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The Demise Of Intellectual Property

3 years ago I revealed 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 8% of the income from the sales of the book once 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 cash generated appropriately belongs to them because they own the copyright.

In the mythology generated by capitalism to pacify the lots, the myth of intellectual property stands out. It goes like this: if the rights to intellectual property were not defined and enforced, business entrepreneurs wouldn’t have taken on the risks related to publishing books, recording records, and preparing multimedia products. As a result, creative people will have suffered as a result of they will have found no manner to form their works accessible to the public. Ultimately, it’s the general public that pays the worth of piracy, goes the refrain.

However this is often factually untrue. Within the USA there is a terribly limited cluster of authors who truly live by their pen. Only select 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 do simply that) and very few actors come back close to deriving subsistence level income from their profession. All these can no longer be considered principally creative people. Forced to defend their intellectual property rights and the interests of Massive Cash, Madonna, Michael Jackson, Schwarzenegger and Grisham are businessmen at least as a lot of as they’re artists.

Economically and rationally, we have a tendency to ought to expect that the costlier a piece of art is to provide and the narrower its market – the more emphasised its intellectual property rights.

Think about a publishing house.

A book that prices 50,000 DM to produce with a potential audience of a thousand purchasers (certain academic texts are like this) – would have to be priced at a at least a hundred DM to recoup only the direct costs. If illegally copied (thereby shrinking the potential market as some people can like to buy the cheaper illegal copies) – its value would have to go up prohibitively to recoup costs, therefore driving out potential buyers. The story is totally different if a book prices ten,000 DM to supply and is priced at twenty DM a duplicate with a possible readership of 1,000,000 readers. Piracy (illegal copying) ought to during this case be additional readily tolerated as a marginal phenomenon.

This is the theory. However the facts are tellingly different. The less the price of production (brought down by digital technologies) – the fiercer the battle against piracy. The larger the market – the additional pressure is applied to clamp down on samizdat entrepreneurs.

Governments, from China to Macedonia, are introducing intellectual property laws (below pressure from rich world countries) and enforcing them belatedly. But where one factory is closed on shore (as has been the case in mainland China) – two sprout off shore (as is the case in Hong Kong and in Bulgaria).

However this defies logic: the market these days is international, the costs of production are lower (aside from the music and film industries), the marketing channels more varied (0.5 of the income of movie studios emanates from video cassette sales), the speedy recouping of the investment virtually guaranteed. Moreover, piracy thrives in terribly poor markets in which 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). Thus why ought to the big makers, publishing houses, record firms, software corporations and fashion homes worry?

The solution lurks in history. Intellectual property could be a relatively new notion. Within the near past, nobody considered information or the fruits of creativity (art, design) as “patentable”, or as somebody’s “property”. The artist was but a mere channel through which divine grace flowed. Texts, discoveries, inventions, artistic endeavors and music, styles – all belonged to the community and may be replicated freely. True, the chosen ones, the conduits, were honoured however were rarely financially rewarded. They were commissioned to produce their artworks and were salaried, in most cases. Solely with the advent of the Industrial Revolution were the embryonic precursors of intellectual property introduced but they were still restricted to industrial designs and processes, mainly as embedded in machinery. The patent was born. The additional massive the market, the more refined the sales and selling techniques, the larger the monetary stakes – the larger loomed the problem of intellectual property. It unfold from machinery to designs, processes, books, newspapers, any printed matter, artistic endeavors and music, films (that, at their beginning were not considered art), software, software embedded in hardware, processes, business strategies, and even unto genetic material.

Intellectual property rights – despite their noble title – are less regarding the intellect and a lot of concerning property. This is often Big Money: the markets in intellectual property outweigh the overall industrial production within the world. The aim is to secure a monopoly on a particular work. This can be an especially grave matter in educational publishing where tiny- circulation magazines do not permit their content to be quoted or printed even for non-business purposes. The monopolists of information and intellectual products cannot permit competition anywhere in the globe – as a result of theirs may be 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 solely of its income, but of a shopper (=future income), of its monopolistic status (low-cost copies can be smuggled into alternative markets), and of its competition-deterring image (a serious 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 problem lies with its pricing policy – not with the pirates. When faced with a global marketplace, a corporation can adopt one among 2 policies: either to adjust the price of its merchandise to a world average of getting power – or to use discretionary differential pricing (as pharmaceutical corporations were forced to do in Brazil and South Africa). A Macedonian with a mean monthly income of 160 USD clearly cannot afford to shop for the Encyclopaedia Encarta Deluxe. In America, 50 USD is the income generated in 4 hours of a median job. In Macedonian terms, so, the Encarta is twenty times more expensive. Either the value should be lowered within the Macedonian market – or an average world worth should be fastened that can reflect a mean global getting power.

