Radical media, politics and culture.

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"... the only way to deal with law in cyberspace is to ignore it, wildly, flagrantly...." John Perry Barlow, 2001, P2P Conference These people are lunatics, who would destroy the future of free expression and technological development, so they could sit in easy chairs at the top of the smoking ruins and light their cigars off 'em. - John Gilmore, Thu, 21 Dec 2000

a. Break down the rights of the exclusive grant under the 1976 Act. Retaining Performance, display, synchronization rights. b. Background of Hardin and Olson. Points of departure The Problem of Collective Action, Harvard, 1965 The Tragedy of the Commons, Science, 1968

Olson analyses the difficulties collective organisation in the context of the attempts to acquire exclusive/ inclusive benefits. Concludes that it is easier to appropriate exclusive benefits. The difficulty in acquiring optimal amounts of inclusive goods (those of a public good type) derives from free-riding.

The seminal description of the public goods problem is Mancur Olson’s “The Logic of Collective Action: Public Goods and the Theory of Groups”, Harvard University Press, 1971 at pages 14-15: "A common. Collective, or public good is here defined as any good such that if person X in a group x…..y….z consumes it, it cannot feasibly be withheld from others in that group. In other words, those who do not purchase or pay for any of the public or collective good cannot be excluded or kept from sharing in the consumption of the good, as they can where noncollective goods are concerned." National defence is often offered as an example. In economic terms this is known as non-excludability. See Olson, op. cit. at p.21: " Though all the members of the group therefore have a common interest in obtaining this collective benefit, they have no common interest in paying the cost of providing that collective good. Each would prefer that the others pay the entire cost, and ordinarily would get any benefit provided whether he had borne part of the cost or not." According to Olson, this implies that there will be sub-optimal production of collective goods to a degree determined by the size of the group: the larger the group, the greater the shortfall. Hardin examines world population growth through the optic of sustainability: “The tragedy of the commons develops in this way. Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons. Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching, and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long-desired goal of social stability becomes a reality. At this point, the inherent logic of the commons remorselessly generates tragedy. As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, "What is the utility to me of adding one more animal to my herd?" This utility has one negative and one positive component. 1. The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly + 1. 2. The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision making herdsman is only a fraction of - 1. Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another.... But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit -- in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.”

The first ripost to Hardin’s thesis as applied to software – which is how I will refer to entertainment/informational goods for the remainder of the presentation – is that as the have the character of public goods, the premise that overconsumption leads to exhaustion is negated. See Rose: individual property and commons are axes that predetermine our response to resource allocation problems – she redefines commons as open access, as opposed to collective property or Common Property Resources. History. Narrative.

c. Breyer/Tynerman debate. Early History of Scepticism Breyer: 1970 “ …. Copyright law… may represent one way of resolving the conflict between the need for book revenues high enough to secure adequate production and book prices low enough not to interfere with widespread dissemination of what is written… A copyright system however, is not the only way to resolve this conflict. It would be possible for instance, to do without copyright, relying upon authors, publishers, and buyers to work out arrangements among themselves that would provide books’ creators with enough money to produce them.” lead-time the threat of retaliation: fighting edition rationality in producing pirated versions of low cost editions reputation quality extant distribution channels

Solutions: Alternative revenue Streams “Buyers, individually or in groups, might contract to buy the book in advance of publication, before copying is possible.” Problems: Administrative costs. Delegation of choice to the tyrants of taste Blind man dilemma of buyer who is financing a book whose contents are unknown. Strategic behaviour on the part of members of the group undervaluing the work. Will pose itself as a problem specifically where there is a shortfall on the embargoes amount. Benefits of Abolition Lower prices Removal of barriers to entry Hazards/Costs of Abolition Threat to high cost, large volume book. Demoralisation costs of institutional change are difficult to assess. Policy Recommendations Duration is too long and should not be extended Private copying should be explicitly permitted Computer storage of works should be allowed without copyright owner’s permission. No © for computer programs. Focus Speed of competitive response and its relationship with price Buyer self-organisation Alternative subsidies Need to tailor analysis when focusing on different types of writings Need for more empirical info prior to revision Tyerman Breyer’s article was cited favorably by Douglas J in a 1971 dissent Lee v Runge 1972 92 S. Ct. Cf. Breyer’s claims that tort law could look after the rights of patenity, integrity and first publication.

