Rights Management
Leveraging lower Reproduction Costs

  1. Digital copies are perfect copies of the original. For digital content, 'Production is Reproduction'. Example
  2. However: It's easy to overstate this case. Perfection really isn't as important as it sometimes is thought to be. Example
  3. The fact that a perfect digital copy can be made is NOT much scarier than the fact that a very good analog copy can be made. We learned to live with analog copies of documents, music, and video -- we can learn to live with digital copies as well.

      Historical Examples



    • It is important to realize that the introduction of cheap production and distribution mechanisms isn't really that new.
      • In the Middle Ages professors used a primitive form of intellectual property protection: They lectures in darkened rooms so that students couldn't take notes.
      • Production: Printing presses, xerography and the Internet have made text reproduction progressively cheaper.
      • Distribution: Express mail, fax machines and the Internet have reduced the costs of distribution immensely.
    • There is more being published today and more money being made publishing today than ever before.
    • Author Notes: The photocopying machine was supposed to be the death knell for the publishing business. In fact, cheap photocopying has probably increased the demand for printed content. Example

      The Rise of the Library


    • Libraries themselves are a wonderful example of an innovation that first appeared to threaten the publishing industry but ended up vastly expanding it. Here's the story......
      1. 18 Century --- Only the wealthy could afford to buy books. (Single book cost the equivalent of a weeks pay). Because books were expensive, there was little reason to invest in becoming literate.
      2. in 1741, Pamela was published as a (equivalent early day 'Trashy Novel'). Pamela's success spawned many imitators, and a whole new product 'The English Novel' was born.
      3. These novels were denounced by the 'Literati' as ignorant and beggarly. But the public ignored them and bought as many as were available.
      4. English book store couldn't keep up with the demand for novels and romances, so they started 'Renting' them. They were called 'Circulating Libraries'.
      5. Denounced by the literate classes as 'Slop Shops of Literature' and (More importantly) denounced by the publishers and booksellers for their potential of cutting into their sales.
      6. In the long run, circulating libraries were much to benefit the publishing industry. The availability of low cost content motivated many to learn to read. The publishers who served the new mass market for books thrived, while those who sold only to the elite disappeared.
      7. Note carefully the causality: It was the presence of the circulating libraries that killed the old publishing model, but at the same time it created a new business model of mass-market books. These circulating libraries continued to survive well into the 1950's What killed them off was not a lack of interest in reading, but the emergence of the paperback book -- an even cheaper way to provide literature to the masses.


      The Rise of the Video


    • The same dynamics happened in the prerecorded video market in the 1980's
    • VCR cost more than $1000 in the early 1980's. Video tapes sold for $90. Video's were a medium only for the rich!
    • Video rental stores changed all that! Like the circulating libraries 300 years earlier, they brought this new form of entertainment to the masses.
    • Hollywood didn't like the rental business. Studios tried to control the stores by various licensing agreements, but the Mom & Pop video store owners wouldn't cooperate.
    • In the end, Hollywood made a lot of money from video rentals. Example

      Growing the Market


    • Producers of digital content are in much the same position now that the producers of books were in the 1800's or producers of film were in the 1975. It's easy to see the threats inherent in the new media; its hard to see the promise.
    • Key Issue: How to exploit economies of scale: a thousand consumers paying a dollar each to download a piece of software that costs pennies to product and distribute is a lot more profitable than 100 consumers paying $10 each for software that costs $5 to produce and distribute.
    • Book producers in the 1800 didn't realize or appreciate how much the market could grow. Neither did Hollywood.
    • The publishers and movie producers understood their own industries, but they didn't understand their complement industries.
    • Natural Tendency: For producers to worry too much about protecting their intellectual property.
    • Key Strategy: Maximize the value of your intellectual property. Don't protect it for the sake of protecting it.
    • If you loose a little bit of your property when you sell or rent it, that's just a cost of doing business alone with depreciation, inventory losses and obsolescence.