Reselling digital content

April 19, 2013 § Leave a comment

Digital Flow

Image credit: Flickr user lum1neuz

In a post on A List Apart, a writer worries about the implications of a court deciding that Redigi infringes copyright by letting people resell the music they have bought from Itunes. The writer says:

In the district court’s view, any transfer that takes place via the internet creates a reproduction of the work on the receiving machine, a new physical object that is “embodied” on the buyer’s hard drive. And that constitutes an illegal copy.

The writer seems surprised by this viewpoint, but for anyone well versed in how information technology works, this is quite clear. If person A sends information to me, that doesn’t entail person A losing access to that information. A digital product, be it a song, a film or a piece of software, is nothing but information and can is in fact copied rather than sent every time a “transfer” happens.

Naturally then, if somebody who bought a digital song was allowed to re-sell it, the copyright-owner’s monopoly would be gone in a flash. A platform for reselling digital content might of course take steps to delete the content from the seller’s hard drive at the point of sale, but in the end there is no way to be completely sure that the seller’s copy is actually removed.

So it’s clear that reselling digital content would be detrimental to copyright-owners. However, rather than taking that as a sign that digital re-sale should be prohibited, it should be taken as evidence that copyright imposes some very curious restraints on what individuals are allowed to do with information. And all because the most powerful cliques of humanity want to keep enabling the business model of selling copies — in a world where anyone with a rudimentary computer can produce 1:1 copies effortlessly and at negligible cost.



The wheels of monetary freedom are turning

March 21, 2013 § 8 Comments

Photo by Flickr user Images_of_Money
Photo by Flickr user Images_of_Money

Monetary transactions truly permeate modern human society. For this reason, some recent events on the payments scene are noteworthy.

Event 1: Some (crazy?) Canadian has offered to sell his house for bitcoins. Bitcoin (BTC) is a decentralized digital currency, meaning there is no central bank issuing or controlling it. For a central government, it’s like a new kind of digital cash that they have no control over. A nightmare — how could you track and collect taxes on transactions that are anonymous (mostly) and don’t pass through regulated banks? It seems BTC haven’t been used for much else than gambling and illegal goods until recently, but things seem to be changing. The odd risk-taker is one thing, WordPress accepting bitcoins as payment quite another.

Event 2: I would argue that this is the more interesting event. Once upon a time, there was an idea called Ripple, promising a smart way of creating and handling community credit. Years passed but the system was never quite developed. At some point, a small group of people took over the name and started developing and implementing the ideas. In February or March 2013, a beta version was launched, and if I were less careful I might have gone so far as to call this revolutionary.

I’ll explain briefly, but here’s an excellent article explaining Ripple and the historical system Bills of Exchange in more detail. In short, Ripple is (or will be when it’s out of Beta) a decentralized payment system that enables anybody to issue currency (already existing or new), a form of IOUs. If I issue some USD in Ripple, they represent a promise to redeem them when the holder so wishes. I would only be able to send my home-issued USD to someone who trusts me for at least the value I want to send. In practice, people will mostly trade with currency issued by so-called gateways, which act like banks. Like banks, they accept deposits and then something representing the money you deposited shows up in your account. You can then trade with anybody who trusts the bank that issued the currency on your account, or anybody that is indirectly connected to the currency issuer via the trust of others. This way there’s no need to extend trust to people that you don’t know and wouldn’t trust in real life.

Ripple has some qualities in common with Bitcoin but goes further than just acting as a currency. Any currency can be handled and issued. The usefulness of Ripple will depend on widespread adoption, which in turn will depend on serious gateways/banks starting to work with it, and that requires compliance with local and international regulations. There are already gateways, but only two. Where will this lead — is the future of banking decentralized?

Trading with intellectual property

February 14, 2013 § Leave a comment

By Flickr user sneetchbeach

By Flickr user sneetchbeach

A rationale for trade

When humans started trading thousands of years ago, it meant that people could specialise in producing certain goods or services and then obtain goods1 that they themselves did not produce by means of trade. A farmer could exchange grain for silk, if somebody else was willing to exchange silk for grain at a mutually agreed-upon rate. Only goods that were in limited supply (or required time, energy etc.) — scarce goods — would be traded. A small village situated next to a stream would have no shortage of water, so there would be no point in trying to exchange virtually unlimited2 water for some scarce product if all potential trading partners also could get water easily from the water source.

Thus it’s natural that only scarce goods are traded, and anything that isn’t scarce has no trade value. Now let’s say there’s an aspiring water trader in the previously mentioned village. He hires guards to prevent the other villagers from taking water from the stream, so that they now have no option but to trade with him if they need water. We have now introduced artificial scarcity, or in other words a kind of monopoly. This arrangement would only benefit the monopolist. If on the other hand there was no monopolist but instead one more person producing scarce goods, that activity would benefit the community in addition to the water being freely available to everybody. This example is crude, but it may serve to illuminate basic principles of trade.

