Peter Suderman of the Competitive Enterprise Insitute has penned a nice editorial on the regulatory threats facing MySpace and other social networking sites. In the essay he notes that “a mandatory [age] identification law would likely require the development of some sort of national identification system, and it would still be unlikely to be fully successful. ” He continues:
Moreover, calls to develop such an identification system would create the possibility for an array of unforeseen consequences, as there are inherent dangers in requiring minors to publicly register their identities. By creating a centralized ID database, such requirements would render minors’ personal information more vulnerable. Do parents really want their kids forced to give out personal data for public use?
Good point. Indeed, there are many dangers associated with requiring identify verification for minors before they get online, and policymakers must realize this becuase for many years they have worked hard to shield information about minors from the rest of society. There are various privacy laws on the books that tightly restrict the release or sharing of information about minors. So why change the rules for social networking? It seems to me like we’d be opening a major can of worms if we did.
Also, check out the outstanding summary of everything that’s been happening on the social networking regulatory front over at the 463 blog. And here’s a recent speech I did on the topic when I debate two state attorneys general at a major conference in D.C.
Forbes has a profile of Mark Shuttleworth and Ubuntu. What I found most interesting about it is the financials:
Ubuntu now has 4 million users, half of which are governments, universities and a smattering of businesses. It adds new ones at a rate of 8% per month. After its public release in October 2004, Ubuntu quickly deposed Red Hat’s Fedora as the most popular version of Linux on DistroWatch, a Web site that caters to Linux users. Ubuntu works in 22 languages, and Canonical, the company Shuttleworth set up to distribute his software, will send a free Ubuntu CD anywhere in the world. New users rave about the simple user interface, which has gained recent converts in a couple of well-known bloggers who switched from Apple Computer’s OS X.
In May, Sun Microsystems announced plans to offer Ubuntu on Sun’s Niagara chips, which power its newer Sparc servers. While Sparc servers aren’t a particularly big market, the stunt made clear that Shuttleworth aims beyond home hobbyists.
Canonical has burned through $15 million of Shuttleworth’s money in two and a half years. He says that it will take him at least another two years to even know whether it has a chance to become profitable, and that it may never return his investment. But that doesn’t matter. He’s paying all the bills either way, along with setting up a $10 million endowment for the Ubuntu Foundation that’s earning interest for a day when his attentions may drift elsewhere.
I mean no disrespect to Mr. Shuttleworth when I say this, but $15 million is a shockingly small amount of money with which to build a full-featured desktop operating system. Microsoft’s advertising budget for each version of Windows is an order of magnitude larger than that. Apple pulls in hundreds of millions of dollars with every release of Mac OS X, while Microsoft makes billions of Windows.
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A reoccurring theme of many of my posts on this blog is the very real danger of policymakers–both here and abroad–attempting to extend traditional media content controls to new media outlets and technologies. My PFF colleague Patrick Ross has just released an excellent new report entitled “Do’s and Dont’s for Global Media Regulation: Empowering Expression, Consumers and Innovation,” which summarizes some of the most serious threats to new media that are developing in Europe, Australia and Canada.
Patrick’s new study builds on two other important papers he authored on Europe’s dreadful “Television without Frontiers” initiative, which Patrick has appropriately labeled “Content Regulation without Frontiers.” Patrick’s alternative vision focuses on achieving legal symmetry between old and new media by deregulating down instead of regulating up. He also warns policymakers about the dangers of continuing to distinguish between different types of content delivery or platforms, and to be careful not to discourage migration of content from one type of platform or device to another.
Anyway, read the whole study for more details.
MySpace is getting into the music market. And to help set them apart from the pack, they’ve opted for a decentralized approach: anyone can offer their music via MySpace, and pricing is controlled by the artist. Moreover, MySpace has opted to offer the music in MP3 format, unencumbered by DRM.
Joe at TechDirt gets the implications of this exactly right:
while many of these music stores are simply iTunes clones, MySpace is trying something different. It’s going to offer a way for bands to sell music directly to fans from their MySpace pages. Furthermore, the songs aren’t DRM’d so they’re not tied to a particular device, and the band controls the price at which they’re sold. Bands are already building up followings on MySpace, but have lacked a way to turn popularity into commercial success. This store will try to solve this problem. Predictably, there’s already talk of whether MySpace can unseat the dominance of Apple in the digital music space, but that misses the point. It’s the record labels themselves that should feel threatened. Not only has MySpace already given young bands an avenue to reach the masses, without a label to pay for their promotional campaigns, but now it’s giving them more control over their distribution as well. The value added by signing with a label is clearly diminishing, and their fortunes are likely to follow.
The labels’ traditional strengths were in distribution and marketing. Their distribution advantage is effectively gone, at least among the under-40 crowd that mostly listens to music on their iPods. And their promotional advantage is fading as more young people find new music on the Internet rather than traditional broadcast media.
As a result, the labels are largely coasting on inertia. Because they’ve got contracts with the vast majority of popular artists, people are in the habit of looking to them for new music. That, in turn, makes their artists more likely to succeed, which in turn makes the best artists more likely to seek contracts from them. It’s a virtuous cycle that’s allowed them to continue to dominate the music charts even as their distribution and promotional network is rapidly rendered obsolete.
But the momentum won’t continue forever. Sites like MySpace will make it ever easier for bands to find fans without the help of the labels. And once a substantial fraction of rock stars aren’t beholden to the labels, the labels’ remaining advantages will evaporate. At that point, their high overhead and history of hostility toward their customers will come back to haunt them. Consumer are likely to find getting music on MySpace to be cheaper, more convenient, and more interactive. And once bands can reach their fans directly, why bother with the middleman?
