I’d like to call out an interesting development from the past week that is a great example of how the Internet can do an end run around traditional regulation–in this case, federal broadcast indecency rules.
As described very well in this NY Times article in yesterday’s Arts section, Saturday Night Live had a decently funny skit (my friends have thought it to be either hilarious or plain stupid) involving a parody of two boy band singers, one played by Justin Timberlake. The skit was called “Special Treat in a Box” and involved a song about giving a holiday present to their girlfriends–their male anatomy, wrapped up in a box.
Over the air, NBC had to bleep out the 16 references to the anatomy (think other name for Richard)–but, SNL simultaneously released an uncensored version that made its way to YouTube. Over 2 million people had viewed it on YouTube alone, according to the article.
Lorne Michaels, SNL’s producer, predicted that other shows might more actively offer material online that isn’t suitable for prime-time broadcast. But in a telling state of the regulatory climate, and its chilling effect on the distribution of content (the easily offended think this is a good thing), according to the article:
[Michaels] cautioned in an interview that the strategy of treating Internet users to the equivalent of an authorized “director’s cut” of his late-night show “will be the exception” going forward.
Don’t want to piss off anyone with power in Washington, DC, or else Internet content could one day receive a not-so-special regulatory treat from the FCC.
Most people are consumers of content, not creators. However, as Web 2.0-style social networking, photo sharing and blogging interactivity increases, more people are and will be producers – and they will want to share their works over the Internet. But as an interesting AP story relates, there’s an imbalance in Internet uploading and downloading – but fortunately there’s no call for net neutrality legislation to address this (at least not yet).
From the article:
The system is a hangover of the old mass media days,” said Paul Saffo, a technology analyst in Palo Alto, Calif. “Some consumers are uploading a tremendous amount of information and that’s the thing the establishment just doesn’t get.”
Cable and phone providers insist they are keeping up with demand, in many cases increasing both upload and download speeds, but they say they haven’t had a huge clamoring for symmetry.
I agree with both of the above views, and I think that the market is responding pretty well to the majority of consumers. Like almost all journalists, Anick Jesdanun, the article’s author, tries to create some sort of conflict or lack of parity – hence the title “Imbalance in Net Speeds Impedes Sharing.” And regarding the state of the marketplace, the author states:
Brazil, India and Italy recently joined the Open Document Format parade, according to today’s press release from the ODF Alliance. Brazil will recommend ODF as the government’s preferred
format, India decided to use ODF at its tax office, and
Italy will recognize ODF as national standard. Is this good or bad news for technology liberators (or neither – is it neutral)?
Hard to tell without reading the full details (Brazil’s document is in Portuguese). But if these governments are in effect choosing technology winners and losers, then this is a bad thing.
Now, I understand that the stated mission of the ODF Alliance is, essentially, to ensure that documents are accessible across platforms and applications, even as technologies change. However, I get squirmy when governments approve and select technologies in a way that that appears to be more than government asserting its power as a customer, and is instead catering to an ideology backed by IBM, Sun, and other large companies with interests in non-proprietary software).
How can we ensure that documents are readable and interoperable without governments engaging in file format beauty contests? There has to be a better way…and there is! I’d rather have governments express their goals – long-term access, interoperability, disability access, etc – and let the market determine the best format. After all, ODF will one day be usurped by a better format, but vested interests in the status quo could delay its adoption by governments.
Wow, there’s something for everyone
on YouTube! I have to give props to the American Antitrust Institute for their
slick film on antitrust regulation (to steal from Tim’s recent post, I avoid saying
"antitrust enforcement" or "antitrust authority" – and so should you – because
these phrases impart too much credence to antitrust law).
The film – called Fair Fight in the Marketplace – is an example
of a public policy organization making a difficult regulatory issue easier to
understand, while at the same time persuading the audience to its way of
thinking. Predictably, their film touts the theoretical aspirations of antitrust policy, and leaves out the messes that are often created by antitrust regulation.