Something must be done concerning it not solely from the economic point of view. Intellectual products are very price sensitive and highly elastic. Lower costs can be a lot of than compensated for by a a lot of higher sales volume. There’s no alternative method to clarify the pirate industries: evidently, at the correct price a lot of folks are willing to buy these products. High prices are an implicit trade-off favouring tiny, elite, select, rich world clientele. This raises a ethical issue: are the youngsters of Macedonia less worthy of education and access to the latest in human information and creation?

2 developments threaten the longer term of intellectual property rights. One is that the Internet. Academics, tired of something with the monopolistic practices of professional publications – already publish on the web in massive numbers. I printed a few book on the Net and they’ll be freely downloaded by anyone who contains a pc or a modem. The full text of electronic magazines, trade journals, billboards, professional publications, and thousands of books is obtainable online. Hackers even created sites obtainable from which it’s potential to download whole software and multimedia products. It is very easy and low-cost to publish on the Web, the barriers to entry are just about nil. Web pages are hosted freed from charge, and authoring and publishing software tools are incorporated in most word processors and browser applications. Because the Net acquires more impressive sound and video capabilities it will proceed to threaten the monopoly of the record corporations, the movie studios and therefore on.

The second development is also technological. The oft-vindicated Moore’s law predicts the doubling of laptop memory capability every 18 months. However memory is only one aspect of computing power. Another is that the rapid simultaneous advance on all technological fronts. Miniaturization and concurrent empowerment by software tools have created it doable for people to emulate abundant larger scale organizations successfully. A single person, sitting conversant in 5000 USD value of apparatus will fully compete with the most effective merchandise of the best printing houses anywhere. CD-ROMs can be written on, stamped and copied in house. A complete music studio with the most recent in digital technology has been condensed to the dimensions of a single chip. This will lead to non-public publishing, personal music recording, and also the to the digitization of plastic art. However this can be solely one side of the story.

The relative advantage of the intellectual property corporation will not consist exclusively in its technological prowess. Rather it lies in its vast pool of capital, its promoting clout, market positioning, sales organization, and distribution network.

These days, anyone will print a visually spectacular book, using the above-mentioned low cost equipment. But in an age of information glut, it is the marketing, the media campaign, the distribution, and therefore the sales that determine the economic outcome.

This advantage, but, is also being eroded.

1st, there is a psychological shift, a reaction to the commercialization of intellect and spirit. Creative folks are repelled by what they regard as an oligarchic institution of institutionalized, lowest common denominator art and they’re fighting back.

Secondly, the Internet could be a huge (200 million individuals), really cosmopolitan market, with its own promoting channels freely out there to all. Even by default, with a minimum investment, the chance of being seen by surprisingly massive numbers of consumers is high.

I published one book the ancient approach – and another on the Internet. In 50 months, I have received 6500 written responses relating to my electronic book. Well over five hundred,000 folks browse it (my Link Exchange meter registered c. two,000,000 impressions since November 1998). It is a textbook (in psychopathology) – and five hundred,000 readers is a ton for this sort of publication. I am therefore satisfied that I am not certain that I can ever take into account a ancient publisher again. Indeed, my last book was printed 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, trademarks, copyright) and their cost blessings in manufacturing and marketing.

However they are faced with three inexorable processes that are seemingly to render their efforts vain:

The Newspaper Packaging

Print newspapers supply package deals of low cost content backed by advertising. In other words, the advertisers procure content formation and generation and therefore the reader has no choice however be exposed to commercial messages as she or he studies the content.

This model – adopted earlier by radio and tv – rules the net now and will rule the wireless net in the future. Content can be created offered freed from all pecuniary charges. The patron 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 sure to fail.

So, content creators will benefit solely by sharing within the advertising cake. They can notice it increasingly tough to implement the recent models of royalties paid for access or of possession of intellectual property.

Disintermediation

A ton of ink has been spilt relating to this important trend. The removal of layers of brokering and intermediation – mainly on the manufacturing and selling levels – is a historic development (though the continuation of a future trend).

Consider music for instance. Streaming audio on the net or downloadable MP3 files will render the CD obsolete. The net also provides a venue for the selling of niche product and reduces the barriers to entry previously imposed by the necessity to engage in expensive promoting (“branding”) campaigns and producing activities.

This trend is also doubtless to restore the balance between artist and therefore the commercial exploiters of his product. The very definition of “artist” can expand to incorporate all creative people. One can obtain to differentiate oneself, to “complete” oneself and to auction off one’s services, ideas, merchandise, styles, expertise, etc. This is often a come back to pre-industrial times when artisans dominated the economic scene. Work stability can vanish and work mobility will increase in an exceedingly 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 producing 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 these trends. The mega-corporation of the longer term is a lot of likely to act as a collective of begin-ups than as a homogeneous, uniform (and, to conspiracy theorists, sinister) juggernaut it once was.

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