1. Tynerman argues that in the absence of legal protection, marginal works of doubtful profitability will not be published due to fears of being undercut in the market by a competitor.

2. The ‘lead time myth’ 1108 on royalties to British authors. Larger sunk costs require greater period of time to recoup; not like the small economies of the 19th century. Breyer reckoned on the initial publisher having a 6-8 week advantage, the author contests this, arguing that technological change makes creation of such imitations easier and swifter. Probably true, DTP, digital e-book etc, even more so. ii. Breyer claims that people are price insensitive when it comes to book purchasing and will refuse to wait until a cheap edition comes out. iii. Says distributors, who determine the structure of the retail market, would be happy to wait a couple of days given the higher margin they could receive from pirate editions. Says that what lead time advantage there is doesn’t work in markets where the time required to recoup fixed costs is longer, e.g. text books, less popular trade paperbacks.

3. The fear of retaliation Retaliatory fighting editions were issued only of British uncopyrighted works, it was an instrument to be used occasionally. In Breyer’s world, this fear would have to play a disciplinary role every time. Used repititively, it would only be a matter of time before the publisher became financially insolvent.

4. Contradicts use of government reprints and puiblic domain titles to claim that publishers and copiers of trade paperbacks can co-exist. SDays that in both cases there is no author to pay, and no advantage in terms of first copy costs for the ‘copier’. Casts doubt on the profitability of 19th c. works by british authors, says maybe it was just a marketing draw, capitalised upon through sale of copyright works by US authors.

5. Transaction costs of group organisation – eroded by technology Delegation of purchasing authority and concomitant blurring of individual preferences. The unseen work problem. Freeloaders

6. State financing alternative is rejected because it could entail utilitarian selection or censorship.

7. Criticises Breyer’s neglect of authors, trots out the Marci claim about financial independence, and Neil’s about countering what would otherwise be an elitist culture. Copyright allows the spreading of risk.

8. Says book prices would rise if dependent on lead time and that the smaller volume produced would lead to higher process as the costs can’t be spread over as many copies. Says the high price of trade paperbacks and text books is because they are x-subsidising agents.

9. Says that permission acquisition will require more stringent rules as it plays a larger role in income stream.

10. Identifies a clash in interests between publiusher and author, one wants to maximise sales and the other profits. These things do n0ot necessarily converge. Think advertising costs.

11. What about revenue from subsidiary rights?

12. Rejects Breyer’s contestability argument and states that loss of © protection will disproportionately impact upon smaller houses with shallower pockets.

Breyer Rejoinder 1. There are book clubs and there are institutional instances of mass purchase. 2. There are plenty of subsidies already. 3. Critical of William & Wilkins decision, demands exemption. Cull the transaction costs. 4 Textbook market is concentrated. Trade market is not, high profits indicates presence of market power, no pricing discipline. 5. Collective licensing organisations spend loads on collecting fees (ASCAP 1971 spent $9m to collect $49m)

On digital storage: 81 “As long as economies of scale are such that only one information system would serve an area, the need to contract with the author for the storage of his work should prove to be a sufficientsafeguard for his securing adequate compensation.”

Predicts difficulties of co-existence of data and hard copy world. Reiterates that it’s about how much protection is required.

What forces sustain production in the absence of ©? What other forces inhibit competition making recoupment impossible? What does the government pay? Are buyers likely to find other channels to direct the funds to producers.

Does © drive up prices? Does this diminish circulation? Do transaction costs for permissions impede circulation? Can © be used to inhibit competition within the industry?

