Catching a tiger by the tail: Patents could destroy the software business

The software business is working itself into a situation where its economics are built on software patents. This will be catastrophic for investors unless such patents are constrained to be of high quality, limited scope and – especially – short duration. If this doesn't happen, licensing costs will dominate the business, and pure software companies will be at the mercy of patent trolls.

The drive to software patents is based on the argument that a knowledge-based industry needs a way to trade knowledge, and thus needs intellectual property. David Kaefer of Microsoft says it well: “Software is built on the shoulders of giants -- no one can build the whole thing. Patents are a property right that allows the innovation to be exchanged”. [1]

This logic is built on the fallacy that the commodities to be traded behave just like the physical goods we’re used to buying and selling. Our models of trade are based on exchanging goods and human services that are exhaustible and rivalrous, because they are essentially tangible. If you give me $20 for the service of cleaning your gutters, you no longer own the money; and I can only clean one client’s gutters at a time. Innovations are knowledge goods. Your use of my idea doesn’t limit another person’s ability to use it, and that idea is infinitely duplicatable. George Bernard Shaw summed it up well:

If you have an apple and I have an apple and we exchange these apples then you
and I will still each have one apple. But if you have an idea and I have an idea
and we exchange these ideas, then each of us will have two ideas.

One may object that the patent system has worked well for centuries; what’s suddenly the problem? Patents have always been on innovations, and thus we have a system that works for non-rivalrous intangibles. What’s changed is that software goods are not wrapped in matter, and it’s matter which is at the root of the metaphor of trade and exchange on which our economy is based. Software is pure ideas, and can be exchanged without being wrapped in stuff. Further, there are far fewer limits on the number of ideas that can be added together than on the number of components that can be added together to make a physical product [2]. I would predict that the number of patents per product increases as the knowledge content of the product increases; there are many more patents entailed in a $100 copy of Windows than in a $100 food processor.

Software is cumulative, as the Y2K experience has shown. Most software products beyond their first release are not only built on relatively ancient algorithms, but in fact are accreted the ancient code that implements those algorithms. Advancing the product is a additive process; little is taken away once it is written. Contrast that with physical products: a new and improved kind of soap can be patented, but one doesn’t have to license all the preceding patents in order to produce the new one. [3]

One of the assumptions implicit in the industry’s world view, and explicit in David Keafer’s contention, is that companies will cross-license with each other to obtain the knowledge inputs that they require without paying for it. This has clearly worked to date; in most industries the participants create license pools or build a web of cross-licenses that enable them all to operate. In the brave new world of knowledge goods, though, everybody is a software company. It will be impossible to draw boundaries around the industry players who’ll need to cross-license with each other, since everybody will be producing software innovations, though most will not sell software. Companies that focus on selling software will be worse off than anyone else – they will have to cross-license with everybody else.

Much has been written about “patent trolls”, those companies who live to invent, and who license their patents to productizers. There are fears that the trolls will extract fearsome tolls from those who want to build products. Their disproportionate power is a consequence of the disproportionate weight that has been given to the inventive step in innovation.

Many in the software industry argue that patents are necessary to guarantee investment in innovation. This only follows if patents incent the most critical step in the process. Let’s unpack the term “innovation”. It consists of the sequential steps of invention, synthesis, execution and distribution, that is, (1) coming up with an idea; (2) composing a number of ideas into a novel product concept; (3) building the product; and (4) putting the product successfully into the market. Patents reward Step 1; however, most of the value is generated further down the chain, in synthesis, execution and distribution. Some might describe patents as the keystone that hold together the arch of innovation. I think that exaggerates the importance of invention. Patents privilege a necessary but by no means sufficient step in the process of bringing new products to market.

If hundreds or thousands of ideas have to be licensed in order to ship a new software release, pure software companies will find that their input costs balloon, especially if the licensors are in industries unrelated or hostile to them, and if inventors are able to charge prices out of proportion to the importance of inventions in the innovation process.

