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01.30.2008

NDN Globalization Initiative Report Out

The NDN Globalization Initiative has released a report entitled "The Idea-Based Economy and Globalization: The Real Foundations of American Prosperity in the 21st Century," by Dr. Robert J. Shapiro.

He writes of the changing landscape of economic value:

Federal Reserve data show that since the mid-1990s, U.S. companies have invested as much in intangibles–mainly the intellectual property of patents and trademarks, as well as databases, branding, organizational changes and the training or human capital to use these ideas–as in physical assets, from equipment to land and buildings. For the first time, intangible assets are more important business investments than physical assets.
This shift is evident in the way U.S. and international investors value America’s public companies. In 1984, the market value of the physical assets of the top 150 U.S. public companies – their “book value” – accounted for 75 percent of the total value of their stocks. A firm was worth nearly what its plant, equipment and real estate could be sold for. By 2004, the book value of the top 150 U.S. corporations accounted for 36 percent of the total value of their shares. Nearly two-thirds of the value of large companies now comes from what they know and the ideas and relationships they own.

Continue reading NDN Globalization Initiative Report Out . . .

posted by Solveig Singleton @ 9:51 AM | International , Markets: Business, Investment & Innovation

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01.14.2008

Nick Carr Reviewed on IT

Musings on Nick Carr's latest book, from Jim Delong. Pertinent to various Google controversies.

posted by Solveig Singleton @ 2:32 PM | Markets: Business, Investment & Innovation

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12.14.2007

IP and Marginal Cost

This week, we released "Jargonomics: Intellectual Property Prices and Marginal Cost," Authored by Solveig Singleton. The paper argues that marginal cost should not be a factor in pricing or the basis of IP policy. My release on the paper can be found here.

In the paper, Solveig offers four "lessons" for policymakers regarding marginal cost:

- Prices set above marginal cost are not a sign of undue market power or monopoly due to intellectual property or anything else.
- Prices above marginal costs bring new investment and new competitors into the market in question.
- Setting prices at marginal cost (for example, in the context of compulsory licensing of music or pharmaceuticals) does not amount to setting the "right" price; only a market can do that.
- Insisting on static inefficiency in the short run reduces investment and undermines dynamic efficiency in the long run.

The paper is much too nuanced to properly summarize here - it can be found on the PFF website.

posted by Amy Smorodin @ 10:30 AM | Economics, Game Theory & Public Choice , Markets: Business, Investment & Innovation , Prices, Terms, and Licensing

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11.20.2007

Jermaine Dupri's Gripe with iTunes

Over on the Huffington Post, Jermaine Dupri sounds off about the state of the music business. Specifically, he has a big problem with artists being forced to offer singles and blames iTunes and "cherry picking" by consumers for the shift away from albums.

posted by Amy Smorodin @ 2:19 PM | Markets: Business, Investment & Innovation , Media: Video, Music...

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11.13.2007

TechCrunch: Piracy Is Cool (Until It Hurts Us)

In Silicon-Valley circles, Michael Arrington’s TechCrunch family of websites is known for encouraging entrepreneurial activity. In copyright-policy circles, TechCrunch is known for discouraging entrepreneurial activity. After all, Mr. Arrington published The Essential Guide to Piracy, which begins as follows:

“Piracy is an action sport. The ability to infringe copyright and steal valuable work induces a rush like no other. Whether you steal music, movies, books, applications, or whatever, it feels like breaking the law and it saves our wallets and purses from becoming empty.”

Gee, where do kids today get the idea that it is OK to engage in the sort of illegal free-riding that Justices Breyer, Stevens and O’Connor recently called “garden-variety theft”?

So TechCrunch thought that copyright piracy was cool. Then, it made a discovery: Hundreds of for-profit websites were “splogging”; they were selling advertisements by copying and re-posting TechCrunch’s original content without permission or attribution. In short, they were pirating from TechCrunch. TechCrunch thought this was not cool at all.

And that was very odd. According to Mr. Arrington, TechDirt should embrace “splogging”: After all, even if for-profit copying of TechCrunch’s original content destroyed TechDirt’s ad-based business model, TechCrunch could still cross-subsidize the production of its content by renting out Mr. Arrington for speaking engagements.

TechCrunch’s response to “splogging” indicates that it suspects that such cross-subsidization schemes are ill-considered utopian nonsense. It is difficult to disagree. Mr. Arrington can understand why our laws must encourage, support and protect the Silicon-Valley entrepreneurs who make the risky investments needed to bring us new gizmos. But he fails to understand why laws must also protect the entrepreneurs who make the risky investments needed to create the new content that makes new gizmos worth owning.

posted by Thomas Sydnor @ 10:29 AM | Enforcement & Remedies , Free Culture Movement , Markets: Business, Investment & Innovation

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10.22.2007

Users Tranforming Innovation

This Financial Times article describes how users are transforming innovation. Interesting. More alarming is Alec Van Gelder's comment that this will be widely misunderstood:

Unfortunately, I predict policy makers will take out all the good aspects of this - removing subsidies, ceasing to support national champions - and employ all of the bad ones, namely to decrease intellectual property protection. Clearly the authors fail to understand that open source business models are actually a result of a strong intellectual property platform, empowering rights-holders with the ability to determine for themselves how to exploit their property.

