Has The Video Game Industry Surpassed The Military In Driving The Next Wave Of Technological Change?

from the video-game-industrial-complex dept

For much of the twentieth century, many of the biggest technological advancements were trickle-downs from the military, which took huge government expenditures for R&D and later commercialized that technology. While many people here no longer remember this, the military connection was a big part of what built up Silicon Valley in the early days. However, times are changing. Andy Kessler's latest opinion piece at the Wall Street Journal suggests that the greatest driver of technological change these days appears to be the video game industry. He talks about how China created the world's fastest supercomputer, using chips that were built on video game chip technology:

Fifty years ago, President Eisenhower was worried enough to declare that "We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex." No need to worry anymore. That game (pardon the pun) is over: Welcome to the entertainment-industrial complex.

Consider the Apple iPhone, often touted as the tech symbol of our era. It's actually more evolutionary than revolutionary. Much of its technology—color LCD displays, low power usage, precision manufacturing--was perfected for hand-held videogames like the Nintendo DS and Sony PSP, which sold in the tens of millions. Think about how much more productively workers are now able to communicate because of some silly games.

He points out that technologies like Microsoft Kinect and online game technology are likely to start to move into corporate applications before too long as well:

Videogames will influence how next-gen workers interact with each other. Call of Duty, a military simulation game, has a mode that allows players to cooperate from remote locations. In World of Warcraft, players form guilds to collaborate, using real-time texting and talking, to navigate worlds presented in high-resolution graphics. Sure, they have funky weapons and are killing Orcs and Trolls and Dwarves, but you don't have to be a gamer to see how this technology is going to find its way into corporate America. Within the next few years, this is how traders or marketers or DNA hunters will work together.

So why is it that the military has been displaced? Kessler believes it's all about the money:

For one, capital formation. Governments had the unique capacity to raise (read: tax) the enormous capital needed to fund state-of-the-art projects. But a fully functioning stock market can raise billions for productive commercial applications, bypassing the military connection. Hate Wall Street all you want, but it's now better than wars at driving progress.

Second, displacing the military is about high sales volume. Often that means lower costs. The $300 Roomba automatic vacuum, which the company iRobot says it has sold to five million customers, helps drive down the cost of the Army's robotic bomb removers. Volume is especially good at spurring the creation of new applications. Hardware is nothing without software and apps. Caffeine-fueled coders won't even think about writing apps unless there are millions, if not tens of millions, of potential customers.

It's an interesting theory. I'm not sure I totally believe it -- as I think there's some cross-pollination going on, but it's definitely an idea worth thinking about.

Filed Under: innovation, progress, video games

Should We Be Interested In 'Saving' Any Industry?

from the forward-or-backwards dept

We hear it all the time, whenever anyone talks about an industry being "destroyed" by new technologies: "how do we save x industry?" where "x" can stand for "recording" or "news" or "movies" or whatever. We saw it just recently when a professor wanted to "save" the newspaper industry by changing copyright law in ridiculous ways. It's also why we jokingly called our last event "Techdirt Saves* Journalism." The whole concept of "saving" an industry is so preposterous, which is why we wanted to mock it with the title of our event. I was reminded of this when reading this recap of the Association for Education in Journalism and Mass Communication (AEJMC) event, where Dan Gillmor was quoted saying:

"I'm not even slightly interested in saving the industry."

And it got me thinking about understanding the mindset of "saving" an industry more deeply. The truth is, whenever anyone seriously (not mockingly) refers to "saving" an industry, invariably, they're really talking about saving a few legacy companies in that industry from whatever disruptive innovation is shaking things up. It's never actually about "saving an industry," because the "industry" almost never actually needs to be saved. The industry may be in the process of being changed (often radically), but that's not the same thing as needing saving.

What's telling is that, through all of this, you almost never hear start-ups talking about asking for help trying to "save the industry" that they're in. That's because they know "the industry" is just fine, and in all of the upheaval there's really tremendous opportunity. So, anytime anyone talks seriously about "saving" any particular industry, challenge them on what they really mean, and see if they're actually just talking about saving a few companies, rather than saving an actual "industry."

