Arnold Kling  

Technology Innovation vs. Government

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Two op-eds today on the issue of technological innovation and government's response. In the Wall Street Journal, former Intel Vice President Les Vadasz writes,


The problem with the "Induce bill" is not its intent, but its overly broad language: Any person or device that "aids, abets or induces" the sharing of copyrighted material would be subject to civil and criminal proceedings. This would include the manufacturers and end-users of such popular file-sharing devices as Apple's iPod. A mock lawsuit is currently circulating on the Internet, showing how iPods could be deemed illegal under the bill, and how Apple could face fines of $150,000 for each one produced; Toshiba could even face fines for making the hard drives inside them. But it doesn't stop there. There might even be fines for newspapers like The Wall Street Journal for publishing reviews of iPods. This is, of course, ridiculous, but certainly possible under the wording of Induce.

The chilling effect that a law like this would have on innovation cannot be underestimated...

What we need more are innovations like Apple's iTunes Music Store that make the Internet a more friendly business environment for entertainment content. What we need is more risk-taking by the entertainment industry to utilize new technologies, to both deliver and protect their content. The more we attempt to provide government protection to the old ways of doing business, the less motivation we provide to the entertainment industry to adapt and benefit from new technology. ..

Most importantly, what we need are legislators who can curb their urge to legislate in areas where their actions are likely to do more harm than good.

On another issue, former National Security Agency technical director Michael Wertheimer writes,


This year alone, e-mail volume is expected to be the equivalent of 40 copies of the fully digitized holdings of the Library of Congress.

Another important medium, instant messaging, is now estimated to generate 530 billion messages per day. Complicating matters further, phone calls can now be sent directly over the Internet using a technology called Voice-over-Internet Protocol (VoIP).

...Much like the code breakers shortly before Pearl Harbor, we risk not heeding the disruptive shift that is occurring with the growing dominance of the Internet. History -- and best business practices -- obligate us to encourage "disruptive innovators" to create new sources and methods for intelligence and let the natural evolution of innovation deliver reduced costs, greater capability and larger markets.


What is striking is that Wertheimer does not advocate what the FBI wants, which is to force VOIP providers to make conversations wiretappable. Wertheimer is saying to work with technology, not against it. In that regard, he seems to reinforce what I have written, namely that "I would have more confidence in a security agency that is working with the latest technology, not against it."

For Discussion. What would be the social costs and benefits of Microsoft, Intel, or Google taking over one or more of the large music publishers?


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TRACKBACKS (3 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/95
The author at The Importance of... in a related article titled Fmr Intel VP and CEI Oppose INDUCE Act (IICA) writes:
    Two significant editorials against the Inducing Infringement of Copyrights Act (IICA, née INDUCE Act) were published today. Ed Felten points to a Wall Street Journal op-ed (alas, behind a subscription wall) by former Intel VP Les Vadasz (Vadasz Attacks... [Tracked on July 21, 2004 4:58 PM]
COMMENTS (2 to date)
Lawrance George Lux writes:

The worst cost would be listening to the music some MBA thought was most Sales-generating. Virtical monopolies always generate about a 12% increase in Product prices even when they are relatively benign. The Customers will have to purchase in a format which both invades their privacy, and demads use of outlets accepting only approved methods of payment. The period of delivery of Product will lengthen, due to the increased volume through limited distribution outlets. Other than that, Service will become bureaucratic and worthless. lgl

Brad Hutchings writes:

The iPod "lawsuiit" is such a joke. I thoroughly deconstructed three of its assertions over at Ernest Miller's blog. The response was "well, it's not a real lawsuit, it just makes a point". But now, it's ammunition in the IICA "debate" (if we want to call it that). Pretty much goes to show lesson #1 about Internet politics... Be outrageous, be loud, be incessant - eventually your drivel will become "truth".

Funny you ask what would happen if Microsoft took over a large music publisher. As a member of the Business Software Alliance, Microsoft is a huge sponsor of IICA. The commercial software industry has the same problem as the music industry, which is some large pockets of blatant disregard for distribution rights.There are serial number sharing websites that sell advertising, just as there is Kaazaa for file trading. The dirty little secret to making money with content (be it music, movies, software, etc.) is that if there is no respect for copyright, there is no way to make money. And no matter what is proposed as a "solution" to this problem that doesn't hold end-users accountable for infringement when they infringe, there is always some route around paying up. Expect that even if Intel bought Sony's record business, Intel would realize this about its asset and play just the same as the current players. Don't expect a sweeping solution in the copyright wars, but ongoing marginal battles like IICA.

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