Not to mention complete and total lack of availability of a lot of items in other countries.

I have been saying it. The issue is exposure and availability. I see something that I like. I not only buy it, I buy tons more of the same things. “Piracy” = exposure = sales

The wild disconnect that somehow this money will flow back in is likely false. If anything, the more you crack down on uncontrolled exposure, the more you will lose.

This industry spends millions on exposure -I cannot understand why they don’t get that.

After Megaupload vanished movie sales went up 3000% and it was all angels and fairies again

But if I had to give up one thing, if I had to choose between copyright and the wild west, semi-lawless, innovation-fest that is the internet? I’ll take the internet every time.

This right here is the crux of the industries problems.

The problem here is one of Institutions vs. collaboration

In discussing the issues of the power law distribution (the “80-20 rule” – a variation of the “long tail” the is often talked about in sales), which occurs from about the 6:30 mark, there is this:

Institutions only have 2 tools, carrots and sticks, and the 80% zone is a no carrot, no stick zone. The costs of running the institution means that you cannot take on the work of those people (the 80% zone) easily in an institutional frame. The institutional model always pushes leftwards, treating these people (the 20%) as employees. The institutional response is: I can get 75% of the value for 10% of the hires, great. That’s what I’ll do.

The cooperative infrastructure models says, why do you want to give up a quarter of the value? If your system is designed so that you have to give up a quarter of the value, reengineer the system. Don’t take on the costs that prvent you from getting to the contributions of these people, build the system so that anybody can contribute at any amount. So the coordination response ask not “how are these people as employees”, but rather what is their contribution like.

The issue here is that increasingly stronger copyright obviously benefits the institution itself. It even, to a lesser extent, benefits those in the 20% at the top of the curve. Copyright doesn’t really help the 80% at the bottom of the curve outside the institution. Copyright may help prevent others from abusing. misusing, or profiteering from their works, but it doesn’t really help them make money directly. It’s the collaborative nature of the internet that allows them the tools to benefit from the free exchange of ideas.

The other issue here is that the institutions aren’t just trying to exclude the 80% of contributors, they are trying to retain all 100% of the value, not just the 80% at the top of the curve.

Next we move onto Thomas Power:

(2:30- 4:15) Now outside there, on the worldwide web, are thousands of these communities (in healthcare, but applies to all communities), and they are desperate for two things: they’re desperate for capital, and they’re desperate for scale. And that’s what corporations have, they have capital, and they have scale. But corpoarations have got a problem. Corporations and communities are opposites. Corporations are closed, selective, and controlling. Communities are open, random, and supportive. They don’t match, they clash into each other. They have to be outside of the organization. Corporations (he accidentally says communities instead of corps) are closed, they don’t like information to leak out of them, they’re very selective who they recruit, and they tend to recruit people like them, so they get more of the same. Controlling. Corporations want to be in control of everything.

So this force of the corporation, or the government, which is closed selective and controlling, is meeting this force of community or network, on the internet which is open, letting everybody in. Random, data comes at you in a chaotic form. It’s very very hard fo follow. Even just following the hashtags of tweets today, it’s very hard to follow. If you read some of the tweets today going out to the rest of the world in the room, some people have actually posted things that haven’t been said. How did they do that? They heard something, reinterpreted it, “Oh, I think they said that”, submit. Communities are open, random, and supportive organisms. They are the complete opposites of companies, corporations, governments.

These differences will become important when we get to the issue of censorship in a bit.

Back to Clay (institutions vs collaboration):

And the tension here is between institution as enabler, and institution as obstacle. when you’re dealing with the left hand edge of one of these distibutions, when your dealing with the people who spend a lot of time producing a lot of the material you want. That’s the institution as enabler world. You can hire those people as employees, you can coordinate their work, and you can get some output. But when you’re down here, where the Psycho Milts are adding one photo at a time, that’s institution as obstacle.

So when institutions are told they are obstacles and that there are other ways of coordinating the value, the go through something like the Kubler-Ross stages of reaction of being told you had a fatal illness. Denial. Anger. Bargaining. Acceptance. Most of the cooperative systems we’ve seen haven’t been around long enough to have gotten to the acceptance phase. Many institutions are still in denial. But we’re seeing recently both a lot of anger and bargaining.