Filed Under: industry, progress, protectionism, saving

My Comments To The USTR On Special 301 Report On Foreign Copyright Issues

from the let's-get-real dept

As you may or may not have heard, the USTR has been accepting public comments for its Special 301 report, which comes out every year in an attempt to name and shame countries that the USTR does not believe does enough to protect US copyrights abroad. Typically, this process is driven very much by the entertainment industry, to the extent that even people in the US copyright office have been known to roll their eyes about the legitimacy of the report. A lot of people have been incorrectly claiming that these comments are about ACTA, but they're not. The Special 301 report basically just tries to determine which countries the US should put more pressure on to "get with the program," diplomatically speaking, when it comes to copyright issues. In the past, it's been used to bully countries like Canada and Israel -- both of which have strong copyright that is very much in compliance with international obligations. This year, with the USTR opening up the comments process to anyone who had some thoughts, I figured I would submit my own thoughts on this particular issue. If you would like to submit your own comments, you can follow the instructions given by Public Knowledge. At that link you can also see PK's own "suggested" text, though I would highly recommend writing your own thoughts out, rather than stuffing the box with the same letter. For another letter, you can see what John Bennett submitted as well.

---

Senior Director for Intellectual Property and
Innovation and Chair of the Special 301 Committee
Office of the United States Trade Representative
600 17th Street NW
Washington, DC 20508
Filed electronically via Regulations.gov

Dear Ms. Groves:

I write to you today as a long-term content creator, who makes my living off of my ability to continue to create content and receive remuneration for that activity. And yet, I am concerned about the state of US copyright law, and the fact that it does not serve my interests or the interests of the vast majority of content creators today. Despite being a professional content creator, I have purposely chosen not to make use of copyright law, because the way it is structured today actually hinders my own ability to profit from my content creation.

The central tenet of copyright law has been, "To promote the Progress of Science and useful Arts," and the mechanism for this is both copyright and patents, or more specifically "securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." Unfortunately, over the years, all too often we've lost sight of the beginning of that sentence, in the assumption that any increase in those "exclusive rights" must surely "promote the progress." And, yet, as we have expanded and stretched copyright law time and time again -- and almost never contracted it -- no one ever seems to ask for any actual evidence that stronger and lengthier copyright law leads to promoting more progress.

This is not a new concern. Thomas Macaulay famously argued in 1841 that we ought to be careful to only extend and expand copyright upon evidence that such an extension or expansion would, in fact, lead to greater incentives to create. Yet, to this day, our public policy has been to take it on faith that stricter copyright laws lead to greater incentives to create -- despite the lack of evidence to support this position. In fact, the evidence has suggested that as technology has decreased the ability of copyright holders to enforce copyright, the incentives to create have only increased. And this is not just the ability to create as an amateur, but the ability to create and earn money as a professional.

A recent paper by economists Felix Oberholzer-Gee and Koleman Strumpf demonstrated this in rather great detail, highlighting that even as new technologies have undermined classical copyright law, there remains little evidence that this change has undermined the incentives to create. In fact, the research collected in that paper and other papers suggested that more people are creating new works of music today than ever before in history. The same is true of movies, an industry that has seen the number of annual releases double in the last five years alone.

There is no doubt that a segment of these industries, who have relied on exclusivity and limits in the distribution channels, such as the major movie studios and the major record labels, have been slow to respond to these changes and have faced difficulties. But their views are not an accurate representation of the overall industry. The Oberholzer-Gee/Strumpf paper clearly demonstrated that the amount of money being spent on music by consumers has grown massively in the past decade -- it's just that a smaller portion of that spend goes directly to the record labels. An even more recent study out of the UK, done by two industry economists working for PRS, the UK's performance rights collection society, also found that the overall music industry was making increasingly more money, despite the challenges of a changing market.

These studies point to important facts about how industries can adapt, even in the face of technologically-weakened copyright, without the need for greater enforcement. But they also raise an important point: when our policy on copyright is made without actual evidence, it is important to allow different countries to experiment with their own copyright policies, from which the rest of the world can learn. Trying to enforce US-style copyright law throughout the world does a disservice to the very purpose of copyright law: to promote the progress.

By allowing different countries to experiment and adopt their own style of copyright law, we create a real-world experiment from which we can learn what does, and what does not, help to "promote the progress." Using US trade policy to pressure other countries to adopt a US-style copyright law brings all of the problems with US law to other countries, and presents no chance for us to examine how our own law might be improved to serve the purpose of the law, as set out in the Constitution.

