Saturday, August 20, 2011

Organizations enforcing commercial laws((YouTube's triple strike ban policy)-is this fair?

Internet is a nearly costless(on incremental cost basis) distribution method, and amenable to use by digital goods industries(media, software, information etc). The relative anonymity and ease of use, provided by internet(relative to other media/distribution channels) enables impulse purchases, but also allows for easy piracy. The music records industry was decimated by Napster(and later Apple itunes), the book publishing/distribution industry is in decline(witness the decline of Borders and the upswing of Amazon/Apple) and other industries(movies, gaming, software) seem destined to go the same way. While some are cleverly averting it with the mantra of cloud computing-where users must operate in a controlled environment where piracy is no longer possible-others are taking legal shield, compelling others to enforce the laws for them.

Take for example YouTube. It does not actively encourage uploads of pirated content. But if copyright owners successfully report pirated content repeatedly, the offending user's account is subject to deletion. There are some safeguards here, that if the user contests the piracy claim, the copyright owner must sue in the courts of law. But given the legal expenses, individual users would mostly not have the will/resources to contest those suits, and may lose. One may argue that thievery cannot be condoned, and that Youtube is justified in ensuing that its users do not use its network to break the law

But taken to its logical conclusion, this argument is dangerous. No organization has clean hands, and some or the other offence/violation/ethical breach would have been committed. If a vigilante takes up those breaches in its hands and decides to mete out instant justice, where would those organizations be? Yet, such justice is conceptually no way different from organizations voluntarily enforcing other's IP. As a ISP like platform provider, Youtube's obligation is at best to delete the offending files. Deleting account access is an extreme step. Such issues will become more important when internet/Google are recognized as essential services.  

Saturday, August 6, 2011

Deregulation cannot be done till market failure is removed.

No regulation is welcomed by industry. And for good reason. Academic theory holds that regulation exists to correct market failure(or the chance of that happening). Regulation does impose costs on everyone involved, and the expense is borne ultimately by end users. But instead of terming it a deadweight cost and calling for 'light weight regulation','self regulation' etc, one should first introspect whether the market imperfections have been corrected or whether the policy framework is self reinforcing. If not, regulation should stay. Few people can openly advocate this position though.

Below are a few areas where 'reform' is often sought, but I propose to show that relaxing regulation would be a disaster, as the market is not mature enough to ensure good behaviour.
  1. Labour laws
  2. Corporate disclosures
  3. Corporate governance
  4. Environmental assessment
  5. Corporate pay-especially to promoters/their relatives
Ironically, people love regulation when it suits them. For instance,
  1. Exercise of eminent domain for private land acquisition 
  2. Coercive savings direction into infrastructure/favoured sector
  3. FDI caps/restriction on foreign competition
  4. Export bans/tax on raw materials(rice/wheat/onion/iron ore)
  5. Subsidized fuel/minerals/freight
So before signing up on that petition opposing 'Big Brother' government, think hard on what you are signing up for. The results may surprise you.