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					Thoughts about The Pirate Bay – by Hans Pandeya
Sharing of unauthorized content, so called illegal filesharing, on the Internet is heavily debated. The entertainment industry's battle with filesharers in courts has received widespread media attention around the world. Copyright law, i.e. the law to protect property rights of a special type of property or assets, namely digital content is the main issue at stake1. The debate has brought forward several other pressing issues such as privacy and freedom on the Internet that cause strong concerns among a large number of people. Society has struggled with the problem of filesharing for almost a decade and it is safe to say that not much progress has been made. To understand the problem of filesharing, it is helpful to take a closer look at property rights from a historical perspective2. Property Rights and Civilisation Property rights, the right to own and control assets is as old as civilisation itself. Man's step from hunting in the wild for his survival to settling down and farming around 10.000 years ago is regarded by historians as marking the beginning of civilisation. In the civilised society, not everyone had to hunt and kill for survival. Some could make a living from pottery, others could farm the land, and some could specialise in constructing houses. A person could exchange the produce of his work with goods others had created. The potter could do what he was good at making pots - and then exchange a pot for wheat from a farmer. Implicit in this transaction was that the potter had the right to ownership of his creation – the pot. He also had the right to exchange it for goods or services offered by another party, provided both parties agreed on the exchange. As communities developed, a set of rules for dealing with issues that concerned the community were agreed by its members and these rules eventually became the law. Institutions rose to develop and enforce the law as the population grew and society evolved further. The enforcement of property rights ensured that man could prosper from the value of his creation and thus had the freedom to develop his interests and skills further to make a living. People who lacked property rights had no right to own what they created and could not prosper – someone else captured that creation and its value and benefitted. These people were called slaves. A slave was denied the freedom to develop his interests and skills further. When denial of a human being's property rights is institutionalized, he becomes the property of someone else. The slave is under the totalitarian control of his master who puts him under survelillance to ensure that all his work and efforts benefit the master. Man's innovation and creation was the driving force of the rise of the great civilisations of Mesopotamia, the Indus Valley and Egypt and enforcement of his property rights ensured that he was rewarded for his work . The enforcement of property rights became one of the main tasks of the pharaos and rulers. Modern society progresses on the same fundamental principles. Man is free to develop skills in his area of interest and can make a living out of his work and creations. Remove property rights and we can go back to hunting since we will not be able to make a living out of our current work if someone else can capture the value we create without our consent. We would not benefit from our skills and efforts. Property rights allowed specialisation of skills and a side effect gave rise to classes which caused tensions. Abholishing private property to create a single class has been attempted in the past and resulted in society sliding into totalitarian control by the state. A central authority would decide what man should work with and put a system of control in place to ensure that man obeyed its instructions – an obsessive control system characterized by its spying on its
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Copyright is the right that writers, composers, artists and other creators hold in their creation. A very brief overview of my understanding of history is given.

citizens coined ”Big Brother”. Let us now look at illegal filesharing with this very brief historical background. Filesharing And Its Consequences Illegal filesharing to obtain valuable content is easier than picking up a $10 note found on the ground – just click a mouse button. Arguments justifying illegal filesharing are readily available and appealing, and have a soothing effect on the conscience when applied. Activists equating illegal filesharing with freedom of speech are admired and respected for their noble cause by many. Claims that copyright laws are outdated are interpreted as signs of intellectual sophistication and modern thinking. The view that the big ”mean” entertainment companies deserve the losses they suffer since they are ”robbing” us all anyway is not uncommon. However, the damage illegal filesharing has caused society has not been properly explained or understood in the debate. Illegal filesharing is estimated to cost the economy £12 billion in Britain alone3. Of greater danger is that the culture of copyright violation is working itself through industy by industry; software, music, video, TV shows, eBooks – intangible assets - so far. Society's failure in enforcing property rights is alarming to some enterprises who claim that not only filesharers, but also other enterprises systematically exploit their work. Society's failure in dealing with this issue is highlighted in our courts when million dollar cases running for years finally end in unreal sentences with fines passed on some young person for committing the crime of listening to downloaded music. The sentence causes us to react with fury at the entertainment industry and reinforces our belief that the industry is indeed obsessed with profits and an abuser of power. The sentence achieves not much for the industry besides bad publicty. The value destruction during the years it took society to pass a sentence has no effect on the continuing destruction of value in the entertainment industry. The Entertainment Industry To get an understanding of the importance of the entertainment industry to us in the Internet age, let us turn off the music and look at the Internet traffic figures instead. To our surprise we find that filesharing traffic accounts for the majority of all Internet traffic. So filesharers who share and download files with music, movies and entertainment cause quite a traffic load on the Internet. The growth in traffic has been so explosive that we have kept upgrading our Internet connections throughout the last decade. This tells us that the entertainment industry has, in fact, been behind the staggering growth and value creation on the Internet. If it weren't for the content created by artists and provided by the entertainment industry, we would have no need for broadband – 56k telephone modems – if anyone still remembers those gadgets – would do. Markets failure In other words, the entertainment industry's creation of culture caused the explosive growth of Internet traffic and the creation of the billion dollar giants of the Internet age. However, the entertainment industry itself did not get its fair share of value it created. The entertainment industry's sales have continued to decline, not because of evil enterprises, but because of society's failure in protecting property rights as it simply does not know how to, when it comes to filesharing of digital content. If there were a way for the markets to see the value that filesharing creates, then the markets would self-regulate, i.e. distribute that value itself to maximize society's benefit4. Hence
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Pirates on Parade Financial Times The markets set the correct price provided there is something to price. In this case, the value that the entertainment industry creates on the Internet cannot be seen, and hence, there is nothing to price.

