OTCQB: RIHT March 23, 2017

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Source / Author(s):  Brian Day

“[It] was technologically determined to break the bonds of existing authority . . . to be free, open like space itself to all comers and unencumbered by traditional notions of property rights.”
Thoughts on radio broadcasting circa 1920

The year is 1620, and a British merchant ship sails along quietly in the early morning hours. Its lower decks are filled with riches of gold and grain, being transported across Caribbean waters for delivery in Europe. Suddenly, the sound of cannons rings out, and the once desolate decks of the ship are bustling with bewildered sailors. Bottles filled with gunpowder, shot, and metal explode upon its top deck, as smoke chokes the lungs of all on board. The ship is overpowered and unprepared for the attack, and pirate sailors quickly take control of the merchant vessel. The ship is plundered and sunk in a matter of hours, as the pirates head off into the gloom in search of their next victim.

Such dramatic events were common on the dangerous Caribbean waters in the 16th and 17th centuries. Piracy was rampant on the high seas for decades, with few maritime laws in place to curtail the practice. At the time, the sea represented the ultimate frontier - outside the protective sovereignty of even the most powerful nations. Pirate ships were faster, more powerful, and better armed than almost all merchant ships of the time. How could anyone control the pirates when no one had jurisdiction over the seas?

Indeed, in the context of piracy the very idea of governance seems absurd at first. The sea was once seen as an unmanageable expanse, much like cyberspace is today. In Debora Spar’s book, “Ruling the Waves,” the history of piracy is given extended analysis. From the high-seas to broadcast radio, Spar contends that new technologies have consistently embodied four phases of piracy: innovation, commercialization, creative anarchy, and a period where rules are imposed, bringing an end to that era of piracy. When a new innovation is first commercialized, “pirates can operate almost without restriction. If there are no rules, after all, no one can break them.” However, as commercialization continues, and new pioneers begin to work legitimately within the new medium, the tides begin to turn against pirates. The “rules” phase gradually eradicates piracy by ushering in a government-sponsored regulations, or laws.

In the late 1600’s for example, ocean-based trade exploded, transforming the sea into the primary channel of commerce between Europe, the Indies, and the New World. Trading companies became increasingly profitable and centralized, wielding immense political power in the process. At first, these companies attempted to combat piracy on their own. However, the practice proved futile given the lack of any coherent or enforceable piracy laws. Under intense pressure from large shipping companies, the European governments eventually expanded their naval presence and bolstered their piracy laws, completely eliminating piracy in only a decade. At the same time, the merchant companies “slowly but critically changed the political views toward piracy,” to the point where “conduct that had been perfectly acceptable in the past . . . was suddenly deemed wholly unacceptable.”

Similar lessons can be had from the development of radio in the early 20th century. In the early days of radio, the Radio Corporation of America (RCA) and other private companies invested significantly in the development of broadcast technology. Over time, however, amateur broadcasters emerged, who, through their own technological innovations, were able to pirate the private radio signals of RCA. Eventually, these amateurs were able to not only intercept signals, but also broadcast transmissions of their own. They were an intrepid bunch, arguing that “radio was technologically determined to break the bonds of existing authority . . . Radio, they cried, was destined to be free, open like space itself to all comers and unencumbered by traditional notions of property rights.” As radio broadcasts gained popularity in the 1920’s, however, it quickly became clear that the right to broadcast could never be open to all. The airwaves were a playground for pioneers, with numerous business models and technologies vying for the public’s attention. Over seven hundred stations fought for limited frequencies, with amateurs broadcasting alongside corporate radio stations. This creative anarchy was followed by the “rule” phase in broadcast radio, where order ultimately prevailed. Private firms like RCA were desperate for industry standards – something they were unable to obtain on their own. In 1927, Congress passed the Radio Act in response to calls from broadcasters that the radio industry was overrun by “pirates” and “wavejumpers.” The Act subdued the chaos, quickly bringing order to radio.

Digital music piracy embodies many of the same “phases” of piracy that have characterized other technological frontiers in the past. As Spar’s book predicted, the innovation of the Internet initially resulted in a period without rules and order, similar to the early days of radio broadcasts and ocean trade. Exploitation of the new medium brought about a period of creative anarchy online, leading to the development of services that have been used by many to commit massive acts of copyright infringement. This inevitably leads to the fourth and final phase of piracy – rules and order. It remains unclear how this final stage will be resolved. However, over the past decade, we have seen an exponential growth in the commercialization of the online marketplace. As the Internet becomes the primary channel of commerce of our era, the need for “rules of road” becomes as crucial to the emergence of order as it was in the 17th century.

Spar concludes that “the frontier is a wild place, a land of anarchy and endless dreams. It draws pioneers and emboldens pirates.” If history provides any guidance, digital music piracy may be no different than that of the Caribbean or the early broadcasting era. The digital frontier is revolutionary, has drawn pirates and pioneers alike, and ultimately requires rules in order to ensure a healthy and vibrant marketplace.

Debora Spar’s Book, Ruling the Waves, is available from Houghton Mifflin Harcourt Publishers.