Category Archives: Copyright

What Makes an Idea a Meme?

Ceci c'est un meme.

On Forbes today, I look at the phenomenon of memes in the legal and economic context, using my now notorious “Best Buy” post as an example. Along the way, I talk antitrust, copyright, trademark, network effects, Robert Metcalfe and Ronald Coase.

It’s now been a month and a half since I wrote that electronics retailer Best Buy was going out of business…gradually.  The post, a preview of an article and future book that I’ve been researching on-and-off for the last year, continues to have a life of its own.

Commentary about the post has appeared in online and offline publications, including The Financial Times, The Wall Street Journal, The New York Times, TechCrunch, Slashdot, MetaFilter, Reddit, The Huffington Post, The Motley Fool, and CNN. Some of these articles generated hundreds of user comments, in addition to those that appeared here at Forbes.

(I was also interviewed by a variety of news sources, including TechCrunch’s Andrew Keen.)

Today, the original post hit another milestone, passing 2.9 million page views.

Watching the article move through the Internet, I’ve gotten a first-hand lesson in how network effects can generate real value.

Network effects are an economic principle that suggests certain goods and services experience increasing returns to scale.  That means the more users a particular product or service has, the more valuable the product becomes and the more rapidly its overall value increases.  A barrel of oil, like many commodity goods, does not experience network effects – only one person can own it at a time, and once it’s been burned, it’s gone.

In sharp contrast, the value of networked goods increase in value as they are consumed.  Indeed, the more they are used, the faster the increase–generating a kind of momentum or gravitational pull.  As Robert Metcalfe, founder of 3Com and co-inventor of Ethernet explained it, the value of a network can be plotted as the square of the number of connected users or devices—a curve that approaches infinity until most everything that can be connected already is.  George Gilder called that formula “Metcalfe’s Law.”

Since information can be used simultaneously by everyone and never gets used up, nearly all information products can be the beneficiaries of network effects.  Standards are the obvious example.  TCP/IP, the basic protocol that governs interactions between computers connected to the Internet, started out humbly as an information exchange standard for government and research university users.  But in part because it was non-proprietary and therefore free for anyone to use without permission or licensing fees, it spread from public to private sector users, slowly at first but over time at accelerating rates.

Gradually, then suddenly, TCP/IP became, in effect, a least common denominator standard by which otherwise incompatible systems could share information.  As momentum grew, TCP/IP and related protocols overtook and replaced better-marketed and more robust standards, including IBM’s SNA and DEC’s DECnet.  These proprietary standards, artificially limited to the devices of a particular manufacturer, couldn’t spread as quickly or as smoothly as TCP/IP.

From computing applications, Internet standards spread even faster, taking over switched telephone networks (Voice over IP), television (over-the-top services such as YouTube and Hulu), radio (Pandora, Spotify)—you name it.

Today the TCP/IP family of protocols, still free-of-charge, is the de facto global standard for information exchange, the lynchpin of the Internet revolution.  The standards continue to improve, thanks to the largely-voluntary efforts of The Internet Society and its virtual engineering task forces.  They’re the best example I know of network effects in action, and they’ve created both a platform and a blueprint for other networked goods that make use of the standards.

Beyond standards, network effects are natural features of other information products including software.  Since the marginal cost of a copy is low (essentially free in the post-media days of Web-based distribution and cloud services), establishing market share can happen at relatively low cost.  Once a piece of software—Microsoft Windows, AOL instant messenger in the old days, Facebook and Twitter more recently—starts ramping up the curve, it gains considerable momentum, which may be all it takes to beat out a rival or displace an older leader.  At saturation, a software product becomes, in essence, the standard.

From a legal standpoint, unfortunately, market saturation begins to resemble an illegal monopoly, especially when viewed through the lens of industrial age ideas about markets and competition.  (That, of course, is the lens that even 21st century regulators still use.)  But what legal academics, notably Columbia’s Tim Wu, misunderstand about this phenomenon is that such products have a relatively short life-cycle of dominating.  These “information empires,” as Wu calls them, are short-lived, but not, as Wu argues, because regulators cut them down.

Even without government intervention, information products are replaced at accelerating speeds by new disruptors relying on new (or greatly improved) technologies, themselves the beneficiaries of network effects.  The actual need for legal intervention is rare.  Panicked interference with the natural cycle, on the other hand, results in unintended consequences that damage emerging markets rather than correcting them.  Distracted by lingering antitrust battles at home and abroad, Microsoft lost momentum in the last decade.  No consumer benefited from that “remedy.”

For more, see “What Makes an Idea a Meme?” on Forbes.


How the SOPA Fight Was Won…For Now

On Forbes yesterday, I posted a detailed analysis of the successful (so far) fight to block quick passage of the Protect-IP Act (PIPA) and the Stop Online Piracy Act (SOPA). (See “Who Really Stopped SOPA, and Why?“) I’m delighted that the article, despite its length, has gotten such positive response.

As regular readers know, I’ve been following these bills closely from the beginning, and made several trips to Capitol Hill to urge lawmakers to think more carefully about some of the more half-baked provisions.

But beyond traditional advocacy–of which there was a great deal–something remarkable happened in the last several months. A new, self-organizing protest movement emerged on the Internet, using social news and social networking tools including Reddit, Tumblr, Facebook and Twitter to stage virtual teach-ins, sit-ins, boycotts, and other protests. Continue reading

Updates to the media page

We’ve recently added another dozen posts to the Media page. These include several articles and interviews related to Larry’s efforts to help stop dangerous copyright legislation pending in Congress, known as SOPA and Protect IP. Larry also provides detailed analysis of a more sensible alternative proposal from Sen. Ron Wyden and Rep. Darrell Issa, the OPEN Act.

