Replica Bulgaria
The Demise Of Intellectual Property
Three 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 that stated that I am entitled to receive eight% of the income from the sales of the book after commissions payable to distributors, retailers, etc. A few months later (1997), I won the coveted Prize of the Ministry of Education (for short prose). The prize money (a few thousand DMs) was snatched by the publishing house on the legal grounds that every one the money generated right belongs to them because they own the copyright.
Within the mythology generated by capitalism to pacify the masses, the parable of intellectual property stands out. It goes like this: if the rights to intellectual property were not defined and enforced, industrial entrepreneurs wouldn’t have taken on the risks related to publishing books, recording records, and preparing multimedia products. Thence, inventive individuals will have suffered as a result of they will have found no way to form their works accessible to the public. Ultimately, it is the general public which pays the value of piracy, goes the refrain.
But this can be factually untrue. In the USA there’s a terribly limited group of authors who truly live by their pen. Only 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 thought of as principally artistic people. Forced to defend their intellectual property rights and therefore the interests of Massive Money, Madonna, Michael Jackson, Schwarzenegger and Grisham are businessmen at least as abundant as they are artists.
Economically and rationally, we should expect that the dearer a work of art is to provide and also the narrower its market – the a lot of emphasised its intellectual property rights.
Consider a publishing house.
A book that prices fifty,000 DM to supply with a possible audience of a thousand purchasers (sure academic texts are like this) – would have to be priced at a no less than a hundred DM to recoup solely the direct costs. If illegally copied (thereby shrinking the potential market as some people will like to shop for the cheaper illegal copies) – its value would have to go up prohibitively to recoup prices, therefore driving out potential buyers. The story is different if a book prices ten,000 DM to produce and is priced at 20 DM a replica with a potential readership of one,000,000 readers. Piracy (illegal copying) ought to in this case be more readily tolerated as a marginal phenomenon.
This can be the theory. However the facts are tellingly different. The less the cost of production (brought down by digital technologies) – the fiercer the battle against piracy. The larger the market – the more pressure is applied to clamp down on samizdat entrepreneurs.
Governments, from China to Macedonia, are introducing intellectual property laws (below pressure from made world countries) and implementing them belatedly. However where one factory is closed on shore (as has been the case in mainland China) – 2 sprout off shore (as is that the case in Hong Kong and in Bulgaria).
However this defies logic: the market today is world, the costs of production are lower (aside from the music and film industries), the selling channels additional varied ([*fr1] of the income of movie studios emanates from video cassette sales), the speedy recouping of the investment just about guaranteed. Moreover, piracy thrives in terribly poor markets in which 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 massive makers, publishing houses, record companies, software corporations and fashion houses worry?
The solution lurks in history. Intellectual property could be a relatively new notion. In the close to past, no one thought of information or the fruits of creativity (art, design) as “patentable”, or as someone’s “property”. The artist was however a mere channel through that divine grace flowed. Texts, discoveries, inventions, artistic endeavors and music, styles – all belonged to the community and may be replicated freely. True, the chosen ones, the conduits, were honoured however were rarely financially rewarded. They were commissioned to supply their works of art and were salaried, in most cases. Solely with the appearance 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 more huge the market, the more refined the sales and marketing techniques, the bigger the money stakes – the larger loomed the difficulty of intellectual property. It spread from machinery to styles, processes, books, newspapers, any printed matter, works of art and music, films (which, at their starting weren’t considered art), software, software embedded in hardware, processes, business ways, and even unto genetic material.
Intellectual property rights – despite their noble title – are less concerning the intellect and a lot of about property. This is often Huge Money: the markets in intellectual property outweigh the total industrial production within the world. The aim is to secure a monopoly on a selected work. This can be an particularly grave matter in academic publishing where tiny- circulation magazines don’t permit their content to be quoted or published even for non-commercial purposes. The monopolists of information and intellectual products cannot allow competition anywhere in the world – as a result of 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 major monopoly preserving asset). This is often 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 international marketplace, a company can adopt one in all 2 policies: either to regulate the worth of its merchandise to a world average of getting power – or to use discretionary differential pricing (as pharmaceutical companies were forced to do in Brazil and South Africa). A Macedonian with a median monthly income of one hundred sixty USD clearly cannot afford to buy the Encyclopaedia Encarta Deluxe. In America, 50 USD is the income generated in four hours of an average job. In Macedonian terms, thus, the Encarta is 20 times a lot of expensive. Either the price should be lowered in the Macedonian market – or an average world worth ought to be fixed that will reflect an average world getting power.
One thing should be done concerning it not solely from the economic purpose of view. Intellectual product are very price sensitive and highly elastic. Lower costs will be a lot of than compensated for by a a lot of higher sales volume. There’s no other manner to elucidate the pirate industries: evidently, at the right value a ton of individuals are willing to shop for these products. High prices are an implicit trade-off favouring little, elite, select, rich world clientele. This raises a ethical issue: are the kids of Macedonia less merit education and access to the most recent in human information and creation?