property rights would be no issue at all and there would be no need for society to take on this impossible task in the court rooms. Society's failure Society will do what it can to ensure that man has the freedom to work with what he wants, develop skills in areas of his interest, and make a living from his work. Society ensures this by protecting his rights to the creation of his work – his property . Society's failure in doing so will threaten the well being and progress of society. Hence, goverments push for more surveillance of its citizens to prevent violation of property rights. The more society fails, the more sophisticated society becomes in it attempts to enforce the law and protect property rights. The drawback is the culture of distrust that breeds in society when more and more resources are invested to spy on us and new laws passed to allow the intrusion. The level of distrust that modern governments have in their citizens is reflected in the increasing number of cameras in public places, and the increasing use of advanced technology to spy on us in our own homes to know what we are doing and every person or enterprise we interact with, every web page we visit, to ”protect” us we are told by our governments5. The rise of Big Brother We find ourselves in a Big Brother society that is obsessed with finding out more and more about us and prove our guilt when appropriate – or rather when we violate property rights. We are aware of being watched and we keep an eye on ourselves so our actions and views are ”right” and we hide what we really want to do and really think as this might not be ”right”. We are very good at being policially correct. In fact, we are so good that we see through others who conceal their true views with words and actions that show the opposite. However, sometimes, we are wrong in our interpretation. We are not sure, and we need to be sure, and when we are not sure, we become suspicious. Intepret but verify. The lesser we understand a person's actions, the more suspicious we are. If we have another explanation for his behavior and actions, which is to his disadvantage, we will accept that explanation if lesser effort is required to come to that conclusion. As society's complexity increases, and a person's actions requires a significant amount of information to interpret, and as the time to process the information is scarce, we will opt for an intepretation that requires lesser information to process, regardless of whether it is to his disadvantage, and pass a collective judgement that is uniform. Weak enforcement of property rights in an increasingly complex information society appears to create problems. The strongest weapon to enforce property rights is man's moral that he shows on a personal level when he interacts with his fellow human beings. It is more difficult to pinch a $10 from a friend's wallet, than to pick up a note on the ground. We'd rather share experiences - or culture is a better word - with our fellow beings, and do good, than be watched by an invisible entity and do what it tells us what to do and not do. Big Brother gets worried when we share, and wants to know what we are sharing and why. No wonder Big Brother hates filesharing. The view that illegal filesharing is free because our moral is low and a stick is needed to keep us on the right side of the law is generally accepted. Measures have to be taken to force us on the right track; threats issued. We need to be watched because our nature is to steal. The thought never seems to have occurred to us that we love The Pirate Bay and filesharing, not because it is free but because it is all there – music, movies, tv shows, ebooks, you name it – it gives us the freedom to access whatever we want. We would pay if someone could just show us how to pay on The Pirate Bay. And if we pay – there will be one lesser excuse for Big Brother to spy on us. The new Pirate Bay Society's failure in enforcing copyright law is not due to outdated copyright law but due to outdated