There is another aspect of the problem, too. Sometimes, users' interests run contrary to the interests of other groups of users, or of all users' interests in the long run. Suppose a producer figures out how to best provide a service, benefiting all users' by coming up with a mechanism to mostly exclude free riders. A determined group of free riders will supply demand for some third party to intrude upon the beneficial arrangement. Ordinarily, the original producer will respond in kind and restore the economic basis for production. But in some environments, or if the power of the free riders is political, that becomes very hard.

posted by Solveig Singleton @ 11:45 AM | Markets: Business, Investment & Innovation

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10.18.2007

User-Generated Content: A Principled Market Response

Some of the most interesting challenges for digital-age copyright policy arise from the growing popularity of user-generated content (UGC). UGC offers exciting new possibilities for people to create or interact with their favorite works, but it raises thorny problems that range from its potential to facilitate infringement to questions about reconciling the creative potential of UGC with other creators’ interests in the artistic integrity of their works.

Fortunately, one advantage of letting enforceable property rights generate markets for socially valuable goods and services is that markets require participants to find “win-win” solutions: In a market, a given transaction should occur only if all parties to it are better off as a result. Markets thus create potent incentives to reconcile divergent interests.

The solution-generating power of markets was evident today when a diverse coalition of technology and media companies released Copyright Principles for UGC Services. The Principles attempt to define a win-win-win solution: A set of ground rules that will promote respect for copyrights, the production of UGC, and the development of innovative platforms for promoting and distributing it. Key provisions of the Principles include the following:

1) UGC sites should use “highly effective” filtering technologies, or human review, to identify and remove infringing content before it is uploaded and enhance or update those technologies as significant advances become commercially available.

2) Copyright holders and UGC sites should cooperate to ensure that filtering systems effectively balance legitimate interests in blocking infringing uploads, allowing original or authorized uploads, and accommodating fair use.

3) Copyright holders and UGC sites should develop procedures to promptly address conflicting claims of ownership, and user’s claims that filtered content was not infringing.

4) Copyright holders should neither file infringement claims against UGC sites that adhere in good faith to the Principles nor assert that adherence to the Principles disqualifies a UGC site from claiming the benefits of safe-harbor protections like those in the DMCA.

At their core, the Principles seek cooperative solutions to the possibilities and challenges posed by UGC. For that, they should be applauded. When property rights are unclear, or not respected, we often resort to non-market-based dispute-resolution mechanisms—like litigation. But litigation does not promote win-win outcomes and may leave all parties worse off. Companies like Disney, Microsoft, NBC-Universal, MySpace, Daily Motion, CBS, Viacom, and Fox deserve great credit for this effort to identify solutions that balance their interests with those of creative consumers. Bravo.

posted by Thomas Sydnor @ 5:46 PM | DMCA , Enforcement & Remedies , Internet: P2P, Search Engines... , Markets: Business, Investment & Innovation , Prices, Terms, and Licensing , Standards

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10.17.2007

Shooting Yourself in the Foot

An insightful article by Andy Greenberg of Forbes on Radiohead's "pay what you want" experiment.

Free? Steal it Anyway

The article quotes Doug Litchtman, one of IPcentral's Academic Advisory Council members:

"But for Doug Lichtman, an intellectual property professor at the UCLA School of Law, the volume of piracy following In Rainbows' release erodes the success of Radiohead's innovation. "If the community rejects even forward-thinking experiments like this one, real harm is done to the next generation of experimentation and change," he says."

posted by Amy Smorodin @ 2:53 PM | Internet: P2P, Search Engines... , Markets: Business, Investment & Innovation , Media: Video, Music...

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09.24.2007

Nick Car on Fair Use Study

Nick Carr's comments on CCIA's study of fair use include the following:

What the authors have done is to define the "fair-use economy" so broadly that it encompasses any business with even the most tangential relationship to the free use of copyrighted materials. Here's an example of the tortured logic by which they force-fit vast, multifaceted industries into the "fair use" category: Because "recent advances in processing speed and software functionality are being used to take advantage of the richer multi-media experience now available from the web," then the entire "computer and peripheral equipment manufacturing industry" qualifies as a "fair-use industry." As does the entire "audio & video equipment manufacturing" business. And the entire software publishing industry. And the entire telecommunications industry.

Oh dear. I think one could fairly count the Tivo, and a portion of some of the activity described above... anything involving parody, certainly.

Of course, there is a larger conceptual problem. Fair use is always fair use *of* something copyrighted... so do we add fair uses on to the value of copyright uses? There is a case to be made that the copyrighted materials--and the consequent fair use of them--would not exist in such abundance but for copyright. The logical response to that is, yes, but we wish to measure in particular the value of this particular *exception.* Fair enough, so long as one bears in mind the risk of the exception's swallowing the rule. Also, that a substantial part of the economic activity in question might well occur in similar form even without the exception, due to the growth of markets in snippets and bits and other licensed material for downstream use.

Empirical studes are funny things, aren't they?

posted by Solveig Singleton @ 12:55 PM | Access: Commons, Fair Use, Orphan Works, Public Domain , Economics, Game Theory & Public Choice , Markets: Business, Investment & Innovation

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09. 6.2007

Asian IP News Roundup

On the changing strategies of Indian generics.

An oped on Thailand and TRIPS.

And Novartis in Thailand.

Continue reading Asian IP News Roundup . . .

posted by Solveig Singleton @ 9:42 AM | Big Tent , Books , Markets: Business, Investment & Innovation , Media: Video, Music... , Pharma

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09. 6.2007