December 2007

Happy New Year

by on December 31, 2007 · 4 comments

The crumbs laid out for me by my feeds this morning have lead me to the brewing showdown between Daily Kos and Jonah Goldberg. Goldberg’s new book Liberal Fascism is certainly provocatively titled. The cover is no less a tweak. Goldberg talks about it with “Glenn and Helen” here.

Kos’ Thomas Kalinowski proposes a Googlebomb on the title of the book, sending searchers to a criticism of it. All well and good – except that it’s not as fair as letting criticisms of the book rise on their merits. And here’s a problem: Google has taken steps to defuse the Googlebombing technique.

I also saw a Danny Glover post this morning speculating on the declining traffic of the Daily Kos blog. Interestingly, Glover saw the talk of Kos’ decline on National Review Online, a home of none other than Jonah Goldberg.

All very incestuous, and part of the rollerball-politics that doesn’t interest me terribly much. Whatever the case, Goldberg is getting a lot of pre-release awareness for his book which, Googlebomb or Googledud, defeats his opponents’ aims.

Watch the success or failure of the “Liberal Fascism” Googlebomb here.

Nothing like the holidays for catching up on one’s reading! Here, in no particular order, are things I should have pointed out to you already:

* The Fall 2007 Regulation magazine has some great articles. (Forgive me if they’ve been touted here already. I may have missed it.) “Considering Net Neutrality” is by TLF’s own Jerry Brito and his Mercatus colleague Jerry Ellig. “Antecedents to Net Neutrality” is another good one, by Bruce Owen of Stanford, who makes points similar to those Tim Lee has made.

Finally, there’s an article critical of Richard Epstein’s treatment of intellectual property as similar to physical property. I understand Professor Epstein will respond to “Intellectual Property and the Property Rights Movement” by Peter Menell in the next Regulation.

* From the homeland/national security data gathering front, I was very interested in a letter to the editor of Foreign Policy magazine commenting on a recent article called “How to Make a Spy,” by Tim Weiner, and the author’s further gloss on his work. In his letter, Senior Fellow at the National Security Archive John Prados points out insightfully:

Technological mechanisms have been seductive because they pull in vast amounts of data and can be planned for and budgeted. But they are indiscriminate and generate more raw intelligence than we can process, even as they fail to provide the key intelligence from inside the enemy camp.

I’ve often thought that spooks like mass surveillance because it means they don’t have to get out of their chairs and put boots on the ground in dangerous places. But don’t underestimate the closely related urge to work on a stable program whose budget situation is under control.

Responding to other comments, the author of the article says the following:

The lower the public image of the United States abroad, the harder it will be to recruit foreign spies who will divulge secrets out of a shared respect for human values.

Think of water-boarding as cutting one head off a hydra.

* The Boston Globe had an article the other day examining the presidential candidates’ views on executive power. Nothing to do with tech policy, but very important.

* In small ways, we continue to see the market respond to privacy demands. None of these steps alone are sufficient to protect privacy, but each is important progress that carries none of the costs of regulation and legislation.

* Finally, next Christmas, I want a spectrum analyzer that will reveal RFID readers!

Copyright’s Path

by on December 27, 2007 · 0 comments

Works of authorship originate in private, safely kept under common law protections. Once published, however, expressive works become data ferae naturae—wild and natural information. As such, expressive works roam and reproduce freely. They may get captured in fixed copies, caged in atoms or bits. But the public, once it has absorbed an expressive work, generally retains relatively cheap access to it—unless and until copyright intervenes.

Copyright law limits public access to expressive works, herding them off the commons and into private hands. The Copyright Act offers a sort of ranch to authors, giving them a place to birth, raise, and sell their expressive works safe from the deprivations of grasping strangers. Authors enjoy those special privileges against the public not as a natural right, but rather solely thanks to a policy authorized by the U.S. Constitution and implemented through the Copyright Act. [The figure below] illustrates the path that copyright, together with some of its legal next-of-kin, takes from its origins towards its goals.

The Paths of IP

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While rightly shuddering at specter of copyism, we should also recognize that the unauthorized use of copyrighted works can, if it does not go so far as to undercut authors’ incentives, increase social wealth. Consider, for instance, an impoverished entrepreneur relying on pirated software to start her business. Supposing that she could not afford to buy an authorized copy, and that her unauthorized use would not depress software production, her infringement would generate a welcome consumer surplus. The same would hold true of, say, someone who enjoys an infringing copy of a CD despite being unwilling to pay its retail price. As [the figure below] illustrates, those exceptions to the strict enforcement of copyright law could in theory benefit us all without discouraging the production and distribution of expressive works.

When Unauthorized Uses Increase Consumer Surplus

[The above figure] surely offers too sanguine a view of the effects of copyright infringement, however. Without the limitations imposed by copyright law, some consumers who would otherwise willingly pay for authorized uses might instead opt to save their money by joining the unpaying masses of unauthorized users. The resulting exodus, from respecting copyright to infringing it, would risk decreasing the revenues afforded by copyright, bringing about the policy tragedy portrayed [earlier].

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The Specter of Copyism

by on December 24, 2007 · 0 comments

On the standard economic view of copyrights, as on the economic view of other monopolies, average revenue equals demand. Those two measures trace one and the same line. Why? Because for most products and services, consumption closely matches supply at the market-clearing price. Sales reveal consumer demand and, in the case of copyright and other supposed monopolies, only one seller reaps revenue from those sales. Thus, for instance, might a utility’s sales show the aggregate consumer demand for electric power.

