Music-Entertainment-Jazz-Tunes-and Cultural Events

The Demise Of Intellectual Property

3 years ago I revealed a book of short stories in Israel. The publishing house belongs to Israel's leading (and exceedingly wealthy) newspaper. I signed a contract which stated that I am entitled to receive 8% of the income from the sales of the book once commissions payable to distributors, retailers, etc. A few months later (1997), I won the coveted Prize of the Ministry of Education (for brief prose). The prize money (some thousand DMs) was snatched by the publishing house on the legal grounds that every one the cash generated appropriately belongs to them because they own the copyright.

In the mythology generated by capitalism to pacify the masses, the myth of intellectual property stands out. It goes like this: if the rights to intellectual property were not outlined and enforced, commercial entrepreneurs wouldn't have taken on the risks associated with publishing books, recording records, and making ready multimedia products. So, artistic individuals can have suffered as a result of they can have found no method to form their works accessible to the public. Ultimately, it is the general public which pays the value of piracy, goes the refrain.

However this is factually untrue. Within the USA there's a very limited cluster of authors who truly live by their pen. Solely select musicians eke out a living from their noisy vocation (most of them rock stars who own their labels - George Michael had to fight Sony to do just that) and very few actors return shut to deriving subsistence level income from their profession. All these can now not be considered principally inventive people. Forced to defend their intellectual property rights and therefore the interests of Massive Cash, Madonna, Michael Jackson, Schwarzenegger and Grisham are businessmen a minimum of as a lot of as they're artists.

Economically and rationally, we ought to expect that the dearer a work of art is to supply and the narrower its market - the a lot of stressed its intellectual property rights.

Take into account a publishing house.

A book which prices 50,000 DM to supply with a potential audience of a thousand purchasers (certain tutorial texts are like this) - would have to be priced at a a minimum of 100 DM to recoup solely the direct costs. If illegally copied (thereby shrinking the potential market as some folks will prefer to buy the cheaper illegal copies) - its value would have to go up prohibitively to recoup costs, thus driving out potential buyers. The story is completely different if a book costs 10,000 DM to provide and is priced at 20 DM a duplicate with a possible readership of 1,000,000 readers. Piracy (illegal copying) should during this case be more readily tolerated as a marginal phenomenon.

This is often the theory. But the facts are tellingly different. The less the cost of production (brought down by digital technologies) - the fiercer the battle against piracy. The bigger the market - the a lot of pressure is applied to clamp down on samizdat entrepreneurs.

Governments, from China to Macedonia, are introducing intellectual property laws (below pressure from rich world countries) and enforcing them belatedly. However where one factory is closed on shore (as has been the case in mainland China) - two sprout off shore (as is that the case in Hong Kong and in Bulgaria).

However this defies logic: the market nowadays is global, the costs of production are lower (excluding the music and film industries), the promoting channels additional numerous (half of the income of movie studios emanates from video cassette sales), the speedy recouping of the investment virtually guaranteed. Moreover, piracy thrives in terribly poor markets in that the population would anyhow not have paid the legal price. The illegal product is inferior to the legal copy (it comes with no literature, warranties or support). So why ought to the big makers, publishing houses, record corporations, software companies and fashion homes worry?

The answer lurks in history. Intellectual property is a relatively new notion. Within the close to past, no one thought of information or the fruits of creativity (art, design) as "patentable", or as somebody's "property". The artist was however a mere channel through that divine grace flowed. Texts, discoveries, inventions, works of art and music, styles - all belonged to the community and might be replicated freely. True, the chosen ones, the conduits, were honoured but were rarely financially rewarded. They were commissioned to supply their artistic endeavors and were salaried, in most cases. Only with the advent of the Industrial Revolution were the embryonic precursors of intellectual property introduced however they were still limited to industrial designs and processes, mainly as embedded in machinery. The patent was born. The additional massive the market, the a lot of sophisticated the sales and marketing techniques, the bigger the financial stakes - the larger loomed the issue of intellectual property. It unfold from machinery to designs, processes, books, newspapers, any printed matter, artistic endeavors and music, films (which, at their starting weren't thought of art), software, software embedded in hardware, processes, business methods, and even unto genetic material.

Intellectual property rights - despite their noble title - are less regarding the intellect and additional concerning property. This is Massive Cash: the markets in intellectual property outweigh the whole industrial production in the world. The aim is to secure a monopoly on a specific work. This is an particularly grave matter in tutorial publishing where little- circulation magazines don't permit their content to be quoted or revealed even for non-business purposes. The monopolists of data and intellectual products cannot allow competition anywhere in the world - because theirs is a world market. A pirate in Skopje is in direct competition with Bill Gates. When he sells a pirated Microsoft product - he is depriving Microsoft not only of its income, however of a consumer (=future income), of its monopolistic status (low-cost copies can be smuggled into different markets), and of its competition-deterring image (a serious monopoly preserving asset). This is a threat which Microsoft cannot tolerate. Hence its efforts to eradicate piracy - successful in China and an utter failure in legally-relaxed Russia.

But what Microsoft fails to understand is that the matter lies with its pricing policy - not with the pirates. When faced with a global marketplace, a company will adopt one amongst 2 policies: either to regulate the worth of its merchandise to a world average of purchasing power - or to use discretionary differential pricing (as pharmaceutical corporations were forced to try and do in Brazil and South Africa). A Macedonian with a median monthly income of one hundred sixty USD clearly cannot afford to shop for the Encyclopaedia Encarta Deluxe. In America, fifty USD is the income generated in four hours of an average job. In Macedonian terms, therefore, the Encarta is 20 times a lot of expensive. Either the value should be lowered within the Macedonian market - or a mean world value ought to be fastened which can replicate an average world getting power.

