taking rights seriously

False or excessively broad claims to rights, if taken seriously, could have devastating effects on content businesses. For example, U.S. National Football League (NFL) broadcasts include the following statement:

This telecast is copyrighted by the NFL for the private use of our audience. Any other use of this telecast or of any pictures, descriptions, or accounts of the game without the NFL’s consent, is prohibited.

The claim, “This telecast is copyrighted by the NFL for the private use of our audience,” is absurd. Copyrighting a telecast is not necessary for the private use of it, nor is advancing that use a credible explanation for the NFL’s copyright action. The problem is not just that the NFL has not expressed a credible business justification for its copyright. The second sentence of the NFL’s statement seems to imply that football fans need permission from the NFL to discuss games (“accounts of the game”) that they watch on television. That’s an impressive anti-social business-destroying effort.

The NFL has not yet succeeded in destroying its business. Perhaps that’s because because football fans recognize copyfraud. The NFL recently has shown no respect for copyright law. The RIAA has executed astonishing initiatives to destroy the music business. If the NFL is serious about destroying the football business, it might run a few plays from the RIAA’s playbook.

Shrewd and successful new media businesses seek to become platforms for users to share and discuss users’ works. YouTube’s terms of service state:

For clarity, you retain all of your ownership rights in your User Submissions. However, by submitting the User Submissions to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the User Submissions in connection with the YouTube Website and YouTube’s (and its successor’s) business, including without limitation for promoting and redistributing part or all of the YouTube Website (and derivative works thereof) in any media formats and through any media channels. You also hereby grant each user of the YouTube Website a non-exclusive license to access your User Submissions through the Website, and to use, reproduce, distribute, prepare derivative works of, display and perform such User Submissions as permitted through the functionality of the Website and under these Terms of Service. The foregoing license granted by you terminates once you remove or delete a User Submission from the YouTube Website. [first bold type in original; second, added here]

Google and BSkyB (Sky) have teamed up to produce SkyCast. This video service offers users a much different deal:

If you send us videos, messages or other content, we will be able to use your content in any way we like. So, we might decide to put your content on one of our other services, like TV, or give it to someone else to put on one of their services. We might even decide not to use it at all! If you decide to take your content off the Service, Sky can still use it in any way we like.

In addition:

You waive all moral rights in relation to your Content.

Moral rights, such as Article 6bis of the Berne Convention, apparently can be waived in some jurisdictions. While SkyCast filters submitted content, its terms of service declares “thou shalt not submit content” that:

1.1 is in breach or promotes the breach of any third party rights (including third party intellectual property rights);
1.2 is defamatory, offensive or libellous;
1.3 promotes racism, bigotry, hatred or harm of any kind against any group or individual or would subject any person to ridicule or cause other people to shun or avoid such an individual;
1.4 harasses or advocates the harassment of another person or persons;
1.5 promotes conduct that is abusive, threatening, obscene or distasteful;

1.24 refers to any arrest of an individuals [sic] or any active court proceedings.

Moreover, in conjunction with the opportunity to offer their work to SkyCast, users are required to accept liability to SkyCast and third parties:

5.5 You will reimburse Sky and any third party who provides services to you as part of the Service for any losses, costs or damages incurred by Sky and/or any third party, on demand, arising out of:
5.5.1 your use of the Service, or anybody else that your [sic] allow to use the Service using your SkyCast Profile; and/or
5.5.2 your breach of these Terms of Use.

How would one assess the financial risk of this liability given the terms of service?

I cannot imagine that any rational, informed users would actual agree to submit work to SkyCast. Put different, if users take seriously their rights as currently set forth in SkyCast’s terms of service, I think SkyCast’s business is worthless.

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reverse caching saves trees

Energy is a significant cost of running data centers. Over a three-year operating period at typical U.S. power costs, a server’s acquisition cost is about equal to its power cost.[1] One documented estimate puts the annual power cost of U.S. data centers at two billion dollars in 2003.[2] IT power costs should be incorporated into a sensible evaluation of IT budgets and considered in energy policy.

Reverse caching can significantly reduce data center energy costs. At the State of the Net Conference this past Wednesday, Dick Sullivan of EMC stated that 70% of data on high-performance drives in data centers hasn’t been touched in the past ninety days. Caching traditionally moves some currently relevant data to relatively fast memory. Reverse caching goes the other way. Moving data unlikely to be used to energy efficient storage (a kinetically idle or unplugged drive, or a dismounted tape) saves significant costs.