Along came intellectual property

Over the last few centuries, new ideas about ownership have come to change trade fundamentally. These ideas advocate the concept of intellectual property (IP). When IP was introduced in the US, it was for the express purpose of encouraging innovation, and IP rights were not awarded unless they were deemed to serve that purpose. In contrast, nowadays IP rights can apply to a wide range of intangible things, and legions of lawyers in a state of perpetual warfare uphold the system. There are two main problems with IP rights. Firstly, IP rights are exclusive — the rights owner enjoys a monopoly situation. Secondly, there is little value in trying to trade with a product that is not scarce, or rather, something that is unlimited. If any number of people can benefit from some mind creation without any additional work being required, why would people have to trade something (money) for it in the first place? The original creator has made an effort to create the content, and if there is demand it seems reasonable that trade agreements can be made. However, the agreement should be concerned with the service of creating content (or possibly the providing of content in a value-adding way, not simply copies) instead of the actual content since it’s by nature unlimited after having been created. Yet people often do pay for IP content itself, and that’s largely because monopolies artificially constrain the supply and arbitrary laws stipulate harsh punishments for those who obtain IP material without paying for it or gaining special permission from the exclusive owner.

Justifications for IP rights

Now comes the objection that IP creators should be able to make money off their works. This kind of objection is unfounded — there is no moral right whatsoever for anybody to make money from a particular activity. As long as there is demand for a certain product or service, it will be possible to make money off them. Non-scarce goods or services without forced scarcity have no trade value, so simply selling copies is neither productive nor is it likely to be a successful business model.

Then comes the assumption that if current IP regulations would be dissolved, nobody would create any intellectual content any more. This argument is often heard in discussions about patents or the film, music and literary industries, especially when the type of IP in question requires substantial expenses to develop. At the risk of stating the obvious, many people create intellectual content without the intention of making money off it. On the other hand, a full-scale Hollywood project is off-limits for the great majority of people because of the costs involved, and it will no doubt be more difficult to earn vast amounts of money when people are not required to pay for copies. Perhaps crowd funding will offer one solution. Business models will have to change, and it’s not unlikely that many people earning their living from copies or artificially imposed monopolies will need to find other ways. Different industries will face different changes, some of them already underway, but scenarios of a post-IP world is out of scope for this post.

1. What is written about goods throughout the article also applies to services.
2. In the real world fresh water, like any other natural resource or anything made from natural resources, is not a strictly unlimited resource.

Homo Sapiens Sapiens and The New King of Replicators

February 5, 2013 § Leave a comment

Image credit: Flickr user goosmurf

Homo sapiens sapiens is one of many fascinating life forms on this planet. There is a widespread belief among themselves that they are in some respect qualitatively different from other life forms, and although this assumption is groundless there are indeed some curious observations that can be made about homo sapiens sapiens.

One of these curiosities is their communication. While communication itself is not remarkable, theirs has come to exhibit so potent properties that it’s set to overtake the unimaginably long1 reign of DNA as the supreme information bearer. The DNA copying process is very accurate, and storage density is high, but improvements in the DNA code form over centuries or millennia — and those are small changes. On the other hand, memes communicated through the languages of homo sapiens sapiens can (1) replicate rapidly through different media, (2) be easily changed and combined with other memes, (3) be stored over time in brains, texts, computers and other media.

Memes as such are not necessarily limited to this species, but their advanced communication enables them to spread very powerful memes — replicating ones.

To be fair, the transfer of power to this new king of replicators has been ongoing for thousands of years, but only more recently has the king been able to consolidate its standing. Where this development will take the species is simply unknown. Perhaps descendants of the memetic replicators will, in a far future, find the tracks leading back to the 21st century and realize that they were preceded by another replicator. Or perhaps they will live replicate in symbiosis.

It will surely take many generations more for memetic evolution to make DNA a second-class replicator, but the time will come.

1. Millions or billions of years — for our purposes, it matters not.

A Good Story

January 11, 2012 § Leave a comment

I read this story today. It’s a simple story, and it was published many years ago, yet it somehow struck me as a particularly good story. It’s short, well-written and it’s real. It doesn’t have to be more complicated than that, yet the kind of occasion when you find something of good quality (and longer than 140 characters) online is pretty rare. Especially considering how vast the online world is. The problem is not that everything online is shallow and of dubious quality – it’s just that sifting through all the undesirable content to find the good picks takes time and effort.

Anyway, a toast to good stories!

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