Archive of UserLand's first discussion group, started October 5, 1998.

Re: Oops, you missed some things!

Author:Dave Rogers
Posted:9/1/2000; 6:40:09 AM
Topic:The Lie of "IP"
Msg #:20668 (In response to 20656)
Prev/Next:20667 / 20669

Excellent analysis.

In fact, the printing press made possible the idea of intellectual property.

Pefect.

As communications and duplication of people's creations becomes even easier, the value that IP can bring to society is not diminished. In fact, it is increased!

Although I believe this is correct also, and I think your example of the printing press illustrates it well, I think it needs to be placed in the context of Dennis' issue.

If we may use music as an example, as I believe that is easier to understand as a conventional "product" of intellectual property than something like computer code, we can show how the concept of intellectual property increases value to both parties of the transaction.

The current distribution model relies on CD's and other physical media. For whatever reasons, the market for CD's seems to put the price for a CD in the $10.00 - $15.00 range. Of all the potential people who might be interested in a given artist's work, not all will perceive a win-win transaction at the market price. Many of these people will obtain the artist's work through unconventional means, either from copying friends' CDs, Napster, or other means. That these individuals would never have paid for CD at the market price does not mean that the artist, or recording company, suffers no economic loss. Clearly, the person who obtains the "free" copy would have paid some price for the work. Indeed, they did pay in some fashion, if only in the time and effort it took to obtain the "free" copy. If the artist's work has enough value to cause the bootlegger to make the effort to obtain a "free" copy, then there is likely some monetary price the bootlegger would have paid to obtain a legitimate copy that respected the intellectual property rights of the artist or recording company.

Dennis' point seems to be that since the price of obtaining a "free" copy is so low, the intellectual property, while not valueless, should nevertheless be free. He proposes a number of means by which creators of intellectual property might otherwise be motivated to create in place of the conventional economic distribution model in which a market determines a price. It is by no means clear that any of his proposed models would produce the quantity of intellectual property today's market supports. If they were able to do so, I think they would have supplanted the current method already.

What I think your analysis correctly shows is that the market, even under current intellectual property laws, will ultimately decide on a new, lower, price for the work of musical artists. This lower price will widen the audience of potential purchasers. Digital technology will also allow greater access to an entire body of an artist's work, which will facilitate a greater number of transactions. The net value of the work increases because a much larger number of people will perceive a net win-win in the economic transaction,and will therefore undertake such transaction. "We make it up on volume."

Dennis will argue no market price can compete with free, but Dennis fails to realize that nothing is free. Right now Napster exists on the backs of any number of facilities that willingly or unwillingly support it. Universities are banning Napster because of the bandwidth it uses on university networks, which were not built to facilitate the transfer of free music for students. Then there are people like Mr. Fix in the NYT piece, who seek to raise the cost to Napster users by polluting the database so the user has some risk of not obtaining the product he or she wanted after investing their own time and network resources in obtaining it. Coders who disagree with Dennis are writing software to facilitate the identification of people violating current intellectual property laws, to enable their arrest and prosecution, a high cost indeed. The owners of intellectual property are taking court action and legislative action to raise the cost of "free" music. So there is already a certain cost of "free" music, and it is only going to rise. At some point, it will be cheaper to get legitimate music.

Dennis, in another post, also made reference to some type of ownership rights, in that he should be free to give away bits he has acquired because they were his. I asked him to explain how his ownership rights differ from those of the creator, but he hasn't clarified that issue as of this post.

It's an interesting discussion, and I congratulate you on the most rational analysis I've read so far.

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