d. William Kingston: Direct Protection of Innovation. William Kingston's work centers on direct support for innovation. His primary field of concern is the patent system although he argues that his central arguments are applicable to copyright law. Kingston identifies three areas for reform in existing law: 1. The nature of the enforcement process, which is long, unwieldy and expensive, intrinsically disadvantages smaller firms in conflicts with deep pocket rivals, and even where litigation may promise good chance of success, is to be eschewed where possible, as it necessarily diverts the principals - who in small companies are often the carriers of important informational capital - distracted from innovation by the courtroom, a move which will disproportionately impact upon their wealth in comparison with a corporate bigfoot which retains fleets of in house counsel and litigators. - The parallels with copyright are not difficult to observe, particularly in court cases that match the owners of copyright inventories against individual plaintiffs and small entertainment/cultural/academic outfits. Think of producers of derivative works as the incremental improvers or combination patentees of the © world. 2. Kingston's second claim is that it is insanity to maintain a system of monopoly defined by length of time, rather than money, as this serves to grant - if one accepts the incentive theory of creation/innovation at least - an exclusivity which is inefficient due to the attempt to make one size fit all. Levels of risk fluctuate wildly from industry to industry, and more pertinently have different relationships between inputs and outputs. Pharmaceuticals and aerospace are a good example of this. The former have high R&D/initial manufacture costs but low costs of reproduction. The latter has market entry costs - in terms of the investments required to set up production - so formidable as to deter would be free riders. - Likewise, different types of copyright works have vastly different cost structures. Movies and books have radically different complexities of production and risk exposure. 3. Diffusion: Kingston's last and most intriguing proposal is the replacement of property regime character of informational law by a system that combines compulsory licenses and capital payments to the innovator. The level of payments would be determined by the time of entry of the second party - a correlation with risk - based upon accepted pre-production accounting - to simulate the return that would be derived from a fortuitous outcome to the innovation and the exclusivity flowing therefrom. The shift to liability means that strategies predicated on extracting a rent-level price through hold-out will be defeated or mitigated (gives example of Motorola's flat refusal to license crucial elements of mobile phone technology to Ericsson, particularly relevant to complex technology industries where saturation patenting is common). For Kingston this is an especially important point as he argues that the most valuable innovations are incremental and companies compete to capture share in new markets and expand the scope of application of an invention. Kingston doesn't like ex post valuations - susceptible to fraud - and wants an ex ante system of accounting. On the basis of these accounts, competitors would be allowed to buy in to share the information produced by an innovator in return for a retrospective sharing in the investment and the risk in that investment - ie that there must be a return multiple to reward the innovator. Capital payment for a sunk cost; royalties would predicate income on ultimate success which would not be fair. Variables for determining capital sum: a. Needs and risks associated with a given industry b. Stage of development of the innovation. e.g. 8(i) at prototype stage, 5(i2) at product stage etc. c. To what degree should the portfolio aspect of R&D be allowed to enter into the capital determination is unclear. d. What duration of protection should the originato & licensees receive? e. Mitigates harmful delays in cumulative technology industries such as aerospace and semi-conductors where progress is impeded until formation of a patent pool, but also disciplines the anti-competitive effects of patent pools.

Problems with Kingston's proposal center on the temptation of participants to cheat in the accounting process, the hiding of costs, the inflation of costs; if these are to be the variables which determine the buy-in price.

Secondly Kingston's proposal implicitly institutionalizes a regime where the scale of R&D finance forms the basis of the reward. This will undervalue cheap but ingenious devices and innovations. This returns us to the question as to whether a period of exclusivity should be determined on the basis of time or money. If it is to be the latter, how shall the sum be calculated. Perhaps K's plan could be partially synthesized wit that of Shavell as outline below, where the reward is indexed to the popularity of the product as measured in sales.

e. Steven Shavell/Tanguy Van Ypersele: Rewards versus intellectual property rights & the State. Tanguy and Shavell make a critical comparison between the incentive provided by IP rights and rewards directly paid to the creator/innovator by the state. The authors dwell on the difficulties of government setting of reward levels due to informational deficiencies but suggest that the amount to be calculated on the basis of the popularity or utility of the product as reflected in sales. The products themselves would pass immediately into the public domain. They conclude that an optional reward/IP regime would be superior to the current form of regulation. The authors identify the waves of opposition to the patent monopoly that rolled over the 18th and 19th century and the institutional alternatives considered. They note that direct rewards was a system used, with 'eight acts awarding rewards for specific inventions passed by Parliament between 1750 and 1825 (including $30,000 for a small pox vaccine collected by Edward Jenner (p.2)), as well as numerous others provided by industry groups and other organizations. The resonance with the Street Performer Protocols proposal for escrow-based markets is striking. Deviations from 'first-best'. Without patents, dissemination would occur at marginal cost and there is no deadweight loss. Incentives to invest in research 'is imperfect under both systems, but in different ways.' (p.6). Essentially the authors argue that depending on the size of the surplus created, rewards and patents may both serve to over or under incentify R&D investment. Neither form can overcome this informational deficiency. They do argue that an optional reward/patent system will always be superior to the patent system.