This is where the content industry is. Mostly the anger stage, with a bit of bargaining throw in (although most of their efforts at “bargaining” as so heavily lopsided in their favor it’s almost laughable they make any effort at all.

The bigger question is what do you do about the value down here? How do you capture that? And institutions, as I’ve said, are prevented from capturing that.

Steve Ballmer, now CEO of microsoft, was criticizing Linux a couple of years ago, and he said “oh, this business of thousands of programmers contributing to Linux, this is a myth, alright. We’ve looked at who’s contributing to Linux, and most of the patches have been produced by programmers who’ve only done one thing.” You can hear this distribution (80-20) under that complaint. And you can see, from Ballmer’s point of view, that’s a bad idea. “We hired this programmer, he came in and drank our cokes and played fuzzball for three years and he had one idea”. Bad hire, right?

The Psycho Milt question is was it a good idea? What if is was a security patch? What if it was a security patch for a buffer overflow exploit, of which windows has not some several? Do you want that patch? The fact that a single programmer, can without having to move into a professional relation to an institution, improve Linux once and never be seen from again, should terrify Ballmer. Because this kind of value is unreachable in classical institutional framework, but it is part of cooperative systems – of open source software, of file sharing, of Wikipedia.

The real issue here isn’t really economic loss due to piracy, it’s economic loss due to increased competition. “Piracy” is the issue of the moment simply because that content is the most widely known and distributed thanks to the very institutions that are fighting it. But it is a symptom of their bigger problem, and one that will eventually go away on it’s own as the problem grows.

The problem is this: the free, open collaborative nature of the internet, the Youtubes, the Twitters, the Facebooks, makes the exposure, make the distribution infinitely easier for those outside the institutions, and therefore easier for those outside the institution to slowly take their cut of the 25% of the value (and even to some extent increase the value for those outside the institution by making it more convenient for them to contribute.

Now we move onto a different Clay Shirky talk:

China is probably the most successful manager of internet censorship in the world, using something that is widely described as The Great Firewall of China. And the Great Firewall of China is a set of observation points that assume that:
media is produced by professionals,
it mostly comes in from the outside world,
it comes in in relatively sparse chunks,
and it comes in relatively slowly.

And so now, the Chinese government, who for a dozen years has quite successfully filtered the web, is now in the position of having to decide whether to allow or shut down entire services. Because the transfer to amateur media is so enormous that they can’t deal with it any other way. And in fact that is happening this week. On the 20th anniversary of Tianeman, they just 2 days ago announced that they were just simply shutting down access to Twitter because there was no way to filter it other than that. They had to turn the spigot entirely off.

This is why efforts like SOPA/PIPA, like ACTA, are ultimately untenable. It requires everything to be vetted prior to distribution, which is practical for large institutions dealing with the 20% at the top of the curve. It is impractical and prohibitive for the collaborative efforts for the other 80% and effectively kills what makes Youtube successful, what makes Twitter successful, what makes Facebook successful.

China understands this, which is why, despite the original purpose of their Great Firewall, they have effectively shifted their their efforts away from filtering content creation. the massive contributions of the 80% makes filtering out those of the 20% impractical other than shutting the whole system down, which is what drives their massive growth. Filtering political speech turns out to be much easier, because totally blocking those mechanisms have far less impact on their economics.

I don’t really expect entrenched supporters of the institutional models to understand or accept their fate. I post this (sort of rough draft of things some of us are working on) to provide further idea for discussion and debate among the collaborative community. For all I care, the main contributors to this forum can lift this whole exchange verbatim for all I care (although I know being wise, they would wisely add their own value to the ideas). Unlike the institutions who think they need to see some form of monetary return for every little creative effort they contribute it is often the free exchange of ideas that create the most lasting value.

This blog post contains links to articles that summarize various academic studies that show that the cultural sector in general, and the artists and creative people in it in particular, are doing better than ever economically:

http://christianengstrom.wordpress.com/2011/09/16/studies-on-the-cultural-sector-in-the-file-sharing-era/

AND if the content was available and not insanely expensive, I’m pretty sure piracy would drop extraordinarily. And a free week-sample if anyone wants to explore but not really buy.

Yay! Everyone wins!