Pirates of the Third Screen

Last month’s online scrap between Scrabble trademark owners Hasbro and Mattel, and the makers of Scrabulous, an unauthorized online version of Scrabble, has some implications for the future of mobile marketing. As far as Hasbro and Mattel were concerned, Scrabulous was a simple case of piracy. But what they saw as a threat should have been a triple-word score. Someone else had created a digital version of Scrabble, and amassed 2.3 million people who played it every day. It was an amazing user-generated ad campaign. All Hasbro and Mattel had to do was swoop in with their checkbooks and make it legit. Instead, they fired their self-proclaimed agency, an army of passionate Scrabble fans.

Scrabulous was a trademark infringement. But it might have been smarter to cut a deal with Scrabulous than anger its players. Thousands signed up with the “Save Scrabulous” Facebook group. One fan threatened a hunger strike. Hasbro and Mattel were talking tough, but they may have to eat their words.

The recent rumors of talks between Nokia and Facebook are a sign that such user-generated dilemmas are already on their way to the mobile world. New devices mean marketing memes will travel faster, but they also mean less control and more “pirates” unofficially repurposing messages and products. The problems of the Internet will be amplified many times in a WiMax-saturated world, but there is sometimes an upside to these problems. As was the case with Scrabulous, some new threats might actually be opportunities.

Online the consumer is king, not content, and copyright has proved to be an ineffective castle. As mobile technology improves, companies will see their intellectual property used in imaginative new ways on the third screen, too, whether they like it or not. The wake-up call to this problem was the ringtone, but the music business quickly turned that into a healthy, legitimate revenue stream. Licensing music that is DRM-free and gratis at the point of consumption could prove to be that industry’s most lucrative move in a decade. Pepsi is paying the record labels so they can give away music in a bid to sell soda. Nokia is doing the same to market handsets and contracts. Electronic content with no marginal cost, like MP3s or online Scrabble games, is a great way to market goods with marginal costs, like soda or real Scrabble boards.

There will be other problems. Along with consumers finding unimaginable ways to change messages and products, the actions of other companies distributing such messages and products will also create PR and marketing snafus. Application owners, content aggregators and wireless operators who enable the spread of pirated material make decisions about how a brand is used, beyond the control of the brand itself.

Ford found this out last month when Cafe Press, a Web site that lets customers create products, prevented a group called The Black Mustang Club (BMC) from producing a calendar featuring photographs of members and their Ford Mustangs because of trademark restrictions. Suddenly Ford had 9,000 angry BMC members and thousands more furious copyright activists to deal with. A decision Ford hadn’t been part of became a public relations mess that leaked all over the Internet. Protecting trademarks is a difficult balancing act.

It turned out Ford was fine with the calendar and there was no infringement. But Cafe Press had been spoken to by Ford before concerning infringements in other products on the site, so it stopped the BMC to protect itself. Sites like Cafe Press, where third parties can upload content they may not own the rights to, are under pressure to police what people upload, causing them to preemptively prohibit some content without checking if it’s OK. When this balancing act goes mobile, it’s going to get significantly wobblier.

The crux of all these issues is a very basic problem we have with information. When we have a new idea, there are two opposing forces at work. At the same time as we are thinking “How can I get this out there?” we’re also asking ourselves “How can I benefit from/monetize/protect this idea?” We want to spread ideas as information but capitalize on them as intellectual property. This problem with information is something I call the pirate’s dilemma.

Effective strategies will mean more connections with consumers and increased opportunities to communicate with them. But they may also mean more crossed wires and mixed messages. The question is, are we in the business of spreading messages or controlling them? In the future it’s going to be harder to do both.

When fans start doing the marketing for you, you have a choice: You can treat them as pirates, hurl lawsuits at them and hope they stop. In some cases, this will be the best thing to do. But what if these pirates are adding value to our marketing effort in some way? What if they are doing something other people are passionate about, which makes them feel passionate about your product? In these cases, using the strong arm of the law won’t do your image any favors. And when the pirates are doing something really cool, and trying to stop them gets people really angry, it’s likely the pirates will keep coming back and multiplying no matter how many people are sued. And the truth is, when lawsuits become a core component of your marketing strategy, you no longer have one.

Matt Mason is the author of ‘The Pirate’s Dilemma: How Youth Culture Reinvented Capitalism.’