Archives for December 2008
At Chamber of Commerce Event, IP Attachés Take Hard-Line Position On Overseas IP Enforcement
My piece about the U.S. Chamber of Commerce event last Friday on U.S. intellectual property attachés giving a report, and taking a hard line, on the enforcement of U.S. intellectual property, overseas, is now live on ip-watch.org.
Here’s the first couple of paragraphs:
WASHINGTON, DC - Nations ranging from Brazil to Brunei to Russia are failing to properly protect the intellectual property assets of US companies and others, and international organisations are not doing enough to stop it, seven IP attachés to the US Foreign and Commercial Service lamented recently.
Meanwhile, an industry group issued detailed recommendations for the incoming Obama administration’s changes to the US Patent and Trademark Office.
The problems in other nations extend from Brazil’s failure to issue patents for commercially significant inventions by US inventors, to an almost-complete piracy-based economy in Brunei, to an only-modest drop in the rate of Russian piracy from 65 percent to 58 percent.
The attachés, speaking at an event organised by the US Chamber of Commerce and its recently beefed-up Global Intellectual Property Center (GIPC), blasted the record of familiar intellectual property trouble zones like Brunei, Thailand and Russia.
But the problems extend to the attitudes and omissions of major trading partners like Brazil, India and even well-developed European nations, said the attachés.
[more at http://www.ip-watch.org/weblog/index.php?p=1387....]
Lessig on Building a Better Bureaucrat
Before commenting on Lawrence Lessig’s latest call to abolish the Federal Communications Commission (he issued a similar call for the FCC’s abolition earlier this year, which I commented on here), let’s recall what Tim Lee posted yesterday about “Real Regulators“:
Too many advocates of regulation seem to have never considered the possibility that the FCC bureaucrats in charge of making these decisions at any point in time might be lazy, incompetent, technically confused, or biased in favor of industry incumbents. That’s often what “real regulators” are like, and it’s important that when policy makers are crafting regulatory scheme, they assume that some of the people administering the law will have these kinds of flaws, rather than imagining that the rules they write will be applied by infallible philosopher-kings.
Ironically, Prof. Lessig — who typically defends many forms of high-tech regulation like Net neutrality and online content labeling — is essentially agreeing with Tim’s critique of bureaucracy. But Lessig seems to ignore the underlying logic of Tim’s critique and instead imagines that we need only reinvent bureaucracy in order to save it. But I’m getting ahead of myself. First, let’s hear what Lessig proposes.
In a Newsweek column this week entitled “Reboot the FCC,” Lessig argues that the FCC is beyond saving because, instead of protecting innovation, the agency has succumb to an “almost irresistible urge to protect the most powerful instead.” Consequently, he continues:
The solution here is not tinkering. You can’t fix DNA. You have to bury it. President Obama should get Congress to shut down the FCC and similar vestigial regulators, which put stability and special interests above the public good. In their place, Congress should create something we could call the Innovation Environment Protection Agency (iEPA), charged with a simple founding mission: “minimal intervention to maximize innovation.” The iEPA’s core purpose would be to protect innovation from its two historical enemies–excessive government favors, and excessive private monopoly power.
As was the case with his earlier call to “blow up the FCC,” I am tickled to hear Lessig call for shutting down an agency that many of us have been fighting against for the last few decades. (Here’s a 1995 blueprint for abolishing the FCC that I contributed to, and here’s PFF’s recent “DACA” project to comprehensively reform and downsize the agency.)
But is Lessig really calling for the same sort of sweeping regulatory reform and downsizing that others have been calling for? And has he identified the real source of the problem that he hopes to correct? I don’t think so. There are 3 basic problems with the argument Lessig is putting forward in his essay. I will address each in turn.
The 12 Days of Christmas
Real Regulators
Don’t miss Jim Harper’s excellent post on the strange way people have responded to the failures of regulation on wall street. In a Meet the Press exchange, we learn that people reported Bernie Madoff’s suspicious books to the SEC, which chose not to do anything about it. And it was agreed around the table that the Madoff affair debunks “the idea that wealthy individuals and ‘sophisticated’ institutional investors don’t need the protection of government regulators.” “There’s no question we need a real regulator,” says CNBC’s Erin Burnett.
