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The entertainment business is
still in a twist about file-sharing over he
Internet. Does it hurt over-the-counter sales of
music and movies or does it gives industry the
opportunity to tap into a vibrant and profitable
online market? Most people in industry believe
it is the former. But that case has recently
been doubly undermined.
First, a paper by academics Feliz
Oberholzer-Gee and Koleman Strumpf concludes
that "file-sharing has no statistically
significant effect on purchases of the average
album" and that sharing actually increased sales
of popular CDs. In the second case,
SiliconValley.com reported that while the
Recording Industry Association of America, the
main trade body, consistently claimed a decrease
in sales of CDs between 2003 and 2004, those
sales actually increased by 10%. In other words,
the RIAA had been fibbing, or at best,
obfuscating.
Fibs or not, the industry had
successfully scare mongered politicians on both
sides of Atlantic into some hasty and tough
legislation. The 1998 Digital Millennium
Copyright Act (DMCA) and its European cousin,
the 2003 EU Intellectual Property Enforcement
directive, outlawed a number of previously legal
activities (including attempts to circumvent
anti-copying measures).
But now some of the legislators
are repenting of their hasty actions, which have
led to lawsuits against research scientists,
software firms and even manufacturer of
automatic garage doors. A bill now at committee
stage in congress looks to soften the effects of
the DMCA: "We went way overboard," said John
Doolittle, a key congressional sponsor.
The problem is that industry
interest groups excel at making the case that
file-sharing, and not poor management or
corporate excess, is the cause of all the
entertainment business's imagined ills.
Take the British Video
Association. A few weeks after noting that the
British video and DVD market had grown 30% to
record annual purchases of £2.87bn, the BVA
complained that 1.7m Brits illegally downloaded
movies over the Internet, costing the industry
£45m in lost sales.
(That means that nearly half of all Brits with
broadband were downloading movies, a scarcely
credible estimate.)
The
BVA even co-opted trade minister David
Sainsbury, who tool a stern tone:" I am acutely
aware that this successful and healthy industry
could be very severely damaged if we do not work
hard to keep the lid on intellectual property
crime."
Of course intellectual property
law needs to strike a fine balance between
protecting creators and harming society. but
economists of all hues, from right and left,
broadly agree that today's copyright protections
are so excessive that they harm innovation.
And even the BBC is getting in on
the file-sharing act. In May it launched a trail
of its Interactive Media Player (iMP), a piece
of software that allows web surfers to download,
watch and share up to a week of television
shows. The BBC has kept rights owners happy by
installing a copy protection system on the iMP
to prevent copying. Some BBC insiders suspect
that it will e only a matter of weeks before the
copying code on the iMP is hacked and eager fans
of Eastenders will finally be able to enjoy it
even if they live abroad.
Can Microsoft change its spot?
After receiving a cursory
spanking in March from the European commission
for anti-competitive behavior, Micro-soft has
been falling over itself to make friends with
old enemies.
In the last few weeks it has
settled several lawsuits and paid more than
US$2.5bn in damages to bitter rivals like Sun
and InterTrust. And as if that wasn't enough,
Microsoft has made up with Electronic Arts, the
largest video games publisher. The agreement
means that EA which owns titles like Fifa Soccer
and Battlefield, will develop games for online
service for Microsoft's Xbox console.
EA had previously refused to play
ball because Microsoft wouldn't share online
games revenues fairly. Needing some good titles
to get consumers buying the Xbox, Microsoft
appears to have sweetened its offer to EA.
Great games are, after all, what
made the Sony PlayStation a success. Is this a
new Microsoft? Can the leopard really change its
operating systems and software, Microsoft is no
longer growing. So it needs to learn to live
with other firms. But towards its new rivals -
Sony in gaming, and Google in searching - We can
expect the usual bodyline tactics. Watch out,
chaps.
E-commerce threat to John
Lewis:
Online shopping is part of
everyday life for a growing number of people.
but as the Economists points out in a survey, it
still accounts for only 1.6% of retail sales in
US, where it is hampered by concerns about
security.
Meanwhile, one famous British
store is holding out against it. Shopping for a
washing machine, your correspondent was able to
survey the market and enjoy the benefits of
transparency thanks to a website that provides
price comparisons. I found the cheapest price
for the model I wanted. Needless to say I was
skeptical of legitimacy of a business that could
undercut the high street by
£200. So why not
take advantage of John Lewis's famous price
promise? Printout in hand I went to the Oxford
street store safe in the knowledge that the shop
would match the best e-price.
But I discovered, the tentacles
of the Web have twisted the heart of that retail
paragon. Perhaps it is time to change its motto
to "Never knowingly undersold expect on the
Net." |
