[ba.politics] Rewarding Researchers Without Restricting Copying

hans@web8e.berkeley.edu (Hans Reiser </>) (06/11/88)

     How can we reward researchers without  the  massive  waste  of  restricting
copying with copyright laws?

     How many times have you stolen pricey software?  Or  walked  away  from  it
because  there  was  no way to know if it was worth $300 without trying it for a
month?  Or run away from it because what was on the $1 floppy was worth  $50  to
you, but not that $300 pricetag.  Being a producer is as much a problem as being
a customer.  When you publish information others  copy  and  spread  across  the
planet,  you  may  receive  only  a  small fraction of the benefit you provided.
Small enough that you may be better off not telling anyone outside your company,
or not researching certain subjects just because you can't find a way to receive
a substantial fraction of society's gain.  Our society tries to provide you with
an incentive to research: a clumsy one in the form of copyright and patent laws.
Using these laws you set a fixed price: those who guess that they would  receive
less  utility  from  your program than the price don't buy it, and unnecessarily
miss out on using it.  Is there a way to reward you in proportion to  the  value
of  what you produce, without restricting its use to a fraction of what it could
be if it was free?

     Consider requiring all information users to donate a  percentage  of  their
computer  hardware expenditures to subsidize information producers.  ``Ugh!'' is
your first thought, ``What a horrible bureaucracy!'' Not  necessarily.   Let  me
describe  a  structure  for such a bureaucracy that might give us something more
efficient than restricting information flow through copyright.

     Let's call it ISA, the Information Subsidizers Association.  It  must  slay
two  dragons: freeloading, and bureaucratic inefficiency.  Four groups will have
a role in ISA:  consumer  members,  hardware  manufacturer  members,  government
members,  and  information  supplier members.  Information supplier members will
license information to ISA in return for reward.  ISA  will  grant  manufacturer
membership  to manufacturers who add to their prices a percentage for forwarding
to ISA, and notify ISA which consumer members were thus forced to contribute how
much.   ISA  will grant government membership to governments who agree to assume
the responsibility of collecting dues from their residents, and to pay on behalf
of  those  not  collected  from.  ISA will grant the right to freely use all the
information it owns to consumer members-while they are using  hardware  sold  by
manufacturer  members  or  inside nation members.  It will use the international
patent and copyright treaties to prohibit all other use.  Each  consumer  member
will send ISA a description of how he wants his dues distributed to producers of
information he has enjoyed.  ISA will check to see if there  is  a  conflict  of
interest,  and  each  time money is received from that member it will distribute
according to the last instructions that member sent.

     Can we make it in the interests of each membership group to participate  in
ISA,  and  then  make  it more hassle than it's worth to freeload?  ISA will pit
each membership group against freeloaders in all groups.

     It will expell consumers who use ISA information on hardware that  is  nei-
ther sold by manufacturer members nor inside nation members, and its manufactur-
ers will not sell to those who have been expelled.  ISA will offer  rewards  for
information concerning such freeloaders.  This will be effective with large cor-
porations and institutions, honest members, and members who find freeloading not
worth the effort.

     To encourage manufacturer membership ISA will: 1) Not subsidize information
for  hardware  by  sellers who are not members.  2) Point out that ISA increases
the relative value of a member's  systems.   3)  Work  to  get  the  sellers  of
hardware  compatible with a given hardware standard to decide as a group whether
to support ISA. (Small groups can often effectively cooperate.)

     In making it in the interests of governments to be supporters we are helped
by  the  fact that the U.S. is half of the world computer market.  Membership by
the U.S. Government would in and of itself guarantee ISA's viability.  There  is
a  great variety of forms of pressure that could be brought to bear against non-
member nations by ISA's member nations and manufacturers, and the  existence  of
the international copyright and patent treaties suggests success is possible.

     Hardware expenditures are the best simple  measure  of  the  importance  of
information  to  a  consumer  weighted by ability to pay. Using this measure has
definite  flaws,  notably  the  economic  inefficiency  of  discouraging  barely
worthwhile hardware purchases by increasing the effective price of hardware, but
I see no better answer.  Note that government members with  inclinations  toward
income  redistribution  schemes can choose to distort the flatness of the tax by
not collecting from some and overcollecting from others.  This will be fine with
ISA. So long as the nation as a whole pays its full share ISA will fully respect
the sovereignty of the government member in dues collection.  ISA itself is  not
designed  as a medium for income redistribution: if it was it would be unable to
acquire the membership of whichever nations felt they were  the  losers  in  the

     The president of ISA will be elected by the members, with votes weighted by
the  dues  they pay. (You should have control over spending in proportion to the
amount of it that is your money, and the economic  importance  of  seeing  to  a
company's  information  needs is reasonably guessed at by the money it spends on
hardware.) Members will also vote once a year to determine the  percentage  used
to  calculate  all  dues: each vote will be weighted by dues paid last time, and
the median value will be the one chosen. Members will specify the percentage  of
their  dues  that  are  to be paid to the president of ISA as his reward, and an
additional percentage he can spend to pay his staff and expenses.

