End in sight for the guerrilla between Big Entertainment and pirates?

There is no shortage of news coverage about the illegal character and, at the same time, the attraction of file-sharing. The Pirate Bay is in serious legal trouble but is still used by millions each day.  Rights holders and the content industries lobby with governments to better enforce copyright. In France and Britain, for example, laws have been instituted that allow the suspension of Internet connections of frequent copyright violators who refuse to change their behaviour.

In public opinion, the entertainment industry often receives the short end of the stick. File-sharing networks are seen as modern day Robin Hoods that take from evil rich companies and give to us. For free. Copyright holders meanwhile face blame for stifling innovation and clinging to outdated business models.

If the debate has yielded anything, it is a guerrilla between Big Entertainment and the pirates. Are the pirates right? Do copyright holders stifle innovation? My answer is that no, they don’t. However, they do slow them down. And so do we all when faced with innovation. Were you the first to embrace the Internet? Did you stun your peers with buying a mobile phone in the early nineties? Do you own an electric car already? Well, neither do I. Innovations need time to be adopted.

Innovation takes time

There are two reasons why this is so. The first reason that innovations take time to become part of the mainstream is that assessing their future value is hard, while calculating the current cost of implementing them is easy. The former can be easily illustrated with many anecdotes. Thomas Edison famously did not see music as a market for his new invention, the phonograph. Instead, he saw it as a handy device for people on their deathbed to record their will. In 1943, former chairman of IBM Thomas Watson is believed to have said: “I think there is a world market for about five computers”. More recently, in 1994, Bill Gates saw “Little commercial potential for the Internet for at least ten years.” Were these people stupid? No, they just could not foresee these inventions changing the rules of the game.

Which brings us to the second reason: innovation requires adaption. Radical innovation (so named for a reason) such as p2p, needs to be tailored to fit with societal demands.  However, that is the easy bit. The hard part is adapting organisational structures, regulatory frameworks, profitable business models and user practices to the innovation. This is by no means exclusive to the entertainment industries.

Societies are complex entities that strive to find a balance between the claims and interests of many different groups: businesses, consumers, civil society, cultural agents, NGOs, etc. A balance helps these actors to achieve a sense of clarity and direction, allowing them to focus and optimise what they are doing. Such an optimisation makes performance of actors in these societies more efficient.

Radical innovations -innovations that don’t fit in the current state of stability- require a new balance to be found. Such a shift from one state of balance to another is called a transition. A transition often involves friction and tension as the old order strives to maintain its status. For a transition to take place, deeply embedded practices need to be re-examined and possibly changed. Such change is hard, takes time and is hurtful both for newcomers and incumbents. And to make embarking on a transition even less attractive a prospect, the outcome is uncertain. Everyone struggles to find a new balance, not knowing if it can be reached or where it will be located. And even then, whether it will be an improvement.

The role of pirates

In this state of flux, possibilities for opportunistic behaviour can arise. In the case of digitally distributing entertainment, a growing queue of new users that want to consume content online felt that incumbents are neglecting the potential of digital channels. This provided fertile ground for file-sharing networks to thrive on. Peer-2-peer networks saw an opportunity to distribute protected content to the masses and make a quick buck doing so.

Even so, p2p networks play a part in the transition. They have created and improved a technology to distribute content, they showed that easy access to content is popular with users and they have created a sense of urgency with entertainment industry to explore digital distribution. So, for all the wrong reasons, p2p networks speeded up the transition and in a twisted way help bring a new stable situation closer.

Digital distribution is coming

here are many signs that Big Entertainment is (finally) finding its feet and that a transition towards embracing the digital age in under way. Services like Netflix, Spotify or the iTunes store, that offer easily accessible digital content, are good examples. Even former “enemy” Napster is has now achieved its goal of becoming an official distribution channel and KaZaA followed suit.

This means that useful role that pirates played in the transition has now lost its value. Their claim, that the entertainment industry stifles innovation by being too protective of its business models, has lost its validity. Not only that: the reverse is now true. Pirates hamper innovation by being unfair competitors of copyright holders that experiment with new business models en distribution methods. Unfair because torrent sites and usenet capitalise on offering the same wares without recompensing the people who bore the costs of creating them.

Amongst courts and regulators, there is more and more consensus on how to deal with copyright in the online environment, indicating that a new stable situation is being reached.

 

However, as soon as copyright holders have mastered digital distribution, it is only a matter of time until the next radical innovation announces itself and the entertainment industry will summon their legal legions to defend p2p networks as it plunges itself in another uncertain future.