netzooid

Found an interesting presentation on Bubblegeneration discussion property rights and innovation (via Occam’s Razor). Some thoughts:

Ultimately, the negotiation for property rights must be coordinated among a huge number of actors, each of whom adds their own negotiation and enforcement cost. …[I]nnovators are using the Net to correct the coordination failure, and effectively offer massively multilateral contracts that work.

He’s talking mostly about DRM here, but there is some mention of EULA. The thing that comes to my mind is open source. The community is massively renegotiating software contracts. And there are plenty of DRM examples – Kazaa, Hymn, etc. He class this response a “gray market.”

…And that’s the point: at the same price, any bundle of property rights and goods must provide at least as much value as the good by itself. Any less, and consumers have a disincentive to consume the property rights with the good. This is why DRM systems are doomed. From an economic point of view, DRM solutions are just massively distributed copy protection.

His premise is right, but the conclusion is wrong. The thing about DRM is that with DRM the price goes down, so even though I may not be able reburn a subscribed song from Napster/Rhapsody onto a CD, it costs me a fraction of the cost to listen to it as it would to buy it (provided I listen to enough music).

I don’t believe that DRM provides negative value as he puts it. DRM’d music provides different value – convenient access via my computer with filters/recommendation engines at a cheaper prices.

For example, innovative licenses might pay dividends, might be options with expiration dates and strike prices, might offer structured, locked-in benefits via frequent-flyer program like subsidies, or might even offer terms like in the Japanese Ring trilogy – replicate this good virally…or else.

Interesting idea that licenses could provide incentives/value to the end user if they follow the license…

Umair’s also posted some new powerpoints and they are very interesting (although there are 200+ slides between the two of them…). I particularly like the idea of coordination economies. He talks about how microeconomies can only exist if you have divisible inputs. For example, the Wikipedia has inputs from many different people.

I wonder if we will start to see new versions of old things which result from divisible inputs. What about Google News applied to television? One continuous feed of remixed news content.

I’ll definitely be reading this stuff over again tomorrow when I’m more awake.

This entry was posted on Tuesday, May 31st, 2005 at 9:45 pm and is filed under Media.