Still: to the extent that patents can be used to anchor innovation transactions, they are useful. However, they are scaffolding rather than a keystone. They can be removed once the structure is complete. Hence, short patent terms are essential. The term of a patent should bear some relation to the rate of change in an industry; the software industry advances rapidly. Short terms are particularly important in software, where the development of a product is cumulative. By all means allow innovators to protect the new icing which makes their cake special; but allow the lower layers to pass into the public domain so that others can also innovate in making icing.

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[1] The arms race, Economist, Survey of patents and technology, 22 Oct 2005

[2] There are surely limits to size of a given piece of software, as innumerable software projects who’ve missed their deadlines have demonstrated; Microsoft’s difficulties in shipping the Longhorn release of Windows is one in a long line of examples.

[3] For example, Lever 2000 bar soap is covered by patents 4,695,395 and 4,663,070.

Science today, gone tomorrow

Christopher Ireland asked me a wonderful question a few days ago: “Of all the facts and principles that science currently believes to be true, which do you think are most likely to be disproved in the next 50-100 years?”

There is more up for grabs in the sciences than some people might think. Christopher explains why this matters:

“I'm interested because I believe social behaviors are strongly influenced by
our collective scientific beliefs. There's a lag time (a long one) while the
science filters down to the population, but once it becomes part of people's
general sense of reality, it changes their behavior in subtle, but pervasive
ways.”

Here are my guesses:

Brain function. There's a lot of work going on here, and it's amazing how little we know. fMRI data is just beginning to be integrated with static imaging, and the scale of analysis is large - patches of brain tissue centimeters across. As the resolution improves, a lot of old ideas will have to be thrown out; they may improve the standard "functional areas" analysis of where how information processing happens.

Cosmology. The standard model of cosmology is creaking, but nobody really knows what to replace it with. "Dark matter" is a symptom; it's essentially a fudge factor in the model invented to make the the universe expand at observed rates. I suspect we'll also see some change in more mundane fields like stellar and galactic models; they're constantly being stressed by new data. The Big Bang model could be discredited in a lot less than fifty years. Who knows, some people are even muttering that Newtonian mechanics is incorrect.

Climate chemistry. There's so much attention here, and there are so many layers of analysis involved (that is, from molecular chemistry to bulk transport at the order of kilometers), that I expect "facts" greenhouse mechanisms to be restated. It wouldn't surprise me at all if other chemicals beyond CO2 and methane turn out to be critical in global warming. I'm not saying that global warming will be found to be incorrect, just that the mechanisms we now assume to be true could well wrong.

Geology. Plate tectonics has stood the test of time but increasingly fine-grained new data could undermine the heuristics that are used to explain earthquakes. We know so little about the dynamics of the mantle, let alone the core, that we might have a very different view of crust activity in a hundred years.

Materials science. This is another multi-scale field, like climate. There is a lot that's not understood between the Angstrom scale of atoms, the nanoscale of new materials, and bulk behavior. It's not been a fashionable field, but it's quite possible that some basic rules of thumb, eg in tribology, will come to be rewritten.

Biological classification. We know almost nothing about bacteria, relative to their importance. For example, the human gut houses 10 to 100 trillion microbes from 500 to 1000 species - more than 10 times the number of cells that make up the human body. The current three domain classification of life (eukaryotes, bacteria and archaea) could well turn out to be wrong.

S., who’s a lapsed physicist just like me, adds these thoughts:

Nutrition - or, more generally, "how to be a fit person". The constant discovery of new trace substances (aspirin, omega-3s, etc.) that you need to be truly healthy suggests the kind of explosion of epicycles that precedes a paradigm shift. I anticipate the discovery that there are multiple different models of a healthy lifestyle, and the "eat fruit and vegetables and lean meat, drink exactly 4oz of red wine a day, and exercise 90 minutes a day" is only one of these. Your model may be a matter of choice, or may be ultimately constrained by ? gut bacteria, level of social interaction, mitochondrial DNA, level of something in the womb, aspect of Saturn at your time of conception...