Something must be done regarding it not only from the economic point of view. Intellectual product are terribly worth sensitive and highly elastic. Lower prices can be more than compensated for by a much higher sales volume. There's no different method to explain the pirate industries: evidently, at the right price a heap of individuals are willing to buy these products. High prices are an implicit trade-off favouring tiny, elite, choose, rich world clientele. This raises a ethical issue: are the kids of Macedonia less merit education and access to the latest in human information and creation?

2 developments threaten the future of intellectual property rights. One is that the Internet. Academics, bored to death with the monopolistic practices of skilled publications - already publish on the internet in huge numbers. I published a few book on the Net and they'll be freely downloaded by anyone who features a pc or a modem. The complete text of electronic magazines, trade journals, billboards, professional publications, and thousands of books is available online. Hackers even created sites accessible from which it's doable to download whole software and multimedia products. It's very easy and low-cost to publish on the Web, the barriers to entry are virtually nil. Web pages are hosted freed from charge, and authoring and publishing software tools are incorporated in most word processors and browser applications. Because the Web acquires a lot of impressive sound and video capabilities it will proceed to threaten the monopoly of the record corporations, the movie studios and therefore on.

The second development is also technological. The oft-vindicated Moore's law predicts the doubling of laptop memory capacity each 18 months. But memory is solely one aspect of computing power. Another is that the fast simultaneous advance on all technological fronts. Miniaturization and concurrent empowerment by software tools have created it potential for people to emulate much larger scale organizations successfully. One person, sitting accustomed to 5000 USD price of equipment will fully compete with the simplest product of the most effective printing houses anywhere. CD-ROMs can be written on, stamped and copied in house. An entire music studio with the newest in digital technology has been condensed to the size of one chip. This can lead to private publishing, personal music recording, and the to the digitization of plastic art. But this can be solely one side of the story.

The relative advantage of the intellectual property corporation will not consist exclusively in its technological prowess. Rather it lies in its vast pool of capital, its marketing clout, market positioning, sales organization, and distribution network.

Nowadays, anyone can print a visually impressive book, using the higher than-mentioned cheap equipment. However in an age of data glut, it's the promoting, the media campaign, the distribution, and also the sales that determine the economic outcome.

This advantage, but, is additionally being eroded.

Initial, there's a psychological shift, a reaction to the commercialization of intellect and spirit. Creative people are repelled by what they regard as an oligarchic establishment of institutionalized, lowest common denominator art and they are fighting back.

Secondly, the Web could be a huge (two hundred million individuals), truly cosmopolitan market, with its own selling channels freely accessible to all. Even by default, with a minimum investment, the chance of being seen by surprisingly giant numbers of shoppers is high.

I published one book the ancient means - and another on the Internet. In 50 months, I have received 6500 written responses relating to my electronic book. Well over five hundred,000 individuals browse it (my Link Exchange meter registered c. two,000,000 impressions since November 1998). It's a textbook (in psychopathology) - and five hundred,000 readers may be a ton for this sort of publication. I am therefore happy that I'm not sure that I can ever contemplate a traditional publisher again. Indeed, my last book was published within the terribly same way.

The demise of intellectual property has lately become abundantly clear. The previous intellectual property industries are fighting tooth and nail to preserve their monopolies (patents, trademarks, copyright) and their value blessings in manufacturing and marketing.

But they're faced with three inexorable processes which are seemingly to render their efforts vain:

The Newspaper Packaging

Print newspapers provide package deals of low cost content backed by advertising. In different words, the advertisers get hold of content formation and generation and also the reader has no alternative but be exposed to business messages as she or he studies the content.

This model - adopted earlier by radio and television - rules the web currently and will rule the wireless internet within the future. Content will be created on the market free of all pecuniary charges. The consumer will pay by providing his personal data (demographic data, consumption patterns and preferences and so on) and by being exposed to advertising. Subscription based mostly models are sure to fail.

Therefore, content creators will benefit solely by sharing within the advertising cake. They will notice it increasingly difficult to implement the previous models of royalties acquired access or of ownership of intellectual property.

Disintermediation

A heap of ink has been spilt relating to this necessary trend. The removal of layers of brokering and intermediation - mainly on the producing and selling levels - may be a historic development (though the continuation of a long run trend).

Take into account music for instance. Streaming audio on the web or downloadable MP3 files will render the CD obsolete. The net additionally provides a venue for the selling of niche products and reduces the barriers to entry previously imposed by the requirement to interact in pricey selling ("branding") campaigns and producing activities.

This trend is also doubtless to restore the balance between artist and therefore the business exploiters of his product. The very definition of "artist" can expand to include all creative people. One can seek to differentiate oneself, to "whole" oneself and to auction off one's services, concepts, merchandise, designs, expertise, etc. This is a return to pre-industrial times when artisans ruled the economic scene. Work stability will vanish and work mobility will increase during a landscape of shifting allegiances, head searching, remote collaboration and similar labour market trends.

Market Fragmentation

In a fragmented market with a myriad of mutually exclusive market niches, shopper preferences and selling and sales channels - economies of scale in producing and distribution are meaningless. Narrowcasting replaces broadcasting, mass customization replaces mass production, a network of shifting affiliations replaces the rigid owned-branch system. The decentralized, intrapreneurship-primarily based corporation is a late response to these trends. The mega-corporation of the future is more likely to act as a collective of start-ups than as a homogeneous, uniform (and, to conspiracy theorists, sinister) juggernaut it once was.

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