1. The race to innovate first, and the waste this generates, continues under either system. 2. Subsequent innovations are facilitated through the fact that the first inventor cannot block improvements through withholding the license. 2a. The value of subsequent incremental invention will complicate the government's job in pinning down its value. 3. Would have to be financed through taxation, probably on income rather than commodities, as this method minimizes the dead weight loss relative to the available alternatives. They remark that taxation on goods functions effectively in the same was as an IPR. 4. A shift to an optional reward/patent system should be frictionless as it can only increase the profits of the companies affected by it. 5. The authors are particularly attracted to the reward system where the social losses from the existing IPR regime are high (i.e. a large gap between price and production cost): pharmaceuticals, software, music, movies.

Rewards to be based on sales, perhaps reassessed annually. Key weakness of the system is its dependence on government knowledge of the social value of innovations. The importance of this in setting rewards ex-ante is clear, but if, as the authors propose, the government should use sales data to assess value other problems arise. Firstly it would require a massive concentration of information in government hands. There may be no malign possibility in the context of the take up of mechanisms/devices, but the dangers of encroachment and the temptation it wpould offer in terms of informational works is clear. Secondly it would encourage various forms of falsification of data by entities motivated to inflate the size of their sales figures in order to increase their rewards.

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f. Bruce Schneier & John Kelsey: The Street Performer Protocol. Escrowing our way out of the tragedy of the commons, without the need for a patron, or rather with a truly public patron - preference-mongers satisfied. Current © schemes driven by the industry can de defined as a) 'Secure perimeter' schemes (encrypted containers/trusted systems). b) 'Traitor tracing' schemes (embedded purchaser information into the digital content allowing identification and later prosecution of the person responsible for the leak).

Escrow-based markets. In the schema Schneier describes works are financed through a form of mass public patronage. The creator of a work establishes a bank account with a trusted third party. A threshold cash requirement is set. When the amount of money in the account equals or exceeds the threshold, the work is released to the public. Escrow holds the work hostage in a sense, and the artist is guaranteed a basic payment for her work. Problems identified by the authors: 1. The author can charge an inappropriate price. He and other authors will presumably learn from their early mistakes, and become skilled at choosing appropriate prices. 2. The author publishes the book before he gets the requested amount donated. This doesn't appear to hurt anyone directly except the author, but it may undermine participation in this kind of scheme later, especially in schemes run by this author later. 3. The author gets his amount filled, but still doesn't publish the book. This will ruin his reputation for future deals of this kind, but that is only a concern if he has already built up a reputation, and if he intends to publish future books. It is here that we can see how to use cryptography and a trusted third party to make the whole system work. First two issues are characterised as market problems that can remedy themselves over time. Third problem is one of trust, which is where the SPP is introduced. Why donate? - A donor may give money partly out of the desire to be recognized as a generous person or a patron of the arts. - There may be additional premiums involved in donating; raffles for a lunch with the author, for example. - A donor may be more likely to give money when he can see that it has an immediate effect. Thus, public radio stations have goals for pledge drives, and also for specific times. This might translate into letting novels appear in small fragments, as small additional goals are met. Experience in the market will determine what pricing and marketing strategies work best. Process: *Submission of Work to Publisher: The Author and Publisher negotiate terms, based on how much the next chapter (or several chapters) will cost to get released, and how the money collected will be split between the Author and the Publisher *Gathering Donations: The Donor sends $N in donations, plus some unique identifier to specify where any refunds should go. Donors who wish to remain anonymous may identify either an anonymous account (where funds could eventually find their way back to the Donor), or some charity or other beneficiary of their choice. *Paying Back the Donors: If the promised work is not released by the specified date, then the Donors' signed documents can be used to collect money from the Publisher. " The Street Performer Protocol is effectively a means of collecting private funds for public works. It allows for all kinds of alternative public creative (literary, music, video) works. It can be used to improve public-domain software. Software developers could announce a price structure to add various features to an existing public-domain software package, and users could pay for the features they want. When sufficient interest generates the right amount of funds for a given feature, it is created. This Protocol could pay for Web sites; contributions mean that a given Web site will continue to be maintained and improved."