Quantum mechanics - your basic Schrödinger equation. This is a bit of a cheat on my part because nobody understands it. However, there's a swirl of ideas around the arrow of time, the classical limit of quantum mechanics, and Bell's inequality crying out for a major advance. Were I cleverer, this is what I would be working on.

Avoiding Armageddon – Why content companies will turn against Intellectual Property

While the two sides in the intellectual property rights debate often argue at cross purposes, or fulminate about secondary issues [1], they are divided on a fundamental issue: whether scarcity of knowledge goods is desirable or not. The “oligarchs” [2] believe that without scarcity they cannot make money, and that without money there is no incentive to create new knowledge. The “anarchists” believe that culture can only flourish if knowledge is abundant and freely available; innovation doesn’t need incentives, just the oxygen of other ideas.

The oligarchs are winning against the anarchists, and they’re set on the path of “propertization” of all useful knowledge. Rather than being good for their businesses, I believe it will prove catastrophic.

Both sides believe that the growth of knowledge is essential to human well-being. However, the oligarchs rank economics ahead of culture, and the anarchists do the reverse. Their fortified debating positions remind me of nothing as much as Industrialists vs. Environmentalists. The argument about knowledge can be turned on its head, just as Hawken/Lovins [3] and McDonough/Braungart [4] did for the environment by arguing that sustainability was good business.

The oligarchs (or King Content, if you like) seem to believe that information is property which needs to be locked down with DRM in order to have a sustainable economy. They are willing to pay the price of buying all their knowledge inputs in order to achieve this [5]. I don’t believe this makes sense for knowledge goods; unlike physical property, knowledge doesn’t (always) degrade over time, and its price does not decline. Since knowledge is so hard to measure, and since the physical attributes of goods have to date been a viable proxy for their knowledge content, economists have been able to ignore the overwhelming scale of knowledge content in our economy. If it is all turn into traditional property, businesses will find themselves hamstrung beyond imagination.

A substantial knowledge commons may be useful to the anarchists/copyfighters; however, it will be essential to the oligarchs [6]. Once this is realized, content companies will be bigger champions of Fair Use than copyfighters. I'm not arguing that they will swear off the concept of intellectual property, but that they will not follow the logic of "all property is the same" to its ultimate point. (Yes, I know, the title of this post was misleading - but it got you to read this far, didn't it? Sorry.)

Conversely, content anarchists will find themselves demanding protection of their cultural production, and working hard to prevent its incorporation into commercial products. It’s a replay of the “Keep My Software” philosophy that led to the GPL, and one can see it at work in the Share Alike condition in the Creative Commons license. Who knows, some may even learn to Stop Worrying and Love DRM.

After all the dust has settled, we’ll find the players at the opposite sides of the argument from where they began – or, perhaps more hopefully, peacefully coexisting in the middle ground.

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[1] Side issues include content companies insisting on total control over all content and all decoding tools at all times, and activists insisting (in an amusingly conservative way) that new content should play anywhere on any of their devices in any way they like, just like the old stuff did. I believe this is secondary because it is an argument over product features, which will evolve as the market matures.

[2] Siva Vaidhyanathan introduced the oligarch/anarchist antithesis in his book The Anarchist in the Library: How the Clash Between Freedom and Control is Hacking the Real World and Crashing the System (2004). His definitions: “Anarchy is a governing system that eschews authority. Oligarchy governs form, through and for authorities.” Most of the players in the debate are neither anarchists nor oligarchs in the strict sense, but they do shade towards the two ends of the spectrum. I believe the distinction is useful starting point, but there are never really only two sides in an argument. Vaidhyanathan argues, rightly I believe, that “[the] question for us in the twenty-first century should not be choosing anarchy or oligarchy but constructing and maintaining systems that discourage both”.

