Re: Intellectual Property (was Re: the future of art)

Greg Ritter (gritter@SATURN.VCU.EDU)
Mon, 15 Jul 1996 09:41:22 EDT

jp may rhetoricized and composed the following:

> >Those printed, recorded objects have material value because of
> >the material resources that go into putting the information
into
> >a material form.
> >
>
> As far as I am aware ... although I may be totally wrong ...
the 'actual
> physical' cost is already very, very, very, very, very low.
> Much as, say, currency (money) has little intrinsic value in
and of it's
> paper self.
> As I understand it, the actual physical production cost of
Prince' new
> 'Chaos & Disorder' album on CD is cents - like 15 - 30 cents.

1) A compact disc is a *digital* form of reproduction, so you've
just supported my point. I doubt the physical production costs of
an audio tape, video tape, or LP are remotely comparable. And I
know from first-hand experience editing print publications that
the cost of paper & printing has almost tripled in the last
decade.

2) However, the means of digital reproduction are still, for the
most part, centralized. The market is dominated by giants like
Sony, for example, which controls large market shares of both
reproduction equipment *and* the content--how's that for a
vertical monopoly? Even wonder why you can get an audio tape
recorder for $100 and a VCR for $200, but DAT (Digital Audio
Tape) has been all but kept off the mass market, as have CD-
recorders? Answer: because the ability of the average person to
use digital recording media to perfectly copy information would
cut into the giants' profits.

3) Now imagine this future: computers develop to the point where
we have enough bandwidth, processor speed, RAM, and storage
capacity to plug the stereo into the PC, capture Prince's new
album, and make it available via the net. The computer hardware
manufacturing industry has no vested interest in protecting
Sony's copyright, so it's doubtful to me that they will keep
powerful computing like that off the market (and I doubt they
could anyway, since computing needs rise to meet the increases in
computing ability).

4) Now, after the initial investment in the equipment, how much
does it cost to reproduce Prince's album? One-quarter of a cent?
One-eighth of a cent? However much electricity is used to
transmit the information over fiber optic....

One-quarter of a cent vs. 15 cents? That's a decrease on the
order of 60 times...

> The big cost of the project, and the reason I just payed $12
for it is the
> massive, enormous salaries of the NPG and the studio in South
Beach, etc.,
> of the album photographer, AFKAP's Agents, chefs, hangers-on
and so on and
> so forth.

And they can pay massive enourmous salaries because there's no
real threat of mass plagiarism, hence they know they can charge
$12 and the consumer will pay it. The consumer has no choice.

Now, imagine someone else--not the label--could make the album
available to the consumers for $4. Or for free! Would the
consumer still pay $12 for the album? Would the label still be
able to pay the enourmous salaries if they couldn't get $12 for
the CD?

The pay enourmous salaries because they control the market. If
they can't control the market (i.e., if mass plagiarism is cheap,
simple, efficient, and fast), then they're going to lose their
market share.

> Movies .. true cost of making a good print is high, very
roughly $1000 a
> pop .. so say $2-4 million for a typical set of prints made for
a
> wide-opening blockbuster these days ... so thats $2 M .. but
that is
> pretty low, I mean it is a triviality compared to say a
typoical ultimate
> expense of $200 million to make the movies and a typical rental
of $500
> million.
> Television .. I am not so familiar with the costs but again the
cost of
> making a season's worth of episodes of Friends (see other
post!) is _almost
> entirely_ talent costs .. from make up artists to Courtney's
hairdresser
> ... and thet overall cost is huge ..
> .. whereas for NBC to actually, I suppose beam via satellite
the programme
> to the various affiliates .. that cost is trivial.

Like I've said in previous posts, creative works based on
individual performances will be the least hurt, which would
definitely include live dance, theater, concerts, etc. Likewise I
doubt film will be severely damaged since I think people *enjoy*
the physical act of going to the movies. There's something
immensely difference about watching a movie in a dark theater on
a 50-foot screen with 500 people opposed to watching it in your
living room with 5 friends, even on a 50-inch screen.

I'm not sure about television. I didn't think broadcast TV would
hang on as well as it has in the face of cable, but I guess
that's attributed to the fact that most original work on cable is
crap with lousy production values to keep the costs down (for
lack of a decent advertising base (which in turn is a result of
cable channels' niche marketing)).

Video rental will be history. Video-on-demand through your cable
system will probably kill it before digital plagiarism would,
though. Digital plagiarism might kill video-on-demand, though.

The media hardest hit will be anything that's currently in print-
-text, photo, graphic design, etc. And the *vast* majority of our
information still resides in print form.

> { And the cost of a huge internet-web-site -- say CNET's (50
full time
> staff) or HOTWIRED (How many Taylor?) or the IBM's Olympic site
($10
> million so far) is certainly no closer to zero. }
> Have you considered this ?

Have you considered that the market for websites is brand new?
Maximum of what? Four years old? And it hasn't even approached
being a mass market until this year.

> >Digital technology requires far less in the way of material
> >resources (practically nothing except a digital storage device
> >like a hard drive),
>
> Why did IBM spend $10 M on the olympic web site so far? (Or a
few mil on
> their own web site) Why do I regularly charge clients $2 -$100
k for a
> site ?

Several reasons:

1) Like I said above, the market is new, thus there is little
competition. Low competition = exorbitant prices. Give it 20
years.

2) Cost of the technology. 10 years ago $2000 got you a 512K Mac
with, what?, 16 mHz and a 400K floppy? If that. Now $2000 gets
you 16 meg of RAM, 120Mhz, 4x CD-ROM, 1.2 gig HD, 14.4 modem,
etc. Another 10 years and the technology will have increased its
effectiveness another thousand-fold. Another decade...who knows,
for 2000 bucks you get your own private AI?