This proposal has been the subject of much criticism, and the principal object of the paper is to tease out the problems identified. Theoretical objections are made, built upon Olson’s work and its derivatives, ‘The Tragedy of the Commons’ and ‘The Prisoner’s Dilemma’.

Experiments with escrow-markets are ongoing in the open source field, notably HYPERLINK "http://www.cosource.com/" http://www.cosource.com/ (344 Requests with total interest of $196,974.00, 54 Proposals with total commitments of $25,884.9043 Leading proposals with commitments of $25,206.95.00) and HYPERLINK "http://www.SourceXChange.com" www.SourceXChange.com (Registered Users: 10399, Active Developers: 2691, $16,000 estimated transacted biz at end of may 2000(revise)). Graydon Hoare has argued however that the bounty is ill suited to capitalize on the best and most dynamic aspects of open source culture, viz. its openness, willingness to share, many eyes making shallow bugs. He says that the really smart programmers won't be interested anyway, they can find their own tasty projects to work on. The bounty will have to be monopolized or shared between a small number of people. 1. It's not the community model. 2. It's not the inspired developer model. 3. It's not the annoyed scratchy genius model. 4. It's not the market model. 5. It's technically difficult. Extraneous technicalities are overburdensome for contracts which are so small and fundamentally uninteresting.

I think he may be spot on, as soon as money is involved for some, it pollutes the relationships with those on the peripherary who remain non-monetized. Everyone is paid or no-one is paid.

In somewhat different form, Stephen King’s excursion into online publishing which has so far turned a profit of $463,832.27 HYPERLINK "http://www.stephenking.com/PlantNumbers_010101.html" http://www.stephenking.com/PlantNumbers_010101.html g. Voluntary Payments & Outstanding Difficulties: Listener/Viewer Support, Paypal, Amazon, Tipster and the continuing absence of Micropayments. Credit card companies charge recipients at a rate that still makes micropayments unfeasible (3.5% of total plus $0.23). Into the gap has come Paypal which allows minimum transactions as low as $.01and more recently amazon.com with their ‘honor system’ of payment also starting at $1.00 (cost: $0.15 plus 15%). Paypal: PayPal had competitors and imitators, but only one -- X.com -- had significant market share. The two companies merged last March, taking the X.com corporate name and the PayPal product name. The combined company has more than 80 percent market share. Paypal Donate: HYPERLINK "http://www.potlatch.net/" http://www.potlatch.net/ HYPERLINK "http://www.fairtunes.com" www.fairtunes.com see their statistics including a list of last ten donors: http://www.fairtunes.com/stats/ Total number of contributions:1248Total US contributions:$7790.14USTotal CA contributions:$632.08CA Pacifica raised $7,652,543 in listener support out of total revenues of $10,733,430 during the fiscal year 1999. In addition to listener support, the Pacifica network received $1,356,818 in federal funding from the Corporation for Public Broadcasting. CPB Appropriations 1990 – 2000: Year1991199219931994199519961997199819992000Amount (Millions)229.4298.9327.3318.6275285.6275.0260.0250.0300.0 More Good News: Listener Support as percentage of total revenues for PB has risen dramatically in the last two decades: SourceTotal Income (Thousands)CPBOther federalLocal Gov.State GovPub CollegesPrivate CollegesFoundationsBusinessSubscribersAuctions/ Other 1982845,214172,000 (20.3%)25,625 (3%)42,353 (5%)166,515 (19.7%)92,170 (10.9%)12,870 (1.5%)22,108 (2.6%)100,486 (11.9%)142,076 (16.8%)69,011 (8.2%)19971,932,260260,000 (13.5%)62,271 (3.2%)66,087 (3.4%)298,834 (15.5%)177,951 (9.3%)35,206 (1.8%)111,570 (5.8%)277,576 (14.4%)472,040 (24.4%)170,725 (8.8%) Furthermore the growth in the size of the contribution made by each donor has greatly outstripped inflation: Membership income as percentage of total cash income19801998Public radio15%35%Public Television15%24%Number of individual contributors19801998Public radio.5 million2.1 millionPublic television2.5 million4.7 millionAverage per-person contribution in current dollars19801998Public radio$24.84$70.47Public television$30.12$73.30Source: Corporation for Public Broadcasting

