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The Revolt of the Poor: The Demise of Intellectual Property?

Three years ago I published a book ofview. Intellectual products are very
short stories in Israel. The publishingprice sensitive and highly elastic.
house belongs to Israel's leading (andLower prices will be more than
exceedingly wealthy) newspaper. I signedcompensated for by a much higher sales
a contract which stated that I amvolume. There is no other way to explain
entitled to receive 8% of the incomethe pirate industries : evidently, at
from the sales of the book afterthe right price a lot of people are
commissions payable to distributors,willing to buy these products. High
shops, etc. A few months later (1997), Iprices are an implicit trade-off
won the coveted Prize of the Ministry offavouring small, elite, select, rich
Education (for short prose). The prizeworld clientele. This raises a moral
money (a few thousand DMs) was snatchedissue : are the children of Macedonia
by the publishing house on the legalless worthy of education and access to
grounds that all the money generated bythe latest in human knowledge and
the book belongs to them because theycreation ?Two developments threaten the
own the copyright.In the mythologyfuture of intellectual property rights.
generated by capitalism to pacify theOne is the Internet. Academics, fed up
masses, the myth of intellectualwith the monopolistic practices of
property stands out. It goes like this :professional publications - already
if the rights to intellectual propertypublish on the web in big numbers. I
were not defined and enforced,published a few book on the Internet and
commercial entrepreneurs would not havethey can be freely downloaded by anyone
taken on the risks associated withwho has a computer or a modem. The full
publishing books, recording records, andtext of electronic magazines, trade
preparing multimedia products. As ajournals, billboards, professional
result, creative people will havepublications, and thousands of books is
suffered because they will have found noavailable online. Hackers even made
way to make their works accessible tosites available from which it is
the public. Ultimately, it is the publicpossible to download whole software and
which pays the price of piracy, goes themultimedia products. It is very easy and
refrain.But this is factually untrue. Incheap to publish on the Internet, the
the USA there is a very limited group ofbarriers to entry are virtually nil. Web
authors who actually live by their pen.pages are hosted free of charge, and
Only select musicians eke out a livingauthoring and publishing software tools
from their noisy vocation (most of themare incorporated in most word processors
rock stars who own their labels - Georgeand browser applications. As the
Michael had to fight Sony to do justInternet acquires more impressive sound
that) and very few actors come close toand video capabilities it will proceed
deriving subsistence level income fromto threaten the monopoly of the record
their profession. All these can nocompanies, the movie studios and so
longer be thought of as mostly creativeon.The second development is also
people. Forced to defend theirtechnological. The oft-vindicated
intellectual property rights and theMoore's law predicts the doubling of
interests of Big Money, Madonna, Michaelcomputer memory capacity every 18
Jackson, Schwarzenegger and Grisham aremonths. But memory is only one aspect of
businessmen at least as much as they arecomputing power. Another is the rapid
artists.Economically and rationally, wesimultaneous advance on all
should expect that the costlier a worktechnological fronts. Miniaturization
of art is to produce and the narrowerand concurrent empowerment by software
its market - the more emphasized itstools have made it possible for
intellectual property rights.Consider aindividuals to emulate much larger scale
publishing house.A book which costsorganizations successfully. A single
50,000 DM to produce with a potentialperson, sitting at home with 5000 USD
audience of 1000 purchasers (certainworth of equipment can fully compete
academic texts are like this) - wouldwith the best products of the best
have to be priced at a a minimum of 100printing houses anywhere. CD-ROMs can be
DM to recoup only the direct costs. Ifwritten on, stamped and copied in house.