The Special 301 process should be an opportunity to see what other countries have done and what we can learn from them, rather than an opportunity to try to export faith-based US-style copyright law to other countries, solely for the benefit of a few companies who have not adapted, while many others in their industries have made the jump to supporting and embracing new technologies and new business models. The US should be encouraging local experimentation with copyright law, rather than strict adherence to our own brand of copyright law -- especially given the lack of concrete evidence that our own laws do, in fact, "promote the progress."

Sincerely,

Michael Masnick

Filed Under: copyright, foreign copyright, progress, special 301 report, ustr

Book Publishing Industry Just Now Realizing That Change Is Turbulent?

from the really? dept

As the latest episode of "the ebook wars" continues, there's still lots of chatter about last weekend's Macmillan/Amazon fight. Apparently a lot of authors are angry at Amazon for this. While I can understand how the fight might hurt some authors -- and they're justifiably worried about Amazon's dominance in the ebook market today, I think they need to take a larger view of things. The reason why Amazon tried (though, failed) to stand up to Macmillan was to avoid Macmillan making some really stupid decisions about ebook pricing and distribution windows. That Macmillan won may have helped some authors in the short run (avoiding them being cut off by Amazon), but could hurt in the long run by fighting against the economic tide.

Perhaps the best summary of this situation was written by Steven Pearlstein at the Washington Post, who recognizes that this is a technological transformation, and while it may be messy in the interim, the end results should be quite positive:

While markets have their flaws, over the long run they are good at executing these technological transformations.... Reports of the death of book publishing, like those of music publishing and newspaper publishing, are greatly exaggerated. Business models will change, companies will come and go, and people will lose their jobs. But at the end of the process, there will be fewer people who will be paid higher incomes to produce a wider array of products at lower prices. There's a word for that -- progress -- and it's exciting to see it unfold right in front of us.

If only those going through that transformation could recognize it in those terms...

Filed Under: books, change, ebooks, progress, publishing

Running The Clock Backwards To Judge Technological Progress

from the would-you-trade-one-for-the-other? dept

Kevin Donovan points us to a short but interesting essay by Steven Pinker, on technological progress. In it, he discusses the popularity of moral panics over new technologies, and claims by folks who say that Google/text messaging/the web/email/etc are "making us stupid." He suggests a rather simple test for determining how silly those are, which includes seeing whether or not you'd exchange what you have today for what you had in the past:

I would suggest another way to look at the effects of technology on our collective intelligence. Take the intellectual values that are timeless and indisputable: objectivity, truth, factual discovery, soundness of argument, insight, explanatory depth, openness to challenging ideas, scrutiny of received dogma, overturning of myth and superstition. Now ask, are new technologies enhancing or undermining those values? And as you answer, take care to judge the old and new eras objectively, rather than giving a free pass to whatever you got used to when you were in your 20s.

One way to attain this objectivity is to run the clock backwards and imagine that old technologies are new and vice-versa. Suppose someone announced: "Here is a development that will replace the way you've been doing things. From now on, you won't be able to use Wikipedia. Instead you'll use an invention called The Encyclopedia Britannica. You pay several thousand dollars for a shelf-groaning collection of hard copies whose articles are restricted to academic topics, commissioned by a small committee, written by a single author, searchable only by their titles, and never change until you throw the entire set and buy new ones." Would anyone argue that this scenario would make us collectively smarter?

The reason technology progresses the way it does is because it is progress. Otherwise, people wouldn't be using it. We use Wikipedia because it has many features that make it more useful. We use email/Twitter/text messaging/mp3s and other technologies for the same reason. They make life better in some way. Otherwise, they wouldn't get used at all.

Filed Under: innovation, progress, steven pinker

Reasons Why Copyright On Art And Music Could Be Deemed Unconstitutional

from the arguments-in-the-extreme dept

I've often discussed the original constitutional reasoning behind patents and copyright law, specifically the phrase we all know in Article 1, Section 8:

The Congress shall have Power... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

From this, I still believe it's quite clear that if copyright or patents are used in a way that does not "promote the progress" of those things, then it is unconstitutional to use copyright or patent law in that way. Not everyone agrees with me, of course. However, I've mostly focused on the "promote the progress" side of things, but haven't delved as much into the details of "science and useful Arts." I have read up extensively on what the founders meant by that, which can be simplified as "science" meaning scientific publishing/books and "useful Arts" meaning inventions. There's also a fair bit of evidence that the real focus of the founders was on patents, rather than copyright. It wasn't that they weren't concerned at all about copyright (they were), but that the bigger issue was patents, and copyright was a sort of "throw in" at the behest of some vocal authors, along with some remembrance of states' fights over local copyright policies. But, on the whole, it was patents that were considered of much more importance to progress than copyrights.