[3] Natural Capitalism: Creating the Next Industrial Revolution (2000) by Paul Hawken, Amory Lovins, L. Hunter Lovins

[4] Cradle to Cradle: Remaking the Way We Make Things (2002) by William McDonough, Michael Braungart

[5] Even a staunch copyfighter like Yochai Benkler has argued that increased property rights will advantage content owners over non-market actors; see his paper The Commons as A Neglected Factor of Information Policy at the 26th Annual Telecommunications Research Conference, Oct. 3-5, 1998. I’m claiming (but have not demonstrated) that his conclusion is based on an under-estimate of the cost of purchasing information inputs. A related threat to content companies is the “patent blackmailer” – small companies that exist merely to develop and patent inventions which they then sell to larger players at a suitably (in)opportune moment.

[6] I will argue in another post that a mix of public and private property increases the value of both.

Peak Oil meets Global Broadband

The Peak Oil theory holds that global oil production will peak soon, and that as production declines, energy prices will increase rapidly. This will lead to major social disruption, including radically more expensive transportation. Let’s stipulate for the purposes of this scenario exercise that the Peak Oil proponents are right.

Activities that require moving physical objects around will be hurt. Shipping a product directly to you from China in a retail FedEx package will be much more expensive than buying a locally produced good. Suburbia, which is premised on cheap gasoline, will crumble, and flying across the country for Thanksgiving will be a thing of the past.

On the other hand, moving information will be essentially free thanks to global broadband networks. The stuff of knowledge work will move easily: phone calls to tech support, medical x-rays, software that needs to be rewritten, contracts to be drawn up and reviewed, and so on.

Our sense of space will be warped: relatively speaking, distances crossed by bits will shrink, and distances crossed by atoms will grow.

This scenario exercise is more than just a good topic for a term paper. It highlights the different dynamics of the two scarcities that lie at the heart of a knowledge economy: energy and brain power.

One implication is “Move, then customize”. Materials will be moved in bulk, ie cheaply, and tailored to the customer as close to them as possible. Micro-manufacturing will become common, and matched to local power generation from non-fossil energy sources. People will keep devices a long time, but upgrade the software often.

There will be marked physical differences between communities, as they produce and consume tangible goods locally. You’ll be able to recognize where someone’s from by how they dress. On the other hand, entertainment and convictions will move more freely where they’re not constrained by local conditions. Expect more culture wars about abstract notions like intellectual property rights and freedom of expression.

Knowledge processing can be easily off-shored, but not the production and manipulation of stuff. Since humans need physical proximity for creativity, places where many brains can be concentrated will have an advantage: Beijing, Bangalore, and the Bay Area, for example.

Second tier cities will suffer, since their best-paying jobs will be knowledge work that will be undercut by off-shoring. For example, Washington State has forecast the occupations with the fastest annual growth rate in the period 2002-2012. Here they are in order of decreasing income (estimated average wages indicated at some inflection points):

Lawyers ($100k)
Computer Software Engineers, Systems Software
Computer Software Engineers, Applications
Computer Programmers
Registered Nurses ($60k)
Computer Support Specialists
Carpenters
Construction Laborers ($35k)
Dental Assistants
Hairdressers, Hairstylists, and Cosmetologists
Security Guards
Landscaping and Groundskeeping Workers ($25k)
Receptionists and Information Clerks
Janitors and Cleaners, Except
Maids and Housekeeping Cleaners
Laborers and Freight, Stock, and Material Movers, Hand ($24k)

Note that the top four are knowledge jobs which could relatively easily be provided at a distance. The jobs that aren’t subject to out-of-region competition are the low-income ones at the bottom of the list.

Ten steps to saving the planet

I don't normally simply link to news stories, but Dave Reay's "Your Top Ten ways to take on global warming" in the New Scientist (10 Sep 05) is so good that it deserves mention.

