The Demise Of Intellectual Property
3 years ago I printed a book of short stories in Israel. The publishing house belongs to Israel’s leading (and exceedingly wealthy) newspaper. I signed a contract which stated that I’m entitled to receive eight% of the income from the sales of the book after commissions payable to distributors, shops, etc. Some months later (1997), I won the coveted Prize of the Ministry of Education (for short prose). The prize money (some thousand DMs) was snatched by the publishing house on the legal grounds that each one the money generated right belongs to them because they own the copyright.
In the mythology generated by capitalism to pacify the plenty, the myth of intellectual property stands out. It goes like this: if the rights to intellectual property weren’t outlined and enforced, industrial entrepreneurs wouldn’t have taken on the risks related to publishing books, recording records, and making ready multimedia products. Hence, artistic individuals can have suffered because they will have found no approach to make their works accessible to the public. Ultimately, it’s the public which pays the worth of piracy, goes the refrain.
However this can be factually untrue. Within the USA there is a very limited group of authors who truly live by their pen. Only choose musicians eke out a living from their noisy vocation (most of them rock stars who own their labels – George Michael had to fight Sony to try and do simply that) and very few actors return close to deriving subsistence level income from their profession. All these will not be regarded as largely artistic people. Forced to defend their intellectual property rights and therefore the interests of Massive Cash, Madonna, Michael Jackson, Schwarzenegger and Grisham are businessmen a minimum of as a lot of as they’re artists.
Economically and rationally, we tend to ought to expect that the more expensive a piece of art is to supply and therefore the narrower its market – the a lot of emphasised its intellectual property rights.
Contemplate a publishing house.
A book which prices 50,000 DM to produce with a potential audience of a thousand purchasers (certain educational texts are like this) – would have to be priced at a a minimum of a hundred DM to recoup only the direct costs. If illegally copied (thereby shrinking the potential market as some individuals will like to shop for the cheaper illegal copies) – its worth would have to go up prohibitively to recoup prices, so driving out potential buyers. The story is completely different if a book costs ten,000 DM to provide and is priced at 20 DM a copy with a potential readership of 1,000,000 readers. Piracy (illegal copying) ought to in this case be additional readily tolerated as a marginal phenomenon.
This is often the theory. But the facts are tellingly different. The less the value of production (brought down by digital technologies) – the fiercer the battle against piracy. The bigger the market – the additional pressure is applied to clamp down on samizdat entrepreneurs.
Governments, from China to Macedonia, are introducing intellectual property laws (beneath pressure from wealthy world countries) and implementing them belatedly. However where one factory is closed on shore (as has been the case in mainland China) – 2 sprout off shore (as is the case in Hong Kong and in Bulgaria).
However this defies logic: the market today is international, the costs of production are lower (except for the music and film industries), the marketing channels a lot of various (half of the income of movie studios emanates from video cassette sales), the speedy recouping of the investment just about guaranteed. Moreover, piracy thrives in very poor markets in that the population would anyhow not have paid the legal price. The illegal product is inferior to the legal copy (it comes with no literature, warranties or support). So why should the large manufacturers, publishing houses, record corporations, software firms and fashion homes worry?
The solution lurks in history. Intellectual property may be a relatively new notion. Within the close to past, nobody considered knowledge or the fruits of creativity (art, style) as “patentable”, or as somebody’s “property”. The artist was but a mere channel through that divine grace flowed. Texts, discoveries, inventions, works of art and music, designs – all belonged to the community and might be replicated freely. True, the chosen ones, the conduits, were honoured however were rarely financially rewarded. They were commissioned to provide their artworks and were salaried, in most cases. Solely with the arrival of the Industrial Revolution were the embryonic precursors of intellectual property introduced however they were still limited to industrial designs and processes, mainly as embedded in machinery. The patent was born. The a lot of large the market, the a lot of subtle the sales and selling techniques, the bigger the money stakes – the larger loomed the difficulty of intellectual property. It unfold from machinery to designs, processes, books, newspapers, any printed matter, artistic endeavors and music, films (which, at their starting weren’t thought of art), software, software embedded in hardware, processes, business strategies, and even unto genetic material.
Intellectual property rights – despite their noble title – are less concerning the intellect and more about property. This is Massive Cash: the markets in intellectual property outweigh the whole industrial production in the world. The aim is to secure a monopoly on a specific work. This is an especially grave matter in academic publishing where little- circulation magazines don’t enable their content to be quoted or revealed even for non-commercial purposes. The monopolists of information and intellectual product cannot allow competition anywhere in the world – as a result of theirs is a world market. A pirate in Skopje is in direct competition with Bill Gates. When he sells a pirated Microsoft product – he is depriving Microsoft not only of its income, but of a consumer (=future income), of its monopolistic status (cheap copies will be smuggled into other markets), and of its competition-deterring image (a significant monopoly preserving asset). This is often a threat which Microsoft cannot tolerate. Hence its efforts to eradicate piracy – successful in China and an utter failure in legally-relaxed Russia.
However what Microsoft fails to perceive is that the matter lies with its pricing policy – not with the pirates. When faced with a international marketplace, an organization will adopt one of two policies: either to adjust the value of its merchandise to a world average of buying power – or to use discretionary differential pricing (as pharmaceutical companies were forced to do in Brazil and South Africa). A Macedonian with an average monthly income of one hundred sixty USD clearly cannot afford to buy the Encyclopaedia Encarta Deluxe. In America, fifty USD is that the income generated in four hours of a median job. In Macedonian terms, therefore, the Encarta is 20 times more expensive. Either the value should be lowered in the Macedonian market – or a median world price should be fixed that can reflect a mean international purchasing power.
