Matt Mason is the author of the just-released critically-acclaimed book The Pirate’s Dilemma: How Youth Culture Is Reinventing Capitalism. The title is an important and timely history and exploration of piracy–its innovations and its implications–in the digital age.

Matt began his career as a pirate radio and club DJ in London, going on to become founding Editor-in-Chief of the seminal magazine RWD. In 2004, he was selected as one of the faces of Gordon Brown’s Start Talking Ideas campaign, and was presented the Prince’s Trust London Business of the Year Award by HRH Prince Charles. He has written and produced TV series, comic strips, viral videos and records, and his journalism has appeared in The Observer Music Monthly, VICE, Complex and other publications in more than 12 countries around the world. Now based in New York City, he’s also recently co-founded a non-profit media company called Wedia.

So, Matt, what exactly is the Pirate’s Dilemma and why is it an important and timely subject?

The Pirate’s Dilemma is a problem we have with all kinds of information. When we have a new idea, there are two opposing forces at work. At the same time as we are thinking “how can I get this out there?” we’re also asking ourselves “how can I benefit from/monetize this idea?” We want to spread ideas as information, but capitalize on them as intellectual property.

But the dilemma also relates to how others use our information, not just how we use it. It’s a framework to think about what you should do when someone ‘pirates’ your intellectual property. When pirates start competing with us, do we throw lawsuits at them, or do we try to match them play for play? To compete or not to compete – that is the question. I make the case that although fighting pirates can be valuable and advisable in many situations – in others it’s better to compete by legitimizing what it is the pirates are doing.

This is timely because never before in history have so many businesses and industries faced so more many insurmountable Pirate’s Dilemmas. The music industry seems to be changing radically day by day at the moment in the face of downloading. As broadband speeds increase, these same problems are hitting Hollywood and other content-based industries. The internet is the ultimate copying machine, and we’re all capable of becoming pirates, or being gutted by them. It’s a crazy time, there are many problems being created, but a lot of these problems might actually be solutions – better ways for us to do things, if we can only figure out how to make sure everybody gets paid what they should.

Your book is overall quite positive and optimistic. Is one of the main reasons that you wrote it to subvert or dispel the traditional view – especially in the business context – that piracy is evil?

I hope the book will change people’s perspective on what piracy really is and how they can turn it round to their advantage. Since I was a kid I’ve seen pirates as innovators. I grew up in London and was a DJ on a few of the pirate radio stations that created and nurtured so much great music in the city. For me it was always fascinating how this system worked so well. Consistently, support from pirate DJs would send unknown artists to the top of the pop charts and pave the way for new music scenes to evolve into sustainable industries. We were creating new markets, new cultural spaces.

I think the traditional view is wrong, and if you look at our history, if you look back through history, tradition is on the side of the pirates. Pirates have been at the birth of new business models, distribution systems and disruptive technologies. When Thomas Edison invented the phonographic record player, musicians branded him a pirate out to steal their work and destroy the live music business, until a system was established so everyone could be paid royalties, which we today call the record industry. Edison, in turn, went on to invent filmmaking, and demanded a licensing fee from those making movies with his technology. This caused a band of filmmaking pirates, including a man named William, to flee New York for the then still wild West, where they thrived, unlicensed, until Edison’s patents expired. These pirates continue to operate there, albeit legally now, in the town they founded: Hollywood. William’s last name was Fox.

I’m optimistic about all this because often stories of pirates changing things have Hollywood endings too. When I began writing this, I thought no-one in the business community would be open to these ideas, I thought people would be chucking things at me at lectures and booing me off the stage, but I’ve been really surprised by how many people are embracing the idea. I think last summer in the music industry was a real watershed moment, not just for music, but in terms of how lots of people think about sharing information and how to capitalize on that.

Unlike entrepreneurs, who look for gaps in the market, you claim that pirates look for gaps *outside* of the market. What is the difference? Is one way stronger than the other?

Gaps inside the market are legal or socially acceptable, that’s the main difference. I’m not advocating that every gap outside of the market is a good business opportunity, but there are many areas today where certain business models only exist because of artificial scarcity, and ignore the economics of abundance that could make them function better. Some gaps outside the market work better than the market itself, and are only illegal or ignored because it’s in the interests of those who hold power in the market to maintain the status quo.

