Oct 21, 2014

Blackphone's biggest problem

Most of you have already heard about Blackphone, a joint venture between Silent Circle and Geeksphone which markets a mobile phone that puts privacy and security first. Their product, launched in 2014, has been extensively reviewed by tech experts, so I won't repeat what's been written elsewhere (for example, in EnGadget, Ars Technica, C|Net, or the NYT). 

What you're about to read here is quite different. It tells the story of a regular paying customer's experience with Blackphone. And I believe this story says a lot about Blackphone's biggest problem (see below), but I'll let the reader be the judge of that.

I had been following Blackphone's development since the Snowden revelations, and I had a positive bias in favor of the companythe Twitter feed next to this post provides massive evidence of that. Being a researcher who deals with topics that can be sensitive (e.g., the arms industry), getting a phone that protects data somehow made sense to me. Yet, four months after Blackphone promised the phone would ship, I still cannot use the product, and my sensitive data is still not protected. That's unbelievable and here's how it happened.

Feb 2, 2014

New course on piracy and industry renewal

Starting in 2014, we are proud to offer a brand new course called The Dark Side of Capitalism: Pirates, Mavericks and Industry Renewal at Ivey Business School (Western University, Canada).

This course puts a strong emphasis on strategy and entrepreneurship in fast-changing industries disrupted by a pirate threat (more details here).

As part of the course, students have to work in teams to address or leverage the 3D Printing revolution that will soon shake the foundations of intellectual property in so many industries.

Students have chosen to work on the following sectors: pharmaceuticals, fashion, food & candy, service parts logistics, construction, and medical devices. You can follow them on Twitter right here. They will be active (at least) between February 3 and April.

Nov 10, 2013

Collapsing music sales: Blaming the wrong guys?

For almost fifteen years, the major movie studios and record labels have consistently blamed the so-called 'pirates' for declining sales.

How file-sharing affects box office revenues and music sales is an empirical question, and there is ample science published out there for people to make their own opinion about what is going on. For instance, a brand new study with a solid design and robust method shows that, after shutting down Megaupload, "box office revenues of a majority of movies did not increase. While for a mid-range of movies the effect of the shutdown is even negative, only large blockbusters could benefit from the absence of Megaupload." In other words, while a minority of oligopolistic players may be hurt by file-sharing, the majority of smaller-scale players are not — and even benefit from the reputational effects of information diffusion (this is good news for independent producers who make low-budget films, and this should prompt the Majors to rethink their blockbuster strategy, in line with the recent analysis by George Lucas and Steven Spielberg).

A key problem of the 'piracy' debate is that most people (on both sides) DO NOT CARE ABOUT THE FACTS. Some believe, as a matter of principle, that movies and music should be made available for free to the public. Sweet, but how do we do that exactly? (don't tell me "by selling ads on a streaming website", because in this case I am merely giving away my private data in exchange for music, and that's not called 'free' music). The other camp is populated by another kind of idealists who keep playing the same old tunes: "file-sharing is theft, file-sharing starves artists to death, file-sharing kills creativity, stealing a song is like stealing a car, piracy is evil, pirates must go to jail and pay huge fines," and blah, blah, blah.

When you show them facts, they usually find them irrelevant. For instance, film director David Newhoff, to whom we recently responded following his violent and insulting attacks, found the above-mentioned study "meaningless" and "irrelevant" on Twitter, because according to him, "nothing justifies piracy". Like many others, he prefers hammering moral judgments into people's heads rather than deal with reality reminding me of how Big Tobacco ignored cancer science to focus instead on the Smoking is Freedom "moral" stance.

Here are some more facts. The largest consumer segment for music and movies are the 15-25 year old. I remember being a teenager in the late 1990s, before the Napster and smartphone era. I used to spend most of the pocket money my parents would give me on CDs and movie tickets (perhaps something like $150 a month? I don't remember exactly). By contrast, nowadays, I see some teenagers spend $700 every year on the latest smartphone. And paying a substantial monthly fee to surf the web in 4G or LTE. And purchasing expensive video games for their PC, Xbox and mobile phone.

But let's get more specific. Between 1998 (the pre-piracy age) and 2013, the global video game industry grew by 70% in value, and is now worth $70 billion. Over the same period, the mobile phone industry grew by 400% (now worth $170 billion), and so did the mobile subscription industry (now worth $1,000 billion). In the meanwhile, the movie industry 'only' grew by 34% ($90 billion in 2013) while the music industry shrank by almost 50% ($29 billion this year). 

What does that mean? We did the math: in 1998, youngsters spent 31% of their disposable income dedicated to entertainment on music and movies. In 2013, only 9%. Put simply, new industries in the tech sector have successfully deflected a large share of youngsters' income away from the music industry. They did so by innovating A LOT. And note that, in the case of the video game industry, they also managed to achieve that in spite of piracy.

Now, before David Newhoff and his associates resume Operation Denial, let's play again their favorite (broken) record: Piracy has killed creativity, armies of pirate teens have destroyed the music & movie industries, and the burgeoning of evil Megauploads has undoubtedly caused the death of millions of artists (by starvation). And arrrrrr, only one solution: more DMCA! Good luck with that.

Piratically yours,

The Pirate Org