One thing must be done about it not only from the economic purpose of view. Intellectual products are very value sensitive and highly elastic. Lower prices can be additional than compensated for by a much higher sales volume. There is no different approach to explain the pirate industries: evidently, at the correct price a lot of folks are willing to buy these products. High costs are an implicit trade-off favouring little, elite, choose, wealthy world clientele. This raises a ethical issue: are the kids of Macedonia less ought to have education and access to the most recent in human knowledge and creation?
Two developments threaten the longer term of intellectual property rights. One is the Internet. Lecturers, bored stiff with the monopolistic practices of skilled publications – already publish on the net in big numbers. I published some book on the Net and they can be freely downloaded by anyone who has a laptop or a modem. The full text of electronic magazines, trade journals, billboards, professional publications, and thousands of books is accessible online. Hackers even created sites on the market from which it is attainable to download whole software and multimedia products. It is terribly simple and cheap to publish on the Web, the barriers to entry are virtually nil. Internet pages are hosted freed from charge, and authoring and publishing software tools are incorporated in most word processors and browser applications. As the Net acquires additional impressive sound and video capabilities it will proceed to threaten the monopoly of the record companies, the movie studios and so on.
The second development is also technological. The oft-vindicated Moore’s law predicts the doubling of pc memory capability every eighteen months. But memory is solely one aspect of computing power. Another is that the speedy simultaneous advance on all technological fronts. Miniaturization and concurrent empowerment by software tools have made it doable for people to emulate much larger scale organizations successfully. A single person, sitting familiar with 5000 USD value of kit can fully compete with the simplest product of the most effective printing homes anywhere. CD-ROMs can be written on, stamped and copied in house. An entire music studio with the most recent in digital technology has been condensed to the scale of a single chip. This can lead to private publishing, personal music recording, and also the to the digitization of plastic art. However this is often solely one facet of the story.
The relative advantage of the intellectual property corporation will not consist solely in its technological prowess. Rather it lies in its vast pool of capital, its selling clout, market positioning, sales organization, and distribution network.
Nowadays, anyone can print a visually impressive book, using the on top of-mentioned low cost equipment. But in an age of knowledge glut, it is the marketing, the media campaign, the distribution, and the sales that confirm the economic outcome.
This advantage, however, is also being eroded.
First, there’s a psychological shift, a reaction to the commercialization of intellect and spirit. Artistic individuals are repelled by what they regard as an oligarchic institution of institutionalized, lowest common denominator art and they are fighting back.
Secondly, the Internet is a huge (two hundred million people), really cosmopolitan market, with its own marketing channels freely on the market to all. Even by default, with a minimum investment, the probability of being seen by surprisingly large numbers of shoppers is high.
I revealed one book the traditional way – and another on the Internet. In fifty months, I’ve got received 6500 written responses regarding my electronic book. Well over five hundred,000 individuals browse it (my Link Exchange meter registered c. 2,000,000 impressions since November 1998). It’s a textbook (in psychopathology) – and five hundred,000 readers may be a ton for this kind of publication. I’m thus glad that I am not certain that I will ever contemplate a traditional publisher again. Indeed, my last book was revealed in the terribly same way.
The demise of intellectual property has lately become abundantly clear. The previous intellectual property industries are fighting tooth and nail to preserve their monopolies (patents, emblems, copyright) and their value benefits in producing and marketing.
But they are faced with three inexorable processes that are likely to render their efforts vain:
The Newspaper Packaging
Print newspapers supply package deals of cheap content sponsored by advertising. In alternative words, the advertisers procure content formation and generation and also the reader has no choice but be exposed to commercial messages as she studies the content.
This model – adopted earlier by radio and television – rules the net currently and will rule the wireless web in the future. Content can be created on the market free of all pecuniary charges. The consumer can pay by providing his personal knowledge (demographic information, consumption patterns and preferences and so on) and by being exposed to advertising. Subscription based models are certain to fail.
So, content creators can profit solely by sharing in the advertising cake. They can notice it increasingly troublesome to implement the previous models of royalties paid for access or of ownership of intellectual property.
Disintermediation
A lot of ink has been spilt concerning this necessary trend. The removal of layers of brokering and intermediation – mainly on the manufacturing and marketing levels – could be a historic development (though the continuation of a long term trend).
Think about music for instance. Streaming audio on the web or downloadable MP3 files can render the CD obsolete. The web conjointly provides a venue for the promoting of niche product and reduces the barriers to entry previously imposed by the need to interact in costly selling (“branding”) campaigns and manufacturing activities.
This trend is additionally likely to restore the balance between artist and therefore the industrial exploiters of his product. The very definition of “artist” can expand to include all artistic people. One will get to differentiate oneself, to “whole” oneself and to auction off one’s services, concepts, product, designs, expertise, etc. This can be a come back to pre-industrial times when artisans dominated the economic scene. Work stability will vanish and work mobility will increase during a landscape of shifting allegiances, head searching, remote collaboration and similar labour market trends.
Market Fragmentation
In a fragmented market with a myriad of mutually exclusive market niches, client preferences and promoting and sales channels – economies of scale in manufacturing and distribution are meaningless. Narrowcasting replaces broadcasting, mass customization replaces mass production, a network of shifting affiliations replaces the rigid owned-branch system. The decentralized, intrapreneurship-based corporation could be a late response to those trends. The mega-corporation of the longer term is more likely to act as a collective of start-ups than as a homogeneous, uniform (and, to conspiracy theorists, sinister) juggernaut it once was.
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Terry Zigmund – The Rich Life
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