McChesney's invocation of Dean Baker's proposal that Federal Taxation laws be changed so as to allow each citizen to dedicate $150 to the non-profit medium of their choice deductible from the individual tax bill. Public subsidy without the hazards or inefficiencies of government administration. h. Freeriding and Gnutella: The Return of the Tragedy of the Commons: Bandwidth, crisis of P2P, tragedy of the commons, Napster's coming difficulty with a business plan and Mojo Karma. Doing things the freenet way. Eyton Adar & Bernardo Huberman (2000) Hypothesis 1: A significant portion of Gnutella peers are free riders. Hypothesis 2: Free riders are distributed evenly across different domains (and by speed of their network connections). Hypothesis 3: Peers that provide files for download are not necessarily those from which files are downloaded. " In a general social dilemma, a group of people attempts to utilize a common good in the absence of central authority. In the case of a system like Gnutella, one common good is the provision of a very large library of files, music and other documents to the user community. Another might be the shared bandwidth in the system. The dilemma for each individual is then to either contribute to the common good, or to shirk and free ride on the work of others. Since files on Gnutella are treated like a public good and the users are not charged in proportion to their use, it appears rational for people to download music files without contributing by making their own files accessible to other users. Because every individual can reason this way and free ride on the efforts of others, the whole system's performance can degrade considerably, which makes everyone worse off - the tragedy of the digital commons ."

Figure 1 illustrates the number of files shared by each of the 33,335 peers we counted in our measurement. The sites are rank ordered (i.e. sorted by the number of files they offer) from left to right. These results indicate that 22,084, or approximately 66%, of the peers share no files, and that 24,347 or 73% share ten or less files. The top Share As percent of the whole 333 hosts (1%) 1,142,645 37% 1,667 hosts (5%)2,182,08770%3,334 hosts (10%) 2,692,082 87% 5,000 hosts (15%)2,928,90594%6,667 hosts (20%)3,037,23298%8,333 hosts (25%)3,082,57299%Table 1 And providing files actually downloaded? Again, we measured a considerable amount of free riding on the Gnutella network. Out of the sample set, 7,349 peers, or approximately 63%, never provided a query response. These were hosts that in theory had files to share but never responded to queries (most likely because they didn't provide "desirable" files).

Figure 2 illustrates the data by depicting the rank ordering of these sites versus the number of query responses each host provided. We again see a rapid decline in the responses as a function of the rank, indicating that very few sites do the bulk of the work. Of the 11,585 sharing hosts the top 1 percent of sites provides nearly 47% of all answers, and the top 25 percent provide 98%. Quality? We found the degree to which queries are concentrated through a separate set of experiments in which we recorded a set of 202,509 Gnutella queries. The top 1 percent of those queries accounted for 37% of the total queries on the Gnutella network. The top 25 percent account for over 75% of the total queries. In reality these values are even higher due to the equivalence of queries ("britney spears" vs. "spears britney"). Tragedy? First, peers that provide files are set to only handle some limited number of connections for file download. This limit can essentially be considered a bandwidth limitation of the hosts. Now imagine that there are only a few hosts that provide responses to most file requests (as was illustrated in the results section). As the connections to these peers is limited they will rapidly become saturated and remain so, thus preventing the bulk of the population from retrieving content from them.

A second way in which quality of service degrades is through the impact of additional hosts on the search horizon. The search horizon is the farthest set of hosts reachable by a search request. For example, with a time-to-live of five, search messages will reach at most peers that are five hops away. Any host that is six hops away is unreachable and therefore outside the horizon. As the number of peers in Gnutella increases more and more hosts are pushed outside the search horizon and files held by those hosts become beyond reach.

Easily isolated providers are set up for litigation by the RIAA etc.

