A few days ago I saw an article - possibly in the Wall Street Journal, but I can't find it there - in which some business type said that he or she took global warming seriously. The best approach would be to strengthen intellectual property rights so that companies would have an incentive to develop technology to help newly developing economies.

Have any of our readers seen this so I can track it down?

Claus Pedersen (ht: Lessig) has data about the Danish music industry. Because the royalties in Denmark are distributed by a monopoly, his data is quite detailed. Here are the salient facts about the industry since 2001

Nordisk Copyright Bureau (NCB) administers the royalties of authors concerning records and CDs...

The authors were divided into four groups in the analysis: Group 1, which receives DKK 1-10,000 from NCB annually, Group 2, which receives DKK 10,001-50,000, Group 3, which receives DKK 50,001-150,000, and finally Group 4, which receives more than DKK 150,000...

First and foremost, it turns out that the number of NCB recipients in the period after 2000 is consistently higher than at any point in time during the heydays of the recording industry from 1995-2000. Thus more authors were successful in releasing text and music in the period of declining sales than in the period of massive increase in sales. Furthermore, we may also conclude that the number of NCB recipients increases slightly in the three "poorest" groups. The number of authors who receive more than 150,000 is decreasing.

Less money shared by more people necessarily entails that someone is getting poorer. Since the number of NCB recipients in the high end (more than DKK 150,000) has declined and the other groups have more members now, a loss of income for the poorest artists would be expected. However, this is not the case.

NCB's own figures show that the average payment for Group 1 (less than DKK 10,000) has increased by 16.7% from 2001 to 2005. The income of Group 2 has decreased by 2.2%, the income of Group 3 has increased by 2.9, and the average income of Group 4 has decreased by 18.2%.

So, there are fewer artists in the high income Group 4 and they make less money than they used to. The low income Group 1 now contains more artists and they make more money than before.

I should clarify this somewhat confusing discussion about the distribution of payments. Less total money is being distributed to more people. Suppose that this took the form of a pro-rata decrease in income - so that the lowest 10% earn 10% less, the highest 10% earn 10% less and so forth. This would have the following effect: The number of people in the high end as measured by those earning more than a fixed cut-off would decline, and (if as is almost certainly the case, the density function is convex in the upper range) the amount of money they would earn per person would go down. At the low end the number of people would increase and if the density function is concave in the lower range, the amount that they would earn per person would actually go up. So basically, all the complicated distributional information Pedersen reports is basically saying that earnings per person went down.

Another salient fact is that while the sale of recorded music during the period has declined by a factor of about two, live performances have almost doubled. This may mean that income at the high end decreased less than in the recorded sales data if high end performers get a higher share of live performance revenue.

What does this mean for copyright? Copyright primarily serves to enhance the incomes of the top artists. So the fact that their income from recorded sales has dropped is pretty much what you might expect if file-sharing has weakened copyright. The rationale as to why it might be a good idea to enhance the income of top artists (as has been discussed in some previous posts and comments) is that it may provide more incentive to enter the industry in the first place. The key point is that the data here isn't consistent with that argument: the total number of people producing music has gone up rather than down.

On the anniversary of the Supreme Court Grokster decision there is an article on AP covering developments during the last year. After the decision

Andrew Lack, then chief executive at Sony BMG Music Entertainment, predicted at the time: "We will no longer have to compete with thieves in the night whose businesses are built on larceny."

And since then?

The average number of simultaneous file-sharing users was about 9.7 million worldwide in May, with about 6.7 million from the United States, according to BigChampagne LLC, which tracks file-sharing activity. In the same period last year, BigChampagne tracked 8.6 million average users globally and 6.2 million in the United States.

So I guess we can conclude that file sharers aren't "thieves in the night whose businesses are built on larceny."

Jim Baen died two days ago. There is a moving obituary by David Drake. In case you are wondering what this might have to do with copyright and DRM, here is the relevant part

For example, the traditional model of electronic publishing required that the works be encrypted. Jim thought that just made it hard for people to read books, the worst mistake a publisher could make. His e-texts were clear and in a variety of common formats.

While e-publishing has been a costly waste of effort for others, Baen Books quickly began earning more from electronic sales than it did from Canada. By the time of Jim's death, the figure had risen to ten times that.

This is real entrepreneurship - making available a superior product at a good price. I expect it put more money in the pockets of authors than the other kind.

I owe my own personal gratitude to Jim Baen. He published the kind of science fiction I love to read - I was reading books he published long before electronic publishing was a gleam in his eye. I read fast, and I like to read on airplanes: while reading off of a palm pilot or tablet pc isn't quite as satisfying as a real book, the fact that I can bring a 1000 volume library with me wherever I am is worth a lot. For me Baen's electronic publication was a godsend. I went to his website to see how many Baen electronic books I own: 171 is the count. That means I've (happily) paid him over $600 for electronic books over the years - probably more than I've spent on traditional dead-tree fiction from all publishers during that time. I imagine quite a bit of that was well-earned money for the authors, as well as well-earned money for Baen himself. My only regret is that I will never have the opportunity to meet the man.

