Friday, July 15, 2005

Is Piracy Inevitable?

I finally saw Star Wars III: Revenge of the Sith. Good flick, especially the final scenes showing the genesis of Darth Vader. But you know what really impressed me—other than the special effects? The fact that complete, unedited, low-priced downloadable bootleg copies of the film appeared on the Internet literally hours after its official release of the film in May 2005. Wow! On July 1, authorities arrested suspects in 11 different countries for controlling a copyright piracy supply and distribution chain. It’s clear that when it comes to pirating, prior barriers like time, space, distance, boundaries, and geography are becoming less and less relevant as the world shrinks and flattens from technologies that bind everyone closer and closer together.

My next book describes the ravages of legal, everyday imitation of products and services, but this is different. The counterfeit trade is the ultimate, albeit corrupt, expression of imitation, and grows by being fed and watered by transparency . Engineers and chemists in various countries can now reverse- engineer and copy patented molecules to produce illegal pharmaceuticals and sell them at a fraction of what a legitimate drug company charges. In countries like China, Vietnam and Ukraine, the production of amazingly authentic-looking but bogus Calloway golf clubs, HP inkjet cartridges, Louis Vuitton handbags, Nokia cell phones, and Intel computer chips hums away and seems to grow exponentially. I was once at a conference with Intel’s Andy Grove and the only time I saw him lose his temper the entire day was when the subject of Chinese counterfeiting came up. He insisted, with some heat, that “there are no ‘cultural differences’ that explain what they do; they know exactly what they’re doing!” But what can Intel do? 90% of DVDs and video discs in Chinese homes are counterfeit. What can Microsoft do? 90% of its products are counterfeit in China too. In fact, the Economist reports that the next Harry Potter books are also in Chinese homes, even though author JR Rowling hasn’t written them yet! The World Customs Organizations estimates that counterfeit products accounted for 7% of global merchandise trade, or $512 billion, in 2004 alone. None of this could occur without the breakdown of traditional barriers and concomitant expansion of total transparency that now defines the global marketplace.

What’s the solution? I wish I knew. Sure, we can all support the police crackdowns like those against the Star Wars pirates, but we all know that those efforts are episodic and inefficient. I was in Shanghai with some Microsoft officials a couple years ago and I said that ultimately, it’s only when Chinese firms develop their own intellectual property and patents that we’ll see some truly aggressive anti-piracy efforts in China. I still believe that. That’s why I support the efforts of many U.S. firms to set up joint ventures and R&D partnerships with organizations in Asian and east European countries. Ultimately, we’ll have to rethink the whole concept of intellectual property, from both a legal and fair practices perspective. Some firms—from Asea Brown Boveri to Proctor and Gamble—are beginning to take the position that licensing intellectual property and focusing on new innovations is more promising than trying to protect and hoard secrets. Others are calling for new collaborative efforts with international legal and regulatory institutions so as to develop some sort of internationally accepted ground rules and enforcement parameters. But perhaps ultimately we’ll all have to accept the possibility that piracy is just one of those unfortunate consequences that are inevitable in a world marked by extreme transparency, globalization and technological advance. What do you think?


Anonymous Anonymous said...

Staying ahead of the curve with market driven needs keeps corporate motives focused on profit and fulfilling the wish of consumerism. How can corporations develop strategies that will help people learn to need less so that the earth's resources are sustained?

Volkswagons 'one model for all' for a sustained period of time represents a product that holds inherent value based on meeting basic needs. Doesn't the bug teach that simple and sustainable are also profitable? The VW strategists chose the values of simplicity and basic needs over obsolescence and quick response.

Profit driven companies won't shoot themselves in the foot in order to help the earth, but if the earth isn't helped we will drown in our own garden.

Does capitalism at its core result in market driven strategies that are harmful to the future of the earth, or can companies be profit driven but help teach consumers how to consume less?! A paradox of perhaps important proportions.

Somebody once said that half the world is starving, the other half is drowning in greed but doesn't know it.

Maybe it is important for corporations to stand for values that transcend profitability and staying ahead of the curve. Maybe they need to lead the world toward the sanity of 'less is more'.

If corporations don't lead us in our overuse and misuse of resources, who will? T.V. after all is based on the lowest common denominator. Who's going to create the paradigm of simplicity, of using less, of not buying what you are able to buy, but of buying only what you need and what will benefit the earth?

Thank you.

11:16 AM  

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