The more things change, the more they stay the same . . .
“The concept of open source and free sharing of technological information has existed long before computers existed. There is open source pertaining to businesses and there is open source pertaining to computers, software, and technology. In the early years of automobile development, a group of capital monopolists owned the rights to a 2 cycle gasoline engine patent originally filed by George B. Selden.[3] By controlling this patent, they were able to monopolize the industry and force car manufacturers to adhere to their demands, or risk a lawsuit. In 1911, independent automaker Henry Ford won a challenge to the Selden patent. The result was that the Selden patent became virtually worthless and a new association (which would eventually become the Motor Vehicle Manufacturers Association) was formed.[3] The new association instituted a cross-licensing agreement among all US auto manufacturers: although each company would develop technology and file patents, these patents were shared openly and without the exchange of money between all the manufacturers.[3] Up to the point where the US entered World War II, 92 Ford patents were being used freely by other manufacturers and were in turn making use of 515 patents from other companies, all without lawsuits or the exchange of any money.[3]” source: http://en.wikipedia.org/wiki/Open_source
Selden sold the patent to Eli Whitney. “Whitney and Selden then worked together to collect royalties from other budding automobile manufacturers. He was initially successful, negotiating a 0.75% royalty on all cars sold by the Association of Licensed Automobile Manufacturers, the ALAM . . . Henry Ford, owner of the Ford Motor Company, founded in Detroit, Michigan in 1903, and four other car makers resolved to contest the patent infringement suit filed by Selden and EVC. The legal fight lasted eight years, generating a case record of 14,000 pages. The case was heavily publicized in the newspapers of the day, and ended in a victory for Selden. In his decision, the judge wrote that the patent covered any automobile propelled by an engine powered by gasoline vapor. Posting a bond of $350,000, Ford appealed, and on January 10, 1911 won his case based on an argument that the engine used in automobiles was not based on George Brayton's engine, the Brayton engine which Selden had improved, but on the Otto engine. . . This stunning defeat, with only 1 year left to run on the patent, destroyed Selden's income stream.” source: http://en.wikipedia.org/wiki/George_B._Selden
So,
a group of “start-ups” refuse to pay less than 1% royalties to a competitor who
claimed to own the patent and go on to build goliath corporations and profit
personally. The giant corporations continue the tradition of “copying” each
other and build a massive commodity market that perpetuates demand with discounting
and low interest loans.
Certainly
the “free” open source software and content movement is destroying competitors
with overpriced old-fashioned technology and content. But since the only way you make money in
commodity marketplaces is through scale, isn’t there a risk that we will end up
with one or a few dominant companies?
Aren’t we throwing the baby out with the bathwater by claiming that respecting patents and copyrights only preserves the status quo and inhibits innovation? This why Newspapers are telling Google that if you want to work together, start by respecting copyrights.
I've
worked at a big corporation in a creative business which has hit a wall because of the common belief that it is impossible to charge for ideas – the core assets of the company. As
the source of US economic growth shifted from creating new value to how large
scale operations and cashflows are financed and managed, the balance of powers
shifted from Hollywood and Madison Avenue to Wall Street.
Anyone
who thinks that Wall Street’s control has been weakened by open source software
and content is sadly mistaken. Tom
Foremski notes that “. . . Larry Page and Sergey Brin, the founders of
Google, strongly believed that search engines should not be commercial
enterprises.” But their investors and
now Wall Street obviously took the company in a very different direction –
essentially replicating the only business model they are familiar with – mass media:
mega scale and ad revenue dependent, albeit with the improvement of performance based pricing.
But
there is opportunity on the horizon:
- Wall Street is also invested in the big media companies. And even the Wall Street analysts are starting to acknowledge the money left on the table since consumer spending on cable, isp, and wireless access surpassed advertising revenues in 2003. "Wall Street Wants To See The Money" via MediaPost
- Murdoch is encouraging the industry to face the elephant in the room that the industry has been avoiding: Pricing and marketing “ideas” to consumers.
- Critically, the value of "ideas" to consumers is validated, the value of syndication, and the value to advertisers seeking engagement more than eyeballs improves.