The problem is that we had a “real regulator.” Ponzi schemes and dishonest bookkeeping are already illegal. Had the SEC been so motivated, it had all the authority it needed to investigate Madoff’s books, discover the problems, and shut his firm down. In a rational world, this would be taken as a cautionary tale about the dangers of assuming that regulators will be vigilant, competent, or interested in defending the interests of the general public rather than those with political clout. Instead, we live in a bizarro world in which people believe that the SEC’s failure to do its job is an illustration of the need to give agencies like the SEC more power.
We of course see the same sort of confusion in debates over regulation of the technology sector. For example, the leading network neutrality proposals invariably wind up placing a significant amount of authority in the hands of the FCC to decide the exact definition of network neutrality and to resolve complex questions about what constitutes a network neutrality violation. Too many advocates of regulation seem to have never considered the possibility that the FCC bureaucrats in charge of making these decisions at any point in time might be lazy, incompetent, technically confused, or biased in favor of industry incumbents. That’s often what “real regulators” are like, and it’s important that when policy makers are crafting regulatory scheme, they assume that some of the people administering the law will have these kinds of flaws, rather than imagining that the rules they right will be applied by infallible philosopher-kings.
More on News Spin-offs
A couple of quick follow-ups to my last post: first, a commenter points out that Career Builder is an example of a successful spin-off from a major media company. (Actually, from three media companies; I bet having ownership by multiple companies helped insulate the company from any one firm’s internal politics). So it appears that the spin-off model can work.
Second, the always-interesting Tom Lee points to the Washington Post’s online operation as an example of the spin-off model. This is a really interesting example because it’s closer to the core of the WaPo’s business than Career Builder is to Gannett’s. And by all accounts, it was relatively successful. I’m pretty sure I’ve read multiple people comment that the Post is a local newspaper with a national website, which is precisely what you’d want a successful spin-off news organization to do.
The problem is that washingtonpost.com is nowhere close to being a free-standing organization. They get tremendous benefit from having access to content from the print Post, and while I haven’t looked at their business model in any detail, I’d be willing to bet that there’s massive cross-subsidy going on. That makes it a better website, but the problem is that it relieves the web side of the business of the need to come up with new, lower-cost methods for generating news. Which means that if and when the print side hits an iceberg, the online side won’t be able to stand on its own.
The News Innovator’s Dilemma
Having recently read The Innovator’s Dilemma, it’s worth pointing out that the discussion Ezra Klein and Matt Yglesias are having about the decline of newspapers is a classic illustration of the principles Clayton Christensen laid out a decade ago. Internet news is a classic disruptive technology. At its outset, it was simple, dirt cheap, and in many ways inferior to established journalism. But it improved over time, and once it began to rival traditional journalistic outfits in quality around the middle of this decade, the “dirt cheap” part of the equation began to dominate. When your competition can produce a roughly comparable product for a small fraction of the cost, your days are numbered.
But here’s the really important point that Christensen made that is often missed in these kinds of discussions: it’s often close to impossible for an organization built around an older technology to retool for a new, disruptive one because their cost structures just don’t allow it. The New York Times is an expensive place to run. It’s got writers, editors, typesetters, delivery trucks, an ad sales force, a big building, travel budgets, and so forth. In order to recoup those costs, they have to make a certain amount of revenue per unit of output. The institutional structure of the New York Times makes it almost impossible for it to produce news the way TPM Muckraker or Ars Technica do. The need to make payroll and cover their rent makes it almost mandatory for them to focus on their traditional core competencies because even as those markets shrink they still offer better margins than the emerging businesses.
Matt’s suggestion of launching NYTList a decade ago illustrates the point well. It’s true that in the long run this probably would have made the Times more money. But in the short run this would have been a truly wrenching transition. At a time when other papers were enjoying fat margins from their classified business, the Times would find more and more of its classified customers switching to the new version. It would have had to start laying off the classified staff and trimming other parts of the budget to cover the lost revenue. And it would have been a huge gamble. It was far from obvious in 2000 that Craigslist would be as big as it has become. So yes, theoretically an enlightened NYT manager could have foreseen the growth of Craig’s List and countered it. But in practice doing so would have required super-human foresight and determination, and an extremely deferential board of directors.