     Members may place as much of their dues as they wish at the  discretion  of
the  President's  staff.  The staff of ISA will research ``who has provided what
with how much utility to others'' to an extent that would not be  practical  for
individual  members. For instance, the staff will randomly sample members to see
what software they are using at a given instant and  ask  how  much  utility  it
provides-evaluating  with statistical sampling programs trivial to an individual
member, but not trivial when summed over the set of all  members.   The  natural
tendency  will be for large corporations to provide allocation instructions with
more detail and fewer dollars at the President's discretion compared to instruc-
tions from individuals.

     Openness of records possessed by ISA is a difficult question.  On  the  one
hand  it should be open to all so that there can be no doubt as to the integrity
of the President. On the other hand it should be completely secret so  that  the
complete  privacy  of all members will be respected.  The compromise we will use
will be to allow each member a complete accounting of their  own  contributions,
and  elect  an  independent  auditor  who  has  the authority to look at all the
records and institute a recall election on grounds of  corruption.  The  auditor
will be elected using the same algorithm as the President.

     The ISA constitution may be changed by any petition from  a  dues  weighted
majority  of the members.  The President may propose changes, which must then be
ratified by a dues weighted majority of those who vote.  Reasonable notification
and opportunity to vote must be provided.

     It will probably be necessary for ISA to approach the government for exemp-
tion from anti-trust laws.

     How can ISA be structured to reduce fears of having yet another bubble  gum
bureaucracy  project stuck to the bottom of our feet?  First, by structuring ISA
to funnel money rather than spend it directly.  Second, by placing the money  it
spends  on  its staff at the discretion of the dues payers.  Third, by having it
only control the funneling to the extent that dues payers let it.  Fourth,  dues
payers  control  ISA in proportion to how much of the money he spends is theirs,
which reduces the ability of special interests to control  more  than  they  pay
for.   (  Historically,  whenever special interests could control more than they
paid for they have tended to use the bureaucracy  to  dip  into  other  people's
pockets. )

     In order for ISA to succeed in attracting a variety  of  nations,  some  of
which  may  hate each other, it's important that ISA be structured as completely
independent of any particular national government.

     ISA will maintain an online library of all subsidized information, and make
it accessible from the major computer networks.

     The Information Subsidizers Association will eliminate choosing to not  use
software  because  the  price  is too high. It will also improve the correlation
between the benefit provided to the consumer and the reward received by the pro-
ducer by effectively placing determination of the price in the hands of the con-
sumer, who is the one best informed as to the utility he has  received,  and  by
not forcing the consumer to evaluate before using.

     Starting software entrepreneurs will enter the market with increased  ease.
It's  a  lot  easier  to  give  a  good program away than it is to sell it. When
friends can casually swap programs they like, word of mouth will multiply  usage
of  good  programs  more  rapidly.  Also,  no consumer will be stuck with having
bought a fancy packaged program that turned out to be useless.

     To help make ISA valuable for non-members to join consumer members will  be
asked  to  reward  information supplier members in proportion to the maximum of:
the utility of their product, or the cost of obtaining  it  other  than  through

     ISA membership rights will travel with the hardware the dues are paid  for;
a  change of ownership will not require additional dues, and old hardware cannot
have its dues transferred to new hardware.  What about depreciation of  obsoles-
cent machines?  ISA taxes are aimed at hardware consumption, and owning hardware
and being the one to use it during the ``prime of its life'' should be viewed as
a form of consumption.

     ISA won't reward the services of printing diskettes and documentation,  and
holding user hands. Since both writing software and holding user hands are forms
of providing information, you might ask, what's the difference? Let me take some
time to draw the theoretical line.

     The Spread Cost of a product is the additional cost of affecting  the  last
member  of  a  group with that product, given that you have already affected all
the other members of the group with it.   The  Averaged  Cost  is  the  cost  of
affecting a group divided by the number of people in the group.

     Yes, I know, that took a moment to digest. But here's where we get  to  why
those  concepts  are  introduced:  We  can  usefully  categorize products by the
difference between their averaged cost and spread cost.  Let's do it: Point Pro-
ducts  have  a  spread  cost  close  to  their averaged cost at their societally
optimal production and distribution levels; Area Products  have  a  spread  cost
substantially less than their averaged cost.  The spread cost of giving software
to all the users of a given type of computer is  much  less  than  the  averaged
cost,  which makes it an area product.  Once you've designed a program and given
it to your mother, it doesn't cost much more to post it on the computer nets and
let  everyone have it.  The spread cost of holding user hands, printing documen-
tation, or distributing diskettes is close to the  averaged  cost,  making  them
point  products.   The exhaust from your car is an area product-you can't easily
pollute one person's air without polluting another's.   Your  car  itself  is  a
point product-producing more cars costs GM money.

