Thinkcorps

Derek posted a measured reaction to a SXSW panel that devolved into an MPAA hate-fest, arguably deservedly so. His take: the movie industry (and others) have evolved a protective, mucus-like litigative layer designed to stem the onslaught of change.

Movies are buried in this goop, preventing any real innovation, while music was blind-sided early on, preventing its “lock down” and allowing consumers to determine their own definition of “fair use,” which arguably fertilized the nascent portable music player market, which led to the iPod, which led to the iTunes store and a billion dollar market for digital tunes.

We hear this “consumers” are in control refrain every day, but music may be the perfect example of how it happens and how much consumers really need to be in control for innovation and new markets to emerge.

Hello, my name is Tim, and I am a pirate

The one point that I disagree with in Derek’s post is that consumers aren’t “pirates” or a “real threat”. I think we are. We’re the biggest threat these industries have ever seen. We’re pirates and we’re going to ransack their towns and villages. We will not stop, we will give no quarter, and we are going to win.

What I mean is that the MPAA can whine all they want about us “pirates” now, but in a few years they will be out and we will be in, and everyone will be talking about those “pioneers” in digital content and the fantastic battles of the late 90s and early 00s.

The reason I’m a pirate is simple: I determine what my time is worth; I determine who I let in and why. Sometimes, I spend valuable time with my favorite bands. Sometimes, I put on an album by an unfamiliar artist in the background while I work. Sometimes I pay, sometimes I don’t.

The industry used to decide this for me: intimate time was a $9.99 LP, casual time was free radio or a special promotion. They liked deciding for me; it fits easily on a spreadsheet. They could make charts and projections; they could make a lot of money.

But now, I’m writing the rules of their economic model, and they are deservedly freaked out. They believe that we should understand and accept their spreadsheet. They maintain that they have a standard of living that they’ve become accustomed to, and we should respect that.

We give no quarter

I am not going to abdicate responsibility here: I am the pirate (today). I didn’t used to be, but I watched and I learned. The capitalism that media execs espouse gave me skills, same as them.

I began to understand the value of promotion. I saw that CDs could be given away in the mail (thanks, AOL). I got a taste of the auction market (thanks, eBay). I could download files fast and furious, and immediately cater to a whim (thanks, Web & P2P).

Eventually, and without even realizing it, I became aware that I could create my own market for music. A market of one, defined and controlled by me.

What do think the Web is anyway? It’s a few hundred million unique user markets. The vast majority of Web sites are free simply because it’s so difficult to determine pricing based on individual markets. Text advertising is a billion dollar business because it addresses the market of one (the click-through).

The reason we’re battling today is not because of changing definitions of fair use or copyright. We are battling for control of the economic model: who gets to decide what a song or a movie is worth. Industry fights copyright and fair use battles because they feel like they can’t give ground. Why they feel compelled to bother with traditional warfare strategies is beyond me.

We are pirates. We’re not going to play by their rules. We’re not even going to fight. We are simply going to open our wallets, or we’re not. That’s it.

One final question

If you were a media exec, you’d probably be willing to let consumers give you feedback, you might even let them in on the development process, guiding you towards popular products. But would you let them set pricing on your new baby?

Until you’re ready to say yes, you’re living on borrow time. We’re pirates, and we’re coming for you.

I’ve been noodling kottke’s nod to Caterina’s lament that: “It’s a bad time to start a company”. It hasn’t been sitting right with me—but then, I have the luxury of not being in the Bay Area, so a boomlet won’t affect me much. Plus, it’s not fair for me to color her argument on the basis that she sold Flickr to Yahoo!

So, I decided this morning that I agree with her, but for very different reasons. It’s a bad time to start a [VC-funded] [Internet] company.

Despite everything you read, definitions have changed. The words “company” and “start” don’t mean what they used to.

An Internet company, especially a Web company, should be a group of friends/colleagues who complement each other. A team that shares some enthusiasm for a particular subject, a goal, and has fun building toward it. Anything and anyone else is dead weight at this point. You can’t make money until you have a great product.

If you’re going to tack on a corporate structure, make it as light as possible, cause it’s not really the point, and won’t be for a while. (You can always change it later. That’s what lawyers are for, after all.)

Taking VC funding is about the same as going public: it’s a big fricking deal and will radically change your little company’s focus. It’s not something to be taken lightly, and if you really need it, you’re in bigger trouble than you probably think.

Putting “VC” in the equation pretty much kills whatever shot you had at building something great. It makes you focus on creating returns for investors, and not on creating a great product.

On the Internet, No One Knows You’re A Dog
My good friend Ted started Dogster by himself. The idea of web pages for dogs is hilarious, and a 100% stupid idea for a business. It doesn’t make any sense, and no sane business person would even consider it.

But he built it anyway, played with it, tweaked it, and steadily attracted users. Soon, he had a community on his hands. He started asking it questions, he learned about it, and he realized that he might actually have a business here.

There’s a lot of advertising in Dogster’s business model right now, but there’s also a lot of other interesting opportunities that the Dogster team is beginning to discover with the help of its community.

What this all means to me is that I think it’s a great time to start an Internet “project”, if you’ve got the skills to pull it off between you and your friends. It doesn’t have to be industrial strength, just get it up and running. You will learn a lot along the way. If you lack skills, get to learning.

Screw the VCs, screw the corporate structures. Screw getting rich. If you can’t get obsessively excited about your product, then what chance do you really have of creating something worthwhile?