The latest site to gain the full attention and ire of the RIAA, MPAA, and copyright holders worldwide is The Pirate Bay (TPB). Or rather, it was the Pirate Bay until their owners were raided, sued, tried and sentenced earlier this month. The Pirate Bay is the latest link in a long chain of peer-to-peer companies that have met their end at the hands of international copyright law. It is also the target of a post-litigation buy-out attempt by a company who wants to monetize the over 25 million community members of TPB.
Global Gaming Factory X AB, a publicly traded Swedish company, has put forth an offer to purchase The Pirate Bay and all of its assets in a bid to move the site toward legitimacy. In essence, the goal was to charge the community to access content on the network and in return for sharing their bandwidth and storage, the new Pirate Bay would reduce the monthly subscription fee based on the amount you contributed. An interesting plan, but the world has seen this before.
First, there was Napster, and then Kazaa and now with The Pirate Bay. Recent history has demonstrated what happens to P2P companies that attempt to migrate to for-pay. Going legit is a desirable goal, especially for those who make a living from selling their intellectual works, but migrating these types of communities to legitimacy has always failed.
There is a lesson in this chain of events that all of us can learn to appreciate. These legitimization attempts fail at times due to mis-management, technology, or lack of proper funding. However, even if they are to succeed in the previously stated areas, they are still doomed to fail because of the culture involved in the change…
How The Pirate Bay Rose to Power and Fell From Grace
The Pirate Bay was started in late 2003 and rose to popularity because it allowed anybody browsing the site to download the latest music and movies for free. It was effectively a search engine for the most desired media in the world. Just like Google, The Pirate Bay provided links to media. It contained instructions on how and where to download movies like Shrek 2, Batman Begins, Spiderman 3, and music like the latest Shakira or Black Eyed Peas album.
Fast forward to 2009 and there are over 25 million Pirate Bay community members. The community finds itself the target of federal raids, ISP shutdown attempts, and a rash of lawsuits. The courts would eventually find that the site helped violate copyright. Copyright violation in most first-world countries is a civil, and sometimes a federal, offense. The latest trial landed a $3.6M USD judgement against the owners of TPB and a year in prison for each of them. It was never a question of if this would happen, it was a question of when the law would catch up to the founders. The Pirate Bay is the largest and most evasive file trading operation of our time.
Therefore, it is no surprise that a group of investors have made an offer to buy The Pirate Bay’s assets for $8.3M USD. There are investors that see a community of 25 million and immediately jump to the erroneous conclusion that there must be a way to monetize a community that large.
Enter Global Gaming Factory X AB
About a month ago, the CEO of a publicly traded Swedish company called Global Gaming Factory X AB (GGF) decided to make an offer to buy TPB for $8.3M. It was part of a deal that would also acquire technology from a company called Peerialism AB and create a for-profit P2P content delivery network. Things were looking good for The Pirate Bay financial trust, which stood to gain a fair amount of cash from the sale. That is, until GGF was hit with a probe alleging insider trading, de-listed from the Swedish stock exchange, failed to pay Peerialism and failed to pay their rainmaker, Wayne Rosso.
Offending Your Culture
These sorts of deals seem to always fall apart at some point in the process. If the management team is skilled enough to pull off the acquisition, and re-brand and re-launch the site, they are inevitably met with a community that has been violently jerked away from their comfort zone. Why would members of The Pirate Bay suddenly want to pay $10 a month for something that they were getting for free? It is a lesson that these executives and investors have failed to grasp over the past decade.
Once a culture has been established, you cannot change the dynamics of that community overnight, if ever. That is not to say that some in the community would never pay for content, but if they choose to do so, it will be in a culture that doesn’t do so forcefully. It will be as a member of Bitmunk, Amie Street or the Apple Store.
Companies like GGF have always failed to grasp that popular websites have deeply ingrained cultures associated with them. Digg has a culture, Facebook has a culture, Twitter has a culture. When you do something that goes against that culture, you inevitably alienate the community members. When you destroy your service’s culture you will destroy the desire for your community members to stay with you. After all, in the age of the Web, your replacement is one Google Search away.
There are No Shortcuts to Building a Culture
As an industry, if we want our customers to pay for music, movies and other intellectual works, we have to build a society that respects the creators of those works and who feel that the system for rewarding those creators is fair. You can’t buy or sue your customers into submission. There are 25 million community members in the Pirate Bay culture, and there are tens of millions more than that who want to fairly reward artistic pursuits — for music, movies and books. Investors should be focusing on building a community and culture of reward, for all their customers and artists, instead of forcing that culture on communities like The Pirate Bay.
You can’t buy an equitable culture. You have to build it.