There is a saying that goes: “Brazil is the country of the future. And, always will be.” Maybe that is still true for much of Brazil but I believe it could shortly become a paradise for Internet startups.

There is a lot of activity here in Brazil, and at first glance you would have to say that, sadly, things are still going in the wrong direction. Before I arrived a few days ago into Rio there were stories of tanks driving into the slums to battle drug dealers, and it looks like the conflict will not be abating any time soon. Drugs have always been a big problem in Brazil. If you are interested in the truest description of this reality, you can do no better than to watch the movie “Elite Squad.” It is a thrilling piece of work, backed by an incredible soundtrack, and has an authenticity which often makes it hard to watch, and many Brazilians I know simply won’t because it is the reality for them. There are no good guys in this film: the film shows the impact of drugs on every level of society, and the complicity there as well. As a vital piece of cultural commentary the film can stand on its own, but the backstory behind it is also incredible: there is speculation that the police in Rio got wind of the production and attempted to stop release of the film. It was subsequently leaked onto the Internet where it became a massive sensation before commercial release, and yet ticket sales seems only to have benefited from that leak. The Portuguese version of Wikipedia which describes the film and the history around it is definitely more interesting that the English version on Wikipedia, noting that over 11 million people watched the pirated version online before it had ever arrived in theaters, and surprisingly the film was still a massive commercial success, #1 in the box office for weeks, achieving over 1000 people per theater the first week of release, and winning the Golden Bear at the Berlin Film Festival in 2008.

Interesting lessons on the opportunities that the Internet provides beyond traditional distribution mechanisms, indeed. And, this is why I think Brazil is primed to become an Internet powerhouse in the same league as China and India. Brazil is, because of its unique relationship to US and European copyright laws (basically ignoring or rewriting them), in a position to exploit its cultural and technological opportunities like no other country. Brazil is a country in love with the Internet. You cannot help notice the large Brazilian populations in whatever technology communities you frequent. Fabio Nunes of Navitas.com.br told me that the java community in Brazil is the largest in the world. The combination of high Internet usage and lax IP laws will make it so that business models which are simply not possible in the US are possible south of the Amazon. Anyone in the US who has tried to build a startup within the music space knows which unworkable US models to which I am referring.

Intellectual property is handled differently here. Everyone has probably heard of the fights between US pharmaceutical companies and Brazilian companies producing generics. This is a complicated issue, of course, but it is not something happening in the shadows of society. Walk down any street in Ipanema and you will see advertisements like this one that proclaim cheap generic drugs.

There is a great documentary which tells more about these problems and also about the opportunities. Good Copy / Bad Copy shows the alternative economies which are rising in places where the US does not have control of copyright, and the results are surprising. Just a few days ago a new site launched called Estrombo, which aims to “inspire business in music” and has some interesting articles asserting that “the music industry is an industry heavily impacted by the Internet, but at the same time, an industry which is guiding our online usage (through games, etc.).” One of the principal authors of this new project is Ronaldo Lemos, head of Creative Commons here in Brazil, and who was also interviewed in GC/BC.

And, unlike the US, this is not a fringe movement led by Cory Doctorow types. Gilberto Gil, a musician who could be described as a Brazilian Paul McCartney in terms of fame and influence on Brazilian music and culture, spent five years as the Brazilian minister of culture, a high level cabinet post. When I saw him in Austin four years ago at SXSW, Mr. Gil had proposed donating his entire music catalog, spanning forty years to the Brazilian government, asserting it was not his own but should become a cultural asset of Brazil. He is deeply involved in open source culture and to see guidance from that perspective at high levels in the government Brazil is very interesting. I believe that Brazil has long felt the dominance of the US and Europe in matters pertaining to IP rights, and I think that now that there are other large markets and partners emerging like India and China, which have their own agendas independent of US dominance, that Brazil feels it can chart its own course.

Of course there are a lot of things in the way of this happening. The “pipes” into the country are poor, and there is bureaucracy beyond belief here, and most dangerously, as a poor country I believe a majority of Brazilians expect their government to protect them, all the while corruption is still rampant and the politicians are still looting the place. These are problems which will take years to address and they are embedded deeply into society. But, I believe the opportunities outweigh the problems in that those societal problems can be routed around, whereas the IP blocks that have destroyed, for example, many an Internet music businesses, simply don’t have the power here that they do in the US. I believe that technology can route around inefficiencies and create new incredible business models as long as there are not backwards IP laws to prevent innovation from occurring.

I think the time is ripe for building a technology incubator like PIE (where I live in Portland) or yCombinator. I’m here in Rio looking for entrepreneurs and other people who see this opportunity. If you know of something happening, get in touch with me.