Over on Ed Felten's blog there is an argument that the transactions costs imposed by IP law are devastatingly bad because of the high cumulative value of many small transactions. The specific fact quoted was

For those not in the know, “long tail” is one of the current buzzphrases of tech punditry. The term was coined by Chris Anderson in a famous Wired article. The idea is that in markets for creative works, niche works account for a surprisingly large fraction of consumer demand. For example, Anderson writes that about one-fourth of Amazon's book sales come from titles not among the 135,000 most popular. These books may sell in ones and twos, but there are so many of them that collectively they make up a big part of the market.

I was pretty surprised by this "fact." Michele and I have gathered some data on book revenues and the striking thing is the concentration of sales by a few very successful authors. While we argue that this isn't a very good fact for those who support IP it also doesn't seem consistent with the Chris Anderson fact cited above. (Anyone know what data he used?)

Anyway, I went back and looked at our data, and I found that 75% of book revenues are earned by roughly the top 200 books out of our sample of 1712 book titles. That is, the bottom 88% of books earns only a quarter of the revenue. This doesn't seem like that long a tail. In our sample, the top 700 books generally sold more than 100 copies during the two week period of the sample; while the bottom 900 books generally sold less than 20 copies. However, this bottom 900 accounted for only about 1/3rd of 1 percent of book revenue. So the idea that books that "sell in ones and twos" make up a big part of the market isn't in our data. In short, I am skeptical of Chris Anderson's fact.

The U.S. Supreme Court is about to take up the critical issue of the "obviousness" of a patent. CNET has an informative article about the upcoming case - although the Supreme Court has a long sad history of allowing the Federal Circuit Court to make up the law as it goes along. Needless to say

Last January, the U.S. Court of Appeals for the Federal Circuit reversed an earlier court decision last that found patents held by Teleflex were "obvious" and therefore invalid.

Also of interest is

Microsoft and Cisco charged that the current test applied by the Federal Circuit "hurts innovation" because it establishes "far too lenient a standard for patentability." Cisco has even built up a portfolio of patents for "defensive purposes" in order to "neutralize" a proliferation of trivial patents, the brief said.

highlighting the fact that large companies probably have more to lose from patent law than gain.

Creative Commons is partying in Brazil. William Patry has a nice post linking to some video, and a discussion of the creative commons with comments. However he says

It is also important to devise ways so that creators don't give away their rights in the first place. That will require market conditions so that individuals will themselves distribute their works in way that will result in sufficient remuneration without the need to involve a middleman.

I don't see that eliminating copyright would do away with the middleman - although it would probably do away with the current middleman. Wheat is produced competitively - but most of us don't deal directly with wheat farmers for our wheat. (ht: Crosbie Fitch)

Eliminating copyright doesn't mean eliminating profits for artists. Historically artists such as Mozart who wrote without copyright did as well financially as those like Beethoven that wrote with copyright. (Mozart was always strapped for cash because he was a free spender, not because he didn't earn a lot.) But the competitive market is a great creative force - a great example of this is Crosbie Fitch's Digital Productions which is pioneering a way for artists to make money through contingency auctions. The idea is that fans make pledges and the money is escrowed. When sufficient pledges are received, the work (music or digital art in this case) is released to the fans.

Ok, here you go: as it were to be expected my first and very belated contribution to the jihad against the devil monopolists is going to be about politics. Bad habits are hard to get rid of!

Anyhow, here's the political scoop: someone is trying to create the US version of the Pirate Party, see here. So far, all that is available is a website, with a good statement of purposes, an explicit reference to the original Swedish experience, and an invitation to donate. Well, I agree: the latter takes a bit too much space in the site and, maybe, these guys should learn the ABC of founding a party. First you let people join and only a little bit later you ask for contributions. Anyhow, transeat.

As I said, the original idea - do not worry, the idea is neither patented nor copyrighted - comes from Sweden where it appears to have progressed. At least judging from their website, the Pirate Partit is quite advanced and well structured. In particular, there is nothing in what they claim that I find disagreeable, and the connection to the right of privacy, individual freedom and post-9/11 makes a lot of sense.

We should consider it, and figure out if these guys in the US are serious. Or, maybe, we should just get in touch with the Swedish. Either way, let's party!

(via Slashdot) An article on CNET covers congressional hearing on patent trolls. Leading the charge against patent trolls: Amazon. My favorite part of the article

"Could not Amazon.com be accused of being a troll for patenting the one-click?" Smith asked, a wry smile on his face.

Misener defended the patent as "a radical departure from the shopping cart model" when it was granted in 1998. "We only exercised the patent against someone who at the time...had publicly announced intention to crush our business," he said. "This wasn't some scheme to hit up small users."

Yeesh. Apparently a patent troll is everyone else who wants a patent except for you. While I'm generally in favor of patent reform that would make patent trolling more difficult, it is pretty clear that the legislation is being pushed by large companies that want to preserve their own ability to garner monopoly through patent, while making it harder for the little guy to do so. This isn't surprising, and it is the main reason why patents should be eliminated. As long as they exist they create an enormous incentive for rent-seeking, and the big guys are always going to win that game.