But in many cases, these gaps are good for the power brokers inside the market too. Last year in New York, DVD pirates were complaining that BitTorrent sites were hurting their business. When the pirates are complaining about piracy, you know things are pretty bad. And yet Hollywood had its first ever $4 billion summer at the box office last year. Piracy didn’t affect how people felt about going to the movies, because that’s a different experience, consumers gain utility from that in a different way. Hollywood ignores the idea of simultaneous release because it perceives it as a threat to the box office revenue, so it’s currently a gap outside of the market. But really it’s a just another revenue stream and sooner or later, they will monetize and legalize it, compete with piracy and make more money by doing so.

Generally, what has been the reaction to The Pirate’s Dilemma from lawyers and those in the IP legal community?

The only time I seem to get any kind of negative reaction is when people think I’m arguing all forms of intellectual property law are bad, or that all forms of stealing are good. One guy at a conference asked me if I was a Communist, which I thought was pretty funny after I’d just been talking about extreme decentralization for an hour. The negative reactions always tend to be knee-jerk reactions, once people get that I’m trying to create dialog around how to fix a system that everyone recognizes is broken, people come around.

I’ve been talking to a number of IP lawyers about how to move forward from here with this whole issue – I’m very supportive of the idea of using licenses instead of sales to sell goods that aren’t physical or scarce, and I’m keen on finding ways for artists and other IP owners to make more money by sharing their work with more people for less money (to put it very simply). Those in the legal community are some of the people who best understand these ideas, and so far everyone I’ve met understands I’m trying to push real solutions to all this, rather than exacerbating existing problems.

The music industry (and specifically the actions of the RIAA) usually comes up as the first and most obvious example of how NOT to respond to piracy. They are the bad poster child and get much of the attention. But who are some of the companies, brands, or industries that deserve credit for having demonstrated (early on) that they get it? In other words, what companies are the poster kids for embracing piracy and innovating because of it?

I would say Steve Jobs is the most obvious poster boy – the idea behind iTunes was competing with pirates, he said himself the way to stop piracy is by competing with it, and he saw a way to do it when none of the majors could. If EMI had launched iTunes, Warner wouldn’t have worked with them for example, but Apple wasn’t a competitor then, although I suspect it soon will be.

Tim O’ Reilly gets it better than anyone else I think, this essay he wrote in 2002 had a big influence on me and you can see the thinking of many other business books in there. It was the inspiration behind the basic idea of The Pirate’s Dilemma. But Nike also gets it for example – they allowed Bathing Ape to come out with a very similar looking sneaker to their Air Force one because the realized that particular shoe, which was more of a remix than a trademark infringement, was adding value to their original.

I think everyone is starting to get it now though. The TV networks are monitoring which shows are the most pirated. Microsoft are worried because not many people are bothering to pirate Vista. Piracy is just another market signal – it lets you know what the market is really thinking. It’s like the free market’s subconscious.

Presently, Hasbro and Mattel, co-owners of the board game Scrabble are taking legal action against the two Indian programmers of the popular yet unlicensed Facebook app Scrabulous. In your opinion, is this the right route for them to take? What would you suggest they (Hasbro/Mattel) do and why?

I think Hasbro and Mattel were mistaken to treat this as a simple case of piracy. What they saw as a threat was an opportunity. Someone else created an excellent digital version of their game, and got 2.3 million people hooked on it. It was one of the best ad campaigns of last year. All Hasbro and Mattel had to do was come in with their check books and make it legit. Firing the self-proclaimed ad agency was a mistake, because the agency also happened to be some of the world’s most passionate Scrabble fans. On the other hand, Scrabulous was a trademark infringement. Hasbro and Mattel needed to defend their mark in order to keep it (if you don’t publicly protect your trademarks, they can fall into the public domain), which is why they had to do something. But it might have been smarter to cut a deal with Scrabulous rather than angering Scrabble players.

In a chapter titled “The Tao of Pirates” you write: “Pirates highlight areas where choice doesn’t exist and demand that it does. And this mentality transcends media formats, technological changes, and business models.” Pirates, as you profile them – as collaborators, remixers, portfolio entrepreneurs (such as hip-hop artists with various business lines), and social change agents – seem to naturally possess a fairly broad-thinking mindset. Would you agree? If so, why do you think that is?

A lot of the ‘pirates’ I talk about came from backgrounds where they had seen a lot of different things and grown up with lots of ideas and cultures influencing them. I think diversity really plays a big part in being able to look at the world from a different perspective. Richard Hell, one of the earliest punks, fused ideas from French poetry with the look of The Beatles and the writings of the beat poets to come up with punk. Kool Herc, the first hip-hop DJ, took ideas from Jamaica’s sound systems and applied them to the streets of the Bronx. David Mancuso, the founding father of disco, fused an obsession with sound quality with the ideas of Timothy Leary, and a some ideas borrowed from the nun who brought him up for the first five years of his life. Understanding diversity is, and being open to new ideas is, so important to being able to innovate.

