Why Piracy Is Good For Innovation


11.02.10 Posted in Blog by

When we talk about piracy we often just look at the negative sides to it. Piracy is presented as stealing, is in conflict with existing laws, or is depicted as unfair competition. The recent Gallo report that was adopted by the European Parliament even states that continued intellectual property infringement, often described as piracy, will lead to a fade-out of innovation. While this is one way to illuminate piracy, it can also be regarded as useful source for market insights, creator of new markets, and inducement for innovation. Let’s learn from piracy.

The term piracy often refers to the unauthorized reproduction of copyrighted or patented information such as music, software, and movies. Therefore, most of the time piracy has the connotation of stealing and is looked upon as an unethical practice. Because of this negative connotation piracy at first sight seems to have little to do with legitimate business. However, taking a closer look at piracy practices throughout history reveals that piracy has a profound impact on the emergence of new business models, technology, and innovation.

In the stacks of books, articles, and reports that have been written about piracy, little can be found about the positive aspects of piracy. The insights of David Y. Choi and Adrian Johns on which the following is based, therefore provide a refreshing vision on the innovative forces of piracy. What can be learned from piracy?

Piracy can be a useful source for market insight

In the 1960s, the English seas were full of illegal pirate radio stations that broadcasted the latest pop music for the mainland. The success of these pirate radio stations showed that the public was not satisfied with the BBC’s monopoly on public broadcasting. To be more precise, it did not agree with the music that was being played by the BBC. Because of a post-war agreement reached with musician’s unions the BBC played not more than a few hours of recorded music every week and much of that time was devoted to classical music.

The pirate radio stations in contrast played an endless succession of the latest hits to their listeners. If you wanted to hear the latest hits on the radio, you could only do that by tuning in to a pirate radio station. And many did so. The pirate radio stations proved to be a valuable source for market insight, revealing the desires of the consumer.

Piracy helps in creating new markets

Not only were these pirate radio stations a valuable source to find out the desires of the music consumer, but this specific piracy culture also helped to establish a new market. Pirate radio indicated that there was a market for pop radio. The question what to do with the illegal pirate radio stations resulted in a discussion in the English House of Commons about the freedom of the air and the goals of radio. Emerging from these discussions was the creation of a new pop radio market.

Piracy can form an inducement for legal, innovative business models

Eventually, in 1960s England, the different pirate radio stations “capitulated” and most of them reached understandings with record companies and copyright agencies. The BBC also underwent a transformation and launched the country’s first national pop radio station Radio One in 1967. Because of the radio pirates and the market insight that was provided by them, a new market and a new legal business model for pop radio was established.

Learning from online (music) piracy

These steps can also be applied to contemporary online piracy cultures. When for example looking at Napster, one can see that the P2P file sharing service provided an useful insight in the desire for digital music. The music consumer desired access to digital high quality recordings, a wide selection of music and a service that was easy to use. Something that the hardly existing legal services at that time did not offer. Napster sparked the emergence not only of several other illegal online music services but formed an inducement for legal online music services such as iTunes as well.

This shows that piracy can also be viewed from another angle in which it proves to be an engine for innovation. If piracy is regarded as a source of innovation rather than a solely negative thing, then politics, the entertainment industry, and entrepreneurs can all benefit from (online) piracy cultures.




6 Responses to “Why Piracy Is Good For Innovation”

  1. [...] my essay ‘Why Piracy Is Good For Innovation‘. It is based on an essay that I recently posted here, and describes how entrepreneurs, politics, and the entertainment industry can all learn and [...]

  2. [...] on the emergence of new business models, technology, and innovation. Look for example at how the English radio pirates in the 1960s helped to establish English pop [...]

  3. Morton Marcks says:

    Hey, very interesting post, it really got me thinking. Thanx!

  4. Aidan Burns says:

    cool stuff.

  5. [...] on the emergence of new business models, technology, and innovation. Look for example at how the English radio pirates in the 1960s helped to establish English pop [...]

  6. [...] on the emergence of new business models, technology, and innovation. Look for example at how the English radio pirates in the 1960s helped to establish English pop [...]

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