E-books and e-publishing by Samuel Vaknin (essential reading .TXT) 📕

minimum of 100 DM to

recoup only the direct costs. If illegally copied (thereby

shrinking the potential market as some people will prefer to

buy the cheaper illegal copies) - its price would have to go

up prohibitively to recoup costs, thus driving out potential

buyers. The story is different if a book costs 10,000 DM to

produce and is priced at 20 DM a copy with a potential

readership of 1,000,000 readers. Piracy (illegal copying)

should in this case be more readily tolerated as a marginal

phenomenon.

This is the theory. But the facts are tellingly different. The

less the cost of production (brought down by digital

technologies) - the fiercer the battle against piracy. The

bigger the market - the more pressure is applied to clamp down

on samizdat entrepreneurs.

Governments, from China to Macedonia, are introducing

intellectual property laws (under pressure from rich world

countries) and enforcing them belatedly. But where one factory

is closed on shore (as has been the case in mainland China) -

two sprout off shore (as is the case in Hong Kong and in

Bulgaria).

But this defies logic : the market today is global, the costs

of production are lower (with the exception of the music and

film industries), the marketing channels more numerous (half

of the income of movie studios emanates from video cassette

sales), the speedy recouping of the investment virtually

guaranteed. Moreover, piracy thrives in very poor markets in

which the population would anyhow not have paid the legal

price. The illegal product is inferior to the legal copy (it

comes with no literature, warranties or support). So why

should the big manufacturers, publishing houses, record

companies, software companies and fashion houses worry?

The answer lurks in history. Intellectual property is a

relatively new notion. In the near past, no one considered

knowledge or the fruits of creativity (art, design) as

‘patentable’, or as someone’s ‘property’. The artist was but a

mere channel through which divine grace flowed. Texts,

discoveries, inventions, works of art and music, designs - all

belonged to the community and could be replicated freely.

True, the chosen ones, the conduits, were honoured but were

rarely financially rewarded. They were commissioned to produce

their works of art and were salaried, in most cases. Only with

the advent of the Industrial Revolution were the embryonic

precursors of intellectual property introduced but they were

still limited to industrial designs and processes, mainly as

embedded in machinery. The patent was born. The more massive

the market, the more sophisticated the sales and marketing

techniques, the bigger the financial stakes - the larger

loomed the issue of intellectual property. It spread from

machinery to designs, processes, books, newspapers, any

printed matter, works of art and music, films (which, at their

beginning were not considered art), software, software

embedded in hardware, processes, business methods, and even

unto genetic material.

Intellectual property rights - despite their noble title - are

less about the intellect and more about property. This is Big

Money : the markets in intellectual property outweigh the

total industrial production in the world. The aim is to secure

a monopoly on a specific work. This is an especially grave

matter in academic publishing where small-circulation

magazines do not allow their content to be quoted or published

even for non-commercial purposes. The monopolists of knowledge

and intellectual products cannot allow competition anywhere in

the world - because theirs is a world market. A pirate in

Skopje is in direct competition with Bill Gates. When he sells

a pirated Microsoft product - he is depriving Microsoft not

only of its income, but of a client (=future income), of its

monopolistic status (cheap copies can be smuggled into other

markets), and of its competition-deterring image (a major

monopoly preserving asset). This is a threat which Microsoft

cannot tolerate. Hence its efforts to eradicate piracy -

successful in China and an utter failure in legally-relaxed

Russia.

But what Microsoft fails to understand is that the problem

lies with its pricing policy - not with the pirates. When

faced with a global marketplace, a company can adopt one of

two policies: either to adjust the price of its products to a

world average of purchasing power - or to use discretionary

differential pricing (as pharmaceutical companies were forced

to do in Brazil and South Africa). A Macedonian with an

average monthly income of 160 USD clearly cannot afford to buy

the Encyclopaedia Encarta Deluxe. In America, 50 USD is the

income generated in 4 hours of an average job.

 

In Macedonian terms, therefore, the Encarta is 20 times more

expensive. Either the price should be lowered in the

Macedonian market - or an average world price should be fixed

which will reflect an average global purchasing power.

Something must be done about it not only from the economic

point of view. Intellectual products are very price sensitive

and highly elastic. Lower prices will be more than compensated

for by a much higher sales volume. There is no other way to

explain the pirate industries : evidently, at the right price

a lot of people are willing to buy these products. High prices

are an implicit trade-off favouring small, elite, select, rich

world clientele. This raises a moral issue : are the children

of Macedonia less worthy of education and access to the latest

in human knowledge and creation ?

Two developments threaten the future of intellectual property

rights. One is the Internet. Academics, fed up with the

monopolistic practices of professional publications - already

publish on the web in big numbers. I published a few book on

the Internet and they can be freely downloaded by anyone who

has a computer or a modem. The full text of electronic

magazines, trade journals, billboards, professional

publications, and thousands of books is available online.

Hackers even made sites available from which it is possible to

download whole software and multimedia products. It is very

easy and cheap to publish on the Internet, the barriers to

entry are virtually nil. Web pages are hosted free of charge,

and authoring and publishing software tools are incorporated

in most word processors and browser applications. As the

Internet acquires more impressive sound and video capabilities

it will proceed to threaten the monopoly of the record

companies, the movie studios and so on.

