Piracy as a core business strategy

I don't think piracy is the salvation of the entertainment industry, but I think there's an interesting germ of an idea in this TechDirt article about Show of Hands and its dependency on piracy to drive business. As one band member suggests:

You may call this process "piracy" if you wish--for me it is an act of generosity and it both increases our audience size and record sales. And as I always say on the night--if you're going to do it anyway you may as well feel good about it! I believe the official term is "viral marketing," and we depend utterly upon it.

Thom Yorke of Radiohead has questioned whether its "pay-what-you-wish" model would work for small bands, but I've got to think that a small band must depends on piracy (and any other means) to drive revenue. For a small band, or any software company trying to disrupt incumbent vendors, adoption is the first order of business.

Piracy is a way to drive adoption. Obviously, piracy only works if someone cares about your product in the first place--otherwise, why would they bother stealing it? But perhaps it's a compelling strategy for some? It certainly seems to work for Microsoft in emerging markets like China...

[Penguinisto]

This was Microsoft's entire Raison d' Etre for Windows marketing, and not just in China. I'm willing to wager that if you had a professional survey of folks who have ever used Windows 3.1 in the US or EU, nearly half of them would (if honest) answer that they got a copy of it from a friend/family-member/work/etc.

[Steve Jordan]

It's not "piracy" when the owner wants the product to be taken... it's a "freebie," and yes, it's a time-honored business strategy. But the producer still has to make money, and once they have created a consumer base with their freebies, they generally stop giving the freebie away, or they promptly sell something else to the consumers they've pulled in. Close examination of the "pirate" business strategy has revealed exactly this phenomenon, as well as the fact that the most altruistic of "pirates" become dyed-in-the-wool Capitalists the first chance they get to see the real $$$.

[Pete Bardo]

In the music business, piracy is the sincerest form of flattery. But it's not piracy if you/re giving it away.

[dascha1]

Xerox loved this kind of model. And its clients adapted to that way of thinking, like Disney, probably wouldn't be where they are historically to not copy for productivity behind-the-scenes. On the other hand, shoplifting is a serious crime. At the end of the day you have to make a decision. You can't whack the horse for dangling a carrot in front of it, that would be torture to most folks.

[Magicland]

Okay Matt, you've got my vote for RIAA president. Piracy is the guy in the flea market selling copies of DVD's and CD's, and his suppliers. PROMOTION is when people freely distribute media which increases an artists reach and/or notoriety. When the record companies realize this and stop spending billions on busting kids and grandmas, maybe they can make some money again, if the artists haven't bypassed them completely by then. After all, who needs a bloodsucking middle-man taking most of your profits? Face it, with digital distribution, there's more profits for both the distributor and the artists, no eco-unfriendly media, and everybody (except the current recording industry) wins.

[The_Decider]

It works for Google.

[The_Decider]

It worked very well for Metallica. In the days from before Kill 'em all to around Master of Puppets, Metallica thrived and encourage tape trading. It was only when they sold out and turned to pop that they started to care.

Microsoft built themselves on piracy as well. They used to (at least implicitly) encourage piracy, it was only when, like Metallica, became irrelevant that they started to complain and act in an extremely hostile manner towards their paying customers.

Come to think of it, they are very similar despite the obvious differences.The only difference in the rise and fall of both Metallica and MS is that Metallica used to do good work.

[DCOriole]

Since the current business model works ONLY for the recording companies, small bands have never benefited from anything but touring. Downloads benefit the musicians--which is the real reason RIAA is against them.