japanese students @ uw

Kathy E. Gill25 August 2008

A 10-minute explanation of US copyright … using words from one of the largest copyright owners in the world

What Is An Info Economy?Economics 101 Impact on Systems: Copyright

“An economy based on the exchange of knowledge information and services rather than physical goods and services.”

Australian Gov’t, Dept. Finance and Administration, 2001.

1963: Tadeo Umesao, Kyoto University, forecast an information industry

1973: Daniel Bell, Harvard, described a knowledge-based post-industrial economy

1981: Frederick Williams, UT Austin, said the communication revolution had arrived and expounded on the “knowledge worker”The Information Society, A Retrospective View. Dordick and Wang. 1993.

Post-industrial society will be “organized around knowledge for the purpose of social control and the directing of innovation and change”

The transformation is industrial to service

Anticipated tension between high-tech, intellectual work and nonprofessionals

1997: Bill Gates traced the computer from mainframe to personal to network. “[W]e have the most powerful communications medium of all time… And the information age is changing business in a fundamental way… [as well as] the way we entertain … and … [educate] ourselves.”Information Technology, Corporate Productivity and the New Economy, p 4

Info Economy, Post-Industrial Economy, “New” Economy?

One definition: the new economy is an integration of free-market economies, globalization and information technology Information Technology, Corporate Productivity and the New Economy, p 9

Anything that can be converted to bits, ie, digitized, is an information good Entertainment News Business Info Software

Telecommunications, computers, software Communication: E-mail, IM, TheWeb Networks: Extranet, Intranet, Internet, LAN, WAN Software: Expert systems, Enterprise Resource

Planning, Query and Reporting, Data Mining Networks: T1, T3, Wireless Protocols: HTTP, FTP, VoIP

Collapse of space and time

Reduction of scarcity

Technology optimists A new society without pollution; time for

creative work; participatory democracy; perfect markets…

Technology pessimists No new society but an increase in the divide

between rich and poor; greater control over individuals; erosion of privacy…

Technology + economics +society

Use whatever label you wish … the makeup of our economy has changed.

Information technologies and information as a good have replaced goods made of atoms and technologies resting on muscle.

Supply & DemandMarket StructureTypes of GoodsNetwork EffectsExamples/Discussion

Economics is the study of how people (and institutions) act in a society with limited resources (scarcity) The choices are more diverse than simply $$

- it’s also time, work, savings

Driving principle: that people optimize the “utility” (satisfaction) of goods and

services consumed - that we are rational

Found that two brain areas known to be part of emotional processing (the limbic system) can help predict financial choicesKuhnen & Knutson (2005)

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Costly to produceInexpensive to re-produce

Economist-speak: High fixed costs, low marginal costs

Rival Non-Rival

Excludable • Most consumer goods• Private land• Services• Single license software

•Trade secrets• Multi-license software• Patents• Subscription web sites

Non-Excludable

• Public land• Most roads• Water - rivers, lakes

• “Public Goods”• Basic research• Defense, police, firemen• Lighthouse• “Open” websites• TV (not cable!)

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The theory, courtesy the World Bank:

Assume someone produces a valuable theorem, but it cannot be kept secret -- it must be made immediately available.

Because anyone can immediately use it, there is no way for an individual to profit from creating it. So they won’t.

Trade Secrets (Coca Cola)Patents (Amazon One-Click)Copyright

Will people create knowledge if they can’t charge for it?

WB says No. Open source movement says Yes.

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DRM iTunes

Subscriptions RealNetworks and Napster, The

Economist and the Wall Street JournalLawsuits

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Global economy is increasingly reliant on information technologies and information

Firms in this sector have a different cost structure than traditional goods/sectors like agriculture or manufacturing

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The products in this sector have characteristics of a public good -- the antithesis of a scarce, excludable good

Thus information technology is disruptive, economically and socially

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These technologies change how we interact with (digital) cultural objects.

We are no longer merely a consumer.

We can also be a producer.

This means it is technically easier to express ourselves in new, creative ways.

SuperBowl CommercialsYouTube Democratic Presidential Debate

An Introduction To SumoFree Science Videos and Lectures

s

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Culture as a freely flowing current of ideas and practices runs head first into culture as intellectual property

A Long Time! In 1709, copyright lasted 14 years Prior to 1923, content is public domain (probably)

After 1978, the life of the author + 70 years OR work-for-hire, 95 years from publication or 125 years from creation

Between 1923 and 1978 ??? … talk to a lawyer!

"Copyright infringement" means exercising one of the copyright holder's exclusive rights without permission.

Copyright purpose is to “promote the progress of science and the useful arts” … and the duration for exclusivity is to be “limited” … - US Constitution

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Digital technologies enable a "Tinkering culture" -- a "read write rip burn culture”

This culture is butting heads with institutions that own “IP” – it’s an economic and cultural clash

The Inkjet Printer, from The Economist. (2002) http://emlab.berkeley.edu/users/bhhall/e124inkjetprinter.html

The Invention of Email, from Pretext Magazine (1998) http://emlab.berkeley.edu/users/bhhall/e124emailinvention.pdf

Science and Engineering Indicators (2002) National Science Board. http://www.nsf.gov/sbe/srs/seind02/start.htm

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Timothy F. Bresnahan. “The Economics of the Microsoft Case.” http://www.stanford.edu/~tbres/Microsoft/The_Economics_of_The_Microsoft_Case.pdf

Cory Doctorow. “How Copyright Turned Us Into IP Serfs.” Speech, University of North Carolina, Chapel Hill. 22 February 2007. http://www.youtube.com/watch?v=NkBX-981_es

Nicholas Economides. “The Economics of Networks,” International Journal of Industrial Organization, October (1996) http://www.stern.nyu.edu/networks/top.html

Tore Nilssen and Lars Sørgard. “TV Advertising, Programming Investments, and Product-Market Oligopoly” http://www.nhh.no/sam/res-publ/2000/dp06.pdf

Frank Zappa on Crossfire, 1986. http://www.youtube.com/watch?v=8ISil7IHzxc

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