The movie starts from a premise that antitrust law actually works for consumers. However, most believers in free markets find that reality doesn’t match this assessment. While the ideals of antitrust regulation might be
appealing, its reduction to practice has been a costly endeavor. Milton Friedman
had this to say about antitrust in a 1999 Cato Policy Report:
My own views about the antitrust
laws have changed greatly over time. When I started in this business, as a
believer in competition, I was a great supporter of antitrust laws; I thought
enforcing them was one of the few desirable things that the government could do
to promote more competition. But as I watched what actually happened, I saw
that, instead of promoting competition, antitrust laws tended to do exactly the
opposite, because they tended, like so many government activities, to be taken
over by the people they were supposed to regulate and control. And so over time
I have gradually come to the conclusion that antitrust laws do far more harm
than good and that we would be better off if we didn’t have them at all, if we
could get rid of them.
In a classic 1983 article in Regulation magazine, Fred Smith, President of the Competitive Enterprise Institute, has this to say in "Why Not Abolish Antitrust?":
Antitrust laws, in their static way, ban activities for which officials and scholars have not yet discovered the rationale; markets are more dynamic than that.
One can go on and on about antitrust regulation. But the main point is this: way too many people place too much faith in the antitrust dogma without measuring its real results. Like any form of economic regulation, there needs to be a cost/benefit analysis. It’s fair to say that antitrust regulation has costs that exceed its benefits.Too bad "Fair Fight" left out this fair criticism.
It’s been over a week now and it’s interesting to meter the reaction to the Microsoft and Novell deal. Popular, mainstream reaction has been generally positive–this could create a win/win for the companies, and consumers will benefit form the partnership. But for those more steeped in the open source community, there have been charged responses that indicate a chasm. Some see the agreement as legitimizing open source, at least in the eyes of the broader (Windows-dominated) marketplace. Others view this as a deal with the devil that will ultimately hurt open source and the GPL. The recent Samba team response is clear: the GPL is a zero-sum game–you exploit open source software for your gain to the detriment of others (ie. the "community"). Under Samba’s view, the Microsoft & Novell deal doesn’t enlarge the pie, but only unfairly redistributes it.
Is this the same sort of broad ideological split that separates money-making capitalists from share and share-alike Marxist communists? Or is the split more indicative of a narrow divide about what is better for software innovation, closed (or patented) or open software? Or even narrower still, are we only talking about whether the Microsoft/Novell arrangement violates the specifics of the GPL? I don’t really know–and perhaps a complete response incorporates answers to all three questions.
Tim points to the threat of a split in his post last week. He states:
Microsoft is laying the groundwork for splitting the open source community in two. On the one hand, you’ll have a handful of "open source" companies that sell products like Linux under the umbrella of cross-licensing agreements with Microsoft and other big patent holders. On the other hand, you’d have the rest of the open source community. This would give Microsoft cover to sue medium-sized open source firms and say "all we’re asking is for company X to go legit like Novell." Once they’ve collected a few scalps, they might be able to scare the business community away from buying open source software from vendors that haven’t joined the protection racket.
As I said in my post on this, I welcome these patent agreements. The Microsoft/Novell covenant not to sue is an example of market participants contracting around or within the patent and copyright legal system to reduce the transaction costs of negotiating, monitoring and enforcing licenses. Far from creating a legal cloud, unilateral or bilateral IP agreements work to create a workable opening for innovative developments in an already existing cloud of assertible (if not all enforceable) IP rights.
But I can’t agree with Tim on the following, when he describes the MS / Novell agreement:
Microsoft and Novell announced a collaborative effort. Whoa, this is big news! Windows and SuSE Linux, proprietary and open source, Microsoft and Novell–working together? Well, yes, according to a recent announcement. And for this collaborative effort to have even been formalized, a required element was some intellectual property rights housecleaning.
