Wednesday, October 21, 2009

Your Digital Rights

Once upon a time in a land far far away, there was a company that made buggy whips. Every day, the owners would pray that someday they would find a technology that would improve the buggy whip to the point where it cost them nearly nothing to produce, and then they could flood the market with cheap buggy whips and make a fortune. The people would have their cheap buggy whips, and the owners would be rich. What a win-win situation for all! One day their top buggy whip research scientist came from the buggy whip research lab shouting “Eureka!” He had invented the horseless carriage!

Each new horseless carriage was, of course, made with a buggy whip holder. To make it go, the driver simply inserted his buggy whip. Now the buggy whips could be made of cheap cardboard, since they didn't actually have to be used. At last the buggy whip company had their fondest desire!

They immediately set out on a huge marketing campaign to sell the horseless carriage with the new “improved” buggy whip. At first, people were reluctant to replace their buggies with horseless carriages, but after a while they discovered that the horseless carriages gave better rides. After all, the people didn't really care about the buggy or buggy whip, but wanted to get where they were going.

The first problem was that people discovered they could make their own buggy whips out of cardboard. That obviously had to be stopped, so the company started making it so that each buggy whip was a unique shape and only that shape would fit a particular horseless carriage. People started modifying horseless carriages so they would run with any buggy whip in response. Eventually, the buggy whip company did the only thing it could do. It lobbied the government to make laws to protect its buggy whip interests. Legislation like the DMBWA (Digital Millennium Buggy Whip Act) made it illegal to circumvent the buggy whip shape-unique features of your horseless carriage.

But people persisted. They started groups to trade buggy whips and techniques for cutting out buggy whip cardboard shapes. Eventually the BWIAA (Buggy Whip Industry Association of America) was forced to institute a series of lawsuits against individual buggy whip owners.

Of course, this story bears no resemblance to any real world events, but there is a lesson to be learned. A friend once said to me that any law that makes more than half of the American public into criminals has got to be wrong. Of course, in a world of moral relativism he would be absolutely right, but we don't live in that world. Yet, he has a point.

The problem is that we are in a world where the economy can't handle what it has produced. Like the buggy whip company, we got our wish, but didn't consider the consequences. I'm told that the inventor of the microchip worked for Fairchild. When he presented his idea to management, they asked him how someone could repair a circuit so tiny. He replied that you wouldn't repair it, you'd throw it out! They reject his idea, as they couldn't accept that someone would throw out an entire electronic circuit when one device failed. He left and went on to found Intel with his idea.

When the “digital age” came about, content publishers were keen to jump on because it would mean they could produce content that was almost free to distribute. Of course, that means everyone has the capability to (re)distribute that content, which was something they hadn't (but should have) anticipated When a CD was something that took huge machines and large capital investment in factories to produce you could see paying $15 for. When I can burn the same CD for under $0.10 (even after paying a “tax” to support the recording industry) I have to question whether they're being greedy by the 15,000% markup.

Of course, the artist deserves to be paid for his work (more on that later) but how much did the artist get for that $15 CD? I'm told 10-18% ($1.50 - $2.70). Let's be generous and call it $2.50. Now, if the CD costs $0.10 to produce and the artist is paid $2.50, then the cost is $2.60. Allow the record company a 40% markup and we have a $3.64 CD. About this time someone's probably shouting “distribution costs!”, but of course, that $0.10 blank CD had to be distributed as well, so I don't buy it. Note also that if CDs were so cheap there would be a lot more sold, so the price could be reduced further while still maintaining a decent profit.

And the situation is worse. We have the ultimate in cheap distribution – download it yourself! When Apple iTunes promised us $0.99 songs people danced in the streets. And yet, when we can listen to (or watch, or read) our entertainment anywhere on portable devices, we get hit with DRM (Digital Rights Management) that restricts us to one manufacturer or some subset of devices. Now you can pay extra to get DRM-free music, which is technically a step in the right direction, but better yet would be to charge less for it.

My point is simply this. If the recording industry charged what the product is worth (as in cost + reasonable markup) instead of what they can get for it, we'd all be better off. There are 2 ways to make more money on a product – charge more for it or sell more of it. If albums were $1 (and songs were $0.10) for instance, would there be a need to restrict copying? Music pirates wouldn't exist because they couldn't make a profit. People would much rather spend $0.10 for something from a manufacturer that was of known good quality, and that supported their favorite artists than turn to a pirated copy of unknown provenance.

But instead the industry continues to overcharge and then spend the money to prosecute their own customers. The same is true of e-books and in fact most forms of “intellectual property”. Ironically, in the information age, information is the medium of exchange, and yet it's not worth the paper it's printed on. Let's look at copyrights. Today's works will remain under copyright protection 70 years after the death of author. If a work of corporate authorship, 95 years from publication or 120 years from creation, whichever expires first.

What's the “common good” of this law? A patent, which might be on some life saving drug or invention to further the good of the human race, only runs for 17 to 20 years. Is entertainment so much more important than invention that we have to reward those who produce it six times as much? Does it take so much longer for the entertainment industry to “develop” the work and make a profit off of it? (Hint, the answer to both of these is “no”)

Yes, the artist deserves to be rewarded for his creative effort. But in the case of Disney film, for example, the artists are salaried employees, and were compensated as much as they're going to be while they actually worked. Even in the case of a band, what's wrong with paying them for actually performing? The brick layer doesn't get paid for 120 years for having laid bricks. The carpenter doesn't get paid for 120 years for having built a house. They stop getting paid when they stop performing their job, and they have to do it again to get paid again.

Instead we live in a society where we cater to the corporation over the individual, and more and more base our economy on what we can get away with rather than what's a fair profit for an honest day's work. We need to adjust to the paradigm, not try to shoehorn reality into our legal framework.

What do you think?



Excellent post!

When corporate publishers ceased being quality filters, I had no motivation to try to conform my intellectual property to their antiquated business models to reap a pittance and lose all my rights.

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