In case the story had been archived behind the subscription wall by the time you click on the link, here's the list in short:

1. Dress for the weather
2. Get out of the car
3. Get into composting
4. Fly less, especially short haul
5. Change your driving habits - or better still, your car
6. Remember the appliance of science
7. Avoid flatulent and jet-setting food
8. Learn the 3 Rs
9. Improve your ethics at work
10. Go green at the final checkout

The annual household savings for each of these steps is around 1 tonne of CO2. As I blogged a while back, that's what a terabyte of disk storage costs the atmosphere. In the US, every person emits over 20 tonnes of greenhouse gas every year.

Getting their priorities right

To alleviate some the unrelieved seriousness of recent posts, here's news from Europe courtesy of New Scientist:

"A beer mat that knows when a glass is nearly empty and automatically asks for a refill has been created by thirsty researchers in Germany.

"Andreas Butz at the University of Munich and Michael Schmitz from Saarland University came up with the idea while out drinking with their students."

I somehow can't imagine this happening in the research universities of the Puritan States of America.

More from CNN.

Money? No thanks!

Matt Marshall reports on start-ups that don't need VC money:

"Many Internet entrepreneurs don't need the cash, because they're building
products cheaply — using open Web technologies, often with two or three developers. "

"SugarCRM's software was done dirt cheap. Roberts and his small team worked out of their homes, chatted through the night via computer on Yahoo!'s Instant Messenger and met only once a week at a small borrowed office. Within four months, they had launched a test version and had 1,000 people downloading the software."

SugarCRM took the money anyway, because one of their VCs had invested in Salesforce.com, and they needed his connections. It worked, it seems; the CEO claims that ten companies have switched away from Salesforce.com. In this case, VC stood for "Venture Connections".

The traditionally cited "factors of production" are land, labor, and capital (and coordination/entrepreneurship, some say). It's clear that in the case of software, know-how matters more than any of those. One might say that the ability to innovate derives from "human capital", that is, education and training. I'm not yet convinced, since neither the inventive urge nor the common knowledge context in the Internet community has the properties of physical capital. Regardless: the assets needed for knowledge production are scant, and this puts in question the role of providers of such assets.

There is often too much money chasing too few deals in the VC world; as more businesses are primarily knowledge-based, this problem will get worse. The key resource entrepreneurs require will increasingly be just social, not financial, capital; they always needed it in the past, but VCs were able to package it in money and make a $$ return for their investors. This is a case where knowledge is losing its husk of money; I argued in Why you should care about CPCM that digital media are a case where information has lost its husk of matter.

The obverse point is that the barriers to entry are very low. If a newbie and three friends can take customers away from a market leader after four months' work, someone else can do the same to them. If the products are intangible, churn will be great. The barrier to entry will be as intangible as the threat. Brand will matter: the loyalty and trust that users have in a provider who buffers them from too much change.

Brain Fitness Clubs

For a society that runs on intellect - this is the Information Age, they tell us, and We're All Knowledge Workers Now - it's curious that Brain Fitness Clubs haven't swept the nation. Honing and toning the body is a perennial fashion phenomenon. Yoga is big this year; last year it was Tae Bo. Beautiful Minds only apply to crazy economists, but everybody aspires to a Beautiful Body.

It's medically accepted that "use it or lose it" applies to the mind as well as the body. A regular program of training would improve mental performance just as it helps with physical well-being. It's easy to imagine an Oprah-ready offering; one can re-use all the tricks that health clubs have developed, like fitness assessments, group work-outs, personal trainers, expensive equipment, and a range of activities tailored to every taste. (There won't be much of a market for spandex accessories, though, and the top practitioners won't be very telegenic.) All it needs is a charismatic entrepreneur who's smart, sexy and a super-seller.

Mental fitness is already established in geriatrics, where Early Boomers buy what it takes to stave off the debilities, mental as well as physical, of old age. Cognitive training can reverse cognitive impairment in many seniors.

The mystery is why it hasn't shown up in the mainstream. Perhaps people feel that their work gives them enough mental exercise, and that they couldn't bear to do any more. However, in the days of farm labor, workers would turn to sport over the week-end and dances in the evenings.

Perhaps it's the association with school. Most people hated school, and mental training sounds too much like being back in class.

