The issue of piracy in the States has a lot of untold truths. The first one is that the main reason why piracy cannot be really stamped out is because it is popular, so popular that democratic politicians worry about fighting it. The second reason is that piracy is a boom to telcos as the main reason to get broadband, more broadband and pay more for more broadband is to download music and movies free on the internet. So piracy is huge and the result is something similar to what happens in countries who have poor tax collection systems. When there´s a lot of tax avoidance those who do pay have to pay more, when there´s a lot of piracy those who pay have to pay more. We now live in a world in which movie and record companies truly rip off those who are honest enough to pay but at the same time truly suffer from the masses who don´t. And the threat of sending potential consumers to jail is like stealing a bank and saying if you don´t give me the money I will shoot myself cause in the end angry consumers mean death to a company. What can be done to solve this mess?

One solution is the Spanish solution. Spain is one of the only countries in the world who passed legislation that makes downloading copyright material for personal use not a crime which is fine for most in Spain cause who wants to pay more money to rich Americans but what many consumers don´t realize is that this really hurts Spanish cultural production. The other solution is the American solution which is to threaten and force consumers to overpay and make the others feel like criminals. A pretty bad solution as well.

Personally what I think that is needed is a compromise and this is what I would do. First I think that legislators if they are serious about piracy should allow content companies to flag copyright material and ask telcos and cable operators, to block it. Yes, I know this sounds very Chinese but China and the States are the most brutally capitalist countries in the world (China more so) and it is not surprising that solutions end up being similar. And I would also propose that the cost flagging illegal sites be paid by the content companies. At the same time what the telcos/isps should do is aggressively market all you can eat music and movie services that are reasonably priced, say $10 per month all the music you can eat and maybe $20 for movies. So for less than the price of one CD you have all the music in the planet streamed to you whenever you want it and downloadable to your iPod. These services already exist today and are services like the new Napster, Rhapsody, Yahoo Music, Musicmatch and others. With this combination of stick (strict policing of illegal sites) but carrot (affordable plentiful music for everyone) I think that a good compromise would be worked out.

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Andy Nardone on July 12, 2007  · 

“…Cause who wants to pay more money to rich Americans….” Who made you or Spain the arbiters of where “rich” begins or ends? Informed by only your CV and some blog posts, this statement surprises me. I hope it doesn’t reflect the mindset of Spain. Because if it does, hurting cultural production is the least of its worries.

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Mariano on July 12, 2007  · 

I think that priacy is a pure market problem and applying your solutions could be a good way for solving that problems. Let’s try to see the problem and your proposed solutions from two points of view: the media supply and the media demand (consumers).

1.- Spanish Model: if you apply a “laissez faire, laissez passer” model (in terms of piracy traffic, not economical concept), probably most of the consumers will be happy but no at all the suppliers. In fact, in Spain all consumers are happy and agree with Goverment policies, but institutions such as Sgae (Authors and Musicians Association) prefers a different status quo, basically because they can not get all fees and taxes associated with a “legal” buying of media.

2.- A fixed fee Model: Well, here the problem is how much should be the Fee. Why 10$? Why 20$ for movies? The problem is that estimate a good demand curve and a good supply curve is pretty dificult. Why? Because is not simple to define a price in wich we could not take the risk to get piracy (For example, some consumers could take risk in a piracy market if we put the price at 150$ for all music, but others could take the risk if you put the price in 10$ for all music) What is the optimal price? Well, we can define a price that minimize the total consumer taking risk. The problem is that optimal price is 0 (zero). But, we can define a level of 5% (for example) of total consumers taking risk and that price should be > 0.

Now the problem is if this price is good for the supply. The supplier will calculate: For that price, the demand will download X quantity of music and Y quantity of movies, and for that quantity of music and movies, my optimal price is….higher? the same? I don’t know because I’m not a specialist in media industry.

So, at the end, demand and supply should negotiate a level of piracy and fix a price that will happy both of them. This problem is not quite different to others public services.


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Jordi on July 12, 2007  · 

What do you think about a model based on picture quality? Let me explain this, people will always be able to download movies from P2P applications for free, but most of those movies are lower quality than the state of the art commercial movie quality. Now a days most of the P2P downloaded material is AVI (VCD quality) or compress DVD quality… we have a new HD trend now on commercial movies based on Blueray and HD-DVD technology support and the proliferation of plasma/TFT big screens. This trend delivers much better video/audio quality and it is very attractive for people who want to see a movie in their plasma/TFT home cinemas that now everybody is setting up at home. I see users paying for a title that is high resolution with more extras and gets delivered straight to your media center, just because of the added value and ease of use, not because their are threaten by the law on getting a download. We will still be able to download lower resolution movies for titles we don’t want to pay for, but will pay for the HD ones that we want to enjoy. After this model is achieved and accepted by the public, then it will be much easier for content providers to offer bundles of free movies together with some HD titles we will pay for and people then will not even bother about setting up their P2P system for movie downloading because, let’s face it, it is still a hassle for most end users to get the movies from the PC to their TVset. This model will need to come together with a new trend of easy to use IPTV devices that plug straight to your Plasma/TFT home cinema systems and get the movies to your screen in a matter of a few remote clicks.

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DomPierre on July 13, 2007  · 

Hey. We rich Amurkans need your money so we can give millionaires and multinational corporations tax breaks so they move jobs offshore, and so we can go start unprovoked wars in countries that look defenseless on paper who end up kicking our asses. Nuff said! 😉

However, I like France’s idea where if someone is caught downloading illegal music, etc, then it only costs them the market value of the song (oh say $2 maybe).

The RIAA and the music industry hate change and that’s why they’re intent on putting internet radio out of business. Imagine, the middle men that add no value still think the public hasn’t caught on to them. DUH!

3.0 rating

Martin Varsavsky on July 15, 2007  · 

Yes Jordi,

I think picture quality could also be a good idea

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