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10 Industries Being Transformed by Pirates (For The Better)

Piracy is usually seen as a problem, but in many cases, it is also offering us some solutions. From western movies to, erm, wooly mammoths, both illegal piracy and legal free substitutes are creating Pirate’s Dilemmas, challenging the conventional ways we share information and improving how we do things as a result…

mammoth pirate


1. The Drug Industry

How are pharmaceutical giants supposed to enforce patents on life-saving drugs that combat HIV and Malaria in developing countries, when those drugs can retail for up to $27 a day, and many of the billions of people who need them earn less than $1 a day?

The short answer is they can’t. India ignored such laws for decades, producing generic knock-offs of patented drugs up until 2005 (not to mention also copying patented pesticides). As a result, life expectancy went up from 40 years in 1970 to 64 years today. In Brazil, Argentina, Thailand, Egypt and China, private and state run enterprises are also ignoring international patent laws and producing illegal generic versions to keep their populations healthy. Western drug companies maybe losing out, but millions of lives are being saved as a result.

The longer answer is the pharmaceutical companies probably shouldn’t be trying to enforce these unworkable laws in the first place. Many think there is another way – most notably perhaps is Nobel prize-winning economist and former head of the World Bank Joseph Stiglitz, who thinks we could put together a prize system as an alternative to the patent system, which would allow developing countries access to cheap drugs, and allow the pharmaceutical companies to make money. When pirates enter a market, they highlight market failures and create debate about how to correct them. This particular debate is likely to rumble on for some time…

2. The Movie Business

Hollywood was founded by pirates who didn’t want to pay Edison a licensing fee for using his film projector (his New York lawyers couldn’t reach them easily out in the then still-pretty-wild West), but pirates are still upsetting the apple-cart there today. As piracy persists, Hollywood’s default position has been to fight venomously, which is understandable. But some filmmakers think the pirates are trying to tell them something, and are instead addressing the problem by releasing their films simultaneously in theatres and on DVD at the same time.

The simultaneous release debate is a classic Pirate’s Dilemma – on the one hand you have directors like M. Night Shyamalan who believe movies will lose their magic if they are not shown in theaters, and has called the idea “heartless and soulless and disrespectful.” On the other you have those such as Oscar-winning director Steven Soderbergh, who released his film Bubble simultaneously in theaters and on DVD in 2006, and Michael Winterbottom, who released The Road to Guantanamo the same way, the same year.

Hollywood should probably try and monetize this market before they lose the opportunity to do so altogether. Movie theaters are selling one kind of specific experience, but DVD pirates are selling another. If someone is not willing to pay $10 for a movie ticket, but will pay $5 to watch a bad quality pirate copy, they might be persuaded to pay $10 for a good copy too. But the opportunity to legitimize this market won’t be here forever – DVD pirates are now complaining that movie downloading is eating into their business. Soon it’s going to be just as easy and quick to download films as it is music, and we all know how that story ends. Disney CEO Robert Iger summed the situation up nicely in 2005: “We can’t stand in the way and we can’t allow tradition to stand in the way of where the consumer can go or wants to go.”

3. The Law

A Pirate’s Dilemma is not just caused by piracy, but also by free substitutes such as open source software – something that is happening to more and more industries. Law Underground is a non-profit legal information project revolutionizing how the legal industry works. Hit the site and answer a few questions about your legal problem. Using a mix of collective and artificial intelligence, the site will generate a solution based on sound legal advice. It’s not done with pirate copies of lawyers, but the real thing – lawyers and law students contribute content and knowledge, and anyone can use the site to find answers, for free. “Around the world, legal information is generally available in proportion to a person’s economic resources,” says the site, “which means that often those who need it the most have the least access to it. Our belief is that rights that one has to pay to learn about are not rights, but privileges. Law Underground’s objective is to provide free access to legal information through collaborative web resources.” Paul Hastings probably isn’t going to go out of business anytime soon because of the project, but many people who can’t afford lawyers are and will continue to benefit. Law Underground believes legal information wants to be free, but they also know customized legal information wants to be expensive, which is why you can also use their technology for commercial purposes. This is a great resource that deserves (and is getting) the support of the legal community.


