Magazine article Ivey Business Journal Online

Lessons from the Dark Side of Capitalism: How Pirates Help to Shape New Industries

Magazine article Ivey Business Journal Online

Lessons from the Dark Side of Capitalism: How Pirates Help to Shape New Industries

Article excerpt

It is a novel and intriguing thought: Business can take a lesson from pirate organizations by paying attention to and working with them to innovate, push forward and become aware of new uncharted territories ahead. This author suggests specific steps a conventional business can take.

The author gratefully acknowledges the research assistance and contribution of David Jackson, PhD Candidate in Media Studies and Community Manager at

Rather than being suspicious of pirates, business leaders should pay attention to the practices of pirate organizations.[1] Since the dawn of capitalism, piracy has pushed business into areas outside its normal boundaries, reshaping existing industries and giving birth to new ones. For instance, sea pirates fought the monopolies of the Indies companies in the 17th and 18th centuries and forced the state to recognize and enforce the freedom of the seas. This has dramatically affected the development of international trade. Similarly, pirate organizations operating in cyberspace and advocating for Net neutrality are shaping the future of the digital economy. So, if your business significantly depends on the Internet economy to generate revenues, you might want to know more about what cyberpirates are trying to achieve.


Many innovative business ideas were originally considered illegitimate by civil society or declared illegal by the state (or both). Until Napster triggered a massive overhaul of the music industry, it was uncommon for consumers to purchase music by the song. If you, as a consumer, wanted to acquire that one big hit song, you would often have to buy a 12-track album for $20 and spend a good deal of your listening time skipping the 11 tracks you didn't like. Distributing free software was not Bill Gates' next big idea back in the 1990s, yet it became a key driver of growth in the software industry (e.g., think of mobile apps). And if you know people who spent time in the United Kingdom prior to 1967, ask them about radio broadcasting - well, ask them about the BBC actually, because back then it was the only radio station authorized by the British government to broadcast. But pirate radio changed the rules of the game and ended the BBC's monopoly. Pirate organizations also played a role in ending Microsoft's dominant position and in wiping out the comfortable monopoly of "The Majors" in the music industry.

Rather than posing a threat to capitalism, pirate organizations indicate those directions and sectors in which the economy is likely to move. So, instead of continuing to associate piracy with theftand vandalism, we should view pirate organizations as norm-generating entities that change the course of capitalism by redefining its rules. Who promoted the freedom of the seas in the 17th century against the state monopolies that claimed ownership rights on sea routes? Sea pirates. Who helped achieve the freedom of the airwaves against the state monopoly of the BBC in the United Kingdom? Pirate radio stations. And what exactly do cyberpirate organizations such as Wikileaks or Anonymous want today? They want cyberspace to be open, neutral, and respectful of privacy and treated as a common good of humankind - rather than as a territory to be divided up and conquered by competing nation-states.

By gaining a deeper understanding of what pirate organizations actually do, entrepreneurs can strategically understand where and how capitalism is going to change. Here's a prediction: the space travel and space mining industries will be the next big thing a few decades from now. In 2012, Google founder Larry Page, Microsoft's chief software engineer Charles Simonyi, and a few other investors announced their funding of Planetary Resources, a space exploration start-up whose purpose is mining natural resources from asteroids. The biggest risk underlying their enterprise is not technological, but normative. …

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