Christensen’s conclusion is that the only way to avoid this grim fate is to spin off an independent subsidiary that can pursue new markets without worrying about fat profit margins or cannibalization of existing product lines. GM’s spin-off of Saturn in the 1980s is a good example of this model. This is still an extremely difficult thing to pull off. It takes a CEO with the foresight to see what’s coming and the political capital within the firm to shield the spin-off from the parent company’s politics. I’m not aware of any high-profile newspaper firms that attempted this, but I’m not sure we can really blame the newspaper managers. It’s a really hard thing to pull off. Christensen was only able to find a handful of firms—in any industry—that pulled it off successfully, and the CEOs who did it almost all said that it was one of the most difficult things they did as managers.
Companies are not big people. They change much more slowly than individual people do. And anyone suggesting that a firm should do things in a new way—even the guy at the top—is going to face strong pressures from traditionalists who want to continue doing things the old way. And in the short run, the traditionalists are almost always right. The old way of doing things is almost always going to be more profitable in the short run. So although I think those who predicted the newspaper industry’s decline are entitled to a certain amount of smugness, I think it’s absolutely not fair excoriate the managers who failed to move more decisively to address the problem. With the benefit of 20/20 hindsight, it’s easy to come up with scenarios that would have turned out better. But from an ex ante perspective, these trends were far from clear, and the people making the decisions were under tremendous pressure to continue the status quo.
Government Spending in XBRL?
Mark Cuban probably didn’t know how much he’d rev up the hypocrisy meter when he suggested that the government should report its own spending and other financial information in XBRL. The SEC recently announced that it would require public companies to do their financial reporting in the format.
Having the government do it to is a GREAT idea.
And it will take years for that to happen.
Why? Because releasing information in a usable form is like releasing power. Agencies and bureaucrats aren’t in the business of giving away power.
I won’t lay predictions because the idea is so good that it may catch a head of steam, unify the transparency community, and get high-level attention in the administration. But barring that, it will be a cold day (today happens to be a cold day) when the government adopts XBRL. Until then, the hypocrisy meter is rising.
ICANN’s gTLD Proposal Hits a Wall: Now What?
Mike Palage, the first Adjunct Fellow at PFF’s Center for Internet Freedom, just published the following piece on the PFF blog.
ICANN’s plan to begin accepting applications for new generic top-level domains (gTLDs) in mid-2009 may have been derailed by last week’s outpouring of opposition from the global business community and the United States Government (USG). Having been involved with ICANN for over a decade and having served on its Board for three years, I’ve never seen such strong and broad opposition to one of ICANN’s proposals.
This past June, the ICANN Board directed its staff to draft implementation guidelines based upon the policy recommendations of the Generic Names Supporting Organization (GNSO) that ICANN should allow more gTLDs such as .cars to supplement existing gTLDs such as .com. In late October, the ICANN staff released a draft Applicant Guidebook detailing its proposal. The initial public forum on this proposal closed on December 15-with over 200 comments filed online.
In its December 18 comments, the USG questioned whether ICANN had adequately addressed the “threshold question of whether the consumer benefits outweigh the potential costs.” This stinging rebuke from the Commerce Department merely confirms the consensus among the 200+ commenters on ICANN’s proposal: ICANN needs to do more than merely rethinking its aggressive time-line for implementing its gTLD proposal or tweaking the mechanics of the proposal on the edges. Instead, ICANN needs to go back to the drawing board and propose a process that results in a responsible expansion of the name space, not merely a duplication of it.
Kids, Video Games, Fantasy, & Imagination
My Kid is the Man of Steel! ... in his mind.
Regular readers will recall my great interest in video games and the public policy debates surrounding efforts to regulate “violent” games in particular. One thing I bring up in almost every essay I write on this subject is how fears about kids and video games are almost always overblown and that kids can typically separate fantasy from reality. Nonetheless, kids have active imaginations and adults sometimes fear that which they cannot understand or appreciate. Friendly mentoring and open-minding parenting can go a long way to encouraging kids to make smart choices and understand where to draw lines, whereas efforts to demonize video games and youth culture almost always backfire.