Two developments threaten the longer term of intellectual property rights. One is that the Internet. Lecturers, bored stiff with the monopolistic practices of professional publications – already publish on the web in massive numbers. I published a few book on the Internet and they can be freely downloaded by anyone who encompasses a computer or a modem. The complete text of electronic magazines, trade journals, billboards, professional publications, and thousands of books is obtainable online. Hackers even created sites out there from which it is attainable to download whole software and multimedia products. It’s terribly simple and low cost to publish on the Internet, the barriers to entry are just about nil. Net pages are hosted freed from charge, and authoring and publishing software tools are incorporated in most word processors and browser applications. As the Web acquires additional impressive sound and video capabilities it can proceed to threaten the monopoly of the record corporations, the movie studios and so on.
The second development is additionally technological. The oft-vindicated Moore’s law predicts the doubling of computer memory capability every 18 months. But memory is solely one facet of computing power. Another is that the rapid simultaneous advance on all technological fronts. Miniaturization and concurrent empowerment by software tools have made it doable for people to emulate abundant larger scale organizations successfully. A single person, sitting at home with 5000 USD price of equipment can totally compete with the best product of the best printing homes anywhere. CD-ROMs can be written on, stamped and copied in house. A whole music studio with the latest in digital technology has been condensed to the size of a single chip. This will lead to non-public publishing, personal music recording, and the to the digitization of plastic art. However this is often only one aspect of the story.
The relative advantage of the intellectual property corporation does not consist solely in its technological prowess. Rather it lies in its vast pool of capital, its selling clout, market positioning, sales organization, and distribution network.
Nowadays, anyone will print a visually impressive book, using the on top of-mentioned low cost equipment. But in an age of information glut, it is the promoting, the media campaign, the distribution, and also the sales that verify the economic outcome.
This advantage, however, is also being eroded.
First, there’s a psychological shift, a reaction to the commercialization of intellect and spirit. Inventive folks are repelled by what they regard as an oligarchic institution of institutionalized, lowest common denominator art and they are fighting back.
Secondly, the Net could be a huge (two hundred million individuals), truly cosmopolitan market, with its own selling channels freely obtainable to all. Even by default, with a minimum investment, the probability of being seen by surprisingly large numbers of consumers is high.
I published one book the traditional approach – and another on the Internet. In 50 months, I’ve got received 6500 written responses regarding my electronic book. Well over five hundred,000 folks scan it (my Link Exchange meter registered c. two,000,000 impressions since November 1998). It’s a textbook (in psychopathology) – and 500,000 readers may be a lot for this type of publication. I am therefore happy that I’m not certain that I can ever contemplate a traditional publisher again. Indeed, my last book was published in the very same way.
The demise of intellectual property has lately become abundantly clear. The recent intellectual property industries are fighting tooth and nail to preserve their monopolies (patents, logos, copyright) and their value benefits in producing and marketing.
But they’re faced with three inexorable processes which are possible to render their efforts vain:
The Newspaper Packaging
Print newspapers supply package deals of cheap content backed by advertising. In other words, the advertisers get hold of content formation and generation and the reader has no alternative however be exposed to industrial messages as she or he studies the content.
This model – adopted earlier by radio and television – rules the net currently and can rule the wireless web in the future. Content will be made on the market free of all pecuniary charges. The patron can pay by providing his personal knowledge (demographic information, consumption patterns and preferences and therefore on) and by being exposed to advertising. Subscription based mostly models are certain to fail.
Therefore, content creators can benefit solely by sharing within the advertising cake. They can realize it increasingly difficult to implement the previous models of royalties got access or of possession of intellectual property.
Disintermediation
A ton of ink has been spilt relating to this vital trend. The removal of layers of brokering and intermediation – mainly on the producing and marketing levels – is a historic development (though the continuation of a long run trend).
Contemplate music for instance. Streaming audio on the web or downloadable MP3 files will render the CD obsolete. The web also provides a venue for the marketing of niche products and reduces the barriers to entry previously imposed by the need to engage in pricey promoting (“branding”) campaigns and manufacturing activities.
This trend is additionally likely to revive the balance between artist and the commercial exploiters of his product. The terribly definition of “artist” can expand to incorporate all creative people. One can ask for to distinguish oneself, to “whole” oneself and to auction off one’s services, ideas, merchandise, designs, experience, etc. This is a come back to pre-industrial times when artisans ruled the economic scene. Work stability can vanish and work mobility will increase in a very landscape of shifting allegiances, head searching, remote collaboration and similar labour market trends.
Market Fragmentation
During a fragmented market with a myriad of mutually exclusive market niches, client preferences and marketing and sales channels – economies of scale in manufacturing 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-based corporation is a late response to those trends. The mega-corporation of the long run is more probably 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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Sonata Arctica – Replica ( live in Kavarna, Bulgaria, 15.07.2011)
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