Pirates set sail to Darknet island

There was a semi-hysterical piece that ran this week in the New York Times, proposing that Darknets are likely to replace the collapsing P2P file exchange businesses, but the logic doesn’t quite seem to be thought through.

Darknets are sub-networks, which have no public face to the world, where a small group can swap whatever files they like, without ever making their offer to swap them public to the rest of the world. They can be password protected, encrypted and virtually invisible to the onlooking anti-pirate brigade such as the Recording Industry Association of America.

Anyone can create a hidden network, just ask any enterprise, and the common practice of using Firewalls and VPNs is no mystery. Using P2P technology behind this protection is hardly an innovation. But the problem for Darknets is developing a business model that both reveals the existence of the network and yet doesn’t make it susceptible to legal action, and this is a much more difficult concept than most people realize.

Morality play

It may well be that an entire generation’s morality has been compromised and that this generation doesn’t have it in its power to ever again believe in copyright laws. It may be equally true that this may become institutionalized and be passed down from generation to generation. But that is no worse than the use of cassette tapes for recording personal copies of music.

The problem of piracy was caused not so much by ignorance or the refusal of a generation to abide by the law, but by the creation of a new distribution mechanism that was more efficient and better at handling bulk than the official retail only distribution of physical media.

And in order to create P2P technology in the first place, which is not a trivial task, and to come up with a scheme that could monetize that invention, took mid-sized organizations that aggressively advertised the idea that music was now “free.”

Any future continuation of piracy also needs those ingredients. It needs to advertise the fact that it is giving away music, or that you can give away music over such a service, for the bulk of the millions of people that used to indulge in piracy to find out about it. It also has to make someone some money so that it can support a mid-sized commercial organization.

Without the chance to make money, almost no-one is going to create something on the internet that might land them in legal hot water. There’s a big difference between believing that you are allowed to share music and operating a system which you know is illegal and that you could go to prison for if caught.

March of time

Sure, Darknets do exist and they are used for piracy no doubt. But the most efficient of them involve smaller groups, perhaps 50 to 100 people. In some cases it’s likely that these share music, and in many of those cases that music will involve pirated works from the heyday of the file sharing years, but that will diminish over time. The prospect of copy protected CDs and the fall of the prime P2P networks, and the march of time, making new music the most desirable, is likely to take care of that.

Of course, earlier record companies didn’t want to put out music on copy protected CDs, for fear of driving existing law abiding customers towards the file sharing networks. That obstacle has been removed and the reticence to put out copy protected media will disappear just as quickly.

And the entire piracy movement will fall back to the situation we were in before, when we perhaps traded cassette tapes among friends, which to the record business was largely manageable.

The New York Times article highlighted a company called Grouper, which hosts more than 100,000 private groups. Effectively it gives privacy tools to anyone that joins, and they use it to create clubs. Groups formed in Grouper have other reasons than piracy to come together, but if it becomes the next haven for piracy, its very public nature will ensure that the RIAA gets to hear about it, and we now know that its attention is potentially fatal for a business.

If Grouper has another, legitimate revenue opportunity, it would be stupid to do anything other than actively discourage piracy. If it does not have alternative revenue streams, then it will become obvious that it’s only reason for existence is for piracy and its servers will get raided.

Companies like this make themselves well-known and are likely to be monitored and if under suspicion, infiltrated, to ensure that piracy is not widespread.

What should be more disturbing for content companies is that not just companies like Grouper, but also social networking sites like MySpace, have created a better distribution network for friendships. And in the current era, one of the great expressions of friendship is sharing experiences, through snippets of video, personally recorded music and pictures. The record labels should be trying to harness this, not put an end to it.

Personally-created materials take time to be seen or listened to and this eats into the available time that the young today have to listen to copyrighted works. This is a far greater threat to content owners and a world where the power of P2P networks is used to create, index and share non-copyrighted works of high quality is only just around the corner.

Say you are 16 years-old and in a band. You download some free recording tools and make a record. You do quite a professional job and upload it to a website for unpublished works. Let’s say that website gets a link on a social networking site or a music recommendation site. This in turn gets pointed at on a social networking site and word gets around.

More people see it and the think they can do better and repeat the process. Pretty soon the world is listening to your music, perhaps making a contribution online directly to the band. The first time one of these makes $1m will create the biggest threat to copyrighted works going forward, which could easily be indifference, exacerbated by the resentment of the way record companies have treated their customers of late, taking bulk legal actions against them.

Copyright © 2005, Faultline

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