September 2007

Outgrowing Copyright

by on September 28, 2007 · 0 comments

In an attempt to explain the effect of market growth on copyright policy, I earlier told a parable, promising graphs to follow. In the meantime, I’ve drafted an entire paper on the topic, Outgrowing Copyright: The Effect of Market Size on Copyright Policy [PDF].

You can find the graphs describing the parable—actually, modified version of the story I told earlier—in that paper. Rather than replicate those graphs, here, I’ll offer you the paper’s abstract:

Does copyright protection offer the best means of stimulating the production of expressive works? Perhaps, at the moment, it does. If so, however, it will probably become inefficiently over-protective as the market for expressive works grows. With such growth, copyright owners will find it increasingly easy to engage in price discrimination against customers willing to pay a premium for particular expressive works. In so narrowly divided a market, the power to bar substantially similar copies will empower copyright owners to extract monopoly rents. And, yet, we have no reason to expect that copyright’s production or distribution costs will likewise increase. Holding all else equal, therefore, growth in the market for expressive works will at some point cause copyright’s social costs to outweigh its benefits. This paper explains that effect and discusses how policymakers should respond.

The paper includes not just graphs describing the parable of the village authors, but graphs of more general import. I might share some of those in upcoming posts.

[Crossposted to Agoraphilia.]

Verizon originally rejected Naral text messages, as Tim notes below, but it quickly changed its tune when the news became public. That’s because there is competition in the marketplace and public pressure made Verizon act faster that it probably has on any other issue in the last year. This is one more example of why Net neutrality advocates should relax and focus their efforts on problems that actually exist, such as the waste and corruption in the Universal Service system.

Also, I have been meaning for a while to post PRI’s new paper on Net neutrality, so here it is.

A reader writes in to point out Ken Fisher’s excellent take on the Verizon/NARAL controversy:

When first reported by the New York Times last night, the issue was tied to “net neutrality,” but this is really a red herring. Laws prevent Verizon from censoring voice calls or even individual emails, but there are no prohibitions on censoring SMS messages sent over that network. Verizon Wireless does not censor Internet content or services, even though it currently reserves the right to do so for short code messaging services. However, public outcry changed Verizon Wireless’ tune in less than 24 hours.

Verizon Wireless is quick to point out that their prohibition had been based on the topic of abortion itself, not on any particular side within that debate. That is, the company does not want to look as though it was taking sides in the abortion debate itself.

Nancy Keenan, president of NARAL Pro-Choice America, said, “Regardless of people’s political views, Verizon customers should decide what action to take on their phones. Why does Verizon get to make that choice for them?”

Given that Verizon Wireless was the only carrier to refuse NARAL, it’s not surprising that they have changed course so quickly. It’s proof positive that bad policies can and will be addressed if the public’s sense of fairness can be marshalled.

It’s worth bearing in mind that given the finite number of short codes available, Verizon has to exercise some level of discretion in deciding who gets to have one. And at a very minimum, I want them restricting access enough to ensure that I don’t get spam sent to my phone. In this case, the market worked: Verizon’s decision sparked a consumer outcry, which in turn caused Verizon to re-consider its decision within barely 24 hours of its coming to public attention. This is hardly a good example of the need for greater regulation.

In an excellent post, Michael Arrington at TechCrunch has picked up and expanded on my post here about the ITAA’s advocacy in favor of REAL ID. His title “Conflicts of Interest: . . .” draws out nicely the schism that ITAA’s advocacy for REAL ID creates for its membership. They work to serve us when they sell products directly, but work to hurt us when they sell surveillance infrastructure to the government.

Helpfully, he also provides links to information at about the House and Senate bills to repeal REAL ID.

Laruen Weinstein has posted a proposal for the deployment of a distributed global Internet traffic measurement system. Aimed at moving past the current impasse over whether their should be government regulation aimed at network neutrality, the system would measure “operational bandwidth, throughput, and other parameters of public Internet traffic” so that norms could be established and deviations from those norms could be discovered, measured, investigated, and debated.

I find it a sensible idea, and am willing to forgive his proposal’s bias toward legislation. The establishment of norms and a system for swift public exposure of deviations will be enough to harness ISPs to the interests of the Internet-using public, without the sclerotic influence of regulation.

TPW 31: Microsoft vs. Europe

by on September 27, 2007 · 0 comments

Last there was more big news out of Europe regarding Microsoft’s ongoing antitrust saga in the European Union. The European Court of First Instance made an important holding regarding what Microsoft would be able to bundle in its Windows operating system, as well as some rulings about the disclosure of interoperability information for its systems. This week, we’ll be discussing the implications of the ruling for the software industry and consumers.

Our guest this week is Jonathan Zuck, president of the Association for Competitive Technology. We’re also joined by TLF regulars Hance Haney, Cord Blomquist, Tim Lee, and Adam Thierer.

There are several ways to listen to the TLF Podcast. You can press play on the player below to listen right now, or download the MP3 file. You can also subscribe to the podcast by clicking on the button for your preferred service. And do us a favor, Digg this podcast!

Get the Flash Player to see this player.

