In my last post I made a key assumption, that piracy is stealing.  Recently I was in a conversation where someone challenged that assumption and made me think.

Laws around the world are, by and large, representations or codifications of our collective sense of right and wrong, our morals in other words.  In my previous article I built on the assumption that piracy was stealing and therefore bad and consequently laws would eventually catch up to technology and find ways to legislate enforcement theft related crimes online as well as they do in the real world and that would lead to a reduction in piracy.

However, if you think back to when you were young, at the same time we are learning that stealing is bad we are also taught that sharing is good.  From when we are tots we are encouraged to play nice and share our toys with our friends.  Sub-cultures such as the Grateful Dead live tape trading scene were created around the idea of sharing.  Current social networking trends are built around sharing what we are doing, pictures of what we are doing, what bands we are fans of, our favorite movies, etc…

Today there are millions of people sharing files online.  Are they all morally corrupt, choosing to be bad and steal?  Or are they morally sound, being good and choosing to share?  If the latter then perhaps what’s being called piracy today falls into the moral bucket of sharing (good) vs. the moral bucket of stealing (bad).  If that’s the case then the industry cannot expect laws to eventually catch up and enforce anti-stealing laws online as a way to curb piracy since laws rarely make illegal what the moral majority considers right.  This would mean that the whole industry needs to think about radically new ideas for how to monetize content.

Obviously just because everyone is doing it doesn’t mean it’s right or good, so this train of thought also has flaws, but in a follow up post I want to explore some radically new monetization models or concepts that might stem from the assumption that piracy is sharing vs. stealing.

The Internet is not above or beyond the reach of the law.  Already we have laws in place around the world that address various aspects of the Internet and the impacts the Internet is having on existing laws.

In pretty much every country in the world stealing is against the law and people seem to understand this and generally don’t steal.  There will always be the ongoing cat and mouse / cops and robbers game, but that represents a small fraction of society at large.

Why is it then that people who have never and would never shoplift CDs and DVDs from their local store are doing the same thing online every day?  And what will happen in the future?

I see three main factors that drive the online stealing behavior, 1) the content is free, 2) the content is easy to get and 3) there is a perception of anonymity or at least some sort of security in knowing that “everyone else is doing it, and they can’t catch everyone”.

There are many companies and technologies that have benefited directly and indirectly from this wave of theft.  In this article I’m going to focus on BitTorrent, because they are the predominant protocol being used to facilitate theft and piracy of content online.  By various metrics BitTorrent traffic makes up somewhere between 40% and 70% of internet traffic and as far as I can tell the majority of those bits are from pirated content.

BitTorrent has split into two entities like many P2P companies / protocols.  One is the open source based protocol and community developing and maintaining that protocol.  The other is the private company focused on the commercialization of that protocol.  What’s going to happen to these two entities and others like them going forward?

First let’s look at the open source version.  This version will get into a cat and mouse game with the authorities and laws of various countries worldwide as the lawmaking bodies of these countries begin to apply the same basic principles that exist in the real world to the online world.  This will force more visibility by law enforcement into the workings of ISPs, network operators, businesses and creators of software systems.  While I acknowledge that this game will never end, and be very costly for both sides I feel that it is inevitable and ultimately a good thing.  Just like the real world law enforcement never ends and is costly, but it creates a society where stealing is rare and that is definitely a good thing.  It is the increased effort to participate (both in time and money) and the increased risk of getting caught that will cause people to abandon the pirate behaviors and to adopt commercially viable, legal alternatives.

So what does that mean for the commercial version of BitTorrent?  It means that it will have to change substantially at a technical level to differentiate itself from the open source version.  In order to sell its technology it needs to provide an assurance of a quality of service.  If at any moment the protocol can be inspected and altered because of suspected illegal activities companies will not want to use the protocol.  Therefore BitTorrent will have to signal to the networks and authorities somehow that it is legitimate and to not adversely affect its operation.  Furthermore it needs to do this in a way that does not allow the open source version to copy and imitate it otherwise it is of no use as a differentiator.

Once successfully separated from the open source cousin BitTorrent the commercial version will have no “install base”, no “millions of users” because the new legitimate protocol will be incompatible with the open source version.  This definitely deals a setback to the commercial version of BitTorrent and would affect its ability to attract new customers.  Furthermore the ongoing cat and mouse game being played out by the open source BitTorrent version will negatively affect the brand and image of the company and keep large businesses wary of doing business with BitTorrent, as they are today.  In the long run I feel that these technical and market based factors could cause the downfall of the commercial version of BitTorrent.