Subject: near/medium future digital media economics
From: Thomas Lord <lord@emf.net>
Date: Thu, 18 May 2006 11:57:43 -0700
Thu, 18 May 2006 11:57:43 -0700
Warning: This is dense and jargony.


Thesis: The entire publication industry, all media, will be reduced to 
four businesses -- retail, reviewers, librarians, and content creators. 
Primary commercial revenue sources will be from advertising and 
regionally limited public performance (theaters, radio broadcasts, 
one-off presses, juke-boxes, etc) -- and these will be the only 
"commercial use" rights that survive a rationalization of copyright law. 
Finally, on a cultural level, our notion of an authorial work will 
revert to something that more closely resembles the ancient model rather 
than the commodity model we see today.

I take "pro", on this question and here is how I got there:

About linked and annotated libraries of all scanned books, future purely 
digital books, software, etc....

We /are/ there in terms of crude technology that can do it and we are at 
most a few years away from technology that can do it well, in 
decentralized form. It is only and exactly copyright law that puts a 
break on this happening more rapidly.

So what? Well, consider Michael Tiemann's "Metcalf's law" economic 
analysis of FLOSS -- very relevant, I think, to emerging views (e.g. Tim 
O'Reilly) of Web 2.0: "The value of a network is proportionate to the 
square of the number of users." The potential value, therefore, of the 
cross-linked, universally annotatable library is vast. Is copyright law 
enough to lead us to resist that potential value? I would think not -- 
rather, the assumption of such a library should be a dominant factor in 
planning for the next few years. (I say that copyright law is not strong 
enough here because it is unenforcable beyond a certain boundary and, if 
rivals outside of that boundary begin to realize the value of the 
hyper-participatory-library, those inside the boundary will have no 
choice but to adapt by emulation.)

Simultaneously, the need for physically pressed forms of works is 
diminishing /and/ the cost of one-off production of pressed works keeps 
falling. Traditional presses, at least, look to become dinosaurs.

All of this puts the relationship between retailers and wholesalers in 
an interesting position. If physical production becomes an on-demand, 
one-off service, should not retailers bypass wholesalers? Or at least 
demand a more precisely focused service from them? And what would that 
other service be? Review. Retailers are defined, more or less, by their 
scarce resource of "shelf space" (real or virtual) to which they 
congregate customers. How best to fill that shelf space? If all works 
are "in the big library" and equally accessible, there is no need for 
channel relationships with wholesalers. Rather, each retailer will focus 
purely on editorial selection of her offerings for which purpose, 
preferential relationships with reviewers may be advantageous. Because 
of the lowered transaction costs of receiving digital content, retailers 
won't need a cash register for customers leaving the store (other than 
for press costs). Rather, they will have to charge for admission and 
perhaps supplement their income by other means such as advertising.

Finite "shelf space" and aggregated consumers can be designed to 
optimize for the revenue from paying customers and supplementary income, 
or they can be designed to optimize for accessibility by people who 
share a topic interest and intellectual orientation and research need. 
There is a social and practical motivation to sustain human cataloging 
of materials as not-for-profit or cost-center resources. Librarians will 
rely on reviewers and direct relationships with content creators to 
select materials to archive and catalog.

Very few forms of use of works, in the hyper-library, will be 
protectable by copyright as a practical and civil liberties matter. Some 
uses, however, can be strongly protected. A movie theater can easily be 
held accountable for the commercial use of works it displays. An 
advertiser, even on-line, can reasonably be held to account on which 
works he attaches his ads to. Even a retailer, creating a one-off 
pressing of some work (or aggregate or derived work) can be expected to 
track which copyrighted works are being reduced to physical form. We can 
generally group these under the headings of public performance and 
commercial use. And there, finally, is the well-spring of revenues to 
ultimately be directed in the direction of content creators or their 
copyright assignees.

On the cultural level, the hyper-library and network effects suggest 
that no work is sacred and that every presentation is customized 
(although some classic presentations may turn out to be most viewed -- 
presentations and customizations are copyrightable works on their own). 
For example, I may want a copy of Michel Foucault's "The Order of 
Things: An Archaeology of the Human Sciences" but not an ordinary copy 
-- I want one with the marginalia of my favorite three commentators. Or, 
I might want a copy of William S. Burrough's "The Place of Dead Roads" 
but peppered with a series of erotic images of 19th century frontier 
life captured as stills from a movie by my favorite Japanese film 
director. Being pleased with these purchases of pressed works, I might 
myself become a reviewer and offer the instructions for making them on 
my web site. Of the ad revenue associated with these works on my site, a 
portion goes to the creator estates in question. If a third party 
themselves ask for a pressing, I and the creators get portions of that. 
Meanwhile, the question of the /authentic work/ becomes less important 
-- a question of forensics, not commodity. Is my offering the product 
Foucault created? Something else? Some hybrid? Does it matter, and how?