Anyway, what got me thinking about all this again was an entertaining column in today’s Washington Post by Ron Stanley (”Who Needs a TV to Play Video Games“), which describes the author’s experiences with his nephew when they played out video game-like scenarios using traditional toys and household items. It’s a wonderful piece worth reading in its entirety, but here’s the key takeaway that I’d like to discuss:
There was no evidence that television and video games had stifled the kids’ creativity. Nor was there any evidence that technology had made them smarter than earlier generations. They simply had a different frame of reference, one that included video games and computers as well as ponies, pet stores and sword fights. Children play with the tools at hand, and they’re great at thinking metaphorically — at imagining that a landspeeder is a sentient robot or that a stick is a gun or that salt-and-pepper shakers are a bride and groom or that a card table is a horse’s stable.
They’re also geniuses at figuring out simple mechanics. My 6-year-old nephew had to explain to me that miniature low-rider cars don’t roll very well on carpet and will flip over more than if racing on hardwood floors. Novice that I was, I was choosing cars that looked the coolest. And they are geniuses at intuiting rules and systems, and at re-creating these rules and systems in their own play. Children who play lots of card games will invent their own card games. Children who play lots of board games will invent their own board games. And children who play lots of video games will invent their own video-game-like games when they don’t have access to the game controllers.
Honolulu Hapa
“Damn their lies and trust your eyes. Dig every kind of fox!” I here sing one for the freedom to mix it up as you and your honey alone see fit:
“Hapa” means “mixed race” in Hawaiian. Skin-tone mash ups have profoundly enriched my life, first with the Honolulu Hapa herself and then with our own little hapas. Honolulu Hapa celebrates coloring across the lines, knocks racism, and gives a shout-out to Loving v. Virginia, 88 U.S. 1 (1967)—the case where the U.S. Supreme Court struck down anti-miscegenation laws as unconstitutional restraints on personal liberty.
As with the prior four songs I’ve posted in this recent series (Take Up the Flame, Sensible Khakis, Nice to Be Wanted, and Hello, Jonah,), Honolulu Hapa comes with a Creative Commons license that allows pretty liberal use by all but commercial licensees, who have to pay a tithe to one of my favorite causes. Honolulu Hapa aims to help Creative Commons, an organization that helps all of us to mix—and remix—it up. Unlike those other songs, however, Honolulu Hapa adds a special ‘unrestricted use” term effective on June 12, Loving Day.
With Honolulu Hapa, I conclude my recent series of freedom-loving music videos. Like it or not, though, I’ve got more music-making plans. Next, I’ll record some good studio versions of those (and perhaps some other) songs. Eventually, I’d like to release a fundraising CD, one that might help out some good causes. Silly? Yeah, I guess so. But it does add another data point in support of my hypothesis: Freedom has more fun.
[Crossposted at Agoraphilia and Technology Liberation Front.]
TPW 38: The Google Kerfuffle — Edge Caching & Net Neutrality
In several of our previous podcasts (see episodes 34, 35,and 37), we’ve discussed what we’ve called the “Comcast Kerfuffle,” which was the controversy surrounding the steps Comcast took to manage BitTorrent traffic on its networks. Critics called it a violation of Net neutrality principles while Comcast and others called it sensible network management.
This week we saw a new kerfuffle of sorts develop over the revelation in a Monday front-page Wall Street Journal story that Google had approached major cable and phone companies and supposedly proposed to create a fast lane for its own content. What exactly is it that Google is proposing, and does it mean – as the Wall Street Journal and some others have suggested – that Google is somehow going back on their support for Net neutrality principles and regulation? More importantly, what does it all mean for the future of the Internet, network management, and consumers. That’s what we discussed on the TLF’s latest “Tech Policy Weekly” podcast.
Today’s 30-minute discussion featured two of our regular contributors at the TLF, who both wrote about this issue multiple times this week. Cord Blomquist of the Competitive Enterprise Institute wrote about the issue here and here, and Bret Swanson of the Progress & Freedom Foundation wrote about it here and here. To help us wade through some of the more technical networking issues in play, we were also joined on the podcast by Richard Bennett, a computer scientist and network engineer guru who blogs at Broadband Politics as well as Circle ID and he also pens occasional columns for The Register. Also appearing on the show was Adam Marcus, Research Fellow & Senior Technologist at PFF, who wrote a “nuts and bolts” essay full of excellent technical background on edge caching and net neutrality.