First, Microsoft will work with Novell and actively contribute to several open source software projects, including projects focused on Office file formats and Web services management. Second, Microsoft will not assert its patents against individual noncommercial open source developers. And third, Microsoft is promising not to assert its patents against individual contributors to OpenSUSE.org whose code is included in the SuSE Linux Enterprise platform, including SuSE Linux Enterprise Server and SuSE Linux Enterprise Desktop.
From an intellectual property perspective, numbers 2 and 3 standout – Microsoft’s legally binding promise not to assert its IP rights against SuSE Linux.
What is Microsoft doing here? It’s trying to put SuSE developers at ease that they won’t be sued. So there’s no need to obtain a license from Microsoft. Furthermore, there’s no need for sublicensing – which is particularly important for the decentralized nature of open source development.
Non-assertion covenants (also called a “promise not to assert” or “covenant not to sue”) are binding agreements. It’s a “promise” but it’s still legally enforceable under the doctrine of promissory estoppel–if Microsoft were to withdraw its promise, anyone who justifiably relied on the promise and suffered harm from the withdrawal can sue. They are ways for one party with intellectual property rights to create zones of enforcement and increase certainty for other parties. Its an example of market participants contracting around (or within) the patent and copyright legal system to reduce transaction costs of negotiating, monitoring and enforcing licenses.
Non-assertion promises are better than RAND (Reasonable and Non-Discriminatory) licenses. What is “reasonable” and “non-discriminatory” depends on the particular circumstance and is open to legal interpretation and business negotiation hassles. Furthermore, RAND does not mean royalty-free. For more on Non-assertion covenants see Andy Updegrove’s informative blog post.
I believe we’ll see more and more of these non-assertion agreements from IP rights holders. And I expound further on this in my posting at the ACT blog.
The UN’s Internet Governance Forum (IGF) held in Athens, Greece just ended. There’s some interesting blogs that discuss the happenings there, including one from the BBC and from my colleagues that were there in attendance, Jonathan Zuck and Steve DelBianco.
There was a lot of talk – but that’s ok, this is what this UN-created forum is all (and thankfully only) about. There were sessions with such broad topics as “openness” and “diversity” and “access.” Basic access to infrastructure for Internet connections is a problem for many people, especially in Africa. We think all youngsters know about MySpace? Think again (from the BBC blog):
A representative of the Council of Europe was made to look a little foolish when he asked the panel of young people about the growing use of social networks by young people and possible over use of such things as MySpace.
A young Nigerian told him: “If you ask a person in Lagos ‘What is MySpace?’ he is going to stare at your face.
And regarding “openness” I invite you to check out the ACT blog where, among other IGF entries, Jonathan writes how the phrase “no one has a monopoly on knowledge” has been a popular refrain at the IGF:
While it certainly sounds good, it is being used to justify everything from tweaking copyright law to outright theft. Many from the audience of a plenary on Openness brought up the topic of patents and copyrights as barriers to the broad access to “knowledge” regardless of what it took to come up with that “knowledge.”
Now it’s true that a lot of material that is paid for by the government, especially if they are not paid back, and stuff for which the term of patent and copyright have passed should all be in the public domain and there’s some work to get them there. That’s a far cry from simply taking entire sectors of innovation, like software and security and declaring them public goods whereby the moment that innovation is developed it must be shared by everyone for free. In market economies, copyright and patents provide the incentives necessary for investment in innovation, and declaring any innovation of value a “common good” and giving it to the public will cripple that system.
The U.S. has the reputation of being entrepreneurial relative to other countries. The AEI event I attended yesterday was a book forum for Carl Schramm’s new book, “The Entrepreneurial Imperative.” The event focused on why entrepreneurs are important (they spur innovation) and how Washington policy helps and hurts entrepreneurial activity (despite our country’s relative success).