-t



Warning: This is dense and jargony.


Thesis: The entire publication industry, all media, will be reduced to four businesses -- retail, reviewers, librarians, and content creators. Primary commercial revenue sources will be from advertising and regionally limited public performance (theaters, radio broadcasts, one-off presses, juke-boxes, etc) -- and these will be the only "commercial use" rights that survive a rationalization of copyright law. Finally, on a cultural level, our notion of an authorial work will revert to something that more closely resembles the ancient model rather than the commodity model we see today.

I take "pro", on this question and here is how I got there:

About linked and annotated libraries of all scanned books, future purely digital books, software, etc....

We are there in terms of crude technology that can do it and we are at most a few years away from technology that can do it well, in decentralized form. It is only and exactly copyright law that puts a break on this happening more rapidly.

So what? Well, consider Michael Tiemann's "Metcalf's law" economic analysis of FLOSS -- very relevant, I think, to emerging views (e.g. Tim O'Reilly) of Web 2.0: "The value of a network is proportionate to the square of the number of users." The potential value, therefore, of the cross-linked, universally annotatable library is vast. Is copyright law enough to lead us to resist that potential value? I would think not -- rather, the assumption of such a library should be a dominant factor in planning for the next few years. (I say that copyright law is not strong enough here because it is unenforcable beyond a certain boundary and, if rivals outside of that boundary begin to realize the value of the hyper-participatory-library, those inside the boundary will have no choice but to adapt by emulation.)

Simultaneously, the need for physically pressed forms of works is diminishing and the cost of one-off production of pressed works keeps falling. Traditional presses, at least, look to become dinosaurs.

All of this puts the relationship between retailers and wholesalers in an interesting position. If physical production becomes an on-demand, one-off service, should not retailers bypass wholesalers? Or at least demand a more precisely focused service from them? And what would that other service be? Review. Retailers are defined, more or less, by their scarce resource of "shelf space" (real or virtual) to which they congregate customers. How best to fill that shelf space? If all works are "in the big library" and equally accessible, there is no need for channel relationships with wholesalers. Rather, each retailer will focus purely on editorial selection of her offerings for which purpose, preferential relationships with reviewers may be advantageous. Because of the lowered transaction costs of receiving digital content, retailers won't need a cash register for customers leaving the store (other than for press costs). Rather, they will have to charge for admission and perhaps supplement their income by other means such as advertising.

Finite "shelf space" and aggregated consumers can be designed to optimize for the revenue from paying customers and supplementary income, or they can be designed to optimize for accessibility by people who share a topic interest and intellectual orientation and research need. There is a social and practical motivation to sustain human cataloging of materials as not-for-profit or cost-center resources. Librarians will rely on reviewers and direct relationships with content creators to select materials to archive and catalog.

Very few forms of use of works, in the hyper-library, will be protectable by copyright as a practical and civil liberties matter. Some uses, however, can be strongly protected. A movie theater can easily be held accountable for the commercial use of works it displays. An advertiser, even on-line, can reasonably be held to account on which works he attaches his ads to. Even a retailer, creating a one-off pressing of some work (or aggregate or derived work) can be expected to track which copyrighted works are being reduced to physical form. We can generally group these under the headings of public performance and commercial use. And there, finally, is the well-spring of revenues to ultimately be directed in the direction of content creators or their copyright assignees.

On the cultural level, the hyper-library and network effects suggest that no work is sacred and that every presentation is customized (although some classic presentations may turn out to be most viewed -- presentations and customizations are copyrightable works on their own). For example, I may want a copy of Michel Foucault's "The Order of Things: An Archaeology of the Human Sciences" but not an ordinary copy -- I want one with the marginalia of my favorite three commentators. Or, I might want a copy of William S. Burrough's "The Place of Dead Roads" but peppered with a series of erotic images of 19th century frontier life captured as stills from a movie by my favorite Japanese film director. Being pleased with these purchases of pressed works, I might myself become a reviewer and offer the instructions for making them on my web site. Of the ad revenue associated with these works on my site, a portion goes to the creator estates in question. If a third party themselves ask for a pressing, I and the creators get portions of that. Meanwhile, the question of the authentic work becomes less important -- a question of forensics, not commodity. Is my offering the product Foucault created? Something else? Some hybrid? Does it matter, and how?

-t