You can download the MP3 file here, or use the online player below to start listening to the show right now.
Some basics about edge caching, network management, & Net neutrality
My PFF colleague Bret Swanson had a nice post here yesterday talking about the evolution of the debate over edge caching and network management (”Bandwidth, Storewidth, and Net Neutrality“), but I also wanted to draw your attention to related essay by another PFF colleague of mine. Adam Marcus, who serves as a Research Fellow and Senior Technologist at PFF, has started a wonderful series of “Nuts & Bolts” essays meant to “provide a solid technical foundation for the policy debates that new technologies often trigger.” His latest essay is on Network neutrality and edge caching, which has been the topic of heated discussion since the Wall Street Journal’s front-page story on Monday that Google had approached major cable and phone companies and supposedly proposed to create a fast lane for its own content.
Anyway, Adam Marcus gave me permission to reprint the article in its entirety down below. I hope you find this background information useful.
___________________________________________________
Nuts and Bolts: Network neutrality and edge caching
by Adam Marcus, Progress & Freedom Foundation
December 17, 2008
This is the second in a series of articles about Internet technologies. The first article was about web cookies. This article explains the network neutrality debate. The goal of this series is to provide a solid technical foundation for the policy debates that new technologies often trigger. No prior knowledge of the technologies involved is assumed.
To understand the network neutrality debate, you must first understand bandwidth and latency. There are lots of analogies equating the Internet to roadways, but it’s because the analogies are quite instructive. For example, if one or two people need to travel across town, a fast sports car is probably the fastest method. But if 50 people need to travel across town, it may require 25 trips in a single sports car. So a bus which can transport all 50 people in a single trip may be “faster” overall. The sports car is faster, but the bus has more capacity. Bandwidth is a measure of capacity, of how much data can be transmitted in a fixed period of time. It is usually measured in Megabits per second (Mbps). Latency is a measure of speed, of the time it takes a single packet data to travel between two points. It is usually measured in milliseconds. The “speeds” that ISPs advertise have nothing to do with latency; they’re actually referring to bandwidth. ISPs don’t advertise latency because its different for each different site you’re trying to reach.
Continue reading this post »
Shafer’s list of professions & technologies destoryed by digital disintermediation
Jack Shafer, editor at large of Slate, is my favorite media pundit. Everything he does is worth reading, and his column this week is no different. It’s entitled “The Digital Slay-Ride: What’s killing newspapers is the same thing that killed the slide rule,” and in it he notes how “Hardly a day goes by, it seems, without some laid-off or bought-out journalist writing a letter of condolence to himself and his profession.” “The underlying cause of their grief,” Shafer argues, “can be traced to the same force that has destroyed other professions and industries: digital technology.” He recalls how people scoffed back in 1993 when Wired founder Louis Rossetto’s said that the “digital revolution is whipping through our lives like a Bengali typhoon” and destroying the old order. But no one is laughing anymore. As I noted in my Media Metrics report, digital disruption and disintermediation has completely upended the media marketplace, as well as countless others. Toward that end, Shafer actually starts a list of professions or technologies that have been “typhooned” by the digital revolution. It’s a pretty amazing (and entertaining) list for those of us old enough to remember when all these things were dominate in our society and economy. Can you think of others?
• Bank tellers
• Typewriters
• Typesetting
• Carburetors
• Vacuum tubes
• Slide rules
• Disc jockeys
• Stockbrokers
• Telephone operators
• Yellow pages
• Repair guys
• Bookbinders
• Pimps (displaced by the cell phone and the Web)
• Cassette and reel-to-reel recorders
• VCRs
• Turntables
• Video stores
• Record stores
• Bookstores
• Recording industry
• Courier/messenger services
• Travel agencies
• Print and cinematic porn
• Porn actors
• Stenographers
• Wired telcos
• Drummers
• Toll collectors (slayed by the E-ZPass)
• Book publishing (especially reference works)
• Conventional-watch makers
• “Browse” shopping
• U.S. Postal Service
• Printing-press makers
• Film cameras
• Kodak (and other film-stock makers)
How Many Competitors Is Enough?
