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Everybody Is Wrong About Piracy

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What a week for the Internet. Is there a way out of the madness?

First, Wikipedia led the charge of the light brigade against proposed anti-piracy bills by "blacking out" entirely on Wednesday. The user-sourced dictionary says that 8 million people looked up their elected representatives through Wikipedia's blackout page.

Google took a less in-your-face route by offering protest tools alongside its regular services rather than replacing them altogether, but that approach was just as effective: Big G claims that over 7 million anti-legislation signatures were collected.

Since a signature on paper is worth at least ten page views, I think Google played a much greater role in the protests than Wikipedia ever did. Regardless, the campaign made a big impact overall: according to Wikipedia chief Jimmy Wales, the number of senators opposing the Senate version of the anti-piracy measures bloomed from five to 35 this week. That's just short of the 41 "nay" votes needed to turn it down. Indeed, both proposals have been officially delayed by their respective backers. There's teeth in those signatures.

While the online protests were going on, the Occupy Wall Street protests spawned a separate meet-up in New York to rail against the anti-piracy proposals. Plans for a similar action in Seattle were stopped only by a heavy snowstorm. People aren't just clicking to voice their opinion -- they're ready to get out in the streets and start kicking.

So far, that's a good week for an innovation-nourishing, uncensored Internet.

But then some killjoys decided to spoil the party.

Here come the Feds
First, police in New Zealand, in conjunction with the FBI, launched a long-planned sting against notorious file-sharing site, arresting four operators and shutting down the offending site. The Motion Picture Association of America (MPAA) "applauds" the action against a site that supposedly generated $175 million in advertising revenue while costing U.S. copyright holders more than $500 million.

Sounds like a perfectly appropriate action, in line with cracking down on another spamming operation or filing lawsuits to shut down music-sharing antediluvian Napster, right?  Oh, but infamous hacker group Anonymous didn't agree. They took action.

The snack that strikes back
A heavy barrage of so-called "denial of service" attacks brought down the websites of the Justice Department, several music publishers, the RIAA music industry group, and yes, the MPAA that crowed so loudly about the successful sting.

That's exactly the wrong thing to do in protest of censorship, free-speech violations, or the onrushing death of open innovation. Running this hack attack on Thursday, Anonymous just erased tons of goodwill for the cause that was created on Wednesday. Easy come, easy go.

What's the silver bullet, then?
Both sides of this seemingly eternal conflict need to simmer down, lest we, the people, take some really drastic measures.

The hack attacks are inferior to more measured protests in terms of ethics, legal status, intellectual bankruptcy, and PR value. It's like using a hammer to fix a broken window. Killing one thug only makes his whole family pick up arms because now they all hate you. Stop it already.

And that argument swings both ways. Content producers should understand that the way to kill piracy is not through stricter legislation but by creating affordable and useful media services that can compete with the pirates head to head.

And there are signs of life. Walt Disney (NYSE: DIS  ) executives have shown some appreciation of that competitive strategy for years. Even the MPAA noted that "Infringing content on and its affiliates is available in 20 languages, targeting a broad global audience."

Doesn't that just sound like an attractively global and flexible business model?

And if the association's numbers for Megaupload are correct, then you have consumers putting their ethics on the backburner to swashbuckle some content for about one-third the price Hollywood wanted to charge directly. Create a legal and easy-to-use movie and music hub, and you can probably get away with charging half price or even just 30% off -- convenience and moral superiority are worth something, after all. Just not the premiums studios are asking for today.

The heroes you need are already here!
(Nasdaq: AAPL  ) and (Nasdaq: AMZN  ) are each working towards becoming that ideal portal. Netflix (Nasdaq: NFLX  ) slashes prices even further in exchange for a weaker content library, and even then only on the movie side. Spotify, Pandora Media (NYSE: P  ) , and many others offer variations on the Netflix theme in the musical realm.

These are the companies that hold the keys to end piracy. But the pirates still hold an edge as long as they can offer content faster, cheaper, and in more places than the legal alternatives can.

Put the techies and distributors in a room with major studio executives and throw away the key. Don't bulldoze the door down to let them out for air until they agree to settle their differences with the consumer in mind. Lawmakers don't even enter into the equation; the Constitution's copyright measures provide all the legal support we need.

That's the only way to end this ridiculous back-and-forth between pirates and police. The truly committed freeloaders will always find a way to get their kicks, but the mass market is a whole 'nuther story -- most consumers want to do the right thing as long as the price is right. Illegal downloading may never end, but the right approach could slow it down from a torrent to a trickle.

Amazon fights the old establishment on many fronts. This special report exposes all about the rebellious ways of Jeff Bezos and how he's making investors a ton of money doing it. Get yours now -- it's free for a limited time.

Fool contributor Anders Bylund owns shares of Google and Netflix but holds no other position in any of the companies mentioned. The Motley Fool owns shares of Apple, Google, and Motley Fool newsletter services have recommended buying shares of Disney, Apple, Netflix, Google, and Amazon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool has a disclosure policy.

Read/Post Comments (5) | Recommend This Article (7)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 20, 2012, at 9:47 PM, prginww wrote:

    "Everybody Is Wrong About Piracy"

    So it's not just you then?

  • Report this Comment On January 20, 2012, at 10:07 PM, prginww wrote:

    Excellent and accurate. This is the key: "Content producers should understand that the way to kill piracy is not through stricter legislation but by creating affordable and useful media services that can compete with the pirates head to head."

    There are two things that the orgs that want to fight piracy would have you believe that are wrong:

    1.That every pirated copy of something is a lost sale. There is no evidence to suggest this and in fact, it's far more likely that the vast majority of pirated copies would not have been sales at all.

    2.That piracy hurts sales. There isn't much definitive evidence and what little there is suggest the opposite. Independent authors and musicians have experimented and found their sales increase when they consciously put works in places where it can be pirated.

    Yes, if producers make it expensive and hard to consume, piracy may be a bit of a threat. And I'm not going to disagree that technically it's stealing and therefore it should be looked at. But given that its impact has likely been exaggerated, the idea that it's worth restricting legitimate things as part of a wide net is wrongheaded. And the idea that we're actually losing 100 billion dollars a year to piracy (the figure they throw around) is laughable and has no basis in fact. It's possible that piracy is actually causing a net gain - no one knows for sure.

  • Report this Comment On January 20, 2012, at 10:44 PM, prginww wrote:

    The internet definitely turned the music and film industries upside down. People want the entertainment that's out there, whether or not they have the disposable income for it, therefore: piracy.

    I think these industries just need to figure out sales models that work in the new landscape. From personal experience, i believe that companies like Pandora and Netflix are excellent steps towards new, sustainable music and film industries. There's a long way to go, but it's great to see progress being made.

  • Report this Comment On January 24, 2012, at 6:34 PM, prginww wrote:

    EGTalbot saw the key, so I won't repeat it. Jeffrey Tucker has keen insight into all this:

    "I'm not going to disagree that technically it's stealing"

    Wrong! Stealing deprives the original owner of the item. Copying duplicates the item, so the original owner is not interfered with in his enjoyment and use of the item. The value may go down as he used to charge others for access to it, but that's a different matter, and after all, value is not guaranteed.

  • Report this Comment On January 24, 2012, at 6:48 PM, prginww wrote:

    Does anyone know why the American movie industry is located in Hollywood rather than the East Coast? It's not the sunny weather. I'll give you a hint. It has to do with movie producers going around intellectual property laws.

    Irony is not without a sense of humor.

    David in Liberty

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