Have you noticed a strange undertone of snark on 60 Minutes every time they feature an entrepreneur? When Lesley Stahl interviewed the founder of Groupon last week, she felt the need to needle him with, “Here’s some of the adjectives that were used to describe you….Thin-skinned, impetuous, and childish.”
Conversely, they grovel at the feet of pompous bureaucrats. When they interviewed the head of the IMF, they came up with lines such as: “The IMF…sits on a fund of $842 billion. But that’s not nearly enough….”
This represents a deep divide in the American psyche. The right sees entrepreneurs as job machines who create wealth for everyone, and they view the government as a parasite thwarting both rich and poor. The left, in turn, portrays entrepreneurs as the parasites. In this instance, the left is wrong and I think it’s because they don’t understand the pie analogy. They think a rich person has taken more than his slice of the pie, which leaves less for the rest of us. They didn’t take math in college and don’t understand that “greedy” entrepreneurs keep creating more pies. While the left scoffs at the idea of more than one pie, they have no problem with Obama trying to synthesize the process by printing more money. They don’t mind the government having infinite cash, but when it comes to an individual having money to burn, they’d rather torch it all.
Big Business and Big Government, who still haven’t officially announced that they’re married, have been seeking to get even bigger lately. They’d been trying to push a bill called SOPA—the Stop Online Piracy Act—that empowered Wall Street and the White House to decide who gets to do what on the Internet. But the Big Biz/Big Guv tag-team wrestling duo suffered a smackdown. In protest of SOPA, huge sites such as Wikipedia blacked themselves out for a day on January 18th.
In retaliation, the Justice Department chose the wealthy but charisma-challenged Kim Dotcom (né Kim Schmitz, AKA Kimble, AKA Kim Tim Jim Vestor) to represent all that is evil about Internet piracy on January 19th. Cooperating with the FBI, authorities in New Zealand invaded his home, confiscated his belongings, and threw him in jail a day after the SOPA blackout. He was deemed a flight risk and is still incarcerated.
The escalating antics mirrored Dotcom’s countersuit from December after Universal Music Group tried preventing him from using their artists to promote his file-sharing software. UMG claimed they had the right to prevent rappers on their roster from promoting certain brands, and Dotcom sued them for lying. UMG lost, and after seeing the groundswell of support the anti-SOPA movement got, it looks like Big Business and Big Government are going to lose again. I hope.
Again, we have two sides: Us and Them. The other side says Megaupload cost Hollywood and record companies hundreds of millions of dollars by allowing users to send each other copyrighted content. Megaupload had a reported 50 million unique visitors a day and was responsible for an estimated 1% of all Internet traffic in North America. (Kim Dotcom himself bragged that it was 4%.) That’s a lot of data and a lot of profits.
Critics note that Kim has a history of committing hacking crimes going back to the late 1990s when he was arrested for stealing credit-card numbers. They claim the only recourse for a repeat offender like this is 50 years in prison. Bill Maher calls Kim’s crimes “Caucasian looting.”
But this assumes that people who downloaded Maher’s film for free are the same ones who would have happily paid $11.98 for it. We believe the people who downloaded Maher’s film aren’t the same ones who would have bought it online. They are new customers, people who wouldn’t have otherwise seen the film. In that sense, Kim Dotcom has increased the size of the pie. Maher should be thanking Megaupload. And he should realize that unestablished artists far less famous than he is need social networking to survive. As tech writer Tim O’Reilly famously put it, “Obscurity is a far greater threat to authors and creative artists than piracy.” Kim Dotcom has enabled more music and movies to get to more people. If anything, he has stimulated the industry. It’s this kind of innovation that made America a superpower. When an old model isn’t working it gets pushed aside for something more innovative. Filesharing is a perfectly legitimate business that even companies such as Microsoft use.
This is all covered in Matt Mason’s brilliant book The Pirate’s Dilemma. Mason points out the term “Yankee” comes from Janke, which is Dutch slang for “pirate.” A huge part of America’s wealth came from disregarding European intellectual copyrights on tools and machinery. Europe had the same contempt for our piracy that we now have for China’s.
Mason also talks about Hollywood’s origins, where rebellious entrepreneurs such as William Fox fled to the Wild West after being fed up with all the taxes and regulations required to make movies in New York. Ironically, the company that is his legacy—20th Century Fox—is now employing movie stars to encourage people to obey all taxes and regulations.
Online “piracy” isn’t looting. It’s capitalism. It forces dinosaurs to evolve or become extinct. The music and movie industries are in denial, mistaking progress for criminal activity. In fact, they’ve already benefited from piracy’s kick in the ass. Music piracy sites such as Napster forced an antiquated model to reinvent itself, and today we have solutions such as iTunes at a dollar per song and Spotify’s monthly subscription rate. These new systems didn’t kill the music industry; they saved it.
The same thing has happened with films. Though Americans are going to theaters 10% less than they did in 1999, profits are up. Why? Because Hollywood came up with new ideas such as creating 3-D versions with a higher ticket price. We’re told Kim Dotcom cost the movie business $600 million, but who came up with this number? It’s not easy to prove Megaupload practiced due diligence in preventing people from sharing copyrighted material, but it’s even harder to prove it caused the industry monetary damage.
Kim Dotcom is bombastic, arrogant, fat, hedonistic, and reckless. He laughs in authority’s face and taunts both corporations and bureaucrats. He isn’t a villain. He’s a hero. What’s more, he is one of us. If Kim Dotcom loses this fight, it will mean Big Government and Big Business run this country and a big part of what made us great is now dead.
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