Perhaps its the belief that one doesn't need to learn how to think. We all know how to think, just like we know how to breathe and walk; we don't need classes on how to walk around, do we? (Actually, we do; cf. the Alexander Technique.) Sure, occasionally we need some one-off training in a new technique, but after that it's just application - right?

Western disinterest in regular training and study with a teacher of one's craft has always perplexed me. It is taken for granted in many Eastern traditions, whether in martial arts (the craft of killing people) or meditation (the craft of cultivating the mind).

Last but not least, it could be that the term "mental health" in fact connotes mental illness with all the stigmas that entails, whereas "physical health" is something that's a good in itself.

Currently, mental fitness is either a private, personal activity (crossword puzzles, sudoku) or a social one grounded in the humanities (book clubs, philosophical discussions).

However, outsourcing and offshoring are rubbing American noses in the prospect of being put out of their job by smart young aliens. It won't be long before a canny entrepreneur figures out how to franchise getting yourself a supple and sexy mind. Some elements of the offering:

• Meditation to increase concentration and creativity
• Memory training and competitions
• Strategy games - remember the old guys on the sidewalk playing chess or go?
• Mind-body combo activities like combining two senses, or doing complex tasks with your non-dominant hand
• Equipment - expensive hardware to make you feel your subscription is buying something real, e.g. mind-controlled video games (overview)
• "Circuits" - a pre-planned sequence of activities from the above list

See you down Sand Hill Road!

Buying, finding, friends and fun

EBay’s acquisition of Verisign’s payment processing business takes another chip out of traditional banks’ defenses. It seems to be more than just a PR alliance, given the purchase and the synergy with Paypal.

I’m intrigued to see a market maker becoming a banker. A market-maker is often has to be a guarantor of liquidity, and so it’s in a good position to clear payments too. I can’t think of historical precedents, but then I don’t know much financial history. None of the traditional banks have bought traditional exchanges (or vice versa) as far as I know.

This is part of the “horizontalizing” of computing infrastructure driven by the web architecture. It’s no longer a vertical layering of platforms and apps, but a web of adjacent functional categories. Two obvious centers of gravity:

• How you find stuff on the web: lead competitors Google and Yahoo. Key assets: search technology and page view monetization.
• How you buy stuff: eBay and Amazon. Key assets: inventory and user-produced content.

Then there are two more which are more debatable:

• The “how you entertain yourself” category: Yahoo, Apple, Real. The assets are media deals and user experience.


• The “how you hang out with other people” category. I lump all communications in here from IM and Skype to Friendster and MSN Spaces; the key assets are reputation and buddy lists. It’s not clear who the leaders are here; in IM it’s AOL vs Microsoft and Yahoo.

Application programming interfaces will be harder to monopolize in this scenario than in the vertical one. Since the major categories are webbed together, there are more interface paths to control than simply apps-to-OS. The lead players in one constellation are often strong in others; for example, Yahoo is #1 in content and #2 in search. The Number Two player will always be willing to give away functionality in when they’re not on home turf in order to undermine the leader; in turn, they'll be undermined by that leader encroaching on their turf. The end result will be a two or three confederacies that span multiple centers of gravity, eg Google-AOL-Real vs. Yahoo-Amazon vs. eBay-Microsoft.

The value for developers will be in bridging between the centers of gravity. The classic case of http://www.housingmaps.com/ in fact sits between the “find stuff” and “buy stuff” constellations (Google and Craig’s List, respectively). They will have to deal with multiple possible combinations. It’s likely that individual developers will align with one confederacy, though their loyalty will shift as the constellations evolve. This is a good opportunity for tools makers, but inefficient for developers and frustrating for those with dreams of market dominance.

eBay becoming a banker signals the maturity of the web, and the likelihood of more regulation. The main players in regulating the internet in the US have been the FCC and the FTC, and it’s mostly been about communications (VOIP, law enforcement access, spam). The eBay action begins to lure in the Federal Reserve. International regulators will get even more involved once money flows across borders. Content and communications are pretty important, which is why governments are making a play for ICANN, but money is where the action really is.