At the far end of reverse caching are major issues of digital preservation. Reverse caching puts digital preservation into a framework of shorter-run operation and maintenance issues. That may be a valuable management reform. Digital preservation is probably a larger business opportunity than reverse caching. Reverse caching might help to make digital preservation more prominent in (short-run) management strategy.

Update:

1) I fixed a few mistakes in the earlier version of this post.

2) Chuck’s Blog has a good discussion of data center power usage.

3) Jonathon Koomey, with AMD sponsorship, has recently estimated total server power consumption in the U.S. in 2005 as 45 billion kWh. That represents 1.2% of total U.S. electricity consumption, about the same amount of power that color televisions consume (Koomey (2007), p. i). At an electricity cost of $60 per MWh, that power costs $2.7 billion. Koomey’s server power estimate includes power for cooling and auxiliary equipment associated with servers. It doesn’t include data storage and network equipment power, which Koomey suggests accounts for 20-40% of data center power consumption (see p. 2). Koomey’s server power estimate also does not include power for custom-built servers. Google’s custom-built servers, if included, might increase the total power consumption figure by 1.7% (see p. 3).

Koomey, Jonathan G. (2007), Estimating Total Power Consumption by Servers in the U.S. and the World (pdf), Final Report, Feb. 15.

[1] The Real Story about Dynamic Smart Cooling, Fact 1, citing HP, Christopher Malone, PhD, Christian Belady, P.E., “Metrics to Characterize Data Center & IT Equipment Energy Use”, Digital Power Forum, Richardson, TX (September 2006).

[2] Jeffrey S. Chase, Darrell C. Anderson, Prachi N. Thakar, Amin M. Vahdat, Ronald P. Doyle, “Managing energy and server resources in hosting centers,” ACM Symposium on Operating Systems Principles, Proceedings of the eighteenth ACM symposium on Operating systems principles, Banff, Alberta, Canada, 2001, pp. 103 – 116, (available pdf). Citing Jennifer D. Mitchell-Jackson, Energy Needs in an Internet Economy: A Closer Look at Data Centers, Master’s thesis, Energy and Resources Group, University of California at Berkeley, July 2001. This estimate used a power cost of $100 per MWh. Where power supply costs are higher, the power consumption cost of a server would be proportionally greater.

case study of trade-off between control and distribution

Early in the sixteenth century, Martin Luther’s work rapidly spread across Europe. Luther issued his Ninety-Five Theses in Latin on October 31, 1517. They became known across Europe in about a month. The Ninety-Five Theses and other subsequent works of Luther were widely reprinted. Between 1518 and 1519, there were about 1,350 reprintings of Luther’s tracts. By 1524, over a million copies of Luther’s writing were in circulation in Europe.[1] An obscure monk in 1517, Luther by 1521 was one of the most famous persons in the Holy Roman Empire of the German Nation.

No one directed or controlled the distribution of Luther’s work. Luther wrote in Latin and in German. German was the language of most persons in German lands. Latin connected Luther to an educated elite across Europe:

The educated élite who could understand Latin and theological debate was no longer composed only of churchmen and professors. [Luther’s theses] were initially read by a small group of learned laymen who were less likely to gather on the church steps than in urban workshops where town and gown met to exchange gossip and news, peer over editors’ shoulders, check copy and read proof. There, also, new schemes for promoting bestsellers were being tried out. [2]

Without the constraint of legal doctrines of copyright or any other controlling authority, religious and commercial innovators and entrepreneurs freely shared, reprinted, adapted, translated, and sold Luther’s work. Their interests and Luther’s interests were loosely joined:

The printers at Wittenberg at times even published material that Luther did not want to have published. This aspect of the matter annoyed him no end, but on the other hand he was glad to have their services and had no serious objection to these sometimes overly enthusiastic colporteurs of his message.[3]

Luther’s writing and ideas were appropriated and incorporated in works directed at popular readership outside German lands:

very few of Luther’s writings were translated into non-German vernaculars — a few into Dutch, and two or three into English and French. On the other hand, many of Luther’s early German writings were translated into Latin and, as the case of William Tyndale so tellingly shows, he was extensively plagiarized.[4]

The interpretations and presentations of Luther’s ideas in non-German vernaculars were not authoritative, but they had great communicative effect.

