Pirates are innovators, they signal market problems and lead the way to new business models. Nevertheless, they are tagged as thieves by many. We invited Matt Mason, author of the book "The Pirate's Dilemma: How Youth Culture Is Reinventing Capitalism", to write an article on the "pirate's dilemma" for TorrentFreak.

The Pirate’s Dilemma: The Problem With Information (and how to fix it)

BY MATT MASON

The same way light confuses scientists by existing as particles and waves at the same time, information increasingly seems to confuse us. Information is getting cheaper and more expensive at the same time, and it appears that many of us, especially those of us who own or control a great deal of it, no longer understand how to observe or use it.

We live in a world where it is legal for a company to patent pigs, or any other living thing except for a full birth human being, but copying a CD you bought onto your hard drive is considered an infringement of someone else’s rights. A place where an average law abiding citizen could owe more than $12 million dollars in fines if they were sued every time they accidentally violated copyright law in a single day. A society where it’s ok for each of us to be hit with 5,000 advertising messages every 24 hours, usually without our permission, but creating a piece of art and placing it in public yourself without permission can land you in prison. This isn’t just about the pros and cons of file sharing – this is about an entire species losing its sense of perspective, failing to understand the potential of one of its most precious (and yet most abundant) resources.

Many of us are confused about whether our ideas should count as information, or property. When we have a new idea, there are two opposing forces at work. At the same time as we are thinking “how can I get this out there?” we’re also asking ourselves “how can I benefit from/monetize this idea?” We want to spread ideas as information, but capitalize on them as intellectual property. This problem with information is something I call The Pirate’s Dilemma.

The first thing we need to understand is that the decision as to how we share “our” information isn’t always “ours” to make alone. If a drug company decides it won’t share malaria and anti-retroviral AIDS drugs with a developing nation for a price the suffering citizens of that country can afford, that country may decide to ignore patent protections and manufacture pirate copies of the drugs anyway in order to save lives. If an industry dependent on physical information, distribution bottlenecks and artificial scarcity decides to ignore more efficient ways of distributing the information it considers its property, pirates will step into the breach and highlight the fact that there is a better way for us to do things.

Some of America’s greatest innovators were thought of as pirates. When Thomas Edison invented the phonographic record player, musicians branded him a pirate out to steal their work and destroy the live music business, until a system was established so everyone could be paid royalties, which we today call the record industry. Edison, in turn, went on to invent filmmaking, and demanded a licensing fee from those making movies with his technology. This caused a band of filmmaking pirates, including a man named William, to flee New York for the then still wild West, where they thrived, unlicensed, until Edison’s patents expired. These pirates continue to operate there, albeit legally now, in the town they founded: Hollywood. William’s last name? Fox.

Piracy is the sharp end of innovation, innovation by any means necessary. Large oligopolies control most of our industries and governments. Six companies control most of what we see and hear. According to The World Bank’s 2007 figures, roughly two-thirds the world’s 150 largest economies aren’t nations, but corporations. We all know the system doesn’t work quite the way it’s supposed to, yet continue to think of this inefficient system we have as “the free market”. Pirates upend inefficient systems , they take order and create short-term chaos, but often the long-term result of piracy on a large scale is a better system – a more efficient way of doing things. Pirates created many of our established orders out of chaos, and now that these industries are becoming inefficient in the face of new technologies, chaos is being created once again.

From CEOs to struggling artists, in everything from health care to entertainment to education, many of us are being challenged by the problem of others sharing and using our intellectual property without permission. This challenge requires a change of attitude, because sometimes piracy isn’t the problem, it’s the solution. You see, piracy is really a market signal – an early warning system, a warning that all too often goes ignored by established industries. Whether we consider ourselves pirates or professionals, we’re all competing in the same space.

When pirates enter our market spaces, we have two choices: We can throw lawsuits at them and hope they go away. Sometimes this is the best thing to do. But what if those pirates are adding value to society in some way? If these pirates are really doing something useful, people support them, and the strong arm of the law won’t work. The pirates will keep coming back and multiplying no matter how many people are sued. And the truth is, if lawsuits become a core component of your business model, then you no longer have a business model (unless you’re a lawyer).

Because in these cases, what pirates are actually doing is highlighting a better way for us to do things; they find gaps outside the market , and better ways for society to operate. In these situations the only way to fight piracy is legitimize and legalize new innovations by competing with pirates in the marketplace. Once the new market space is legitimized, more opportunities are created for everyone. This is how cable TV started, it’s why many drugs are now sold at prices people in the third world can afford, it’s how many other new opportunities are being created today. Pirates present us with a choice. We can either fight them in the courts, or match them play for play in the marketplace. To compete or not to compete, that is the question; that is The Pirate’s Dilemma.

Matt’s book: “The Pirate’s Dilemma: How Youth Culture Is Reinventing Capitalism” is out now through Free Press, and probably soon on a BitTorrent tracker near you ;).