One of the reasons for high prices on websites is the technology
required to do fancy rendered graphics, to keep the site running
fast, to manage tens of thousands of hits a day, etc. As the the
tech develops it becomes cheaper. As it becomes cheaper, it
reaches the hands of more people. Look how many people can do
their own typesetting now via desktop publishing, compared to ten
years ago. Sure, sure, they do lousy, crappy design work, but
that's because creative work is skilled labor. *Plagiarizing*
creative work is unskilled labor, though!

3) The cost of websites is an indirect result of the IP laws. My
guess is IBM shelled out $10 million for a website because they
contracted out to somebody like Chiat-Day to design it, and
Chiat-Day charges through the nose. Why do they charge through
the nose? Because they have high-price graphic designers. Why do
they pay their designers so much? To acquire the unique rights to
whatever that designer creates. Why can they acquire the unique
rights? Because it's illegal for anyone else to use that
designers work? Why can that illegality be enforced? Because the
means of reproducing that designer's work are centralized. How
does that equate to enforcement? If it's rare to be able to mass
replicate a creative work it's easier to control; if it's common
it's hard to control.

And there we are, back to square one.

Re: enforcement, I like the LA Riots example I used earlier: if
only 10 people are looting a store, it's easy for the cops to
stop them. If the whole fucking city is a looting each other,
there's nothing the cops can do but stand at the perimeter and
watch it burn.

(Total aside: wouldn't the "LA Riots" be a great name for a
sports team?!)

> >and it puts the capability of perfect,
> >infinite reproduction and instantaneous, worldwide
distribution
> >in the hands of *far* more people, hence the decentralization.
>
> .. but I can see what you mena there of course.
>
> Mind you is that TRUE .. ??? or a total MYTH ?

*Today* it is mythical. *In the future* it may be true.

I believe that if the current curve of development continues we
will reach a point where digital reproduction technology, whether
via computer, DAT, CD-recorder, some new medium (HoloCubes?), is
as commonplace as Walkmans. And I think the cross-over of phone,
cable, and internet companies into each other's domain will
eventually lead to some kind of interactive digital network that
goes into almost every home. Combine digital reproduction in
everyone's hands with an interactive digital network in
everyone's home, and, if you ask me, no one in their right mind
would pay $12 for a CD.

Of course, this scenario applies mainly to developed countries.
My default mode is talking about developed countries, but it's
good to remind myself and others that what happens in the First
World doesn't necessarily follow in the Third World. I can see
the information gap widening in an ugly way.

> Your average "real" web page "viewer", if there is such a
nascent thing, is
> only interested in the "real" web sites, of which there are
about 10
[snip]
> No-one (essentially) (other than us arcane Original
> Internetters) is interested at looking at me or Greg's Little
Interesting
> Web Page ..
> folx want to see "real" web pages with "huge" amounts of
> information produced by Lots Of Staff spending Lots Of Money.
> And again the huge costs of running such a 'real' web site make
it a game
> only for the big corporations, and the artists they choose to
'patronize'
> in that sense.
> Your thoughts ?

See above regarding costs. I don't disagree that 99.99% of
personal websites are dull, which is why there will probably be
even bigger business for services that filter the web to your
customized preferences in the future. As the technology becomes
more affordable, as it becomes more automated, and as as it
becomes easier to "copy Microsoft's website and insert the
GregSoft graphics" (i.e., the kind of plagiarism that worried Deb
and began this whole thread), we will certainly see a reduction
in the costs of 'real' websites and, thus, an increase in the
number of 'real' websites out there.

> When you buy the latest Tom Clancy thriller for $5, or pay your
$7.50 for
> the latest Arnie movie, almost none of that money (essentially
'none') is
> going into the physical cost of production of a paperback or CD
or what
> have you.

Nope, most of it is going into the pockets of CEOs, editors,
printers, designers, writers, etc. The reason the money can go
into their pockes is because they control the means of
production. If they can't control the means of production, they
can't profit from the product, hence they don't make the money.

> the cost of minting CDs is "trivial in relation to the product
cost, but
> non-zero".

And the cost of sending information over the wires is trivial in
relation to the cost of minting CDs.

> {In fact it is probably more! Ultimately, running millions of
miles of
> fiber optic is not really a cheap undertaking in any sense. A
trivial
> little retail distribution system for bits of plastic CDs is
easy, but
> millions of miles of glass and millions of 2501 routers is
really quite
> hard.}

The same could be said for the phone lines and TV cable, but I
still never pay more than $30 a month each for basic phone and
cable service, nor would I expect to every pay more than $30 a
month for basic internet service...and, probably in the not-too-
distant future, I'll be able to get all of those services from
one provider for one fee.

Running the cable is not a cheap or easy undertaking, but 100
million hook-ups paying $30 bucks a month (i.e. $3 billion
dollars a month, $36 billion dollars a year) would probably pay
off the initial investment in just a couple of years (as it did
with the cable-TV industry).

Your main points seem to be:

> So my point is .. isnt what you described there ALREADY,
unconncted to any
> issues of digitality or the internet?>
>
> What you are saying "WILL BECOME" the case .. "IS ALREADY" the
case. I
> think. Perhaps ?

Nope, not even remotely. The threshold will come about when the
means of cheap digital reproduction and distribution are in the
hands of people with PCs, DAT decks, CD-recorders, and a high-
bandwidth computer network connection. Still several decades off,
IMO. (Which is why I still have a chance to make it big as a
writer!)

--
Greg Ritter
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   ritter@urvax.urich.edu
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