And, not only were copyrights initially for a "limited time" (14-years) but the first federal copyright law in the US limited copyright to books, maps and charts. Tom Bell points out that, based on this, and some other aspects of the early intentions of the founders, you can make an argument that copyright law, as per the constitution, was never intended for things like art and music. After all, what does art or music have to do with "science"? And if it really was intended to cover art and music, then why didn't the founders have it cover music that was being composed at the time? Perhaps it was because they realized that music and paintings had nothing to do with science, and the Constitutional clause is only limited to promoting the progress of science and the useful arts (and, again, in the parlance of the day, "useful arts" was inventions). As Bell states:

Here as elsewhere, acquiescence to long-accepted practices has dulled us to the Constitution's bracingly straightforward words. We should read them anew and reflect that the Founding generation did not evidently think that granting statutory privileges to such purely artistic creations as romantic operas or pretty pictures would promote the progress of both science and the useful arts. Furthermore, most citizens today would, if presented with the Constitution's plain language rather than the convoluted arguments of professional jurisprudes, probably say the same thing about pop songs, blockbuster movies, and the like. That is certainly not to say that purely expressive works lack value. They may very well promote such important goals as beauty, truth, and simple amusement. The Constitution requires that copyright promote something else, however--"the Progress of Science and useful Arts"--and a great many works now covered by copyright cannot plausibly claim to do both.

Bell is interpreting the Constitutional clause in an even stricter manner -- suggesting that any work covered by patents or copyright needs to promote both progress in science and in the useful arts, which is an even higher bar, though I'm not sure I'm convinced it was meant to be both. Also, many would retort that the Constitution grants the Congress the ability to determine if such monopolies promote the progress of science and the useful arts -- and as long as Congress says they do, then we should consider that they do (no matter how wrong they might be). For a variety of reasons, that line of thinking is problematic, but it is the line that the Supreme Court has taken with copyright before (such as in the Eldred case). I'm not necessarily convinced of Bell's thinking here, but it's certainly a point worth pondering (and discussing).

Filed Under: art, constitution, copyright, music, progress

The Problems Of A Legacy Business: Verizon's Union Freaks Out That Verizon Wants To Look Forward

from the what-a-shame dept

It's really sad to see some of the struggles that legacy businesses go through in trying to adapt to a more modern world, but not all of it is the fault of those businesses themselves. Look, for example, at what's happening with Verizon. Subsidiary Verizon Wireless -- which is 55% owned by Verizon -- began a marketing campaign pushing people to ditch their landline phone and go completely wireless. That's not a bad marketing campaign (and, in fact, might be a very good marketing campaign these days). So what happens? The union that represents Verizon's landline telco workers flips out and accuses the company of trying to undermine the union by helping Verizon get out of the landline business, so it can get rid of those workers. Seriously. First of all, there's little evidence to suggest that's true. Like most traditional telcos, Verizon still sees its basic landline business as a useful cash cow that I'm sure it intends to milk for as long as possible. Chances are, since VZW is a separate company, the marketing plan had nothing to do with the parent's marketing efforts. But, either way, at some point the company should be pushing customers to ditch landlines and other older technologies and embrace better solutions. Not because it puts old union guys out of work, but because it's where the market is headed.

Filed Under: landlines, markets, mobile, progress, technology, unions
Companies: verizon, verizon wireless

Even The Pope Is Worried About The State Of Intellectual Property

from the didn't-see-that-coming dept

The US Constitution clearly states that the sole purpose of intellectual property monopolies is "to promote the progress of science and the useful arts." For quite some time, we've felt that current intellectual property law does not live up to that challenge... and it appears that, of all people, the Pope may agree. Pope Benedict XVI is certainly not subject to the US Constitution, but Roberto Valenzuela alerts us to the Pope's "Caritas in veritate" (Charity in Truth) that just came out today. In it, the Pope discusses what is progress and the importance of economic development, which makes for quite an interesting read, whether you are religious or not. The Pope talks about how economic development, prosperity and economic growth has helped lift many out of poverty and built up nations and created tremendous opportunities for people. However, he is worried about "malfunctions and dramatic problems" in the system. Such as? Well, intellectual property for one thing:

On the part of rich countries there is excessive zeal for protecting knowledge through an unduly rigid assertion of the right to intellectual property, especially in the field of health care

While there's plenty that I don't necessarily agree with, a lot of the talk certainly does appear to be pretty economically literate, suggesting that an overabundant focus on short term profits can do significant harm to long-term economic growth. He talks up the importance of increasing knowledge and research and better sharing the results of that research.