As always, it’s striking that all the names are American (all the more so now that Skype has been swallowed by eBay). Asia and Europe are now on a par with the US on internet use (stats), and the mystery of where their champions are becomes more striking by the day. I guess it’s evidence of the USA’s first mover advantage coupled with a system that fosters entrepreneurialism. The players who are likely to use regulation against the market leader are probably going to be countries, not companies (cf. again the fight over ICANN). The one place where market innovation with global impact is likely to arise is China. I’m intrigued by the China/Singapore combo. They’re both totalitarian market economies; China has the audience, and Singapore has the lead in web sophistication. The surprise is South Korea. While it’s a leader in social adoption of the broadband web, its problem is that industrial policy is strongly biased towards advantaging CE manufacturers; software is just a way of selling boxes.

Now we just need a charity bracelet

... a nice puce-colored one with little suckers.

If the endless multiplication of memorial ribbons is getting you down, or if the lobbyization of American politics is driving you nuts, the campaign to save the Pacific Northwest Tree Octopus may just be the one that takes you over the top.

Link (thanks to S.)

The ever-threatened lecture

Storm clouds are gathering over university lecture theaters. Course materials are available online (eg MIT’s OpenCourseWare), and students are increasingly learning on the web. If everything you need is online, why sit in big room with two hundred sleepy colleagues at some ungodly early hour?

The economics are also ominous. Jonathan Aronson was explaining the financial side of universities to me the other day: the key, as I understand it, is short-changing freshmen and sophomores in order to teach seniors and graduate students. Professors spend very few hours per student on first- and second-years, so that they can give personal attention to more advanced students. The big bucks for Departments are in teaching large classes, so they pack them in tight.

This feels like a raw deal if you’re a freshman. Students have found an alternative. More and more undergraduates are enjoying the better student/teacher ratios in community colleges for a couple of years, and then transferring back to universities. If freshman enrollment tanks, university finances crumble.

That lectures are old-fashioned and that students dislike them is not a new insight; the dons in Cambridge figured this out in the middle of the 16th Century. In his wonderful imagined biography of Christopher Marlowe, Rodney Bolt writes

“Attitudes to study underwent a radical change in the years before Kit arrived [around 1580]. Instead of merely lamenting the fact that lectures were so poorly attended, the authorities addressed themselves to the reason for the decline, and realized (about 100 years after the event) that the accessibility of printed books meant that students were no longer reliant on lectures for basic information. This revelation led to a new approach in which college tutors (rather than lectures) played an increasingly important role in a student’s education …” [1]

Attendance at lectures is optional in Oxford and Cambridge to this day. The real teaching is done in one-on-few tutorials. It’s expensive, though, and few institutions can afford it – hence the large lecture theaters in most places.

The boom in online tutoring may bring the costs down. A Google search on the term “online tutoring” turned up more than 700,000 hits today. The kinks are being worked out with high school students and language learners. Global communications will push down the prices tutors can charge. Voice over IP will be key. Face-to-face interaction is impossible to replicate, but everyone has experienced the deep emotional engagement one can get with a telephone conversation; VOIP can make the connection even deeper by offering better-than-phone sound audio.

What remains of the university? The place itself and the students, I think. Cambridge didn’t dissolve into tutors scattered around the town, receiving students in their homes; the community of teachers and students living together continued. Though one can now network online as well as in the pub or common room, students and their parents will continue to pay over the odds for a place-centered, face-to-face experience and the social network it brings.

The future of professors and teaching assistants is less clear. Some resident scholars and a few academic celebrities will survive, and advanced teaching will be face-to-face. However, lecturing and entry-level tutoring will be outsourced off-campus. We may expect a painful transition a few decades as universities are hollowed out into a bi-modal age distribution: young students and old professors, with less and less on-campus work for graduate students and associate professors.