How does widespread remixing lead to more innovation?

One of the major benefits of the remix is its ability to eke out the “ghosts in the machine.” In music, ‘ghosts in the machine’ is a term producers use to describe the happy accidents that occur when sampling an old sound. Some of the best bits of samples are the white noise that is recorded unintentionally – hidden information in the audio that distorts and makes itself heard when the sample is changed in some way. Remixing allows us to find the ghosts in all kinds of machines, not just the ones that create music. We can find these same original elements of innovation inside business models, and pull out and amplify the weird and interesting noises nobody thought to look for in the first place.

Letting others remix our ideas too further increases our chances for finding the ghosts. Letting others remix your work leads to more people pitching with suggestions and ideas, who have a different perspective and can see things that we cannot. Boeing took this approach with the new Dreamliner, enlisting the help of 120,000 engineers from outside the company to throw in suggestions and improvements.

I thought the distinction you made between gangs and crews was quite interesting. What was it that influenced graffiti writers, for example, to form multiethnic, multi-gender, cross-neighborhood groups?

The New York graffiti crews of the 1970s understood the benefits of diversity before CEOs were taking it seriously. Graffiti crews aggressively recruited people from different ethnic backgrounds and walks of life because they thought the variety of influences made their work as a collective stronger. The diversity also got them access to different parts of the city, by not all being from the same gang they could move through different neighborhoods and increase their reach across the city. This was a really prevalent strategy – the cops would know who graffiti crews were, because they weren’t all black, or all white, or all Hispanic. The crews were deliberately diverse because it improved their output and gave them access to wider markets.

Near the end of the book you mention two important points: that youth culture is now “picked before it ripens” and that the generation gap in understanding subcultures has effectively disappeared. Do these two things diminish the idea that, as your book’s subtitle suggests, “youth culture is reinventing capitalism”? More specifically, is youth or age likely to become less and less of a factor?

The strip mining of youth culture is a problem. But because the mainstream is now more open to ideas transmitted by youth culture, youth culture is increasingly able to interact with the free market on its own terms and change things in the mainstream too. If there was nothing good on TV in the 1970s and you didn’t like the way the media worked, starting a punk band was one of the most effective ways a group of young people could counteract the media messages around them. Now we have three guys in their twenties starting alternatives to TV like YouTube, and flipping the media upside down. While capitalism is able to take meaning from culture the way it always has, increasingly we can use media and culture to inject meaning back into capitalism as well. Warhol once said that “good business is the best art” and I think as advertising becomes less important, truly having meaning, beyond just making money, is going to become more important for companies and brands.

It’s really interesting to see youth culture movements like the streetwear scene develop. Streetwear brands like ALIFE, OriginalFake, 10 Deep or Supreme embrace branding and take it to an extreme in terms of the level of thought and detail that goes into what they do. They are better at branding than most blue chip companies, and the kids into that scene respect that and think it’s cool. ‘Selling out’ isn’t socially unacceptable anymore, but things like ‘greenwashing’ are. Capitalism is strip mining youth culture the way it always has, but increasingly the reverse is happening too, youth culture is using the capitalist framework to create new ideas, affect change and improve things. I think that’s a good thing.

Some generation gaps have clearly closed up in the West, because several generations of us have grown up in a world saturated in brands, trends and pop culture movements. We are used to the way movements ebb and flow, and get sold off. This wasn’t always the case. The concept of a ‘teenager’ didn’t really come into being until the 1950s, people forget that. Now youth itself is something sold to people of all ages. Retro sneakers like Nike Air Force Ones or Adidas Superstars are worn by parents and their kids, who have some of the same music on their iPods. Vinyl toys targeted at men in their 30s. Nintendo Wiis are enjoyed by grandparents and grandkids alike.

But new gaps are appearing all the time too. The generation growing up now has no interest, by and large, in the idea of music being a physical object the way it was. That’s a pretty big change, and in the fight over ‘piracy’ that gap is clearly visible, the Pirate’s Dilemma is highlighting a new generation gap.

How does the type of innovation you write about translate internationally, at the level of nations? Which countries might be considered good pirates (in terms of policy and/or commerce)?

