Tag Archives: intellectual property

Net Neutrality: No Compromise

To begin talking about Net Neutrality, it helps to clarify what the internet is. It’s simply data sent via TCP/IP (the protocol for sending data through routers). Some people host web sites, others connect to their company e-mail, others do other things – it’s all the internet.

Understanding that the internet is just a connection using TCP/IP, then Net Neutrality is simple, too. Net Neutrality simply means that your ISP may not interfere with the internet. They may not censor your packets (the data that is sent via TCP/IP). This means they can’t censor your news, keep you off of Skype, restrict your sending and receiving, or otherwise interfere with your communications.

Any compromise on this is wrong for two reasons: 1) Your ISP should not have the right to interfere with your free speech, and 2) ISPs should not be able to tax the value creation of the media industry.

ISPs should not be able to interfere with consumer access to media companies, nor tax those companies for access to consumers. ISPs should not be able to interfere with our speech or block our access to the speech of others.

ISPs are in the business of providing internet access, but they don’t own the internet; any attempts to eliminate net neutrality would violate our consumer rights and hurt the economy.

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Copyleft 101

NewScientist has a very good survey article regarding copyleft. They discuss the legal implications of waiving the exclusivity rights, as well as the philosophical differences in vision regarding the commercialization of intellectual properties.

Online Rights: No "Deep Linking" – Texas

Wired News is reporting on a cease and desist letter sent to an independent news site by Belo, corporate parent of The Dallas Morning News, forbidding links to individual stories within the web site. They claim the author can only link to the web site’s homepage, and attempting to link to stories within the site violates their copyright.

If things move in this direction, the best characteristics of the web will be wasted.

Competition in the information age

Consolidation is the result of economies of scale – essentially horizontal integration, vertical integration, and resource sharing. These methods create competitive advantages in powerful ways that make it difficult for smaller players to compete in the same markets. There is nothing necessarily wrong with this trend, but it creates large barriers to entry and often leads to larger profit margins than would be otherwise possible.

In the information age – yes, now – this effect is greatly increased, and the limitations of transportation and capacity have been eliminated. The ability to integrate and share resources is much easier, and new extra-strength synergies are created. For example, if a website allows you to shop for both books and music, then it is possible to tailor your music shopping experience based on your book purchasing preferences. This is a very simple example of a much more powerful trend. It may be impossible to enter into any sort of competition with large information companies after the next 20 years.

You can already see it beginning to happen: Yahoo builds from scratch any web business that seems to make sense. Then because of its existing market coverage, and the ability to integrate new businesses with existing businesses and data, Yahoo is able to capture so much synergistic value that they gain an insurmountable competitive advantage. In this way, I think that Yahoo and the other major aggregators and integrators are great companies.

There are risks. Big ones. And the FTC may not be able to do anything about it.

It may be inevitable that the consolidation will lead to a stable equilibrium under monopoly – where there would be no reason to be a competitor because the types of services being provided rely on historical information and broad business integration that is impossible to recreate or beat. Then this monopolist would have virtually limitless pricing discretion, and the ability to manipulate markets and cultures in unprecedented ways. Humanity, in many ways, would be at the mercy of the monopolist. (I hope that its leaders are benevolent democrats with philosophically sound motivations and long time horizons – but what if they are not?)

The only way to eliminate this market dynamic is to eliminate the factors that make it possible, namely, the opportunity to use your market dominance in one field to create dominance in another field. More specifically, eliminate the competitive advantage created by archival data. This can be accomplished by sharing archival data freely. But what about my privacy? Good question. We have a big problem here. The private information about you and your preferences plays a large role in creating the value that leads to this consolidation. If you want to eliminate this competitive advantage, then you either eliminate the value or you share private information.

There is another way.

What if users owned their own archival data? Amazon could still track my click streams, and do whatever they wanted with them. But I would also be tracking my own use, and have control over my own preferences and historically available data. Amazon would quickly learn that the personalization algorithms produce much more valuable customization using the users’ data than the Amazon archives. Market entry for this standard benefits from this implication. Now what happens if you go to a small competitor – one with little history, but better value than the others? They would be able to provide you with services that took advantage of your archival data, just as the monopolist would have. Competition is restored, and the advantages for humanity are regained as well.

Somebody should create a standard – probably using an XML document editable from within your browser. I’d love to help. Somebody has to do it eventually, and the sooner the better for all of us (except the monopolist, of course!)

Intellectual property protection is important

Imagine there are two worlds: One with freely flowing information, and the other with intellectual property rights retained. What would these worlds look like?

What are the implications of free distribution? Whatever they are, that world is still available to the people in the world with information rights. The individuals with rights would just be foregoing their rights, an option that is often exercised today. It’s obvious; some information is worth more than others. Being able to price and transact for money is a basic financial tool that has been developed to make trade and specialization possible. Would we really want to eliminate this important dynamic in the next cycle of business evolution? What would be the implications of that loss? There would be no direct incentive to create valuable information; originators could benefit from the marketing effects of popularly reproduced content, but this is not the same. Clearly, an important part of the economy in the coming century will be based on software companies, media companies, research companies, and other producers of intellectual properties. Eliminating the financial viability of their products would eliminate the incentives for these companies to exist.

Allowing trade is always good. If it weren’t the preference of both parties, then the trade wouldn’t take place. Licensing intellectual property is similar: If you were willing to pay for it, it was because it was worth at least that much to you. Anticipating the value you would assign to their work, the producers invest their time and resources into a better product. What quality of intellectual property would you rather live with?

In which world would you rather live?

Commerce in the 21st Century

The weight of value in the goods and services that make up commerce will shift toward the intangible. This includes media, communications, rights, and information services, primarily.

Preparing for music rights protection on the internet

Napster users on the night of the first injunction found downloads crawling as peers were scrambling to loot the music warehouses. Consumer preparations for the fall of Napster indicate that many worry that they will have to pay for music downloads in the future.

On the other side of the coin, the Recording Industry Association of America (RIAA) is looking for new channels for online music sales that will allow them to capture as much value from their music portfolios as possible. With their music less available, they believe consumers will pay for their recordings on the internet, just as they do with traditional media like tapes and CDs.

The Internet is preparing for the fall of Napster as well. Many DRM providers, AnIdea Corporation included, now make it possible for record labels (or anyone else) to list and sell their music online. Content markets for Music are attached it to tracking, accounting, and billing systems. AnIdea.com makes many of these services free for everybody. Each listing is managed by the music owners, including any promotional materials. Distribution occurs in a manner that finally compensates the music owners for their sales.

The Music Industry and the Internet are constantly evolving under the prevailing winds of the markets and their legal frameworks, and how we acquire music is far from settled. Some things seem clear, though: that music will continue to be protected by copyrights, that people love internet music distribution, and that technology will adapt to fit the markets and the laws.

It is probably just a matter of time before media players come with fingerprinting software that analyses the waveform, generates an ID, and compares it against a public database of waveform IDs. A system like this could be used to apply copyright protection to the files you think you got away with. In other words, the free files you have downloaded for free from Napster might someday require a fee to play. Same file, new price.