Adam’s recent post on Free Press’s hysteria over media consolidation reminds me of the left’s general tendency to move the goalposts when it comes to market concentration in communications markets. Over the last quarter century, we’ve gone from a world in which there were honest-to-goodness monopolies in the telephone and cable markets to a “duopoly” where the former monopolies invaded one another’s turf, to a world of much greater competition as mobile companies entered the telephone market and satellite companies entered the video market. Yet as I noted last year, Free Press chairman Tim Wu characterizes the wireless market—with its four national carriers and several regional ones—as a “textbook oligopoly.” Indeed, one often gets the impression that the arguments of pro-regulation scholars are the same as those they would have made 20 years ago with “monopoly” replaced by “oligopoly.”
Now, I’m sympathetic to the argument that a “duopoly” is insufficient competition, and that regulators should at least take a close look at the behavior of firms that comprise one half of a duopoly. I think libertarians’ tendency to laud the broadband marketplace as a free-market nirvana is a bit misguided. However, I find the language of “oligopoly” much harder to swallow. While more competition is better, there are plenty of industries with 4-6 players that few people regard as problematic. The wireless business is extremely capital-intensive, so it’s not that surprising that there are relatively few restaurant chains.
But the tendency to shift from “monopoly” to “duopoly” to “oligopoly” while deploying essentially the same arguments does make one wonder if there’s any amount of competition that the good people at Free Press regard as sufficient. And it seems that Adam has found the answer. Having 55 major players in a market is the very definition of cutthroat competition. The notion that 55 firms can constitute a “bottleneck” that significantly curtail the flow of information to consumers is just silly. And of course the 55 figure is totally arbitrary. The media are a long tail business, and they could have included a lot more firms if they hadn’t set their cutoff at $100 million in revenues. For example, their chart misses Hubbard Broadcasting, which owns around a dozen broadcasting stations concentrated in the upper midwest. So if you’re a Twin Cities resident who doesn’t like what Clear Channel, News Corp and the rest are producing, you can tune in to KSTP’s TV station and talk radio station for a perspective that’s not controlled by the “Big 55.”
Ultimately, I think the moral of the story is that for some advocates of media regulation, it really has nothing to do with competition. Whether there are 1, 2, 4, 8, or 55 competitors, they continue to believe that there’s too little government regulation of communication. When the number is small, it makes a convenient talking point, but they go right on making the same arguments when the number of competitors gets ridiculously large.
Google’s Lopsided Trademark Policy
The intrepid Chris Soghoian has turned up an important wrinkle in Google’s services. Google pulled his AdWords ad pointing out AT&T’s campaign contributions to an Indiana politician after AT&T lodged a trademark complaint about it.
Trademark law is for preventing confusion about the source of goods and services. There is no possibility that Chris’ ad would confuse consumers in this way. He’s not providing telecommunications services, and his ad didn’t suggest it. Chris’ use of “AT&T” did not violate AT&T’s trademarks.
The subject matter of Chris’ ad is an important part of our national discourse, and something people should be able to run ads about on a platform like Google. It would be, well, evil, to kick small public policy advocates to the curb in favor of big corporations.
A company like Google is in a tough spot, of course, trying to adjudicate trademark claims at scale. But it is not acceptable to treat trademark complaints as proven just for having been submitted.
Google should take some steps to make its process more fair, such as by allowing advertisers to respond to a trademark complaint before Google acts on it. Much of the process could be automated, and it could explain to both sides what trademark rights include - and what they don’t. If after a few automated steps, the two remained at loggerheads, Google employees could take a look to see whether the claim or the response were meritorious. (A trained monkey could have determined that Chris’ ad is not a trademark violation.)
In close cases, Google should leave it to the parties to resolve, while it works in the courts to generate a substantive body of law that service providers in the position of Google are not properly liable for the trademark infringements of users. (My brief pitch for common law findings of “no liability” in such situations - as opposed to statutory protections like CDA section 230 - starts at minute 22 of this video.)
Would these ideas increase Google’s cost and potential liability? Yes, some. But Google should embrace those costs as it educates its users, employees, courts, and - most important - trademark holders about what trademark does and does not do.
Kudos to Chris for his tenacity. Google, fix this.
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