     ISA won't reward point product type information; it will reward  area  pro-
duct  type  information.  Point products can be effectively responded to (with a
reward or demand for compensation) by those they affect on the individual level;
area  products  should  receive  a  response  by  those  they affect acting as a
coherent group.  ISA will require that  dues  be  paid  on  all  point  products
designed  to aid the use of information area products.  It does this in order to
better encourage the production of those information area products.  The use  of
those  point  products  is the best available measure of the importance of those
information area products to the user.

     Our society tends to respond to the production  of  point  products  fairly
adeptly; it tends to stumble in rewarding area products. Often the group an area
product affects can't organize to effectively respond to the product as a group,
and societal inefficiency results. One area product is particularly important to
our civilization over the long run-information. Copyright and patent laws are an
attempt  to  make  information area products behave like the point products they
aren't. More effectively rewarding information area products is the aim  of  the
Information Subsidizers Association.

     We are accustomed to the idiocies of  copyright,  and  so  they  seem  less
extreme to us than the dangers of yet another Bureaucrat Employment Opportunity.
But think for a moment of how most copyrighted software  reaches  only  a  small
fraction  of those it would reach if copying were free.  It's difficult to esti-
mate what the total increase in the utility of  a  given  piece  of  copyrighted
software  would  be if anyone could copy it freely, but estimating a factor of 2
to 3 might well be conservative for some products.

     What's going to happen when music, books, and films become commonly  avail-
able  across  computer  nets?   Or, perhaps more near term, when Tandy comes out
with its promised read-write CDs?  Without ISA, pirating will cause music, book,
and film industry's revenues to plummet, and we'll all suffer from the attendant
reduction in quality.

     ISA will not eliminate the freeloader problem from software production, but
I think it will move our industry a step closer to an efficient information dis-
tribution system.  Even as a commercial association without  government  support
its  problems  with  freeloaders  will  be  no worse than those of the copyright
mechanism.  In that they will tend to focus on  a  finite  list  of  freeloading
manufacturers  rather  than millions of individual software pirates its problems
will be fewer.

     Do you think ISA meets the test of being better than  copyright  laws?   To
make  ISA  happen  will require a long effort on the part of many.  If you think
that effort might be worth it, please let me know.  You can help by simply send-
ing  me  email expressing your support, so that I can have a stack of letters to
show my congressman.  I'd appreciate that.

Hans Reiser
email: hans@zen.berkeley.edu
ph: (415) 482-2483
6979 Exeter Dr.
Oakland, CA 94611

andy@carcoar.Stanford.EDU (Andy Freeman) (06/15/88)

In article <10777@agate.BERKELEY.EDU> hans@web8e.berkeley.edu
(Hans Reiser </>) writes:

Reiser's scheme doesn't work for a large fraction of the software
market, and distorts the hardware market.

There are lots of programs that only have a few users each.  They
don't have lots of users because they're fairly specialized.
Producers of such software won't be paid by Reiser's ISA because it
doesn't (and can't) survey every user; it merely survey's a
statistically significant portion.  This is fine for operating
systems, editors, compilers, spreadsheets, some databases but not much
else.  (For example, there are very few airline databases and their
software is specialized, so airline database programmers won't get
squat from ISA.)

In addition, the software cost to the hardware cost is basically
wrong.  Look at the PC/clone market.  Extremely reliable machines tend
to cost more, as do portables, but why should the ISA tax on these
machines be higher than that on the cheaper desk-top models?

At best, the ISA serves a portion of the hardware and software market.
Since those groups can already form such an organization yet they
haven't, it seems that the people who would actually benefit from an
ISA don't want it.

The ISA that Reiser is really promoting requires more coercion than
he's admitting to because he's lobbying congressmen.  (If it didn't,
he could set it up himself and sign up any hardware and software types
who were interested.)  I suspect he's a stooge for a large software
house (or he's a wannabe).  They'll naturally benefit from a process
that can be influenced by politics like "we deserve a bigger portion
because we're constantly releasing new versions while that guy hasn't
updated his program in years" or even "we have 100 programmers, we
should get more money than some guy working in a garage even though
the same number of people use our programs."


ps - Anyone who thinks that the ISA won't get into software
development is smoking better stuff than I can afford.  Of course,
ISA-developed software will be benefit from the politics mentioned
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