China catches a lot of flak for ripping off Western stuff, but people forget that America industrialized by doing the same thing to the Europeans. I think the way many developing nations are today ignoring Western patents of certain life-saving drugs is an example of ‘good’ piracy. India for example, was producing generic knock-offs of patented drugs up until 2005 (not to mention also copying patented pesticides). This was national policy, because most people in India simply couldn’t afford the drugs, and letting your population needlessly die isn’t a vote-winner. As a result of this and the Green Revolution, life expectancy in India went up from 40 years in 1970 to 64 years today. In Brazil, Argentina, Thailand, Egypt and China, private and state run enterprises are also ignoring international patent laws and producing illegal generic versions of drugs to keep their poor populations healthy. Western drug companies may be losing out, but they are already some of the most profitable companies in the world. Millions of lives are being saved as a result of drug pirates, pirates that only exist because the pharmaceutical giants refuse to do the right thing.

You make the point that piracy is actually a force for social good; that society gains value as a result of it. Can you elaborate on that? What area or areas of society do you think can potentially be most improved by it and how?

Life is improving in India now and so the laws are changing as people get out of poverty. But all the drug companies there lowered their prices to reasonable levels because of the pressure from pirates. Many think there is another way to make this system work – most notably perhaps is Nobel prize-winning economist and former head economist of the World Bank Joseph Stiglitz, who thinks we could put together a prize system as an alternative to the patent system, which would allow developing countries access to cheap drugs, and allow the pharmaceutical companies to make money. When pirates enter a market, they highlight market failures and create debate about how to correct them. This particular debate is likely to rumble on for some time.

What is Wedia and what are its goals?

Wedia is a non-profit media company run by my wife Emily, which connects NPOs and journalists all over the world in an effort to get underreported humanitarian crises more news coverage. We’ve been going a short time, but have been able to raise a lot of money for some great causes.

The idea behind Wedia is to create more awareness of humanitarian crises in the mainstream media. Humanitarian crises are invisible to Western audiences without mainstream media coverage. But big, ratings-driven network don’t have the motivation to cover these stories as much as perhaps they should, because celebrity gossip gets higher ratings. By using media volunteers, we remove the cost factor for both the media and NGOs. We’ve got these user-generated stories on humanitarian crises coverage on CNN, CNN International, BBC News, Fox News and other networks around the world, which creates huge spikes in donations for non-profits working in the area.

This year we are working with a developer, Identity Tank, on rolling out Wedia’s new social network, which we are really excited about. So far we’ve been putting journalists on planes, and funding every trip ourselves. But it seemed we could be much more effective if we could also facilitate the relationship between NPOs around the world and nearby journalists who wanted to donate their expertise to help generate more media coverage of important issues, so we are creating a space where these communities can meet and work together and post the media they create back to Wedia. Wedia is now going to be its own media channel, as well as serving others, so we’ve had to build in ways for people to be able independently verify and second-source stories that appear there. It’s really exiting and an experimental way to approach journalism – I can’t wait to see how it develops. I wish the market was taking care of this kind of reporting, but it’s not. It occurred to us we could create a new media space outside of the market. Non-profits are some of the coolest pirates out there.

Where do you look for inspiration? Are there any organizations, people, books or websites that you find especially inspiring?

So many. I read so much news these days via social aggregation sites like Digg and Reddit, and visit a ton of blogs on a daily basis like PSFK, Global Voices, Josh Spear, Torrent Freak, BoingBoing and Hypebeast are probably my favorites. Pirate radio still inspires me an awful lot. Even though I live in New York City, I still listen to the London pirates over the internet every day when I’m working (I listen to NYC radio when I’m in the kitchen). You can understand what’s happening in London socially by what’s happening on the pirates. That was what initially inspired me to look at society through the lens of youth culture to gauge change, it was the pirates that made me see how youth culture acts as social experiments. I listen to Rinse FM a lot, DJs like Supa D and Perempay are pushing a new type of sound in London that’s pretty exciting right now. I read The Economist, The Observer (not the New York one, the UK one) and Wired pretty religiously. In terms of authors, my good friend Frans Johansson had a big impact on me with his book The Medici Effect. I’m inspired by writers like Jeff Chang, Seth Godin, Malcolm Gladwell, Howard Rheingold, Chris Anderson, Lawrence Lessig. Penguin just asked me to create a story loosely based on Hard Times by Charles Dickens which has been a real challenge, so I’m reading that at the moment. I can’t say too much about it, but it’s one of the most challenging things I’ve ever done. There are so many parallels between the difficulties of the industrial revolution and the problems of the information age.

Thanks Matt!

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