Over at Reason.com, I write today about the ongoing Time Warner-CBS blackout and point out that Congress and the FCC have tipped the scales in favor of broadcasters with, inter alia, free spectrum, must-carry power, retrans consent rights, network non-duplication rules, and my personal favorite, syndicated exclusivity privileges. It’s just not a fair negotiating environment. But, and this is important, two wrongs don’t make a right.
Trying to plan the market got us into this mess, and making new rules to try to “even out” the playing field is only further distorting the market. As I say,
Congress should completely deregulate the video distribution marketplace by repealing broadcaster’s special rights. While the they’re at it they should also end compulsory copyright licensing that allows video distributors like cable companies to pay regulated rates for the programs they retransmit, rather than negotiate. And they should privatize the spectrum, rather than continue to give it away to broadcasters in the name of the “public interest.”
You can read the whole thing here. And after you’re done, you can listen to my colleague Adam Thierer make much the same case opposite Susan Crawford on the Diane Rehm Show earlier today. Audio is available here.
Plugs out of the way, I want to take a moment to address a small point that really grinds my gears, as Home Simpson would say. It’s the constant refrain I hear about blackouts that consumers are being “victimized” by the impasse in negotiations. Some examples,
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Sherwin Siy, Vice President of Legal Affairs at Public Knowledge, discusses emerging issues in digital copyright policy. He addresses the Department of Commerce’s recent green paper on digital copyright, including the need to reform copyright laws in light of new technologies. This podcast also covers the DMCA, online streaming, piracy, cell phone unlocking, fair use recognition, digital ownership, and what we’ve learned about copyright policy from the SOPA debate.
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National Review today runs a pretty unfortunate article about Bitcoin in which the reporter, Betsy Woodruff, tries to live for a week using only bitcoins—a fun stunt already done by Kashmir Hill about two months ago. Aside from misrepresenting libertarianism, what's unfortunate about the article is how Bitcoin is presented to NR's readers, many of whom may be hearing about the virtual currency for the first time. Woodruff, who admits she doesn't completely understand how Bitcoin works, nevertheless writes,
From what I can tell, the main reason Bitcoin has any practical value is the existence of Silk Road, a website that lets users buy drugs and other illegal material online. …
A lot of Bitcoin aficionados will probably take issue with my next point here, but I’m pretty sure history will eventually be on my side. My theory is that Silk Road is the Fort Knox of Bitcoin. Bitcoin, from what I can tell, isn’t valuable because of idealistic Ron Paul supporters who feel it’s in their rational self-interest to invest in a monetary future unfettered by Washington; Bitcoin is valuable because you can use it to do something that you can’t use other forms of currency to do: buy drugs online. As long as Bitcoin is the best way to buy drugs online, and as long as there is a demand for Internet-acquired drugs, there will be a demand for Bitcoin.
Woodruff is right that folks who understand Bitcoin will take issue with her because she's demonstrably wrong. While it's true that illicit transactions probably did help bootstrap the Bitcoin economy early on, we are way past the point where such transactions account for any sizable portion of the economy. It's easy to put her "theory" to the test: Nicolas Cristin of Carnegie Mellon has estimated that Silk Road generates about $2 million in sales a month. The estimated total transaction volume for the whole bitcoin economy over the last 30 days is just over $770 million. So, Silk Road accounts for about 0.25% of bitcoin transactions—far from being the "Fort Knox of Bitcoin," as Woodruff says. And to put that in perspective, the UN estimates that the illicit drug trade accounts for 0.9% of world GDP.
The fact is that Bitcoin is not only a revolutionary new payments system that potentially disrupts traditional providers and can help serve the billions of unbanked around the world, but it also has the potential to be a distributed futures or securities market, or a distributed notary service. This is why Peter Thiel's Founders Fund and Fred Wilson's Union Square Ventures are investing millions of dollars in Bitcoin startups. Should we really think that these investors have overlooked what Woodruff posits—that the only value of bitcoins is to buy drugs? No, and I hope NR updates its story.
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.