illegally copied (thereby shrinking theA complete music studio with the latest
potential market as some people willin digital technology has been condensed
prefer to buy the cheaper illegalto the dimensions of a single chip. This
copies) - its price would have to go upwill lead to personal publishing,
prohibitively to recoup costs, thuspersonal music recording, and the to the
driving out potential buyers. The storydigitization of plastic art. But this is
is different if a book costs 10,000 DMonly one side of the story.The relative
to produce and is priced at 20 DM a copyadvantage of the intellectual property
with a potential readership of 1,000,000corporation does not consist exclusively
readers. Piracy (illegal copying) shouldin its technological prowess. Rather it
in this case be more readily toleratedlies in its vast pool of capital, its
as a marginal phenomenon.This is themarketing clout, market positioning,
theory. But the facts are tellinglysales organization, and distribution
different. The less the cost ofnetwork.Nowadays, anyone can print a
production (brought down by digitalvisually impressive book, using the
technologies) - the fiercer the battleabove-mentioned cheap equipment. But in
against piracy. The bigger the market -an age of information glut, it is the
the more pressure is applied to clampmarketing, the media campaign, the
down on samizdatdistribution, and the sales that
entrepreneurs.Governments, from China todetermine the economic outcome.This
Macedonia, are introducing intellectualadvantage, however, is also being
property laws (under pressure from richeroded.First, there is a psychological
world countries) and enforcing themshift, a reaction to the
belatedly. But where one factory iscommercialization of intellect and
closed on shore (as has been the case inspirit. Creative people are repelled by
mainland China) - two sprout off shorewhat they regard as an oligarchic
(as is the case in Hong Kong and inestablishment of institutionalized,
Bulgaria).But this defies logic : thelowest common denominator art and they
market today is global, the costs ofare fighting back.Secondly, the Internet
production are lower (with the exceptionis a huge (200 million people), truly
of the music and film industries), thecosmopolitan market, with its own
marketing channels more numerous (halfmarketing channels freely available to
of the income of movie studios emanatesall. Even by default, with a minimum
from video cassette sales), the speedyinvestment, the likelihood of being seen
recouping of the investment virtuallyby surprisingly large numbers of
guaranteed. Moreover, piracy thrives inconsumers is high.I published one book
very poor markets in which thethe traditional way - and another on the
population would anyhow not have paidInternet. In 50 months, I have received
the legal price. The illegal product is6500 written responses regarding my
inferior to the legal copy (it comeselectronic book. Well over 500,000
with no literature, warranties orpeople read it (my Link Exchange meter
support). So why should the bigregistered c. 2,000,000 impressions
manufacturers, publishing houses, recordsince November 1998). It is a textbook
companies, software companies and(in psychopathology) - and 500,000
fashion houses worry?The answer lurks inreaders is a lot for this kind of
history. Intellectual property is apublication. I am so satisfied that I am
relatively new notion. In the near past,not sure that I will ever consider a
no one considered knowledge or thetraditional publisher again. Indeed, my
fruits of creativity (art, design) aslast book was published in the very same
'patentable', or as someone'sway.The demise of intellectual property
'property'. The artist was but a merehas lately become abundantly clear. The
channel through which divine graceold intellectual property industries are
flowed. Texts, discoveries, inventions,fighting tooth and nail to preserve
works of art and music, designs - alltheir monopolies (patents, trademarks,
belonged to the community and could becopyright) and their cost advantages in
replicated freely. True, the chosenmanufacturing and marketing.But they are
ones, the conduits, were honoured butfaced with three inexorable processes
were rarely financially rewarded. Theywhich are likely to render their efforts
were commissioned to produce their worksvain:The Newspaper PackagingPrint
of art and were salaried, in most cases.newspapers offer package deals of cheap
Only with the advent of the Industrialcontent subsidized by advertising. In
Revolution were the embryonic precursorsother words, the advertisers pay for
of intellectual property introduced butcontent formation and generation and the
they were still limited to industrialreader has no choice but be exposed to
designs and processes, mainly ascommercial messages as he or she studies