The Associated Press reported yesterday on the latest battlefront in the broadcast indecency wars: a CBS documentary on 9/11. The film–which has aired before without controversy–has been criticized by some indecency advocates because of bad language used by firefighters as they struggled at the World Trade Center on 9/11. The American Family Alliance, for example, has readied its members to complain to the FCC and CBS. As a result, some two dozen affiliates have announced they will replace or delay broadcast of the piece.
“This is example #1” of the chilling effect of the FCC indecency rules, said Martin Franks, CBS’ executive vice president. “We don’t think it’s appropriate to sanitize the reality of the hell of Sept. 11,” Franks was quoted as saying. “It shows the incredible stress that these heroes were under. To sanitize it in some way robs it of the horror they faced.”
Well said. The simple fact is that some Americans will not be seeing this documentary because of the threat of FCC-imposed liability. Would the FCC actually find the piece indecent? That’s anybody’s guess. But the mere possibility has been enough to cause some stations–rationally enough, given increased fines–to cut and run.
A better example of the folly–and outrage– of government content controls would be hard to find. However well-intentioned, the FCC’s rules blow a clear, cold wind on speech.
Former Vice President Al Gore had some rather passionate things to say about democracy and the role of media in it during the recent Edinburgh International Television Festival. “Democracy is under attack,” he told the crowd. “Democracy as a system for self-governance is facing more serious challenges now than it has faced for a long time. Democracy is a conversation, and the most important role of the media is to facilitate that conversation of democracy. Now the conversation is more controlled, it is more centralized.”
Apparently, Mr. Gore wants us to believe that democracy is dying and that the blame for it falls on “controlled, centralized” media. I guess such apocalyptic rhetoric helps grab attention for your cause but, in reality, such comments are completely off that off-the-mark and bear no relationship with reality whatsoever.
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I was generally impressed with Tim Wu’s paper on Hayekian analysis of intellectual property, but I did want to note one place where his analysis goes off the rails:
A second example is broadcast spectrum reform, which has been under consideration for about a decade in the United States. The question is whether broadcasting at certain frequencies should be propertized. In other words, the question is whether some firm should own the alienable rights to broadcast between frequencies X and Y. The impact of the government’s decision whether to grant property rights or not will have important decisional consequences. Granting no rights will create decentralized market entry for spectrum-dependent projects or technologies. Any entity willing to make the investment may develop a project that depends on access to spectrum, albeit at the cost of many failed projects. Granting government-specified licenses or property rights, conversely, makes some kind of hierarchical decision structure possible in the first place. That is, we should expect to see greater screening of spectrum-dependent projects or technologies before they are launched.
Which is better is slightly ambigious. For some uses of spectrum there may be good arguments for a hierarchical, centralized authority who decides what the spectrum will be used for, perhaps to ensure public safety. But otherwise, whether we want propertized spectrum depends on whether there is any argument that spectrum-dependent projects be carefully screened. Absent risk the public, the answer must sometimes be no.
This strikes me as rather misguided. As Jerry has explained in this space before, the difference between spectrum and ideas is that spectrum is rivalrous and scarce, whereas ideas are not. Complete decontrol is never an option–somebody has to pick the rules governing how the resource will be consumed, and the only question is who will make the rules.
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Every week, I look at a software patent that’s been in the news. You can see previous installments in the series here. This week’s patent comes courtesy of Techdirt, who reports that Apple has settled a lawsuit with the owner of this patent. Here’s the abstract:
A computer system and method for controlling a media playing device. The system provides a user interface for allowing a user access to media pieces stored in a media database. The interface is also for controlling a media playing device, like a player piano or movie playing video device, that is coupled to the computer to play the accessed or selected piece of media. In one embodiment there is a computer interface that allows a user to display only music that relates to a selected category, like jazz or classical music. Another embodiment allows the user to direct the media playing device to automatically play selected music pieces that are related to a selected music category. Another embodiment allows a user to direct the media playing device to automatically play selected music pieces that are related to the selected music composer or artist.
I think the obviousness of this patent can be readily seen from a selection of the description of the “invention”:
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I just read a fantastic paper by Tim Wu about the implications of Hayek’s insights about decentralized decision making for intellectual property policies. In the standard debate over intellectual property, supporters of stronger protections tout to the ability of IP regimes incentivize creativity, while critics point to the dead-weight losses incurred when the monopolist prices its products above marginal cost.
But Wu argues that this discussion misses an important consideration: in addition to propping up the price of intellectual creations, intellectual property regimes like patent and copyright centralize the decision making processes of creative industries. Take the case of Netflix’s patent on Internet-based video rental. This patent appears to give Netflix the exclusive right to decide who may offer online video rental services, at least those that have interfaces similar to Netflix’s own. That effectively means that anyone who wants to enter the online video rental business (such as Blockbuster) must get a license from Netflix to do so.
In a world of perfect information, that might not be a big problem. Netflix has every incentive to develop the online video rental industry. After all, Netflix wants to maximize its revenues, and a larger, healthier online video rental market means bigger licensing revenues for Netflix. Hence Netflix has every incentive to develop new and better online video rental features, and to license its patent to third parties who have the capability to expand the market. If Netflix were omniscient, giving Netflix a monopoly over online video rental might actually make the market more efficient, as Netflix could reduce wasteful competition.
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