Larry appeared last month on the PBS Newshour to debate domain name seizures and the pending bills with a representative of the U.S. Chamber of Commerce. Video and a transcript are on the Media page.

Larry has also been busy with FCC stories, including the clumsy release of the staff report on the failed AT&T/T-Mobile merger and the subsequent revelations about manipulation of the agency’s important “spectrum screen,” a key metric in merger reviews that was grossly mishandled. (Congress is looking into how the agency fumbled so badly.) With the collapse of the deal, watch for louder cries about the spectrum crisis and the lack of any solution to it.

A New Year’s Day post at Forbes on the dimming prospect of consumer electronics retailer Best Buy generated tremendous response, including over 2.3 million page views on the site and thousands of comments there and elsewhere, most by customers with horror stories to tell. Follow-up and fall-out to come.

Updates to the Media Page


We’ve recently added over two dozen new posts to the Media page. Most have to do with SOPA, the Stop Online Piracy Act, introduced a few weeks ago in Congress to cheers from the entertainment industry and jeers from Silicon Valley. The bill would make it easier–too easy–for copyright and trademark holders to turn on and off Web content they don’t like.

Larry’s early analysis of the bill for CNET, and his on-going work on the poor relations between Hollywood and Palo Alto, led to a great deal of press coverage and speaking engagements. His detailed review of the bill was praised across the political spectrum, including by TechDirt’s Mike Masnick and the National Review’s Reihan Salam.

Larry participated in a Capitol Hill debate on SOPA and other pending piracy legislation sponsored by the Congressional Internet Caucus, debating the bill against industry representatives. He also appeared on CNET’s Reporters’ Roundtable and This Week in Law, as well as podcasts by the Heartland Institute.

Net neutrality also stayed in the news, as did the AT&T/T-Mobile merger, privacy, spectrum reform and online human rights. Larry was quoted in a wide range of publications on these topics, including Politico, Reason, NPR’s Marketplace, the Wall Street Journal and the Daily Caller.  Conference footage from this year’s Compass Summit panels on privacy and tech policy are also available.

Stop the "Stop Online Piracy Act"

For CNET today, I have a long analysis and commentary on the “Stop Online Piracy Act,” introduced last week in the House. The bill is advertised as the House’s version of the Senate’s Protect-IP Act, which was voted out of Committee in May.

It’s very hard to find much positive to say about the House version. While there’s considerable evidence its drafters heard the criticisms of engineers, legal academics, entrepreneurs and venture capitalists, their response was unfortunate.

Engineers pointed out, for example, that court orders requiring individual ISPs to remove or redirect domain name requests was a futile and dangerous way to block access to “rogue” websites. Truly rogue sites can easily relocate to another domain, or simply have users access them with their IP address and bypass DNS altogether.

There are millions of DNS servers, according to Verisign, so getting all of them to make the change would be impossible, splintering the system. And redirecting DNS requests is some sense introducing a bug in the system, one that is inconsistent with upcoming security measures aimed at protecting users from being hijacked.

But all the drafters of SOPA seemed to have heard was the part about “futile.” Their response has been to make the DNS provisions vaguer and more open-ended, in hopes that whatever mechanisms the rogue sites come up with to evade the law will also be illegal.  Blocking is now extended not just to “parasite” sites but to a “portion thereof,” for example.

And the Attorney General can now apply for injunctive relief against any “entity” that provides “a product or service designed or marketed for the circumvention or bypassing of measures” taken in response to an earlier court order.

Similar efforts are found throughout SOPA, particularly in the felony streaming provision, and the private right of action (or what the bill calls the “market-based system”) for private enforcement of copyright and trademark abuses.  Where clarity isn’t possible, the drafters have opted for vagueness, open-ended definitions, and hedges.  Even the term “including” is defined, to be clear that it means “including but not limited to.”

The point to criticism of Protect-IP was instead that it was impossible to regulate technology that is changing so quickly, and that any effort to do so would only prove obsolete on arrival.  As previous efforts from CAN-SPAM to ECPA and back make clear, you cannot future-proof legislation aimed at specfiic features of emerging technologies.

That, unfortunately, is exactly what SOPA tries to do.  And beyond making the legislation clumsy and imprecise, the intentional vagueness greatly increases the potential for unintended consequences.  I describe several unintentionally dangerous examples from SOPA in the CNET piece; other analysts have done the same in pieces listed at the end of this post.

Two good things I found in the 79-page draft:

1.  The failure of Protect-IP to define “nonauthoritative domain name server” has been addressed.  That term is now defined, and the definition looks correct to me.

2.  SOPA recognizes, at least, the better approach to solving the problem of foreign websites that blatantly violate copyright and trademark.  Near the back, Section 205 calls on the State and Commerce Departments to make enforcement of existing international law and treaties regarding information products and services a priority.  This includes the assignment of new attaches dedicated to information products.

Would that SOPA started and ended with this provision, there would be little basis to fault its drafters.  If the problem SOPA is attempting to solve, after all, is the scourge or foreign websites that distribute movies, music, and counterfeit goods without a license (often pretending to be legitimate), then surely the solution is one of foreign and trade policy and not micromanaging Internet protocols.

Instead, we have a bill that treats all U.S. consumers as guilty until proven innocent, and hands Hollywood the keys to the inner workings of the Internet.  Just what they’ve always wanted.


Worth reading:


Updates to the media page

We’ve added another dozen entries to the Media Page. Throughout the summer, Larry was busy with articles and press interviews on everything from pending copyright legislation, the FCC’s annual wireless competition report, and the merger of AT&T and T-Mobile. The focus, as always, was on the impact of these regulatory proceedings on Silicon Valley and the I.T. community generally. In addition to new articles for CNET and Forbes, Larry appeared in USA Today, the National Journal, and The Hill. Check them out!