October 31, 2004  ·  Lessig

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When this story broke, my reaction was the same as Begala’s on Crossfire: There was no way that Bush cheated like this in the debates. And just because Doonesbury believes it that doesn’t make it true.

But now Salon says a NASA photo analyst has concluded that he did. I know on the scale of things — unnecessary war, torture, trillion dollar deficits, the environment — this sin is tiny. But is there anything more pathetic than cheating in a debate? WBSH — George “radio man” Bush. Powerful and effective, so long as he keeps the channel in tune.

October 31, 2004  ·  Lessig

So translation is the hardest thing in the world to do well, so no criticism of the translator intended here, but: There’s something very weird about the translation of bin Laden‘s speech.

As Aljazeera has translated it, near the end bin Laden says this:

And for the record, we had agreed with the Commander-General Muhammad Ataa, Allah have mercy on him, that all the operations should be carried out within 20 minutes before Bush and his administration notice.

It never occurred to us that the Commander in Chief of the armed forces would abandon 50,000 of his citizens in the twin towers to face those great horrors alone at a time when they most needed him.

He goes on to refer to the Pet Goat incident, so we know he’s referring to the morning of September 11. But what does “carried out within 20 minutes before Bush and his administration notice” mean? Is bin Laden saying he gave the US warning (“notice”) before the attack — which would explain the weird look on Bush’s face before he was told the attack had actually occured?

Is there someone out there who can do better with the translation?

October 31, 2004  ·  Lessig

It is astonishing to me how hard it is to talk to friends and family about this election. It must have been easier before we entered the age of the broadcast. People must have expected it. But today, politics is religion � and neither are to be discussed among people who disagree. We feel free to stuff envelopes at an election headquarters. Or even to blather on in a blog. But the act of directly confronting someone else — at least if you know them — and asking them to explain their vote is as rude as asking them to explain their heart.

Most of the time, that doesn’t bother me. But in elections like this, it depresses the hell out of me. My family has had a vicious, extended debate through our mailing list about this election. I never understood how families were torn apart by the Civil War. I understand it now. Yet despite the bloodiness, it feels to me a duty. I swayed just one vote in that exchange with my family; I never expected to sway any. But the expectation of failure is not a reason to concede — see, e.g., the free culture movement.

I think this a duty we all share. We should learn to do it civilly. We need better tools. But if we’re ever to become a democracy that is immune from the spins of the likes of bin Laden and Rove, we need to rediscover, or just discover, the ethic of reasoned persuasion.

We built p2p-politics to ease people into this practice. Despite its brilliant technical implementation, the idea was a bust. Billions came to the site to watch the clips; scores of great clips were submitted; but precious few used the tool to send to someone else an argument, or a reason, or even a clip.

Whatever your tool, make this a duty of citizenship. Not always, maybe not in every election. But at least in this election. I spend a huge part of my time (insanely, my friends say) engaging with people I don’t know who email all sorts of questions and abuse (and even some words of praise). So this might seem more natural to me. But citizenship must mean explaining why. At least this time, it must. We are divided, and furious. We should use that anger for some good.

October 30, 2004  ·  William Fisher

Larry has been extremely generous in providing me this week-long opportunity to use his blog to explore some controversial questions involving contemporary intellectual-property law. I�m grateful to him � and to all of you who have offered reactions to my suggestions and questions.

Terry Fisher

October 30, 2004  ·  William Fisher

In this, my final, post, I�d like to take up the troublesome topic of price discrimination � both with respect to the distribution of audio and video recordings and with respect to sales of pharmaceutical products. My own view, which I�ll try to explain briefly, is that (a) we are likely to see much more price discrimination by the providers of these goods in the near future; (b) price discrimination in the context of entertainment is, on balance, bad; and (c) price discrimination in the context of drugs is, on balance, good. Judgments (b) and (c) are tentative and surely debatable; I�m hoping to elicit reactions.

First some background (from Chapter 4 of my book): �Roughly speaking, price discrimination refers to the practice of charging different consumers different prices for access to the same good or service. Somewhat more precisely, it means charging different consumers different prices when the variation cannot be explained by differences in the costs of the versions of the good or service that is supplied to them. A traditional example of price discrimination is the practice of airlines to offer discounts to customers who �stay over� at their destinations for a Saturday night. The cost to the airline of supplying the service in question–the various expenditures necessary to carry a person in a plane from, say, Boston to San Francisco and back–is the same regardless of whether the passenger stays in San Francisco for a day or a week. The only reason for varying the price is to extract higher fares from people who are able and willing to pay more (in this case, business travelers, most of whom have expense accounts), without pricing out of the market people who are able and willing to pay less (in this case, tourists).