Solutions? i. In the "old days" of the modem-based bulletin board services (BBS), users were required to upload files to the bulletin board before they were able to download. ii. FreeNet, for example, forces caching of downloaded files in various hosts. This allows for replication of data in the network forcing those who are on the network to provide shared files. iii. Another possible solution to this problem is the transformation of what is effectively a public good into a private one. This can be accomplished by setting up a market-based architecture that allows peers to buy and sell computer processing resources, very much in the spirit in which Spawn was created

i. If granularity is the answer then empirical data is going to be required to get us there. Normative choices must be made in an informed environment, not all decisions need rigorously adhere to the indications of empiricism, but where there is a conflict this should be transparent and the social grounds for choosing an alternative made clear.

Building a Practical Model: The Movie Industry Disney With regard to home video, DVD is beginning to breathe new life into this market. The growth in sales of DVD players has exceeded the growth of CD players at this stage. When I wrote you a year ago, there were 9.7 million units in American households. Now, there are an estimated 22 million units. And, at the end of 2001, it is forecast that there will be more than 36 million units. This trend is especially important to our company because more and more people are not just buying DVDs of new movies, they are also buying DVDs of movies they already own on VHS. For example, someone who already has Pinocchio in his library might now buy Pinocchio on DVD because of the added quality and extra features. Indeed, a survey conducted earlier this year indicated that 14 percent of people who own DVD players said they are likely to replace all of their VHS movies … while 55 percent said they are likely to replace their Disney videos. When it comes to home entertainment, there is a Disney difference, and consumers know it.

Changing Revenue Sources in the Motion Picture Industry 1980 - 1995 WindowTheater DTheater FHome VideoPay CableNetwork TVSyndicationForeign TVMade for TV198029.6%22.8%7.0%6.0%10.8%3.8%2.5%17.5%199514.4%12.8%40.6%7.8%1.4%4.2%6.7%12.2% Source: Entertainment Industry Economics: A Guide for Financial Analysis, 1998.

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Other Problems Comment: The FSF and Open Source provide the factual base on which Moglen's argument is built. The development of Graphic User Interfaces such as Gnome and Photoshop substitutes suggest that open source is moving towards a point where its adoption by the mass market becomes viable. The advantages for system administrators etc. are already manifest in the success of Apache/Perl etc. The fact that multifarious forms of culture can now be rendered as bits, and are thus subject to the law of the bit, leaves a lot of other questions about cultural production unanswered. What type of information is produced in an environment where legal regulation is ineffective? Who will control it? The production of literature or song is not as amenable to the form of collaborative construction as is the case with modularized software. There are examples, but they remain the exception, and in most cases are initiated through practical co-operation in real-space rather than contact through news groups.

1. Entertainment companies can port many of the factors that give them an advantage to the net. If we abolish copyright altogether, then producers of independent works will have no recourse if their work is appropriated by the commercial behemoths. There are two solutions to this problem. One is the retention of the right to public performance, on a copyright or compulsory license model that would oblige remuneration of the producer. The other is to stick with the GPL model and reserve all commercial implementations within the fabric of copyright law.

2. The point of hastening the demise of the media industry is to improve the quality of the information environment. As above a necessary precondition to this is the enabling of independent producers, who have mouths to feed and wains to clothe, and beer to drink. They must be remunerated, not as a matter of incentive but as a matter of survival. The alternate is a return to patronage along one of two lines. The first is patronage through individuals and corporations; this is unwelcome because it regresses the social context of the production to a date prior to the French revolution, of which Eben writes rather fondly. The second is a system of public patronage through either (a) the state or (b) the public tout court, in unmediated fashion. The former is undesirable for all the reasons we associate with the first amendment, the boredom and wastefulness of time involved in filling in grant applications and the example of the NEA. The latter is desirable and possible - Bruce Schneier has outlined a protocol roughly fitted to the task - but problems remain.

The SPP can be characterized as either a system of public patronage or an embargo system working on an escrow-based market, according to the sensibility of the speaker.