U.S. bankruptcy law is a reflection of our culture that accepts failure. In other countries, if you start a company and it goes under, you are a failure. In the U.S., however, entrepreneurs go on to start another business, and if that fails, then another one. The process is a learning–not losing–experience.
Yet other laws often have unintended deleterious effects on entrepreneurial activity. Schramm mentioned that the market for medical devices is dominated entirely by large companies because of the over-application of product liability laws. He also mentioned tax rules that prevent acquiring companies from fully writing off the R&D expenses of the acquired firm, which reduces the ability of large firms to incorporate small firm innovation and hurts small firms with an exit strategy of based on monetizing their hard work and selling the company.
International trade policies affect innovation. Schramm said that U.S. policy based on protecting dying, inconsequential industries like steel, sugar and textiles hurt our negotiations when trying to prevent piracy and protect our growing intellectual property industries. IP is the future (if not the present) yet our protection of older industries hurts our leverage when advocating free trade and IP protection.
According to Schramm, of the Fortune 100 companies that existed in 1980, only 25 rank among the 100 today. This, he said, is due to the dynamism of the marketplace–thanks mostly to the direct and indirect influence of entrepreneurs.
Indeed, the entrepreneurial imperative should be a categorical imperative for U.S. policy.
Yesterday I was in Richmond to participate in a focus group to help the Virginia courts system run better through IT (it’s good to see governments using information technology to help their citizens–I’m for limited government, not Luddite government). Virginia recently created a commission to look 10-15 years into the future and make recommendations that will position the Supreme Court of Virginia to address upcoming challenges. And as I learned, Virginia’s judicial system can certainly benefit from IT solutions.
Most judges, court clerks and lawyers that I have known place a good deal of emphasis on the integrity of the judicial system and view our courts to be almost sacred institutions. This mentality means that change can come slowly, even if it is for the better–and courts have ample opportunity to incorporate technology into their operations.
In particular, videoconferencing has HUGE possibilities for quick face time in front of a judge, mostly related to routine stuff like determinations of indigency in criminal cases or pre-trial scheduling and discovery. Anything that minimizes the need for attorneys and their clients to appear in court reduces costs all the way around–to clients, lawyers that have to travel to different courthouses, and taxpayers that fund courthouse operations and salaries to bailiffs, court reporters, sheriffs that transport prisoners, etc.
From my perspective, the judiciary is an untapped opportunity for IT-minded entrepreneurs. Perhaps there’s a company already out there that will improve the filing of court forms in a similar way that TurboTax and Quicken did for electronic tax filings?
Last week I was in New York City for a hearing on ticket scalping (I prefer the nice term “reselling”) and the impact scalping (resale) laws have on online businesses like eBay, StubHub and RazorGator. My colleague, Steve DelBianco, testified at what turned out to be an interesting hearing on what’s really best for the consumer (see his blog post on this). I’m happy to say that most agreed that a free market for secondary sales of tickets is in a consumer’s best interest.
Gone are the days of having to go to the event and purchase a ticket from some gruff, shady character. Sites like eBay and StubHub offer a safe (and often guaranteed) experience for buying and selling tickets. But in case you haven’t noticed, venues and teams will often prevent these resales–just look at the small type language on the back of your ticket next time you’re at a Yankees game (which, thankfully, won’t be until next year!). The Yankees have already “evicted” 10 or so season ticket holders because they resold their tickets (mostly on eBay). These restrictions are on single-game tickets as well.
So here’s where the libertarian in me is somewhat conflicted. The ticket is legally a license, so it is a contract that I willfully entered into. If the Yankees want me to only use THEIR approved exchange to resell my ticket, I agreed to that. BUT, don’t most people assume their ticket is personal property, to give or sell to whomever at whatever price? Perhaps this is a property rights issue.
Regardless, here is the testimony that my organization presented last week. And if you’re really interested in how corrupt the entertainment and Broadway ticket sales market is in NYC (something that an open and transparent online market would help), check out this Spitzer report.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.