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 Copyright Protection Is for Dinosaurs Stewart Alsop Why do we need to protect intellectual property? Seriously, I'm beginning to wonder if we really need government protection of intellectual property in our new cyberworld.
Copyrights. Trademarks. Patents. The basic idea behind these three concepts is to provide a kind of legal monopoly that safeguards the results of creative effort as an incentive for people to engage in that effort. The theory, at least in most Western nations, is that people will not be motivated to produce such effort if the results can be copied freely. Copyright law protects the physical expression of ideas: writing, music, broadcasts, films, software programs, etc. (This Fortune 500 issue is full of photographs, illustrations, and articles--such as this column--that are all protected by copyright.) Trademark law protects brand names and company logos. (The name of this magazine, Fortune, and the name of the annual compilation that is published in this issue, the Fortune 500, are protected trademarks.) Patent law protects demonstrably new ideas, judged worthy by dint of their newness to be protected from copying. (A new printing machine, for example, might qualify.) I'm going to deal with copyright, as it's the principle nearest to my heart--I've spent most of my career as a journalist and editor profiting from my own or my employers' copyrights. Copyright protection evolves from a world in which copying can be prevented. No one would have even considered this slightly screwy idea--let's prevent people from copying other people's work--if it had never been possible to prevent copying. But now we live in a new world where copying is next to impossible to stop. Indeed, copying is so easy that perhaps a government-enforced monopoly on creative efforts doesn't make sense anymore. (I'm not proposing this lightly, even though I now mostly profit from my investing activities. But I can assure you--unless you happen to be Tom Clancy--that investing produces considerably more profit than copyright protection!) There was a time, from about 1980 to 1986 or so, when PC software companies were concerned about users copying programs from one floppy disk to another. (People under the age of 25 may have difficulty believing that software actually could fit on a floppy disk.) These companies resorted to "disk protection" schemes, which were programming that made it impossible to copy software unless you were a proficient hacker. But this protection also made the software more difficult to use, and customers complained. After a few years the companies figured out that they could remove the disk-protection schemes without harm. They discovered that they could still get customers to pay for manuals, customer service, and other benefits, and still make lots of money. (You've noticed how profitable Microsoft is?) For eight years, from 1985 to 1993, I produced a newsletter called P.C. Letter. I printed copies on paper and mailed them in envelopes to subscribers. (Yeah, I know it sounds archaic.) My subscribers, of course, could easily photocopy the material and send it to colleagues. That mattered to me, since I was charging $500 a year for subscriptions. Indeed, many newsletter publishers still consider photocopying a big legal issue. But the truth is that photocopying was a great sales tool, because prospects were more likely to subscribe if they had read an issue or two and knew that a colleague was not only reading the newsletter but also getting it first since he'd paid for a subscription. So I never made a big deal out of photocopying. Instead, I sold subscriptions as aggressively as I could, in part by emphasizing the benefits of having your own copy. No one has paid any attention whatsoever to my proposed remedy for dealing with Microsoft's allegedly anticompetitive behavior. I proposed that if we believe that we citizens of the U.S. can't control or regulate Microsoft's behavior as a monopoly, then let's withdraw government protection of the intellectual property making that monopoly possible. In other words, take away copyright and trademark protection for Microsoft products deemed to be monopolies--Microsoft Windows 98, for instance, and perhaps Microsoft Office, but not Windows NT or Windows CE. This would probably spur competition. Other software makers have been reluctant to create an alternate version of Windows primarily because of the threat of having Microsoft sue them. Smart people: Microsoft would have an excellent case if anyone tried to copy Windows or Office. Remove the government-approved monopoly, however, and you'd still have some pretty phenomenal obstacles that would, in effect, protect Microsoft. First, there's the technical challenge of reproducing the Windows programming interface so successfully that Sun Windows, for instance, would run all the programs that run on Microsoft Windows. Then there's the sheer speed of change--as soon as a competitor had managed to reproduce Windows 98, say, Microsoft would be out with a new version. Most important, although Microsoft is considered a Darth Vader because of its business practices, the truth is that users wouldn't trust anyone else to make Windows work. Trust is so significant in technical matters that it means more than it ever used to, and is now a true barrier to entry for competitors. Meanwhile, whole industries are arising around unprotected content and ideas. Linux is an operating system that isn't owned by anyone and so can be freely copied and revised. A bunch of companies, including Red Hat Software of Research Triangle Park, N.C., and LinuxCare of San Francisco, are building businesses that charge not for the product but for service in support of the product. Most recently, you might have heard about this thing called MP3. It's a new way to store music in digital form. Just like Linux, music in MP3 format can be freely copied. Nothing in the format protects the rights of the artist or music company. Needless to say, the recorded-music business is in an uproar. How can you make any money, it asks, if people can just make copies of the songs they want, attach them to an e-mail message, and send them to 50 or 500 friends? How indeed? Well, I've seen business plans for at least three companies that are planning to answer that question by building businesses around unprotected music. I can't get into details because these plans are still floating around, but one thing's for sure--the same thing will happen to film once hard disks and network connections get big enough to handle digital video as easily as current equipment handles digital music. So here we are, at the dawn of virtual reality, electronic commerce, and digital
information. Doesn't it begin to feel as if we should go back and reexamine our assumptions about whether creative effort
should be protected by the government? Of course, as a spur to these discussions,
I would love to grant you blanket permission to copy this article freely, but I
don't own the copyright. You'll have to ask the permissions manager here at
Fortune if you want to make more than one copy.
Stewart Alsop is a partner with New Enterprise Associates, a venture
capital firm. Except as noted, neither he nor his partnership has a financial
interest in the companies mentioned. Alsop may be reached at stewart_alsop@fortunemail.com.
Magazine Issue: April 26, 1999
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