As someone who works in many facets of the music industry, I used to seethe with a mixture of anger and jealousy when I would hear people in more “traditional” goods-based industries argue in favor of music content-based piracy. They made all the classic talking points, like “I wouldn’t spend money on this artist normally, and maybe if I like it I’ll spend money on them when they come to town” (which never happened), or “artists are rich and I’m poor, they don’t need my money” (rarely the case), or the worst, “if it were fairly priced and worth paying for, I’d buy it” (not true).  I always wondered if they’d have the same attitude if 63% of the things acquired by customers in their industries weren’t actually paid for, as was conservatively estimated as the case for the music industry in 2009 (other estimations put the figure of pirated music at 95%). Well, we may soon see the answer to curiosities like that. Though one can say with tentative confidence that music piracy is on the decline thanks to services like Spotify and Rdio, it could be looming on the horizon for the entire global, physical supply chain. Yes, I’m talking about 3d printers.

Before I get into the heart of this article, let me take a moment to make one thing clear: I think these machines are incredible. It’s damn near inspiring to think of even a few of their potentially world-changing applications: affordable, perfectly fit prosthetic limbs for wounded servicemen and women; the ability to create a piece of machinery on the spot instead of having to wait for a spare to arrive in the mail, or en route if your car or ship breaks down in a far away place; a company based out of Austin, TX even made a fully functioning firearm from a 3d printer a few months ago.

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If these machines become as consumer-friendly and idiot-proof as possible (like computers), it’s possible that in a matter of decades (maybe less), a majority of U.S. households will have their own 3d printer. There’s also the possibility they could take the tech-hobbyist path, one that is much less appealing to the masses. Dale Dougherty of Makezine.com estimates there are currently around 100,000 “personal” 3d printers, or those not owned for business or educational purposes. I don’t think they’ll ever be as ubiquitous as computers, but there are plenty of mechanically inclined, crafty hobbyists out there who would love to play around with a 3d printer if it was affordable enough.

That being said, is there reason to worry about the economic implications of consumers making what they want, essentially for free, instead of paying someone else to produce it? Or will the printers instead be used for unique items more so than replicating and ripping off other companies’ merchandise in mass amounts? The number of people working in industries that would be affected by a development like this is far greater than the number of people who work in content-based industries, so any downturn would probably have a much larger economic implications. Certainly, those times are a ways off, but a little foresightedness never hurt anyone!

So, how do these printers work? It’s actually simple enough for the average Joe. 3d Printers scan a 3 dimensional object, taking its various measurements and angles, and convert all of that data into a CAD (computer aided development) file. The machine then takes the data in the file and uses it as a blueprint for constructing a 3 dimensional replica out of molten plastic or another material, ranging from PVC to Titanium depending on the printer model’s capabilities. The printers themselves are not new technology, having been around since Chuck Hall of 3D Systems Corp invented the first in 1984.  However, until recently they were typically only used by institutions and large corporations because their price point was in the 6 figures. That is no longer the case, as 3d printers are becoming increasingly more affordable (around $1,500 per) and CAD files are very easy to get a hold of.  In fact, some observers are comparing the current 3d printer landscape to that of computer hobbyists in the late 70’s and early 80’s, and we all know what came of that. But is there the potential for a revolution of these machines to change the world like Jobs, Wozniak, and Gates did?

Aside from the wonderful problems these devices can solve with specific products, they can also help free up much in the way of storage and therefore building costs. Some speculate that the expansion of 3d printers to retail stores would convert storefronts from being stocked with merchandise to merely ordering locations. You go to a store, see that they have one of every product lined up for you to play around with, and then go to the clerk and tell him or her what you want. They locate the appropriate CAD file and make the product for you right there on the spot, thus drastically lessening the risk they take when they place orders with manufacturers or buy from anyone else higher up the supply chain. No more wasted merchandise. These goods could be cheaper for the end purchaser as well, as they’d go through the entire supply chain in one location in a matter of minutes. Of course, this would only work for some types of retail outlets, but you get the picture.

What are manufacturers expected to do in this scenario? One possible solution is that manufacturing companies sell the CAD files of objects they make to retailers via something like the iTunes storefront. The retailers could earn some sort of volume discount depending on how many times they use the file in a given month (something that could be easily tracked), similar to how traditional bulk orders are carried out. These CAD files could be digitally “wrapped” by the manufacturer, copyright owner or patent holder in a way that ensures the only people that can unwrap them and use them are people that have the right to – not anyone who came across one haphazardly or illegally. Eventually, this storefront could be expanded from strictly B2B to include B2C as well, accommodating both retail outlets and everyday 3d printing hobbyists. But that raises the possibility of retailers being left out in the cold – if the end consumer can buy the CAD file from the manufacturer’s storefront, why go to a retailer? And still underlying these traditional relationships is still the question of piracy: if someone found a way to hack a digitally “wrapped” CAD file (which they will), what’s preventing them from spreading it online for free? How much of a dent would this “piracy” make on the bottom line of the original manufacturer and/or retailer?

