e.Digital Corporation (fka EDIG)

[Tinroad]

Opinion: Reassessing The Value of Digital Content
By Monty Manley, www.osOpinion.com

I read an essay many years ago which suggested that the cores of certain gas-giant planets might be made of diamond. Think of that. A single, two-thousand-mile-in-diameter diamond. It boggles the mind. What would such a diamond be worth?

The answer: absolutely nothing in monetary terms. Diamonds are, after all, only rocks. Well, crystals actually. It's only their relative rarity that makes them valuable.

That is, diamonds have little intrinsic worth. They are valuable only because people are willing to pay for them. Were the diamond market to suddenly become flooded with high-quality stones, their value would plummet. Diamonds would morph back into pretty rocks.

We can see an analogous situation forming up in cyberspace. It's no longer possible to make money selling hardware for most companies; you have to be a huge conglomerate in most cases to turn much of a profit.

Selling operating systems and infrastructure software is likewise a losing proposition. You can choose to pay nothing for Linux (news - web sites) and its associated software, or spend more money and get your software from Microsoft.

Checking for Leftovers

A new vendor can't really add much value to the mix. The application software market is an even tougher nut to crack. So what's left?

In a word: content.

Despite the dot-com shakeout, businesses new and old are still rushing to put content on the Internet -- movies, music, books, artwork, you name it. And there are hundreds of schemes floating around to extract payment for this content: micropayments, escrow accounts, debit cards, direct account withdrawals, credit cards, and many others.

But something has happened that media companies especially have been dreading for years -- the content is losing its value even as the cost to produce the content is going up.

Digital Decline

Some point to the "piracy" or "theft" of digital content on the Internet as the reason for the decline. There is some truth to that theory. Why pay $15 for a CD when you can get it for free (in the form of MP3) from Gnutella (news - web sites)? Despite Hollywood's attempts at deterring this scenario, the day is not far off when the same will be true of motion pictures.

Broadband access will make downloading a feature film a trivial exercise. When Stephen King published the first e-book (which used a lame encryption technique), it was cracked and distributed on Usenet within the hour.

Laws and ethical considerations aside, it is clear that sharing movies online will happen. Digital technology is too pervasive to ignore and too dispersed to control completely. If a piece of information *can* be distributed digitally, it *will* be eventually -- and in vast numbers.

Does that mean people are inherently bad? Did the computer revolution turn us into a nation of thieves? Why do we feel the need to propagate "intellectual property" over the Web, rather than accept its controlled dissemination by corporations?

Blurring Right and Wrong

Most people would never think of sneaking into a movie or taking a CD from a store without paying for it. And not just because they fear getting caught. They'd consider it wrong to do so. And yet these same people think nothing of grabbing the latest MP3 of their favorite artists off Gnutella or, in the old days, Napster (news - web sites). But is downloading an MP3 the same as taking a CD without paying for it?

To the RIAA (news - web sites), absolutely yes. To them, digital content is no different from media in real space and is subject to the same restrictions and laws. The MPAA feels the same way about movies, and publishers probably feel the same way about books and magazines. The U.S. court system, by and large, agrees with them. So why is this digital anarchy still proceeding apace?

We are entering a time when information, in and of itself, will be so common and easy to get that it has no innate value. Content will become free not because it is right or ethical that it be so, but rather through a harsh Darwinian devaluation.

Digital Differences

In real space, even the commonest things -- paperclips, gumballs, thumbtacks -- are constrained by natural barriers: they must be manufactured, shipped, stored and disseminated. There can only be so many of them.

A digital thing is different. There is no theoretical upper limit on how many perfect copies of the thing can exist, and there are no real barriers to its propagation. A digital thing can be created, disseminated and stored for almost nothing. Even that "almost" may go away when broadband is more common.

It is this facet of the Internet that has led to the saying that "information wants to be free." This is a misstatement. Information itself has no will, and thus cannot "want" anything.

It is human beings who want information to be free, for whatever reason. We can choose to call this desire criminal, and hold that people who believe so are enemies of democracy and the free market. Or, we can admit that cyberspace and real space are two very different places and do not share the same rules.

Shifting Gears

I personally don't believe that vast numbers of people turned into criminals overnight. It's clear that some major shift in the concept of property is happening, and this shift is going to be painful for many (especially those who profited from the old way).

We need to start having serious discussions about whether it is even possible to own digital content or intellectual property.

If not, where does that leave us?

http://dailynews.yahoo.com/h/nf/20010918/tc/13591_1.html