. It’s a negotiation.

Pirates on Current TV

Current TV just put up an interview I did a few months back with Brooklyn producers John Carluccio and Mark Kotlinkski – They dug up some cool slides I haven’t seen before. Mark also has a production outfit called 88 Hip Hop which does some great stuff – look for his film The Mural Kings about legendary graffiti artists TATS CRU – which is well worth checking out.

The Pirate’s Dilemma in Strategy + Business

strategy and business

I did an interview for Booz Allen Hamilton’s strategy + business magazine with Edward Baker – you can read it here.

How pirates could fix big pharma’s image problem

Western drug companies badly need a shot in the arm of good PR, but are all but ignoring one of the greatest PR opportunities ever presented to them.

Pirate Pill

Pharmaceutical companies spend more on advertising than they do on research and development, and yet most people have a negative view of the industry thanks to debacles like the Vioxx scandal.

The big margins in pharmaceuticals are in drugs rich people use, like Viagra. There’s not a great deal to be made on malaria tablets and anti-AIDS drugs, and patented malaria tablets and anti-AIDS drugs are often too expensive for most people in countries like Brazil, Argentina, Thailand, Egypt and China who desperately need them.

As a result, in countries including Brazil, Argentina, Thailand, Egypt and China, pill pirates are saving lives by offering illegal, albeit life-saving drugs at prices that make financial sense to the residents of those countries. Their governments are all ignoring Western patent laws, because letting their citizens die in the name of profit isn’t exactly a vote-winner.

In the book I talk about how competing with pirates using Joseph Stiglitz’s idea of a prize system could help the drug companies create better, cheaper meds for some of the world’s poorest people – an idea that a lot more people are getting behind. But also I’m willing to bet my deductible that by competing with pirates in the developing world, the drug companies could turn around their image problem all over the world.

If you’re a drug company making no money on an anti-leukemia drug in Thailand, because no one there can afford the Western price, what’s the harm in lowering your prices and competing with the pirates selling cheap knock-offs? The marginal cost of a pill is tiny, and you’re not making money in this market anyway. There is an element of risk involved with lowering your prices, sure, but if you’re a multi-national company of any kind, you should be able to master the art of market separation, at least at a basic level like this. And besides, think of the upside.

By saving lives in one country, you create a positive piece of PR you can use worldwide, something that you as a drug company spend billions trying to create, that is currently in very short supply.

Novartis are already starting to do this in Thailand, India, and in other developing countries, and are winning corporate social responsibility awards as a result. TV ads will only get the drug companies so far, but acting in a socially responsible way overseas is likely to win hearts and minds at home too. And as foreign markets develop, being the trusted brand is going to be a huge competitive advantage in the long term.

The pirates are out there anyway. Fighting pirates doesn’t work when we’re talking about music files, never mind saving human lives. Good corporate responsibility practices are much more potent than empty advertising messages, especially if you PR them the right way. Saving lives in the developing world won’t kill the drug companies, but it could revitalize their ailing reputations.

Slinger Must Live!!!

Slinger

Just saw this melancholy tale of a He-Man character that never was over on THEBLOG WEEMADE. Slinger (pictured) was a new He-Man character Brian came up with when he was seven years old. He was sure Mattel would go for his idea, and from the sounds of things, he wasn’t looking for much more from the deal that some playground kudos from his peers.

Unfortunately for Brian, Mattel responded with a letter telling him that for legal reasons they couldn’t accept his idea, and had to place the blueprint for Slinger in a special box where it would be sealed for all time, in what I imagine was a warehouse full of secrets like the one at the end of Raiders of The Lost Ark.

Brian was devastated, and twenty years later, it’s clear Mattel are still struggling with monetizing user-generated content. But why does this have to be the end for Slinger? I say Slinger must live. I say Slinger must shine as a beacon of user-generated hope to seven year olds everywhere. Anonymous is great and everything, but user-generated content needs another hero. Slinger is not part of the He-Man franchise, so there is no reason why he can’t be 3-D printed vinyl toys, snarky t-shirts and the Reddit alien before the week is out (unless Brian has other plans for him). Slinger can be bigger than He-Man! With that in mind, I created a new version of Slinger:

Slinger 2

If any toy companies would like more information on licensing this new version of Slinger, click here.

He may not look like much, but it’s the best my cacky-fingered hands can do with paint.net in ten minutes. Do your bit for Slinger too, because unless he survives, the terrorists have already won.

A pirate, a professor and a political compass

Commonspace

One of the most satisfying parts about writing a book is the part after you’ve published it when other people extend your argument and see some of the things you didn’t. I’ve seen a lot of cool interpretations of the ideas in the book online since January, and found this piece by Mark Surman in Canada especially interesting.

Mark weaves my thoughts about pirates together with Jonathan Zittrain’s concept of ‘communitarians,’ and places these ideas in the political spectrum. He writes:

“Over the past week, I’ve been reflecting on the ideas of two people: Jonathan Zittrain (a professor) and Matt Mason (a pirate, or at least a fan of pirates). This has got me thinking about the ‘political compass question’ again, which goes something like this …

“Right and left just aren’t enough anymore. We don’t live in a world where collective vs. individual sums up who we are (if it ever did). In fact, the much bigger tensions in today’s world are: democracy vs. authority; diversity vs. singularity; ecumenicism vs. fanaticism. We are in a struggle between open and closed.”

It’s an interesting post that’s well worth a read if you liked the book. I agree with almost everything Mark has to say on the subject. One thing I didn’t agree with is a point made towards the end, when Mark suggests by way of a quote that ‘pirates’ and ‘communitarians’ shouldn’t see each other as the enemy, because really the common enemy is proprietary systems. Personally I think proprietary systems aren’t an enemy, they are useful, and valid, and we need them. Some information, such as bank account numbers, works better behind closed doors. It’s just that we don’t closed systems for everything we use them for. But as Mark points out, “We don’t need to agree on everything (that’s the point, right).”

The Pirate’s Dilemma at The Medici Summit

Here’s the full speech from my keynote last week at The Medici Summit on when and how it’s best to compete with pirates. There were some amazing speakers at this conference, check the Summit website for more videos over the coming months.

Probably the coolest picture of an X-wing fighter parked outside a Costa Rican hotel you’ll see all day.

Costa X wing

A few weeks ago I noticed this X-wing, complete with R2 unit, outside a beach-front hotel in the town of Jaco, Costa Rica. I could find no apparent reason for it being there.

Costa Rican x-wing 2

It’s mounted on what looks like a small stage, but there isn’t much room around it. You can see roughly where it is on google maps here, the problem is it’s not there yet – many new buildings have gone up since this was taken, the town is developing fast.

Is is street art? An advert? Is the local theater company doing an outdoor performance of Return of the Jedi? Could it affect the country’s efforts to go carbon neutral? If anyone out there on the intertubes has more information on the X-wing, I’d love to know what it’s doing there.

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