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TinotopiaLog → Endangered Gizmos (25 Jan 2005)
Tuesday 25 January 2005

Endangered Gizmos

EFF offers up this list of endangered gizmos, products that are at risk of disappearing (or that have already disappeared) because the do some harm to (or, in may cases, merely frighten) the copyright industry.

I can’t help but think that ‘endangered gizmos’ — that’s the EFF’s phrase — is a misnomer, though. These things will always exist as gizmos as long as there’s any demand for their capabilities; but as long as the copyright industry is determined to never evolve, they will not exist as products, i.e. it will be difficult or impossible for anyone to make significant amounts of money from any of them.

This — the failure of large business plans due to the hidebound thinking of the copyright industry — has already happened twice, by my count.

The first failure was the famous collapse of the telecommunications industry in about 2000. It’s true that shenanigans at Worldcom were a part of that (Worldcom was essentially lying about its capacity, traffic, customers, and revenue, and since Worldcom was (at least on paper) the largest factor in the telecommunications industry, this threw off everyone’s picture of the industry as a whole, leading to bad decisions), but it’s important to remember that in 1998 and 1999 everyone thought that the near future would bring a lot more traffic to the network. Look at the kind of traffic that Napster was generating, and that without any advertising, with dodgy technology, with significant legal risk to the users, and with nobody in particular interested in seeing to it that there was content available! Imagine what would happen when the movie studios and record companies started taking advantage of this new distribution mechanism!

You’ll still have to imagine, of course, because it still hasn’t happened. The few online music- and movie-selling ventures are limping along (relative to the illegal underground file-sharing networks). They all take, as their first commandment, Thou Shalt Not Be Able To Copy The Files Freely, which is probably a reasonable condition. But then they charge their users more, generally, than they would pay if they were to go out and buy a CD. They’re paying for the convenience of not having to go to the record store, the copyright industry says. Ah, but they’re not getting as much value as they would if they bought a CD. We’ll just pretend that’s not true, the industry says. And then they’re surprised when consumers manage to accurately evaluate the relative values of the products anyway.

In any case, I’m still sitting here on a network connection no faster than I had seven years ago, and literally billions of dollars have gone down the tubes. On the other hand, the continued viability of the record industry in exactly the same form has ensured that the public is not denied access to the talents of top-notch professional ‘artists’, like Ashlee Simpson.

The second failure was the celebrated collapse of the AOL/Time Warner merger. To be sure, there were a lot of reasons this merger failed, but in the end I think the single most significant cause was the unwillingness of Time Warner to consider taking advantage of AOL’s ‘walled garden’ of an online service to distribute their products.

People have made fun of AOL for years, and rightly so. The AOL service sucks; very soon after AOL started offering flat-rate service plans and stopped paying content partners for time users spent in the partners’ sections of AOL, there’s been nothing available on AOL that isn’t also freely available on the public network. A few people, those particularly tied to their AOL e-mail addresses or to a particular pre-existing forum and its inhabitants on AOL, will keep paying. But other than to those people, AOL just doesn’t have a lot to offer.

But wait: since the merger, AOL/Time Warner owns both an enormous collection of movies, TV shows, music, photographs, magazine articles, books, etc., etc., etc., and a walled garden of an environment with which to distribute these things — most of which produce exactly no revenue for the company as things stand today. AOL subscribers have access to none of this, though: with an AOL account, you don’t even get to watch CNN video for free, because they’d rather try to get an additional $12.95 a month from you than to increase the value of your $24 a month AOL subscription.

Again, billions of dollars down the drain. I’m sure that there are hundreds more stories of similar things, if smaller in scope.

This is the real danger of the copyright industry’s greedy risk-aversion. I have little doubt that I will always be able to do what I want with information that comes my way. In some cases, this might require strange software downloaded from places like Sweden; in others, it might require building little devices that are, strictly speaking, illegal. Any scheme that would be totally impossible to get around would also be too cumbersome to use as intended, and the market would reject it in short order.

But since it’s impossible to sell things anonymously on any large scale, it’ll be impossible to base any businesses on new capabilities. Remember that the copyright industry tried to sue the VCR out of existence. They seem to have learned nothing from the fact that, far from destroying their business, the VCR allowed the movie studios to create new products that have earned them billions and billions of dollars.

There is recently reason for a tiny bit of hope, as Sony — a gadget company that also owns a music label and a movie studio — has admitted that it’s in error:

Sony missed out on potential sales from MP3 players and other gadgets because it was overly proprietary about music and entertainment content, the head of Sony Corp.’s video-game unit acknowledged Thursday.

What Sony apparently has yet to realize, though, is that they have also missed out on potential sales of music and entertainment content itself because they’re overly proprietary about it. Sony (and its competitors, both in the consumer-electronics industry and in the copyright industry) will eventually fully see the light, or they’ll be replaced by other companies that have seen it. If it doesn’t happen soon, though, we’ll spend yet more time deferring the enormous profits and entirely new industries that new technology makes possible.

Posted by tino at 12:54 25.01.05
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