This sort of piracy is already happening on torrent sites. Yep – the exact same sites that many associate with the draining of music, film, and publishing sales over the past decade can now be used to download these digital blueprints of 3d products, for free.  Pirate Bay even has its own section for these files, called “Physibles.“Do you see the long-term problem here? If these printers become affordable enough for mass consumption, then why would a father buy a particular toy for his son if he can just print it for free? Or from another angle, wouldn’t the gift of a toy be more special if it was something he designed and created himself? There’s the ostensible “startup” cost of purchasing the printer and spending time in learning how to use it, but those things are investments that should return nicely. It will be a while before we see things come to this, but you’d have to imagine that relevant manufacturing and retailing CEO’s around the world have a place for thoughts like this in the back of their minds.

I realize this may be coming across as premature and unprovoked hysteria, and some of it probably is. New technologies have been disrupting old technologies since the beginning of time. The transitions from horse & buggy to car and candlewax to light bulb didn’t end the world. However, the greater entertainment industry is still grappling with the effects of the digital revolution, more than 10 years after Napster burst it open. Manufacturers and their retail partners are fortunate in the sense that they’re not going to be one of the first industries that has to deal with a digital takeover, like the music industry was.  They can learn from the examples and mistakes made by the industries that were blindsided by the digital revolution before them, and hopefully use those lessons to soften any potential blow instead of spending gobs of money fighting the inevitable. Better yet, they’ll use them to make their industries more robust than ever before.

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Notes

In 2009, some would say at the peak of music piracy, some estimates were that 95% of music was pirated.

http://www.guardian.co.uk/music/2009/jan/17/music-piracy

The RIAA has some more specific statistics. Most notable is that they estimate in 2009, only 37% of music acquired was paid for.

http://www.riaa.com/faq.php

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Much harder to find statistics on movie industry piracy, but box office sales numbers have been declining for 7 years.

http://www.nytimes.com/2012/02/05/opinion/sunday/perpetual-war-digital-pirates-and-creators.html?_r=1

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ebook piracy? No good stats here either, but one study says $3 billion: http://venturebeat.com/2010/03/02/book-piracy-costs-u-s-publishers-3b-says-study/

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3d printer piracy

Article that outlines the issue well, from the economist:

http://www.economist.com/blogs/babbage/2012/09/3d-printing

It is likely that traditional, established manufacturers label them as “piracy machines” as soon as the threat becomes significant. Right now, existing manufacturers can still make the products like toys and sunglasses much more affordable and sturdy.

These printers rely on CAD (computer aided design) files to create the objects, and CAD files are created by scanning a 3d object to determine its size, dimensions, etc. Copyrght infringement is taking place if the object being scanned belongs to someone else.

This article compares the current 3-d printer landscape to that of computer hobbyists in the early 80’s. no one quite knew what would become of these machines they were tinkering with, but all knew they would do something big.

There is already a category for CAD designs on pirate bay, called physibles.

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Optimistic article from Forbes:

http://www.forbes.com/sites/gcaptain/2012/03/06/will-3d-printing-change-the-world/

Some very functional possibilities:

·         A ship in the middle of the ocean breaks down but is able to manufacture the replacement part on board with a 3-d printer, instead of having to wait however long for a replacement part to come.

·         Space shuttle could build a base on the moon constructed entirely of 3d printed-materials.

·         Cities could be built underwater, fit perfectly to the sea floor’s contours.

·         Could even build better houses, and for a fraction of what traditional construction companies might charge.

·         Wounded servicemen and women can get a much more affordable prosthetic limb, fit exactly for them.

·         Could eliminate the need for warehouses full of spare parts.

·         Can print many different kinds of materials, from plastic and pvc all the way up to aluminum and titanium.

·         Printers could technically print themselves. Could this spell doom for the 3-d printing business? Would cannibalize itself.

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Digital “wrapper” patent protection?

http://www.bbc.co.uk/news/technology-19928502

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Ways for manufacturers to embrace the technology instead of spending millions fighting it:

http://www2.macleans.ca/2013/01/28/the-new-age-of-piracy/

One idea is that manufacturing companies sell the CAD files to objects they physically sell as well, kinda of like the iTunes storefront. However, this would have a very negative impact on retailers, just like iTunes did to brick and mortar music stores.

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Explanation of how the emergence of 3-d printers could render the global supply chain totally obsolete:

http://www.smartplanet.com/blog/bulletin/3d-printing-may-put-global-supply-chains-out-of-business-report/2019