“Piracy is Progressive Taxation…”

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“… and Other Thoughts on the Evolution of Online Distribution” is the title of an essay Tim O’Reilly wrote in 2002. Occasionally I re-read it, and every single time I’m baffled about how he just got it right. I guess that’s exactly what makes a great writer/thinker stand out. Once I had the great opportunity to do a Skype interview with Tim (which for reasons beyond my control sadly never was published), and remember it to be just mind-boggling. (And quite nice despite my complete failure to solve some technical issues with the French-only speaking staff at his hotel in Brussels where he was staying for OSCON.)

Even after nearly 5 years, this essay is so dense & full of good ideas that… well… that I wish more people had read it.

Just some snippets, more or less at random:

Many works linger in deserved obscurity, but so many more suffer simply from the vast differential between supply and demand. I don’t know the exact size of the entire CD catalog, but I imagine that it is similar in scope. Tens of thousands of musicians self-publish their own CDs; a happy few get a recording contract. Of those, fewer still have their records sell in appreciable numbers. The deep backlist of music publishers is lost to consumers because the music just isn’t available in stores. (…) I have watched my 19 year-old daughter and her friends sample countless bands on Napster and Kazaa and, enthusiastic for their music, go out to purchase CDs. My daughter now owns more CDs than I have collected in a lifetime of less exploratory listening. What’s more, she has introduced me to her favorite music, and I too have bought CDs as a result. And no, she isn’t downloading Britney Spears, but forgotten bands from the 60s, 70s, 80s, and 90s, as well as their musical forebears in other genres. This is music that is difficult to find — except online — but, once found, leads to a focused search for CDs, records, and other artifacts. eBay is doing a nice business with much of this material, even if the RIAA fails to see the opportunity. (…) We’ve found little or no abatement of sales of printed books that are also available for sale online. What’s more, many of those who do infringe respond to little more than a polite letter asking them to take the materials down. Those servers that ignore our requests are typically in countries where the books are not available for sale or are far too expensive for local consumers to buy. (…) While few of the people putting books on public web servers seek to profit from the activity, those who are putting up CDs for sale on eBay containing PDF or HTML copies of dozens of books are in fact practicing piracy–organized copying of content for resale. But even so, we see no need for stronger copyright laws, or strong Digital Rights Management software, because existing law allows us to prosecute the few deliberate pirates. We don’t have a substantial piracy problem in the US and Europe. The fact that its software products have been available for years on warez sites (and now on file trading networks) has not kept Microsoft from becoming one of the world’s largest and most successful companies. Estimates of “lost” revenue assume that illicit copies would have been paid for; meanwhile, there is no credit on the other side of the ledger for copies that are sold because of “upgrades” from familiarity bred by illicit copies. What we have is a problem that is analogous, at best, to shoplifting, an annoying cost of doing business. (…) If a bookstore has only one copy of your book, or a music store one copy of your CD, a shoplifted copy essentially makes it disappear from the next potential buyer’s field of possibility. Because the store’s inventory control system says the product hasn’t been sold, it may not be reordered for weeks or months, perhaps not at all. I have many times asked a bookstore why they didn’t have copies of one of my books, only to be told, after a quick look at the inventory control system: “But we do. It says we still have one copy in stock, and it hasn’t sold in months, so we see no need to reorder.” It takes some prodding to force the point that perhaps it hasn’t sold because it is no longer on the shelf. Because an online copy is never out of stock, we at least have a chance at a sale, rather than being subject to the enormous inefficiencies and arbitrary choke points in the distribution system. (…) Those of us who watched the rise of the Web as a new medium for publishing have seen this ecology evolve within less than a decade. In the Web’s early days, rhetoric claimed that we faced an age of disintermediation, that everyone could be his or her own publisher. But before long, individual web site owners were paying others to help them increase their visibility in Yahoo!, Google, and other search engines (the equivalent of Barnes & Noble and Borders for the Web), and Web authors were happily writing for sites like AOL and MSN, or on the technology side, Cnet, Slashdot, O’Reilly Network, and other Web publishers. Meanwhile, authors from Matt Drudge to Dave Winer and Cory Doctorow made their names by publishing for the new medium. As Jared Diamond points out in his book Guns, Germs, and Steel, mathematics is behind the rise of all complex social organization. There is nothing in technology that changes the fundamental dynamic by which millions of potentially fungible products reach millions of potential consumers. The means by which aggregation and selection are made may change with technology, but the need for aggregation and selection will not. (…) To truly supplant the existing music distribution system, any replacement must develop its own mechanisms for marketing and recommendation of new music. And in fact, we already see those mechanisms emerging. File sharing services rely heavily on that most effective of marketing techniques: word of mouth. But over time, anyone who has studied the evolution of previous media will see that searches based on either pre-existing knowledge or word of mouth represent only the low-hanging fruit. As the market matures, paid marketing is added, and step by step, we build up the same rich ecology of middlemen that characterizes existing media marketplaces. New media have historically not replaced but rather augmented and expanded existing media marketplaces, at least in the short term. Opportunities exist to arbitrage between the new distribution medium and the old, as, for instance, the rise of file sharing networks has helped to fuel the trading of records and CDs (unavailable through normal recording industry channels) on eBay.

And the lessons learned:

Lesson 1: Obscurity is a far greater threat to authors and creative artists than piracy. Lesson 2: Piracy is progressive taxation Lesson 3: Customers want to do the right thing, if they can. Lesson 4: Shoplifting is a bigger threat than piracy. Lesson 5: File sharing networks don’t threaten book, music, or film publishing. They threaten existing publishers. Lesson 6: “Free” is eventually replaced by a higher-quality paid service Lesson 7: There’s more than one way to do it. And that’s the ultimate lesson. “Give the wookie what he wants!” as Han Solo said so memorably in the first Star Wars movie. Give it to him in as many ways as you can find, at a fair price, and let him choose which works best for him.

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