The institutional Church controlled communication much more tightly and communicated much less quickly and much less widely. The Council of Trent, an important response of the Church to the religious turmoil of the early sixteenth century, met three times from 1545 to 1563. Pope Pius IV’s bull accompanying the concluding decrees of the Council set out a tightly controlled communication system for the decrees:

that these things may come to the knowledge of all men, and that no one may use the excuse of ignorance; We will and ordain, that, in the Vatican Basilica of the prince of the apostles, and in the Lateran church, at the time when the people is wont to assemble there to be present at the solemnization of masses, this letter be publicly read in a loud voice by certain officers of our court; and that, after having been read, it be affixed to the doors of those churches, and also to the gates of the Apostolic Chancery, and to the usual place in the Campo di Fiore; and be there left for some time, to be read by and to come to the knowledge of all men. And when removed thence, copies being, according to custom, left in those same places, it shall be committed to the press in our good city, that so it may be more conveniently made known throughout the provinces and kingdoms of the Christian name. And we ordain and decree, that, without any doubt, faith be given to copies thereof written or subscribed by the hand of a public notary, and guaranteed by the seal and signature of some person constituted in ecclesiastical dignity.[5]

Interpretative and derivative works were also controlled:

in order to avoid the perversion and confusion which might arise, if each one were allowed, as he might think fit, to publish his own commentaries and interpretations on the decrees of the Council ; We, by apostolic authority, forbid all men, as well ecclesiastics, of whatsoever order, condition, and rank they may be, as also laymen, with whatsoever honor and power invested ; prelates, to wit, under pain of being interdicted from entering the church, and all others whomsoever they be, under pain of excommunication incurred by the fact, to presume, without our authority to publish, in any form, any commentaries, glosses, annotations, scholia, or any kind of interpretation whatsoever of the decrees of the said Council.[6]

By the early sixteenth century, an independent, decentralized, commercially oriented, competitive printing and book-selling business had developed in Europe. The Church organized communication of the decrees of the Council of Trent so as to keep it outside of the new printing and book-selling business.

In retrospect about five hundred years later, the split between Luther and the Church seems to have been mainly a communication problem.  Communication problems are difficult problems.  For a communicative endeavor to succeed, it must have actually necessary and feasible control within a sufficiently effective communication system.

* * *
[1] Hillerbrand, Hans J., “The Spread of the Protestant Reformation of the Sixteenth Century: A Historical Case Study in the Transfer of Ideas,” The South Atlantic Quarterly LXVII (Spring 1968) p. 275.

[2] Eisenstein, Elizabeth L., The Printing Press as an Agent of Change, 2 vols. (Cambridge University Press: 1980), vol. I, pp. 308-9.

[3] Hillerbrand, “Spread,” p. 275.

[4] Ibid. p. 282.

[5] Bull of Pius IV, February 7, 1564, printed after canons and decrees in The Council of Trent, The Twenty-Fifth Session, ed. and trans. J. Waterworth (London: Dolman, 1848).

[6] Ibid.

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evaluating monetary policy

Funniest. Video. Ever. And its production quality is probably better than what Hollywood was doing twenty-five years ago. Web junk is quality entertainment.

P.S. – It’s got about 500,000 views. Makes me proud to be an economist!

limitations of crowdsourcing

The brainpower of all human being around the earth is vastly underutilized. Organizing production to give more persons more opportunities to use their brains can make a huge contribution to the common good.

Crowdsourcing” describes some new production arrangements. An interesting example of crowdsourcing is InnoCentive. InnoCentive mediates between companies seeking solutions to R&D problems and persons around the world interested in solving problems. All kinds of persons with all kinds of training have succeeded in solving problems that have been difficult and costly for rigidly structured research organizations to solve.

This shouldn’t be surprising, notes Karim Lakhani, a lecturer in technology and innovation at MIT, who has studied InnoCentive. “The strength of a network like InnoCentive’s is exactly the diversity of intellectual background,” he says. Lakhani and his three coauthors surveyed 166 problems posted to InnoCentive from 26 different firms. “We actually found the odds of a solver’s success increased in fields in which they had no formal expertise,” Lakhani says. He has put his finger on a central tenet of network theory, what pioneering sociologist Mark Granovetter describes as “the strength of weak ties.” The most efficient networks are those that link to the broadest range of information, knowledge, and experience.
[from Wired]

Academic disciplines are largely cartels for dividing up the knowledge market, lessening intellectual competition, and facilitating symbolic claims to authority. Broader, more fluid organizations of intelligence can make a major contribution to creating replicable, instrumental solutions to practical problems.

This kind of production arrangement has some important limitations. In many cases, persons and organizations don’t recognize the most important problems that they need to solve. Defining the problem is nine-tenths of the solution. That’s a cliché. It’s also true. If you don’t understand what the key problem is, you can’t get someone to solve it. This situation is pervasive in the communications industry.

