Tag Archives: intellectual property

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.

CD Repair Shop

The CDDB provides the identification of CD content based on track set characteristics. This is how your Winamp program can provide you with the CD track titles when you put a CD in your computer and are connected to the internet. CDs get scratched and damaged, and are cumbersom to travel with. With a large single centralized database of CDDB data and the associated MP3 files, a CD could act as a key to gain access to a set of MP3 files – available from anywhere. A user account could store a list of authorized CDs for any user. Each account would not require additional storage of MP3s – rather, simply a list of unique keys. Even damaged CDs could be converted to high quality (undamaged) MP3 files in less than a few seconds with this system. Barrier to entry is high, but marginal costs for volume users is low. User accounts would provide users with access to their CD libraries from any networked device.

Innovation in the 21st Century

The rate of innovation will continue to increase as communications and transportation help us to conquer time and space. The value of innovation will become quantifiable and attributable – leading to a renaissance in most fields, and a new breed of professional innovators currently being born as a new sector in the consulting industry.

Falling Profit Margins

More availability of information leads to more competition. More Competition leads to lower profit margins.

Higher profit margins will only be possible in businesses with limited competition. The dominant way to legally limit competition is through innovation and protecting intellectual property rights.

Innovators will be rewarded more and more over time.

Over time, information becomes more and more available and interpretable. In this environment, people are able to demand fair compensation with a better and better understanding of what fair is. People will have to be compensated more and more closely to the value of their work. As this happens, profit margins will fall toward the pure value of synergy, however it is defined, and equity valuations will reflect these changes. Whenever employers refuse to meet the demanded minimum compensation for employees, the employee suddenly becomes competition. The economy will transition toward a large number of smaller economic players rather than the small number of large currently dominant players. Existing job roles become commoditized over time as large numbers of players compete profit margins away. The only way to substantially and positively differentiate your profit margins is to do something that is not yet commoditized; in other words, to innovate. The only way to maintain your differentiated position is to protect your existing innovations through patents and secrecy and continue to innovate.

Implications:

  1. In valuing your stock positions in companies, consider how easy it may be to enter their market in the future. Also consider their profit margins with the knowledge that there tends to be a profit squeeze as competition increases.
  2. Record your thoughts if you think that they may be unique and potentially valuable. Nobody else can patent something if you thought of it and recorded it properly first.