Sunday, September 14, 2003

The Internet and the copyright oligopolies An article in today's New York Times ("In the Age of the Internet, Whatever Will Be Will Be Free," September 14, 2003) mostly goes over familiar ground. It argues that the distribution of content on the Web (music, movies, pictures, software, etc.) threatens the interests of a number of large corporate oligopolies who have been fighting to significantly extend copyright laws over the last decade. As a small number of firms have gathered together large masses of valuable content, they have used their concentrated legislative and judicial clout to extend the duration, scope, and enforcement of copyright laws. But now these groups face major disruption. Since Gutenberg's printing press, new technologies for creating, copying, and distributing information have eroded the power of the people, or industries, in control of various media. In the last century, the pattern held true, for example, when recorded music became popular in the early 1990's , radio in the 1920's and cable television in recent years. But the heritage and design of the Internet present a particularly disruptive technology. Today's global network had its origin in the research culture of academia with its ethos of freely sharing information. And by design, the Internet turns every user in every living room into a mass distributor of just about anything that can be digitized, including film, photography, the written word and, of course, music. Already Hollywood is trying to curb the next frontier, film swapping. The inevitable advance of technology will make reading on digital tablets more convenient than reading on paper, so the publishers of books, magazines and newspapers have their worries as well. Most of this borne out by our studies of oligopolies and disruption. All media oligopolies are in danger of losing their grip on the market, and new technologies unleash a tide of creative destruction. But all the past revolutions have not ended up in a totally free market, but rather has started a new cycle of oligopolies. Sometimes this means a new set of players; other times (as with cable TV and DVDs), it ends up with pretty much the same basic oligopoly. As we have noted, the new type of oligopoly is particularly adept at finding a way to profit. The one way the big record companies, book publishers, and movie studios earn their keep is by creating mind space, however inefficently. Through marketing, they build a hierarchy of value, that makes some releases central and others peripheral, always subject (to some extent) to audience reaction. By creating branded entities, they make the job of choosing more streamlined, just as branded products make shopping in the supermarket easier. Even sophisticates use the excessive branding to define what they prefer in reaction (independent films, non-mainstream music, locally grown foods.) When the big companies have no money left to brand copyrighted materials, the net effect might be less availability and greater confusion. The utopia of free exchange seems rather unlikely as a long-term phenomenon. The current fight of record industry may well be a losing one, but it's not hard to imagine that somehow, in the near future, the property rights of those who own the content will be salvaged. It may involve new companies, it certainly will involve new rules and new technologies, but it's doubtful that these disruptions will result in anything but a new order, a new profit model, and eventually a new oligopoly. 11:03:25 AM

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