4. Doctors

Free substitutes are also helping the healthcare industry become more efficient here in the West. Your resident pirate doctor is Dr Google. Researchers from Princess Alexandra Hospital, Brisbane, Australia found that 58% of the time, Google is as a good source for doctors to use to diagnose difficult cases. While those odds don’t sound great, when you consider how many people are killed by doctors every year in the U.S., it’s got to be a good thing Google is giving them a helping hand.

More help is on the way too – both Google and Microsoft are currently making plans to jump into the healthcare business next year. We may or may not see Universal Healthcare happen in the U.S., but socially networked healthcare is another matter entirely.

5. The Music Industry

Many artists, record execs and fans have always believed downloading was the best thing that could have happened to the music business, but recently Sellaband has started to use the power of fans and downloading to re-shape the business in very different way. The company’s tagline line is “you are the record company,” and that pretty much sums it up.

Bands log on to Sellaband and upload their demo songs, and fans can invest in them (each fan can invest $10 or more). Once that band has $10 from 5,000 fans, they have $50,000, and the money is invested into hiring top A&Rs, producers and studio time so the band can make a killer record. Once the CD is produced, each fan that invested gets a special limited edition copy. Then retail copies and downloads go on sale, and the fans, the band and Sellaband split the profits three ways. Try walking into one of the majors and asking for 33.3% of the profits.

The first half of this decade saw the major music industry nosedive because of piracy, but now real improvements are happening, and it looks like the industry is being democratized. Selllaband has been a huge hit so far in Europe, expect to see more labels like it very soon – unless of course, Elton John gets his way and they close down the Internet altogether.

6. Phone Companies

Skype and the idea of free calls via Wi-Fi have been scaring the bejesus out of the telecommunications industry for a while. Wi-Fi was the evil digital-communist scourge that was threatening to eat the industry alive. But some now see the threat as an opportunity, and it doesn’t look quite so bad after all. T-mobile was the first national carrier to take the plunge into Wi-Fi with their @home service. You pay an extra $10 a month on top of a regular voice plan, and your phone switches to Wi-Fi whenever you’re near a “hot-spot.” They also throw in a Wi-Fi box for you to make free calls at home.

But the big news in this sector will be the Google phone, which so far has proved more elusive than the Loch Ness Monster. Will it be free calls supported by ads? Will the major telcos work with Google? Will the phone turn into a robot? Or will Google go it alone on its own free wireless spectrum (Google recently said they were willing to spend up to $4.6 billion on such a spectrum in a Federal Communications Commission Auction). If Google is looking at this opportunity, it’s likely others are as well. Nobody knows for sure yet what the deal is, but this will very likely be on of the biggest stories of 2008.

7. Body Parts

The age of silicone breast implants maybe coming to an end, and may be the harbinger of a number of other biological innovations, thanks to a technique not unlike file sharing. A new process pioneered in Japan allows women to use stem cells from butt fat to grow natural breast implants, which feel and look more natural because fat grown from stem cells allow fat cells to create their own blood supply. Stem cells can be used to rebuild cells anywhere else in the body. According to The London Times, the method can be use to regenerate breast after cancer surgery, repair damaged hearts and even repair facial disfigurements.

If we can copy cells like mp3 files, shouldn’t someone be building a biological Napster?

8. Energy

With wars over oil, global warming and spiking gas prices, the number of people going off the grid and home-brewing their own energy is only going to go up and up. But the backlash from utility companies has already begun. Last month Gore Vidal claimed the Los Angeles Department of Water and Power very publicly invaded his home of and ripped his newly installed solar power system to pieces. As solar and wind become larger concerns, decentralized concerns at that, except to see many energy companies doing the right thing and investing appropriately and responsibly, but at least one or two acting like they are record labels suing The Pirate Bay. It doesn’t matter what industry you’re in, if your business model revolves around suing people for doing something more efficiently than you are, then you no longer have a business model.