IPRED, FRA– Sweden's ”Big Brother ”laws

technology that is in use in distribution of digital content on the Internet. GGF can make the markets”see” the value the entertainment industry creates on the Internet, and GGF will make this possible with the next generation filesharing technology. GGF will upgrade the outdated filesharing technology that is the standard today to the superior next generation technology. The new filesharing standard will capture the value in the form of cost savings in Internet traffic. GGF will pass on its share of the cost savings to the community of filesharers who in turn will pass them on to content owners and right holders. We want to pay The Pirate Bay member will pay for his consumption of authorized content, contrary to the belief that the user will go to another site that offers the same content free with illegal filesharing. An extensive study Comscore carried out for GGF in 2009 shows that: Torrent Visitor Profile (USA) Source: Comscore, June 2009 • The majority of Torrent site visitors range between the ages of 35-54 and are middle income. More than 25% are high income. Less than 10% make up the young generation, are low income, and a minority. High E-commerce spending. Total Internet ecommerce spending was down this year, however ecommerce spending by Torrent site visitors has increased. Uniquely different. Compared to total Internet, Torrent users are uniquely different in that they are more likely to visit gaming, technology, conversational media, entertainment and retail sites.

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Looks like we will be ok with paying. The young generation, the group of below 24 years of age, have the most time available to devote to filesharing. The young generation is the community's hardest working group with most content and are the most generous filesharers (Seeders). This group will be rewarded with Frequent Filesharing Points for their consumption and contributions towards the community. The points will be used to pay for consumption. (Point conversion to cash, and cash-out options will be introduced at a later stage). Anonymize vs Legalize. As the legal environment has become tougher, filesharers have begun using services that anonymize their IP addresses and remove their tracks (providing further impetus for a sophisticated "Big Brother") . Such services can easily be obtained for a monthly fee. If a user is prepared to pay a monthly fee for visiting a site with unauthorised content, the same user should be prepared to pay för using a site with the same content but with the difference that it the content is authorized – no need for anonymizing. The large majority group that is made up of high income earners have the least time to spend on filesharing work such as community activity, spotting new trends and content, creating torrent files, quality control etc., due to family, work and other committments. This group of high income earners use The Pirate Bay out of convenience to get what they want, and a very large majority of these have no objections to paying. The cost of using The (new) Pirate Bay will amount to aproximately $20 on average every month for this group.

Risks GGF is listed on Aktietorget, a Small Caps list in Stockholm. History has shown that the legal risks in a venture like this are significant. Not even a large enterprise from the entertainment industry with a market capitalization of several billions of dollars succeeded in a similar undertaking in the past due to legal complications6. This naturally raises questions about GGFs venture. Furthermore, concerns are raised by those who are very well aware of the experience and efforts required to pull off a global venture of this scale. The organization needed to build and manage a legal filesharing site with a top 100 global ranking is a major undertaking; license agreements with the global entertainment industry need to be entered into; the capability to conduct e-commerce on a global scale that is required exceeds the capability and resources of GGF. GGF admits its lack of experience of the entertainment industry, its small organisation and limited resources, and does not hesitate in bringing these matters to its shareholders attention. However, society has failed to enforce property rights and prevent the value destruction in the music industry that has taken place for an entire decade. Value destruction has spread from music to film, TV shows, eBooks and the entire entertainment industry is under attack. The urgency has caused stakeholders to be more open for new models such as GGF. The entertainment industry's strong interest in GGFs plans shows it is on the right track. GGF has the attention of the global markets and will use the stockmarket to raise its capabilitities to the level required to succeed with The Pirate Bay. GGF believes it has the most important asset required in this venture - its insight into the importance of property rights, the importance of its enforcement for society, and how to create a new model for monetizing digital content consumption that will address society's failure. Final word GGF is in a position to establish cooperation between different stakeholders to build a legal filesharing business where the rights of creators of contents are respected as well as the privacy of the users. GGF has chosen the right time and the right place to develop its venture; a time when society has to make room for entrepreneurial enterprises like GGF that see society's failure in the filesharing world, and see the opportunity to adress the failure and create value. GGF is in a position to create a safe haven for businesses to transact with its users with enforcement of property rights on The Pirate Bay. August 25, 2009 Hans Pandeya Stockholm, Sweden,


Bertelsmann Napster