Replacing the old professors when they retire will be a challenge, since the young talent will have gone off to industry. There won’t be successors with academic track records ready to take over. Perhaps former post-grads will be lured back from commerce in their late forties to teach the next generation, thus providing a twist to the old Shavian quip:

Those who can, do. Those who have done, teach.

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[1] Rodney Bolt, History Play: The Lives and Afterlife of Christopher Marlowe, p 50

Why you should care about CPCM

The EFF critique of the proposed standards for copy protection in European digital TV systems exemplifies the conflict that arises when the husk of stuff is sloughed off information goods.

EFF position

The EFF rejects the downstream control of content that these standards would give entertainment companies. For example, the proposed technology would determine which shows can be copied, which devices can be used for copying, and who would be able to share copies with whom.

The EFF motivates its objections in various ways:

1. The user "owns" the content once it has been delivered and should be able to decide how to dispose of it


2. Customary rights on fair use of content will be infringed, harming society in a variety of ways


3. Restricted outputs would limit innovation in the equipment market


4. A veto on allowed devices would crimp the Open Source movement

I'll focus on the first one, since it's at the heart of the transition to digital media.

I imagine content producers have always believed that they continue own the content even after it’s sold (or licensed, rather, as they'd insist). However, there was no need to press the issue in the analog era, since lossy copying meant that quality degraded so rapidly that massive illegal appropriation of their property wasn't a significant business risk.

The difference with Digital

Digital media is reproducible perfectly and infinitely, at minimal cost. Producers worry that if they don’t control its downstream distribution, content will show up as a perfect but free copy, and they will no longer be able to make money from it. The product in question is now much closer to the ideal knowledge good; it's no longer packaged in a carrier that degrades over time. (In economic terms: Content as a knowledge good is, in principle, a non-rival good, but when packaged in an analog distribution medium it becomes effectively rivalrous, and thus much easier to fit into existing economic structures.)

The content companies are betting – hoping! – that technology will save them. However, for the solution to succeed the controlling technology has to be everywhere content is played, and has to be the only way content can be played.

Such centralized control is anathema to the advocates of a new digital content regime. The paradigm of their daily lives is the mash-up, open Internet: building new services by combining existing ones in new ways (eg housingmaps.com, which combines Craig’s List with Google Maps), and getting under the hood to tweak code if they want to add their own features (eg Linux).

The crux

It’s more than just a clash of cultures, though. The argument matters because it resonates with a shift in technology that has flecked open this question: How should intellectual property be managed when it is no longer wrapped in “stuff” which obscures its fundamental difference from conventional physical goods? As more and more knowledge is represented in digital form (examples below), and as the ratio of knowledge to stuff in our products increases, it will affect every business, and every citizen.

Forthcoming attractions

Phones are much smarter than they used to be (more knowledge), not to mention smaller (less stuff). Phone companies didn’t used to worry much about what I did with a phone once I bought it, because I couldn’t do much. Now that one can (in theory) make calls over a Wi-Fi network that the phone company can’t monetize, they care a lot more, and are asserting control over the software that’s allowed on their phones.

Cars are much smarter, too. It comes as no surprise that people are increasingly unable to choose who maintains their vehicles, since manufacturers only give their dealerships the requisite electronic diagnostic equipment. Say goodbye to your friendly independent mechanic… Changing the bits has become more important than changing the oil, and the manufacturers care about the bits.

Consultants and professionals are also “knowledge wrapped in stuff”. The Stuff is human flesh, and the Knowledge is what they learnt in Law School or Med School or B-school, and the School of Hard Knocks. While the knowledge is non-rivalrous, acquiring and distributing it via human carriers (the ultimate analog distribution medium :-) makes it effectively rivalrous: if I’m using the consultant, you can’t have her. (A Washington DC ploy much-used by incumbent industries: put all the top law firms on retainer so that they can’t lobby for insurgent industries.) As such knowledge is increasing – though of course still imperfectly – represented in software, similar fights will arise over the control that digital consultants have over the downstream use of their expertise algorithms.