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Angry Birds Chief Says Piracy Can Be Good For Business

January 31, 2012

Not everyone in the music industry is as vehemently anti-piracy as the giants of the Recording Industry Association of American (RIAA) – one of the last beleaguered bastions of an anachronistic music imperium which, like the giant cartelized companies in the age of mercantilism, is only sustainable as long as its members continue to wield influence over legislators.

At the annual Medim conference in Cannes, France – the world´s largest music industry trade fair since 1967 – the head of the mobile developer that created the sensationally popular Angry Birds game had a few choice words for those of his colleagues still clinging to the dinosaur business model.

Noting that his own company had learned valuable lessons from music industry´s overly aggressive approach to tackling the problem of piracy, boss Mikael Hed of the Finland-based firm Rovio said that the big wigs in the music industry needed to chill out and wise up.

“We could learn a lot from the music industry, and the rather terrible ways the music industry has tried to combat piracy,” he told the assembled audience at the conference which was covered by the Guardian.

Rather than waiting in ambush and then launching massive lawsuits against piracy, he says the music industry needs to co-evolve and realize that there´s an opportunity to form a profitable symbiosis with digital pirates, a phenomenon that has proven itself remarkably robust and resilient in the face of countless legislative attempts to squash it.

In what must have sounded like heresy to the heads of industry giants like Sony and Columbia, Hed said: “Piracy may not be a bad thing: it can get us more business at the end of the day.”

What Rovio had done, explained Hed, was to embrace a paradigm shift in how it thought about the people using their products.

“We took something from the music industry, which was to stop treating the customers as users, and start treating them as fans. We do that today: we talk about how many fans we have,” he explained.

“If we lose that fan base, our business is done, but if we can grow that fan base, our business will grow.”

Yet despite report headlines emerging after the speech, Hed´s message was not that “piracy is great.” His comments were directed specifically towards piracy in Asian markets, which he says is more or less outside of any company´s ability to effectively tackle and would thus be “futile” to pursue.

“We have some issues with piracy, not only in apps, but also especially in the consumer products. There is tons and tons of merchandise out there, especially in Asia, which is not officially licensed products,” he explained.

But according to a newly emerging business model, Hed said, apps in particular need to be seen less as a product and more as a marketing medium.

“Already our apps are becoming channels, and we can use that channel to cross-promote — to sell further content. The content itself has transformed into the channel, and the traditional distribution channels are no longer the kingmakers.”

Rovio did note, however, that there´s a proper time and place to legitimately go after pirates: namely, when they do real damage to the company´s new business model or when they start ripping off their fans.

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Source: RedOrbit Staff & Wire Reports



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