The principal problem is that of free-riding, or as it is sometimes referred to, 'strategic behavior' on the part of individuals. In essence the claim is that if the production of works is contingent upon receipt on a given level of donations or pledges from the public, individuals will decide to wait in the expectation that others will pay for the works which they want to get their mitts on. The result is that there is underproduction of works. This argument could also be called the apologia for force argument, in that it supports copyright law's imposition of an authoritarian obligation to pay. One solution would be to have a list of donors displayed on the site containing the original copy of the embargoed work, thus providing a self-congratulatory factor. Hey, we might even get a useful transposition of the first post irritant that has long plagued Slashdot! First donor!

A similar problem is revealed in the PARC Xerox survey of Gnutella users that found that even where cost of participation was low, 70% of the content available derived from just 5% of the active servers. Most users did not contribute anything at all. Could insert an upload download ratio, to remind participants, don't even try to make it foolproof, just make it a little bit inconvenient.

Another issue, although much less compelling, asks why users would pay for the production of something ex ante, whose content and quality they are not familiar with. This claim supports publishers' role as the financiers and public marketers of works. These objections are not compelling because today when we buy a CD we are usually acquainted with a portion of its contents. The rest we purchase at our own risk. Thus there is actually little difference between the two set-ups. Publishing intermediaries have traditionally played a role as filters evaluating content, and peer groups and artists portals are more than capable of fulfilling the same role, and doing it better. Then there are endorsements by known individuals, like with books these days. There'd be more room for reviewers. There'd be more room for small publishing operations where the imbalance in bargaining power would not be so drastic.

2. Strategic behavior problems can be expected to take their toll in an initial period. Insufficient demand, as expressed in lack of greenbacks, will drive down supply. If the supply drops below this demand, the people who freeload will have to pay up or go without. That is a question of time. It allows also the reformulation of the question what is free content. Is advertising subsidized content free? Does our attention have a price? Of course it does, that is why companies spend up to 25 % of their revenues on trying to acquire and hold it.

3. One objection that requires more consideration is the claim that barriers to entry for new artists will be higher if popularity is related purely to reputation. This is another surreptitious claim to the benefits of the publishers' role, namely to invest and risk-take in new work. But the reason why such risk taking is necessary is the extent of the barriers comprised of marketing and distribution costs. Marketing has many unpleasant spillover effects, like a media environment where our taste (as determined by the array of options proposed) is fashioned externally by economic agents.

4. Chicago objectionists claim that the system is doomed by the impossibility of pricing ex ante. Thus the price will be set either too high, leading to a failure to garner enough donations to produce the work, or too low implying that the artist does not receive her due given the popularity of the work. In first scenario, pricing corrections will be possible. In the latter, pricing correction will be applied to the next release. Tipping also offers a realistic, although admittedly partial, remedy here. Another slashdotter suggested "How about this as a way of calibrating "runaway hits": artist announces a new song is available, it will be released in one year -- and each $100 contributed will move up the release date by one day. (Set the dollars-per-day amount higher or lower depending on the artist's popularity.) The song eventually gets released, even if no one donates a dime; but if enough people are interested and contribute, the song could be released almost immediately, and the artist will instantly be $36,500 richer. Alternately, the song is to be released in six months, but a contribution total of $1 knocks one week off the release, $2 for two weeks, $4 for three weeks ... each additional doubling knocks off another week. This makes it theoretically possible for the artist to earn up to $32M (not bloody likely for just one song), and eliminates the need to calibrate the pricing to the artist." 5. What happens to the money if the threshold isn't reached? 6. Get stats on investigative reporting from Ed Baker 7. Lots of suggestions on the tipping variety. 8. A reinvigorated concept of the physical object. 5. Stats: In five days, 120,000 people downloaded the first chapter, 76% made a voluntary contribution of $1.00. The 'Street Pusher Protocol' pay me and I'll give you more of the same. How much of the current cost of a CD goes to the artist? How much of the current book price goes to the artist? How many full time writers musicians, actors etc are there earning more than 50,000 p/a? Advance orders for new books, what do they total? Magazine subscriptions what do they total? What device could be designed to ensure that pledged money is used in the period prior to release to lubricate the process - money management etc. J o h n G i l m o r e , T h u , 2 1 D e c 2 0 0 0 G e t t i n g g r i t t y a n d g r a n u l a r . t o S o c i a l D i l e m m a s :

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