�Price discrimination increases a seller�s profits. Why, then, don�t all sellers engage in it? The main reason is that, with rare exceptions, price discrimination is only feasible when the seller both has some degree of market power and is able to discourage �arbitrage.� Market power exists when there are no readily available, equally satisfactory substitutes for the good or service that the seller is offering. Arbitrage occurs when a customer who purchases a good or service at a low price is able to resell it (typically at a profit) to someone who otherwise would be obliged to pay a high price for it�.�

Record companies, film studios, and pharmaceutical companies all enjoy some degree of market power. Their ability to engage in price discrimination in the past has been limited primarily by the difficulty they have had in curtailing arbitrage. (The �first sale� doctrine in copyright law affirmatively protects arbitrage, and drug companies have had trouble preventing purchasers of drugs at low prices from reselling them to others at higher prices.) This has not prevented the companies from engaging in price discrimination altogether, but has forced them to engage in relatively crude versions. The best known is the so-called �windowing� marketing system in the film industry, in which the studios divide up their markets temporally — first milking the market of especially eager or wealthy viewers by charging high license fees to first-run theatres (which, in turn, charge substantial fees for admission), then gradually releasing the film at diminishing prices in a series of secondary markets. (More detail on this practice can be found in Chapter 2 of my book.) The pharmaceutical companies, by contract, have practiced geographic price discrimination. Except when prevented by �exhaustion� doctrines (e.g., within the EU), they price their products differently in different countries, depending on the residents� ability and willingness to pay.

In the near future, I suggest, we are likely to see much more precise and ubiquitous forms of price discrimination � certainly in the entertainment industry and perhaps in the drug industry. With respect to the former, the main reason is that (assuming that an ACS is not adopted in the near term), the record companies and film studios are likely to intensify their efforts to develop digital rights management systems (perhaps with support from governments, in the form of enhanced versions of the Digital Millennium Copyright Act and its ilk). DRM systems are designed, among other purposes, to frustrate arbitrage � i.e., to prevent the first purchaser or licensee of a recording from transferring it to others. The net result: the record companies and films studios, if their DRM systems work, will begin to divide the universe of people who wish access to their works into much thinner slices and to set different prices for each subgroup. In the old days, everyone paid the same price for a CD. Soon, the price you are charged for access to a recording will vary with such things as your age, your zip code (a proxy for your income), what sort of device you will play it on, etc. Whether we will see a similar trend in the drug industry is less certain, but the overall trend toward the curtailment of international exhaustion rules, combined with intensified pressure on drug companies to lower their prices in poor regions, may enable and induce the pharmaceutical houses to further refine their price discrimination schemes.

Should we applaud or lament these trends? My contention is that there�s no blanket answer to that question � that price discrimination has both good and bad effects, and that its overall social desirability varies by context.

Its benefits include:
(a) It enables the entertainment and drug companies to make more money. If (a big �if�) we believe that augmentation of their profits will increase their incentives to engage in socially beneficial innovation, that�s good.
(b) It increases the ability of the poor to gain access to copyrighted or patented material. When the material in question consists of a life-saving drug, that means that price discrimination saves lives.
(c) Usually (not invariably), it redistributes wealth from the rich to the poor � and thus functions like a progressive income tax.

Its disadvantages include:
(d) The time and effort necessary to devise and implement price-discrimination schemes represent a social waste. Some forms of the practice (most importantly, so-called �second degree� price discrimination � in which the seller of a product induces potential buyers to reveal their resources or preferences by offering them different versions [such as business-class and coach-class plane tickets]) � are especially wasteful.
(e) In the view of at least some people, it is immoral. �Charging whatever each submarket market will bear,� �gouging,� seems improper. All people ought to have equal access (i.e., access on the same terms and at the same price) to a particular good or service.

My own view is that, with respect to drugs, argument (d) and (e) are trumped by the compelling interest in getting life-saving drugs into more hands (argument (b)). With respect to recorded entertainment, where increasing access to the products as issue is nowhere near so important, the right way to weigh these competing considerations is much less clear. Moreover, in context of entertainment, price discrimination has some additional troubling features, summarized in the following excerpt from Chapter 4:

�Sadly, [the] benefits [of enhanced opportunities to engage in price discrimination] would pale in the face of three other pernicious effects. The first is cultural. As Wendy Gordon has suggested, [a world characterized by pervasive price discrimination] would have a distressingly granular feel. Each time you listened to a song or watched a movie, you would know that a tiny meter, attached to your credit card or bank account, was whirring. Each time you bought a lobster in an upscale grocery store, you would know that your �consumer profile� was being adjusted–and that, next week, the prices you paid for all entertainment products would be one notch higher. Awareness of these effects would likely make you more calculating. Also, perhaps, less altruistic. Conscious that you are paying for each bit of entertainment you consume, you might be less inclined to �give back� freely to the culture the fruits of your own imagination. To most people, such a world seems unattractive.

�Second, creative and critical uses of entertainment products would likely suffer in this new environment�. [S]uppliers would most likely charge higher prices to people who wished to modify their products or incorporate them in other works. Cover artists, rap artists (who rely on digital sampling), and ordinary consumers who just like to �play around� with recordings, would all pay substantially higher fees. This price rise, plus inevitable imperfections in the rate-setting mechanisms, would sometimes place access to digital products beyond the financial means of such second-tier creators. Society at large, consequently, would lose the benefit of their derivative products, and opportunities for semiotic democracy would be curtailed�.

