SHELLY PALMER REPORT: The 1st InfoWar: Antigua's Copyright Threat and the Virtualization of Value

This week the government of Antigua threatened to unleash hell on the information economy. Well, kind of … they're threatening to repeal intellectual property treaties with the United States and to allow massive copyright infringement on the island if the U.S. doesn't hasten its response to pending trade disputes. In short, they are threatening to copy "virtually anything that can duplicated."

The reason for the threat of InfoWar, according to a representative of the Island, is that the United States is not negotiating fairly in a dispute over Internet gambling. Apparently, we owe Antigua $21 million dollars and they really want the money. If they don't get it, they will tighten-up our debt by stealing music, movies and other intellectual property.

Oh no … pirates in the Caribbean! All right, this isn't really that funny. The government of Antigua is pissed and they want us to know it. I'm sure that our bureaucrats and their bureaucrats will work it out in some bureaucratic way.

What interests me is why anyone would think that there is one piece of intellectual property anywhere in the world that is not already available online free for the taking. Every piece of music I've ever heard of is available for free online. Every major movie and a zillion movies I'll never care to watch are also available. If I need a license key for any major piece of software, it will take me (or you) under two seconds to find and download one. There is absolutely nothing about this threat that matters – oh wait, yes there is.

"We've analyzed their attack sir and there is a danger, shall I prepare your shuttle." "Evacuate? In our moment of triumph? I think you overestimate their chances."
-- Grand Moff Tarkin, moments before the destruction of the Death Star (Star Wars 1977)

Antigua's plan is to single out one of our most profitable classes of export, Intellectual Property, and defeat our ability to profit from it in their country. Sure we could still send DVDs to the island, but who would buy them? Legally pirated copies of everything would be available in retail stores for far less money than the imported originals. And, of course, it would be legal to copy, upload and download anything and everything to your heart's content.

I'm sure that a diplomatic solution to Antigua's grievances will happen soon. But, for purely intellectual reasons, it would be fascinating if they actually carried out their threat -- it would be the first time we could measure the impact of "almost free content" in a controlled environment. It would show the content industry where the bottom is and offer some insights into life without enforceable copyright laws.

I know that everything in Antigua would be available online, but – as you know – everything is already available online. So, on the island of Antigua, nothing about the online world should or would likely change. Perhaps, a few sites would pop up that shouted "legal music for free, legal pirated video for free." But, somebody would still want to get paid for the bandwidth and I think the file sharing community on the island would not change much.

However, the retail marketplace on the island might change in a significant way. Would you go into a store and see a "real" version of Harry Potter for $14.95 and a packaged, legally pirated copy for $9.95 or even $4.95? Would the legal pirates experience so much competition from each other that the price would drop to just enough money to cover the cost of the disc, duplication, distribution and retail profit, say $3.00? Or, would the pricing stay at $14.95 for the DVD, preserving the margin for the retailer and dramatically increasing the margin for the distributor (no royalties)? It would be an interesting experiment, to be sure.

My guess is that the cost of physical copies of everything would drop to the lowest possible retail price point. It couldn't be free, but it would be really, really cheap. DVDs under $5 retail and CDs in the $2 zone. On the other hand, software would be a real problem. No US publisher would even consider customer service or tech support for pirated copies. Would this matter? Could a consumer function without the ability to call Microsoft, Apple or Adobe tech support? The short answer is, absolutely! Purchasing legally pirated software would be only slightly more annoying than purchasing "real" software – the physical media would be sold at or near the bottom possible price.

What might really change is the value chain. People actually do need customer support, technical support and customer service. Even for something as simple as a music download. It would be interesting to watch the rise of specialized businesses that cater to the needs of the various levels of consumers. Robust third party tech support for software, new and interesting channelized or branded portals for music and movie distribution and a new, more economical physical packaging paradigm.

Antigua is not a very big marketplace, but if it went Pirate, we would really learn a lot about how the future information economy might function.

As for my idea that this is the threat of the 1st InfoWar? The flow of information is global and, from the Internet's point of view, Antigua is a construct, not a country. Last week, Philip Rosedale (cofounder and CEO of Second Life) and I had a conversation about the information economy and he said, "in a few years telling someone you're from China will have about as much meaning as telling them your astrological sign." While even Philip agreed that that might be hyperbole, he was pretty sure that where you live in the physical world is starting to have less meaning with respect to your ability to function online. If this does become the first international InfoWar, it will be about the virtualization of value – in other word, like all wars – it will be about money.

Shelly Palmer is Managing Director of Advanced Media Ventures Group LLC and the author of Television Disrupted: The Transition from Network to Networked TV (2006, Focal Press). Shelly is also President of the National Academy of Television Arts & Sciences, NY (the organization that bestows the coveted Emmy® Awards). He is the Vice-Chairman of the National Academy of Media Arts & Sciences an organization dedicated to education and leadership in the areas of technology, media and entertainment. Palmer also oversees the Advanced Media Technology Emmy® Awards which honors outstanding achievements in the science and technology of advanced media. You can read Shelly's blog here. Visit Shelly's website at www.ShellyPalmerMedia.com or reach Shelly at shelly@palmer.net