The impact of technology is a constant theme throughout the entire thing, with an entire section focused on technology towards the end, where he does worry that our fascination with technology its own sake often obscures the its overall impact. He talks about the responsible use of technology, but (and perhaps I'm reading too much into it) he doesn't appear to be condemning technological progress, but noting that for its gains to be sustainable, people do need to think about the wider impact. However, I certainly disagree with his assessment that technology for things like social communications can have a direct moral implication, as opposed to being "neutral."

It's a worthwhile (if long) read, no matter where you stand on these issues -- but the very fact that even the Pope is concerned about the excesses of intellectual property being used to harm economic and social development again suggests that this is a problem that is having a pretty wide impact.

Filed Under: economic development, healthcare, intellectual property, pope benedict xvi, progress, technology

No, Telecom Progress Hasn't Slowed

from the wonders-of-competition dept

Megan McArdle points to a post by "cactus" claiming that progress in the telecom industry has slowed since the passage of the 1996 Telecom Act, and suggests that this is an argument against deregulation. Megan points out that cactus is likely exaggerating the responsiveness of Baby Bell customer service in the early 1990s. Here's another part of the argument that's really misguided:

"My guess is that the improvement in technology available to the consumer from 1984 to 1996 is more significant than the improvement from 1996 to 2008. (Anyone remember using a BBS?) And the improvements on the cell phone side of the business seem to come mostly on the manufactured hand-unit, which was never regulated because it isn't a natural monopoly."

The problem with this is that if we're talking about Internet access, there were no improvements at all between 1984 and 1996 in what phone companies offered to residential customers to get online. In 1984, if you wanted to get online, you got a second phone line and purchased a modem. In 1996, if you wanted to get online, you got a second phone line and got a modem. Now, the 1984 modem was probably 1200 bps, while the 1996 modem was probably 28,800 bps. And the 1984 online service was probably Compuserve, while the 1996 online service might have been a real ISP. But of course the Baby Bells weren't major players in the modem or online service markets during these years, and neither market was regulated. So touting them as evidence of the virtues of the pre-1996 regulatory regime, while dismissing the analogous improvement in cell-phone handsets since 1996, is disingenuous.

More broadly, it's just silly to claim that progress in the telecom industry has slowed over the last 12 years. Between 1984 and 1996, typical home online speeds increased from 1200 bps to 28.8 kbps, an impressive 24-fold improvement. By 2008, typical internet speeds were upwards of 3 mbps, an even more impressive 100-fold improvement. And 28.8 was the fastest you could go in 1996 without paying exorbitant charges for a dedicated data line. In contrast, some broadband providers are offering speeds as high as 20 mbps—a 700-fold improvement—for under $70/month. Now, I don't think improvements in the telecom market have been primarily due to the 1996 Telecom Act (which wasn't especially deregulatory anyway). Primarily, I think the progress was due to two things: cable companies getting into the broadband and phone markets (which which has created pressures for faster DSL and fiber roll-outs), and the government auctioning off spectrum to increase competition in the wireless market (which has provided additional competition for the Baby Bells' phone business). The former was likely sped along by some provisions of the 1996 Telecom Act, although the the "local loop unbundling" fiasco may have stunted development of DSL service during the same period. On the other hand, spectrum auctions were first authorized by Congress in 1993, so the latter can't be credited to the Telecom Act.

The bottom line, though, is that deregulation is most successful when it's designed to increase competition. A well-designed deregulatory scheme will enhance competition by removing barriers to entry and letting new firms enter the market. Poorly-designed "deregulation" will leave barriers to entry in place and simply relax regulations that limit the monopolist's ability to extract monopoly rents. There was some of each in the 1996 Telecom Act, but either way it's clear that progress continued at a brisk clip after 1996, and increased competition was a big part of that. If Congress wants that progress to accelerate over the next decade, it should look for ways to further increase competition in the telecom industry, not try to turn back the clock to the 1980s.

Filed Under: deregulation, progress, regulation, telecoms