Video: To Catch a Thief

By Producer
updated 8/9/2009 11:37:50 AM ET 2009-08-09T15:37:50

The corner of Broadway and Spring Street in New York City is a place bustling with street cart peddlers and shoppers looking for bargains. If you’d been standing on that corner on a warm summer’s day this past June, you likely would have been standing in front of a cart laden with inexpensive knockoffs of high-end women’s handbags.

And if you weren’t watching carefully, you might have been jostled by Eden Lipke, a 20-something New Yorker, who came dashing south on Broadway with a $10 bill in her hand to buy a designer original. She was rushing to that peddler’s cart to buy her dream purse, a small white clutch worth more than $300 at high-end stores like Saks or Bendell’s, if it had been available there — which it wasn’t.

“I've been searching for two weeks for one of these bags,” Lipke said as she slung it over her shoulder and reached for her cell phone. She was one of only eight people that day lucky enough to buy the genuine article.

Handbag designer Rachel Nasvik and her marketing team, Michael Hastings-Black and Biba Milioto, were selling just a few of these designer originals through a street peddler better known for cheap pirated fakes.

“It’s moving product in a space that’s not at all expected,” said Hastings-Black.

Nasvik, an up-and-coming New York handbag maker, already is selling her bags at high-end stores like Bloomingdale’s and Saks Fifth Avenue. As a fashion designer, she’s well aware that she’s working in an industry full of copycats and pirates who steal a designer’s styles and sell copies at a fraction of the price.

Piracy is pervasive
“Piracy is the biggest problem facing any piece of intellectual property in the world — and it’s getting worse as it’s becoming easier and easier to copy things,” said Matt Mason, author of “The Pirates Dilemma: How Youth Culture Is Reinventing Capitalism.”  

Mason argues that even with the law on your side, piracy today is so pervasive that it’s nearly impossible to combat. 

“I’ve always looked at piracy as an opportunity rather than a problem,” Mason said. “There’s also new money to be found in what pirates are doing, because often they’re highlighting a different revenue stream of a different market or a different distribution model.”

Back in New York, Nasvik, Hastings-Black and Milioto were using the pirate’s domain — the fly-by-night peddler carts — for their own purposes. They turned these carts into a treasure hunt location for their own special marketing project. Using the social networking site Twitter, they sent out clues to a pool of more than 1,000 followers, telling them where they could buy a small number of genuine handmade lambskin bags at locations usually known for selling cheapo, poorly made copies.

“How many people do you think are going to show up and how fast?” asked a reporter.

“There's the likelihood that within 10 to 15 minutes, they could even all be sold out,” Hastings-Black predicted.

He was right. In fact, it took even less time than that. The first lucky Twitter follower showed up in just under five minutes, and the last of the eight bags on the cart was sold in just over eight minutes.

While the campaign was not a money maker for Nasvik (she sold the bags at a loss for $10), she says that being considered cool enough to be copied by a pirate elevated the brand. 

“You're walking along and you're seeing, OK, here’s the Armani and there’s the Chanel and here’s the Rachel Nes — Who is Rachel Nasvik?” said Hastings-Black.

This campaign also turned the chore of buying a purse into a fun competitive game that energized her fan-base and caught the attention of the media as well.

Making money off the copycats
Across the country, in San Francisco, another entrepreneur has found a remarkable way to outfox the pirates. 

“If we could put up a sign that says, ‘Pirates come here, we’re your friends,’ I would do that.  Whereas everybody else in the industry is shunning them, we want them to come and work with us,” said Jameson Hsu.

Hsu, head of Mochi Media, builds and hosts computer games.

“We used to look at pirates as people that would take content without the permission of the owner and distribute it across the Web,” Hsu said. “And now as we've built our own business model, we look at pirates in a very different light.”

Hsu’s strategy begins by accepting that piracy is on the Web and cannot be stopped. “It’s how content is being distributed on the Web now. It’s a different way of syndication, and we thought, ‘OK. We can’t fight it, but we can figure out a way to leverage it.’ ”

Getting games in front of people
So what’s Mochi Media’s secret? The company builds advertisements into the body of every game they publish on their Web site. The ads, which range from Snickers bars to Hollywood movies to air freshener and stain removers, travel with the game every time it is illegally copied or pirated. 

“The pirates are helping us to distribute our content,” said Hsu. “They get our games in front of people. They take the games, the packaged solution with our (embedded advertising)  technology, and they put our games on their Web sites. And what happens is another pirate will come to that site, see that game and go, ‘Hey, I want that, too. I’m gonna put it on my site.’ And it just happens over and over again. And we see these games spread to thousands of Web sites. So, the pirates are the guys operating these Web sites and driving traffic to them.” 

No matter where the games end up on the Web, the ads are part of the game. Every time a player views one of those ads, Mochi Media and the game inventor get a small revenue. So, the more people who play the game, the more people see the ads — which means more money for Mochi Media.

“We want every single pirate to come to us, take our content, because they get it ... in front of more eyeballs,” said Hsu. “So pirates have definitely pushed innovation. They have pushed us to build better technology. They have pushed us to find better ways to work with them. They have pushed us to change our business model to better adapt to the things that they’re doing.”

For these entrepreneurs, learning from the pirates may be the best way to stay ahead — and the only way to survive.

“The train is leaving. And you're either on it ... or you're under it!” said Hsu. “And I mean, that's really how we look at it. And that's why we say the industry has to change.”

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