�Finally, when added to the many other opportunities to make money considered in this chapter, the ability to engage in precise price discrimination would radically increase the incomes of the creators of music and movies. The result would be a massive transfer of wealth from consumers to producers–much more than necessary to offset the losses that the producers are currently suffering or are likely to suffer in the future. That effect seems troubling in its own right. In addition, it would exacerbate the problem discussed at the end of Chapter 2 — in which the large and highly visible incomes of �star� performers draw inefficiently large numbers of aspirants into the music and movie businesses. If that problem is bad now, it would become worse in the altered legal and business environment.�

Bottom line: we should adjust legal rules to assist drug companies to engage in price discrimination, but, other things being equal, we should legal reforms that afford the owners of copyrights in songs and films similar opportunities.

Reactions?

Terry Fisher

October 29, 2004  ·  Lessig

It is no surprise to readers of this blog that I would endorse John Kerry for President. I’ve been harshly (sometimes unfairly) critical of the President (though the Secret Service has not questioned me about my criticism), while I’ve withheld criticism of John Kerry, save for questions about his campaign, and anxiety about his views on IP (and subsequent events have calmed both fears).

But every blog owes it to this space to state its case one way or the other, however briefly, so that the reality of November 3 doesn’t distort the views of where we are today.

Update: Dave’s taken the idea of endorsement and made it bloggable. Check out the options here.

There is an aspect of George Bush that has made it hard to come to this view. I’ve had no doubt about his policies — except for his views on trade (the steel tariffs embarrassment notwithstanding), I’m against them. But his character (as we see it) has a feature that is rare in politicians, and that as a liberal, I long for. As Bush likes to say, even if you disagree with him, you know where he stands. He’s flip-flopped of course (see facts 88-92 on The Nation’s 100 Facts about Bush), but on core positions, he has remained firm.

This is a feature in a politician, not a bug. It was the great disappointment of Clinton that heat would melt any resolve. Loyalty was a weakness. Commitment to an ideal that was unpopular was simply a prelude to a changing commitment.

Bush is different in this respect. It is a certain stubbornness, no doubt, but when stubbornness reflects principles, it is a rare virtue for a politician. It is how we like to remember Reagan. It’s what gave Lincoln the strength to risk everything for the Union.

But ultimately the question is what this stubbornness is a commitment to. One can respect a man committed to values one disagrees with, but that respect depends upon believing that it is really values that constitute the disagreement.

And here I found the Suskind’s book about Paul O’Neill the most instructive. The Price of Loyalty tells a story about a terrifying White House. The terror is the role of politics in this White House. No doubt, every White House has a political director. But at its core, policy should be the driver. Politics might wrap the policy; politics might guide its execution. But if a Presidency is to be more than a machine to assure reelection, then commitment must be to something more than the machine to assure reelection.

This White House has no policy core, at least according to O’Neill, and confirmed in many obvious ways. As he describes through Suskind, there is just a political shell, with no core policy driving the politics. Policy debates are scripted; arguments are removed from the script. The least curious President gets surrounded by yes men, who are themselves watching for signals not from the President, but from the men in charge of getting the President elected.

This is a criticism we could generalize across branches. The branch I know the most about (though admittedly, not much) is the judiciary. Everyone who lives and studies the law recognizes that judges too have a political shell. They are sensitive to, and react with, the changing mood of a time. But we respect judges not for their political skill, but for the principles that define their legal core. The political shell must answer to those principles. If it does, the judge merits respect, even from those who disagree with the principles at his or her core.

I spend my life as a lawyer in the dreamworld that imagines that principles guide judicial decisions. My students try to wake me from that world; I refuse to wake. And as a citizen, I want to live in the world where the White House is guided by a policy making core, not by a political shell. There is an ideal in the law called getting it right, politics notwithstanding. There should be such an ideal in the White House too.

My values are closer to Kerry’s than Bush. So I start biased in his favor. But in those moments when I let myself imagine that Kerry might actually pull this off, the picture that is most dramatically different in my mind is the idea that getting it right might return to the White House. Getting it right: following the facts, asking questions, testing theories, doing what, in light of these, and the values that frame these questions, is right.

Kerry reads. He asks questions. He gets angry at incomplete answers. He does policy. On this alone, he will be a better President than President Bush. And if he can thin the political shell to its properly secondary place, and not fear standing for some ideals that most think wrong, then he’ll be a great President — greater than Clinton, or Reagan, or just about anyone else.

There’s of course much more one could say. There are the parts that make me rage with anger (torture) and well with tears (torture). But the ideal of a policymaking White House is at least a reason for Kerry over Bush. I won’t pretend that it was reason that got me to my vote. I’m sure that anger and tears will always have more power than reason. But if you want to get it right, here at least is a reason.