Even a so-called monopolist might face competition, however. The sole authorized seller of hard liquor might fail to capture the entire market of drinkers, for instance, losing some to the resale of stolen goods and others to moonshine. So, too, might an electrical utility suffer theft, competition from home-brewed power, and exit to gas appliances.

The caveats to “monopoly” prove especially strong in the case of copyright, which permits some unauthorized uses of protected works, such as fair uses, and fails to prevent many infringing uses. We might fairly say that the former category of uses, because copyright holders have no statutory power to bar them, do not really cut into the market share for a copyrighted work. Copyright holders cannot lose what never have, on that view. I here thus focus on infringing uses. Still, though, it bears noting that, whether due to permitted or forbidden uses, a copyright holder never commands all of the market for an expressive work.

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Music Patents

by on December 24, 2007 · 4 comments

Ike Elliott offers a great analogy:

Tim asserts that copyright should be adequate protection for software, and that patents for software are harmful because they inhibit innovation. I find that argument far more fascinating.

I found myself comparing software to music. Music is not patentable, but it is subject to copyright. So, at the risk of oversimplifying, Tim is proposing that we treat software in the same way that we treat music.

Imagine if music were patentable…what kind of changes would it have caused in the music industry? I imagine that somebody along the way would have patented the twelve-bar blues, the classic blues form that frames so many great blues songs. For the ensuing twenty years, nobody else could have written a twelve-bar blues song without “licensing the blues” from the patent holder.

To me, the patentability of music would have created a grave inhibitor to creative expression, and would have deprived the world of many great musical works. I would definitely not favor patenting music.

Don Marti has drawn a similar analogy to literary patents. One can imagine a world in which novelists file patents describing the plot twists and other literary techniques they use in their novels, requiring other novelists to license the patent if they want to use that particular literary technique in their own novels. Needless to say, I don’t think very many novelists would be in favor of this plan, although the patent bar and some large book publishers might be.

Creating a work can cost authors a lot, whereas copying a work costs others very little. Absent copyright, then, authors might find it discouragingly difficult to recoup the costs of creating fixed expressive works. Authors might then underproduce expressive works, and the public consequently suffer.

To avoid that policy tragedy, the Copyright Act empowers authors to control the reuse of their fixed expressive works. By selling those special statutory privileges, authors can offset their production costs. Thus does copyright arguably do what the common law allegedly cannot: ensure that the public enjoys an adequate supply of expressive works.

The benefits of copyright policy come at a price, however. Although it may cost a great deal to make the first copy of a fixed expression, it usually costs very little to make and distribute subsequent copies. Absent copyright protection, those works would constitute public goods. Copyright bars the public from freely enjoying the very goods labeled “public.” Instead, the Act vests copyright holders with the power to charge whatever the market will bear to escape liability for infringement. Though the monopoly rents that copyright holders thereby win allegedly provide a necessary stimulus to creativity, non-holders suffer the opportunity costs of losing cheap access to fixed expressive works. Most commentators thus understand copyright policy to aim at striking a balance between giving authors sufficient incentives to create expressive works and providing the public with adequate access to the works thereby created. [The figure below] illustrates that, the standard economic model of copyright policy.

Standard Economic Model of Copyright

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In my 2004 book, Media Myths: Making Sense of the Debate over Media Ownership, I pointed out that mergers and acquisitions represent just one of many strategies media companies utilize to respond to consumer demand and new market challenges. Other strategies include spin-offs and line-of-business divestitures on the one hand, and new technological investments or expanded product or service offerings on the other.

But those other strategies never seem to attract the same amount of attention as mergers and acquisitions even though they are far more common. In fact, as media guru Ben Compaine correctly observes, “Break-ups and divestitures do not generally get front-page treatment.” Such stories usually get buried in papers and magazines, or get a small mention at the bottom a news website, if at all.

That’s why I started this series of “media DE-consolidation series” of essays a few years ago. I wanted to highlight the other side of the story and show how the media marketplace is far more dynamic than critics care to admit. In fact, as FCC Commissioner Robert McDowell noted recently in an excellent speech on the true state of the media market, “Traditional media’s numbers are shrinking,” and “The ironic truth is: in many cases, media consolidation has actually become media divestiture. Companies such as Disney, Citadel, Clear Channel and Belo actually have been shedding properties to raise capital for new ventures.”

That’s exactly right, and the many other entries in this series prove that point. We’re in the midst of a massive wave of media divestitures and downsizing. And today we have another example with News Corp’s announcement that it will be shedding 8 of its Fox-affiliated TV stations in mid-sized markets.

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This somewhat cryptic blog post at Wired reflects the delight of Roger Clarke that the Australian national ID card has been dropped by the incoming government. Clarke wrote an article in 1994 that is probably fairly regarded as the foundation of identitifcation theory. I expanded on his thinking in my book, Identity Crisis.

In related news, Montana Senators Max Baucus and Jon Tester put language prohibiting the expenditure of federal funds for development of a national ID card in the omnibus spending bill Congress passed last week. Because the Department of Homeland Security denies that REAL ID is a national ID, this language is probably hortatory during the current administration.