The Virtuous CIO  

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March 21, 2010 — Digital Piracy

What is the true impact of digital piracy today? A recent commentary by Andrew Orlowski in The Register (http://www.theregister.co.uk/2010/03/18/tera_downloads_study/ ) looked at a study by the international Chamber of Commerce which claimed 2.7 million jobs have been lost since 2004 in Europe due to digital piracy.

He does not dispute the claim of job loss, however he does examine some of the underlying assumptions and reaches a conclusion that while there were indeed job losses due to unlicensed downloads, it was not as great as was claimed in the study. The thrust of this study was to call for stricter laws against illegal downloads of content over the Internet.

It is not my purpose to justify the activities of people who download content for which they have not paid. We live in an entitlement driven society, and many people rationalize their activities by telling themselves they are entitled. This spans the range of the 15-year-old with an MP3 player to a Congress which has raised legal larceny to an art form. The rallying cry of the victims of content theft, or the self-perceived victims, is "there should be a law against this."

In the 1970s a prior generation cried out "there should be a law against this," when they saw undesirable changes to society drifting in before their eyes. The young liberals and radicals of the day replied with the mantra "you cannot legislate morality*." This was said with the smug self-righteous superiority often evinced by the young against the old. Those former young are now the establishment who are crying out against this young generation and demanding laws against undesirable activity. Surprisingly, perhaps, I have not heard the old rejoinder used against the people who invented it.

In this environment there are some things we should keep in mind as business leaders, and those who would be active in helping society. The young never react well to standards set by their elders, but they often respond to leadership. Set standards for yourself: I will always purchase the software I use in my business or at home. I will always purchase the music I listen to on my MP3 player or stereo system. I will acquire videos from legitimate sources and enjoy them under the fair use guidelines. Take the time to explain your reasons to the young people. This is important.

Having established the right thing, the moral thing, we can take a look at the other side of the problem. It is difficult to be sympathetic to industries which established cartels and forced several generations of consumers to pay far more for content than what the market probably would bear. The leaders of these organizations were wrapped up in their own comfort and hubris, and completely missed the changes which bore down upon them like a tsunami in the 1990s.

Rather than attempting to quickly modify their business models to meet the changes in the market, they have worked diligently over the last 15 years to legislate their position and maintain hegemony over the consumer. Not only have they failed to recognize the horse has left the barn, they continue to advocate ever more draconian measures against the loss of their business. Guess what? It ain't gonna work.

The new distribution model is iTunes. The new content creation model is called self-publish. The Grand Pooh-Bahs of the industry are gradually losing their ability to ride in their stretch limousines and tell the consumer, “Let them eat cake.” No one will regret their fall, except themselves. Have jobs been lost? I think so. Not to excuse those stealing content, but the fault of the job losses rests on those screaming the loudest. They failed to anticipate the sweeping changes in the industry (which can be excused), and also failed to react in a timely and creative fashion (for which they cannot be excused).

As IT leadership, we need to look at the example of the content industry and absorb the lessons. It is always better to learn lessons at someone else's expense. It is much cheaper, and certainly less painful. What are the lessons then?

This is where the well runs dry for me. I don't really know. The consumer market for technology has changed dramatically over the past decade. The technology business for industry has been relatively stable over the last decade since the dot com bust. Just in the past year or two have we seen a trend towards cloud computing, and service oriented structures. But we are not seeing a massive shift. I suggest another tsunami may be bearing down upon us, and it would behoove us to be ready for another round of technology related disruption in the enterprise.

*For the record, I believe law is nothing other than legislated morality. However, it really only reflects the prevailing morality of the time, whether such is considered an absolute or not. The more it reflects absolutes, the more stable it will be in the long run.