February 04, 2003

Like light from a lighthouse

An entry over on Doc's weblog titled "Ownership (does not equal) Exclusivity" points to a question posed by Brent Ashley about misaligned property analogy:

"What pervasive meme can we come up with that will be strong enough to counter the powerful theft/piracy images?"

After reading the blog entries, I was reminded of a discussion in an economics class about public goods. Classic public goods display two characteristics:

1) Inexhaustible - Non-rival in consumption; i.e. my consumption doesn't reduce others' consumption.

2) Non-excludable - Difficult (costly) or impossible to exclude non-payers from consuming.

This definition has not been applicable to intellectual property -- until recently. Let's pick on the music industry, for purposes of this article.

Professionally produced music has historically been both exhaustible and excludable. There are production costs for the media, which result in limited production runs. Also, exclusion was feasible because media duplication technology was either non-existent (vinyl LPs) or inferior in quality (dubbing your own cassettes). You had to buy the media from the source, or you made do without, or with reduced quality.

However, the arrival of easy-to-use digital duplication technology has made music close to inexhaustable. And, the internet makes it much more difficult for music companies to exclude use. Effectively, music is becoming a public good.

In our econ class, we were hard-pressed to come up with a true public good that fit the classic definition. The one I remember most clearly is a lighthouse. Use of the lighthouse does not reduce the ability of others to use it. And, it is nearly impossible to exclude people from using the lighthouse.

Intellectual property that can easily be put in digital form is now like light from a lighthouse. Owners of this kind of intellectual property are now presented with a new challenge -- how to exclude non-paying customers from using the light from their lighthouse.

That's the new meme I'm proposing: "Like light from a lighthouse". When I use the light, it doesn't reduce anyone else's ability to use it. And the supply is practically inexhaustible.

Posted by Patrick at February 4, 2003 12:03 PM | TrackBack