The second development is also technological. The oft-vindicated Moore’s law predicts the doubling of computer

memory capacity every 18 months. But memory is only one aspect

of computing power. Another is the rapid simultaneous advance

on all technological fronts. Miniaturization and concurrent

empowerment by software tools have made it possible for

individuals to emulate much larger scale organizations

successfully. A single person, sitting at home with 5000 USD

worth of equipment can fully compete with the best products of

the best printing houses anywhere. CD-ROMs can be written on,

stamped and copied in house. A complete music studio with the

latest in digital technology has been condensed to the

dimensions of a single chip. This will lead to personal

publishing, personal music recording, and the to the

digitization of plastic art. But this is only one side of the

story.

The relative advantage of the intellectual property

corporation does not consist exclusively in its technological

prowess. Rather it lies in its vast pool of capital, its

marketing clout, market positioning, sales organization, and

distribution network.

Nowadays, anyone can print a visually impressive book, using

the above-mentioned cheap equipment. But in an age of

information glut, it is the marketing, the media campaign, the

distribution, and the sales that determine the economic

outcome.

This advantage, however, is also being eroded.

First, there is a psychological shift, a reaction to the

commercialization of intellect and spirit. Creative people are

repelled by what they regard as an oligarchic establishment of

institutionalized, lowest common denominator art and they are

fighting back.

Secondly, the Internet is a huge (200 million people), truly

cosmopolitan market, with its own marketing channels freely

available to all. Even by default, with a minimum investment,

the likelihood of being seen by surprisingly large numbers of

consumers is high.

I published one book the traditional way - and another on the

Internet. In 50 months, I have received 6500 written responses

regarding my electronic book. Well over 500,000 people read it

(my Link Exchange meter registered c. 2,000,000 impressions

since November 1998). It is a textbook (in psychopathology) -

and 500,000 readers is a lot for this kind of publication. I

am so satisfied that I am not sure that I will ever consider a

traditional publisher again. Indeed, my last book was

published in the very same way.

The demise of intellectual property has lately become

abundantly clear. The old intellectual property industries are

fighting tooth and nail to preserve their monopolies (patents,

trademarks, copyright) and their cost advantages in

manufacturing and marketing.

But they are faced with three inexorable processes which are

likely to render their efforts vain:

The Newspaper Packaging

Print newspapers offer package deals of cheap content

subsidized by advertising. In other words, the advertisers pay

for content formation and generation and the reader has no

choice but be exposed to commercial messages as he or she

studies the content.

This model - adopted earlier by radio and television - rules

the internet now and will rule the wireless internet in the

future. Content will be made available free of all pecuniary

charges. The consumer will pay by providing his personal data

(demographic data, consumption patterns and preferences and so

on) and by being exposed to advertising. Subscription based

models are bound to fail.

Thus, content creators will benefit only by sharing in the

advertising cake. They will find it increasingly difficult to

implement the old models of royalties paid for access or of

ownership of intellectual property.

Disintermediation

A lot of ink has been spilt regarding this important trend.

The removal of layers of brokering and intermediation - mainly

on the manufacturing and marketing levels - is a historic

development (though the continuation of a long term trend).

Consider music for instance. Streaming audio on the internet

or downloadable MP3 files will render the CD obsolete. The

internet also provides a venue for the marketing of niche

products and reduces the barriers to entry previously imposed

by the need to engage in costly marketing (“branding”)

campaigns and manufacturing activities.

This trend is also likely to restore the balance between

artist and the commercial exploiters of his product. The very

definition of “artist” will expand to include all creative

people. One will seek to distinguish oneself, to “brand”

oneself and to auction off one’s services, ideas, products,

designs, experience, etc.

 

This is a return to pre-industrial times when artisans ruled

the economic scene. Work stability will vanish and work

mobility will increase in a landscape of shifting allegiances,

head hunting, remote collaboration and similar labour market

trends.

Market Fragmentation

In a fragmented market with a myriad of mutually exclusive

market niches, consumer preferences and marketing and sales

channels - economies of scale in manufacturing and

distribution are meaningless. Narrowcasting replaces

broadcasting, mass customization replaces mass production, a

network of shifting affiliations replaces the rigid owned-branch system. The decentralized, intrapreneurship-based

corporation is a late response to these trends. The mega-corporation of the future is more likely to act as a

collective of startups than as a homogeneous, uniform (and,

to conspiracy theorists, sinister) juggernaut it once was.

 

The Territorial Web

By: Sam Vaknin

 

The Net was supposed to dissolve anachronistic national

borders and cultural boundaries. It was expected to vitiate

distance - both physical and mental. It was hailed as the

invention that will unify Mankind and harmonize (though not

homogenize) civilizations, east and west.

Yet, this was not to be. As dot.coms bombed, their more

veteran and more experienced brick and mortar rivals took over

the Net, transforming it in the process into a giant content

delivery, marketing, supply chain management, and customer

relationship management platform. This evolution all