9. Education

Education, like legal advice, has long been a privilege. But thanks to initiatives like MIT’s OpenCourseWare, it’s now possible to get a world class education for free, from anywhere on the planet. Like many of the innovations discussed here, this is but the first step of a thousand-mile journey, but the goal of making an ivy-league education available to everyone on the planet is a noble one. Couple that with the potential of the $100 laptop, and that goal seems a little bit closer, and the implications of getting just a little of the way there are staggering.

10. Wooly Mammoths?!?

When a Siberian reindeer herder found a mummified baby wooly mammoth in May of this year, the science community went bananas at the prospect of cloning and copying new pirated mammoths from the DNA, á la Jurassic Park. But while science would like to pirate Mammoths with the best intentions, another band of pirates is ripping off mammoth specimens before intrepid scientists can reach them.

Mammoth hair trades for $50 an inch. Meanwhile mammoth skin, ivory, and mummified body parts are also changing hands for ever-larger sums of money. On top of all the rampant piracy affecting mammoths, Russia is also claiming any and all mammoth remains found are the property of the Russian government, so copying one would technically be illegal without the Russian’s permission. When scarcity is non-existent, as it is in the case of music files, piracy can be a problem (but also a solution). But when scarcity really is a mammoth problem, as it is in the case of mammoth remains, piracy really is a solution worth considering.

10 Responses to “10 Industries Being Transformed by Pirates (For The Better)”

  1. Josef Assad Says:

    Literature; you forgot literature.

    The advent of copyleft literature is obsoleting traditional notions of what can be expected of a book. Backchannels to the author are stronger, communities can be built on works, derivative works are celebrated and not prosecuted, etc.

    I ought to know; I’ve got my own little experiment going with open culture publishing, having released my own novel online for free under a Creative Commons license.


  2. Jay Neely Says:

    Google phone in 2008? A-HA, A-HA, A-HAHAhahahahahahahaha….

    Definitely not. Deploying the physical infrastructure necessary for such a thing is going to take a lot longer than rolling out their next major web service. Even if they’re partnering with other companies that already have most of the infrastructure, it still takes a while to make those kind of deals and get production going. I say Google Phone 2009. If they’ve already planned out everything, made all the deals, done all the designs, laid all the groundwork necessary… *maybe* 2008, but at the very end. Christmas gift of the year.

  3. NotBodyParts Says:

    The body parts section didn’t make much sense to me. You should have focused on networks like OpenWetWare and biotech blogs that open up the information and spread biological protocols, simulations and models through on-line how-to videos and kitchen sink recipes as opposed to some bizarre blurb about fat cell injections being the new breast implants. It’s true that free and open networks have a great influence on biological research but it seems like a mistake to focus myopically on such a small and unconfirmed aspect of what will potentially have a greater influence than the pharmaceutical issue.

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  6. Xalem Says:

    You totally forgot the fashion industry. OThe designers could put a copyright on their designs, but no one even bothers. Immediately after the models show off the new designs on the runway, the knock-off fashion industry starts painstakingly copying the look of those fancy dresses. The knock off versions of the high end fashions help the high end designers. Sure, they don’t sell as many $10,000 dollar dresses, but, they have a stronger influence on the industry, and more people pay attention to them. It is because the designers are copied by everyone that the designers become celebrities.

  7. mattmason Says:

    Good point Xalem – I do cover this topic in the book, it’s fascinating how the process works in fashion and keeps the industry churning out trends.

    Thanks too, NotBodyParts, you’re right there are many other ares in biotech I could have focused on in this post, and do focus on in the book. The way the Human Geonome project happened and why is also a good example.

    You could also be right on the Google phone Mr Neely…

  8. Justin Rich Says:

    4,6,7, 9 & 10 aren’t piracy..

    Stealing music and movies is stealing because it infringes upon copyright holders or upon retail stores. Cloning wooly mammoths isn’t stealing unless it is done by someone who doesn’t have a right to the mammoth dna. Do you see a difference? I think you ARRRRRH just applying the word examples where copying is taking place. Copying something is not necessarily stealing or piracy. It is an integral part of progress.

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