embedded in machinery. The patent wasthe content.This model - adopted earlier
born. The more massive the market, theby radio and television - rules the
more sophisticated the sales andinternet now and will rule the wireless
marketing techniques, the bigger theinternet in the future. Content will be
financial stakes - the larger loomed themade available free of all pecuniary
issue of intellectual property. Itcharges. The consumer will pay by
spread from machinery to designs,providing his personal data (demographic
processes, books, newspapers, anydata, consumption patterns and
printed matter, works of art and music,preferences and so on) and by being
films (which, at their beginning wereexposed to advertising. Subscription
not considered art), software, softwarebased models are bound to fail.Thus,
embedded in hardware, processes,content creators will benefit only by
business methods, and even unto geneticsharing in the advertising cake. They
material.Intellectual property rights -will find it increasingly difficult to
despite their noble title - are lessimplement the old models of royalties
about the intellect and more aboutpaid for access or of ownership of
property. This is Big Money : theintellectual property.DisintermediationA
markets in intellectual propertylot of ink has been spilt regarding this
outweigh the total industrial productionimportant trend. The removal of layers
in the world. The aim is to secure aof brokering and intermediation - mainly
monopoly on a specific work. This is anon the manufacturing and marketing
especially grave matter in academiclevels - is a historic development
publishing where small- circulation(though the continuation of a long term
magazines do not allow their content totrend).Consider music for instance.
be quoted or published even forStreaming audio on the internet or
non-commercial purposes. The monopolistsdownloadable MP3 files will render the
of knowledge and intellectual productsCD obsolete. The internet also provides
cannot allow competition anywhere in thea venue for the marketing of niche
world - because theirs is a worldproducts and reduces the barriers to
market. A pirate in Skopje is in directentry previously imposed by the need to
competition with Bill Gates. When heengage in costly marketing ("branding")
sells a pirated Microsoft product - hecampaigns and manufacturing
is depriving Microsoft not only of itsactivities.This trend is also likely to
income, but of a client (=futurerestore the balance between artist and
income), of its monopolistic statusthe commercial exploiters of his
(cheap copies can be smuggled into otherproduct. The very definition of "artist"
markets), and of itswill expand to include all creative
competition-deterring image (a majorpeople. One will seek to distinguish
monopoly preserving asset). This is aoneself, to "brand" oneself and to
threat which Microsoft cannot tolerate.auction off one's services, ideas,
Hence its efforts to eradicate piracy -products, designs, experience, etc. This
successful in China and an utter failureis a return to pre-industrial times when
in legally-relaxed Russia.But whatartisans ruled the economic scene. Work
Microsoft fails to understand is thatstability will vanish and work mobility
the problem lies with its pricing policywill increase in a landscape of shifting
- not with the pirates. When faced withallegiances, head hunting, remote
a global marketplace, a company cancollaboration and similar labour market
adopt one of two policies: either totrends.Market FragmentationIn a
adjust the price of its products to afragmented market with a myriad of
world average of purchasing power - ormutually exclusive market niches,
to use discretionary differentialconsumer preferences and marketing and
pricing (as pharmaceutical companiessales channels - economies of scale in
were forced to do in Brazil and Southmanufacturing and distribution are
Africa). A Macedonian with an averagemeaningless. Narrowcasting replaces
monthly income of 160 USD clearly cannotbroadcasting, mass customization
afford to buy the Encyclopaedia Encartareplaces mass production, a network of
Deluxe. In America, 50 USD is the incomeshifting affiliations replaces the rigid
generated in 4 hours of an average job.owned-branch system. The decentralized,
In Macedonian terms, therefore, theintrapreneurship-based corporation is a
Encarta is 20 times more expensive.late response to these trends. The
Either the price should be lowered inmega-corporation of the future is more
the Macedonian market - or an averagelikely to act as a collective of
world price should be fixed which willstart-ups than as a homogeneous, uniform
reflect an average global purchasing(and, to conspiracy theorists, sinister)
power.Something must be done about itjuggernaut it once was.
not only from the economic point of



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