Subscribe to Tech Policy Weekly from TLF on Subscribe to Tech Policy Weekly from TLF in iTunes Subscribe in Bloglines

In his latest article, Tom Hazlett, professor of law and economics at George Mason University, points out that despite all the talk about the need for mandatory “openness” or wireless Net neutrality, Apple’s “walled garden” i-Phone model has spawned some serious innovation. He argues:

“One million customers bought iPhones in the first 79 days; analysts project 4.5m units sold in the first year. Hosting this Apple party is a curious way for carriers to lock out innovation. It is even more remarkable that critics could configure Apple’s entrepreneurship as an attack on creativity. They claim that only a device that is optimised for any application and capable of accessing any network is efficient.

They are wrong. What works best for consumers is a competitive process in which independent developers, content owners, hardware vendors and networks vie to discover preferred packages and pricing. When decision-makers compete for customers and answer to shareholders, a sophisticated balance obtains. The alternative proposition, business models voted on by regulators, is a recipe for stasis.”

Continue reading →

Here’s an essay that (based on the abstract, at least, I haven’t had a chance to read the whole paper) perfectly crystalizes the anti-libertarian premises at the heart of the copyright maximalist position:

The adaptation to the Internet economy of intellectual property law in general, and copyright law in particular, is at the center of a profound power struggle for governance that places democratically chosen legal rules against technologist-defined network rules. This essay argues that many of the technological challenges to intellectual property rights such as peer-to-peer software are a movement against democratically chosen intellectual property rules. These challenges reflect a basic defiance of the Rule of Law. In making this argument, the essay first maintains that intellectual property rights have an important public function in democracy marking political, economic and social boundaries. Next, the essay shows that the public law, as enacted by democratic government, has re-allocated intellectual property rights to adapt to the information economy. While many aspects of the new allocation of rights have been controversial such as the scope of copyright’s anti-circumvention provisions, these decisions nevertheless emanate from duly constituted public authorities. The essay then analyzes the rejection of those rules by technologists and their fight to take control of rule-making. In essence, the technical community seeks to replace the state’s decision on public intellectual property law with the community’s own private preferences in subversion of democratic choices. The essay concludes with the normative prediction that public law prevails over network rule-making.

The (mis)use of the term “rule of law” here is telling. The American founders understood the phrase to refer to the idea that government officials may use the coercive apparatus of the state only in accordance with general laws that apply equally to all citizens. The founders would be appalled at the way many people seem to use it today, to express the idea that citizens have a duty to obey Congressional edicts, no matter how vague or arbitrary they might be.

Nor would any libertarian be comfortable with the notion that a “re-allocation” of peoples’ rights was justified merely because such an allocation “emanates from duly constituted public authorities.” Libertarians believe that rights exist prior to and independently of government edict. One of my examples of this is in Hernando de Soto’s The Mystery of Capital which includes a lengthy discussion of the origins of American property law. The American Congress tried repeatedly to impose top-down property rights systems on frontier territories. These efforts were resisted by pioneer squatters, who were not impressed by the fact that their edicts had “emanated from duly constituted public authorities.” Instead, the squatters came up with their own indigenous schemes for establishing their own property rights and recognizing their neighbors’. Eventually, after repeated efforts by American troops to drive squatters off land that (according to the official property system) belonged to someone else, Congress was forced to give up its efforts to “re-allocate” property rights, and instead recognized and formalized peoples’ existing property claims.

In a sense, it’s absolutely true that “the technical community seeks to replace the state’s decision on public intellectual property law with the community’s own private preferences in subversion of democratic choices.” But technologists are not “fighting to take control of rule-making” in the sense of imposing a different set of copyright restrictions on people. Rather, they’re fighting for the right to be left alone, free of meddling from a distant and incompetent federal government. Most geek activists simply want meddlesome laws like the DMCA repealed, leaving people free to do as they please with their lawfully acquired property.

Rarely has the case for copyright maximalism been put in such starkly anti-libertarian terms.

New Online Safety Bills

by on September 27, 2007 · 1 comment

Building on what Braden said yesterday about education being the key to online safety… I just released a short new paper about “Two Sensible, Education-Based Legislative Approaches to Online Child Safety.” The paper focuses on S. 1965, the “Protecting Children in the 21st Century Act,” and H.R. 3461, the “Safeguarding America’s Families by Enhancing and Reorganizing New and Efficient Technologies Act of 2006,” or “SAFER NET” Act. These bills wisely adopt an education focus to online safety concerns instead of the same old regulatory approach that members of Congress usually recommend.

Both bills would require that the Federal Trade Commission (FTC):

Continue reading →

CEI has recently brought on a very productive Research Associate named Alex Nowrasteh who has posted a great piece about the Google/DoubleClick merger and the hearings on Capitol Hill today on CEI’s blog, The merger received a one-two punch from Sen. Herb Kohl Rep. Bobby Rush (D-Ill), Chairman of the Congressional Subcommittee on Commerce, Trade, and Consumer Protection and by Sen. Herb Kohl (D-Wi), Chairman of the Subcommittee on Antitrust, Competition Policy, and Consumer Rights.

Alex will also be doing some of the research on an upcoming paper focusing on FCC reform.