In addition, for many business problems, solutions are quite difficult to evaluate. Solutions to the generic problem, “how to make a lot money quickly,” can be intelligently dismissed with little effort. Recognizing neglected, decision-relevant knowledge for narrower problems of mundane human behavior (economics) can be simply a matter of logic. But recognizing such knowledge can also require wisdom. Crowdsourcing cannot solve the problem of distinguishing between wisdom of crowds, and folly of crowds.

history of science and business

Bell Labs, one of the world’s premiere research institutions, was promoting the development of the PicturePhone by 1969. The first article documenting that the sight of lips annunciating sounds affects hearing (the McGurk Effect) was published in Nature, a leading scientific journal, in 1976. The authors of the article, Harry McGurk and John McDonald, were affiliated with the Department of Psychology, University of Surrey, UK. Did researchers at Bell Labs know about the McGurk Effect by 1969?

At least this is clear: good science, whether known or yet to be discovered, is not sufficient to produce a profitable new product.

essential reading to prepare for the future

Ponder the possibilities for funding network infrastructure. Think about how to contact persons dispersed after a cataclysm. Understand the deep significance of exchanging a chicken. This isn’t highly successful fiction, or merely a fantasy game that you can enjoy from the comfort of your telecom fortress. If you’re not reading Telepocalypse, you really are gonna be left behind!

fortress telecom

spineless gene contributes to smell, taste, and color vision

As an FCC bureaucrat, I’m intrigued by a recent discovery about the spineless gene. I’m trying to understand better the demand for communications services, particularly across sensory modes. A leading researcher on the spineless gene in fruit flies explained:

“Spineless plays a key role in the antenna and maxillary palp, the two major olfactory organs of the fly,” said Ian Duncan. “It’s also important in mechanosensory bristles and in the taste receptors of the legs, wings, and mouth parts. There has been a sensory theme to the gene, and now we learn from Claude’s work that it plays a key role in color vision.”

The spineless gene also produces certain random structures apparent in the eye:

“Nobody knew what controlled this random pattern,” said Dianne Duncan. “Now we know it’s spineless.”

This discovery may provide an important insight into the evolution of the communications industry.

fruit fly

For more information and images of invertebrates, check out this month’s Circus of the Spineless at Burning Silo.

customer relations: old and new

Customer relations for the old teleco: how the company relates to its customers.

Customer relations for the new communications service provider: the customers’ relations.

ARPUR: a business performance metric for presence in communication services

The largest share of value in communications services is the value of presence. How can communication services providers measure their performance in capturing this value?

Average Revenue Per User’s Relation (ARPUR) is a practical measure of presence value. ARPUR is Average Revenue Per User (ARPU) divided by some measure of user’s interaction with other users (relations). Such a measure might be the least number of users who account for in total at least 50% of the given user’s communication sessions, time, or revenue. The higher the ARPUR, the more the communication service is creating value through presence.

Persons typically value most highly the presence of family and friends. Limitations of time and attention, which good communication services can help to relax, constrain the number of family and friends that a person can sustain in daily interaction. The value of communication with the family and friends that persons do sustain is typically high and enduring. A good business plan for communication service providers is to capture a large share of this value. ARPUR is a metric of success in doing this.

While not often recognized as such, telephone service is a quintessential presence business. A study in the U.S. in the 1970s found that 50% of residential calls go to a set of five numbers. I think this has been roughly true for personal telephone service in most places throughout the history of telephone service. Creating more value in these relations creates value in this kind of communication service. It’s a presence business.

For contrast, consider an anti-presence communication service: telemarketing. Telemarketing involves mass distribution of information of interest only to a small number of persons. The telemarketer typically does not know any of the persons whom she contacts and does not typically repeatedly contact them. Moreover, most of her contacts probably wish that they did not know that she existed. A good communication service for telemarketing users might have a high ARPU. But its ARPUR would be near zero. It’s not a presence business.

ARPUR might help a new communication service provider steer its business between the imperatives of viral marketing and the long-term value of presence. Viral marketing, like infectious diseases, propagates most rapidly with some highly promiscuous agents. A communication service that wants to succeed virally needs to enable promiscuous agents. On the other hand, promiscuity is inconsistent with large presence value. The business challenge might be to manage change from low initial ARPUR to strongly rising ARPUR.

Suggested analytical exercise: Consider ARPUR for portraiture over the past 500 years. Take the user relation to be the gift of a picture of oneself to another person. What has been the trend in ARPUR? What has been the trend in total portraiture industry revenue? For relevant information on the economic history of the photography business, see Photographs and Telephone Calls in Sense in Communication.

Take-away message for busy communications executives: Get out of the telecom toilet and get your business purring. Stop sniffing ARPU and start making ARPUR!

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