One of the rather interesting by-products of the flawed intellectual property regime in the United States (I refer mainly to patent law, but I suppose that is just the subset of IP law that is most problematic) is that there are companies in the U.S. that exist solely to pursue lawsuits. One such company was Caldera Systems/The SCO Group. Caldera was formed in 1994, and its first product was Caldera Network Desktop, a Linux distribution targeted at business users and containing a few proprietary add-ons. In 1996, the company acquired DR-DOS, a DOS-compatible operating system, from Novell. In 2000, it acquired several UNIX properties from the Santa Cruz Operation (SCO), including OpenServer and UnixWare, and Caldera changed its name to The SCO Group to emphasize the change in focus. Shortly after changing its name, SCO began to claim that Linux “contained SCO’s UNIX System V source code and that Linux was an unauthorized derivative of UNIX.” SCO sued IBM for 1 billion dollars and demanded that Linux users pay them an end user license fee. As revenues declined, the company began to focus more and more on suing ex-customers. Subsequently, the SCO Group sued two former customers (AutoZone and DaimlerChrysler). In SCO v. AutoZone, SCO claimed that AutoZone violated SCO copyrights by using Linux. In SCO v. DaimlerChrysler, SCO claimed that DaimlerChrysler breached its UNIX license contract by inappropriately using derivative works of UNIX and by refusing to respond to requests for certification of compliance by SCO. SCO’s suit against DaimlerChrysler was dismissed in 2004. Novell, from which The SCO Group claimed to have acquired its UNIX intellectual property rights, claimed that it had not sold the copyrights to SCO and that Novell retained them. In response, SCO sued Novell for slander of title. On August 10, 2007, Judge Dale Kimball, in the SCO vs. Novell case, ruled that “…the court concludes that Novell is the owner of the UNIX and UnixWare Copyrights.” Novell was awarded summary judgment on a number of claims, and a number of other claims by SCO were denied. In addition, SCO was ordered to pass on to Novell an appropriate portion of income relating to SCOSource licences to Sun Microsystems and Microsoft. About a month later, SCO filed for Chapter 11 bankruptcy. Revenues from their products had been declining for some time and perhaps bankruptcy was inevitable, but I can’t help but think that maybe Caldera/SCO could have avoided this fate if they concentrated on writing good software rather than trying to sue ex-customers and Linux users.
On the other hand, maybe suing people for copyright/patent infringement is the way to go. Today I came across this message board posting about the last nail in Commodore Business Machine’s coffin. Anyone who lived through the 1980’s and wasn’t living in a broom closet probably remembers Commodore’s salad days. Since 1977, Commodore had been selling home computers like the PET, VIC-20 (1981), Commodore 64 (1982), and C-128 (1985). By ruthlessly cutting their prices, Commodore was able to drive their competitors out of the home computer business, and by 1984, it was a billion dollar company. The company soon began to flounder, however, as a result of bad management and a failure to successfully market their next-generation computer, the Amiga. A desultory attempt to sell IBM PC clones in the late 1980’s was also largely a failure. By the 1990’s, the company had fallen on hard times. Productivity users were choosing Intel-based machines and Macs over Amigas. The C-128 had been discontinued in 1989, and although the C-64 was the biggest-selling computer of all time, sales were declining (it was discontinued in 1992). The company staked its future on the CD32, which was the first 32-bit gaming console. The message board posting linked to above tells the rest of the story:
Apparently Commodore-Amiga owed $10M for patent infringement. Because of that, the US government wouldn’t allow any CD-32’s into the USA. And because of that, the Phillipines factory seized all of the CD-32’s that had been manufactured to cover unpaid expenses. And that was the end. Commodore-Amiga had basically gambled everything on the CD-32 being the platform that would save the company. And when they couldn’t bring any into the US, it was clearly Game Over.
But that’s far from the most interesting part of the story of Commodore’s demise. What is really interesting is that the patent which they had been found to be infringing was a software patent for exclusive OR-ing (XOR):
The XOR patent covers the use of the machine language XOR (exclusive-or) operator to make a cursor blink in a bitmapped display. This is at the top of many lists of the most ridiculous software patents. For one thing, it’s an obvious idea that might arise in the mind of a moderately intelligent software developer in the course of an afternoon or less. A given software program is composed of hundreds of thousands of such ideas; it would be absurd to grant patent privileges to each such idea. But that’s exactly what the US Patent Office did, and, so far as I know, keeps on doing. The only reason why this hasn’t brought software development to a halt is that usually such patents aren’t enforced anyway; companies just patent everything they can thing of to protect themselves from other companies doing the same thing. But in the case of the XOR patent, the originating software company, was basically going defunct, but some lawyers saw this one patent as their key to riches, so they bought the company for a few bucks just to capitalize on that patent. So they had nothing to lose, and everything to gain, from vigorous enforcement of an absurd patent.
I seem to recall reading something about a member of Commodore management who traveled to the headquarters of the company that had sued them for patent infringement. He claimed that they had laid off all the engineers and now the company consisted entirely of lawyers.
Anyway, these are some factoids that I find interesting on this Saturday afternoon…and it’s probably proof that I spend way to much time in IRC with other technologically oriented people.
The topic of this posting isn’t really something about which I usually write articles, but this article about the new e-textbook trial by the University of Texas got me thinking about the college textbook business. This is a business that has all the earmarks of a cartel: there are, relatively speaking small number of firms in the industry, and their product relatively homogenous. There is a relatively stable level of demand for their product – there is a steady supply of college students – and production costs are likely the same across the industry. There are several factors working in favor of the textbook publishers charging as much as possible. (1) A small number of textbooks gain widespread acceptance, thus limiting the amount of competition. (2) College professors – not the students, who must ultimately purchase the textbook – decide what is the required textbook for a course; thus since they are insulated from the financial cost of textbook purchasing, they have little incentive to consider the price when choosing a textbook. (3) Students (or their parents, if the parents foot the bill) who wouldn’t think about dropping 80, 90, or 100 dollars or more for a book under ordinary circumstances may well look upon it as the “cost of an education” and bite the bullet on overpriced textbooks. And all of this means substantial revenue for those in the business: the University of Texas’s financial aid website estimates that students should expect to shell out an average of $409 a semester for books.
The effects of this are obvious to anyone with a Internet access and 5 minutes of free time. At Amazon, the cost of the latest edition of Paul Samuelson’s Economics textbook sells for $140.65. The book is 800 pages long, so I suppose if you believe in the labor theory of value, the cost may be warranted; I, however, see little point in paying that much for what the late Murray Rothbard once referred to as a textbook that “differs from its rivals largely in being bigger, more indigestible, and filled with the flip and unsupported wisecracks with which Samuelson is wont to dismiss deviant economic views.” Around the same time I looked up the cost of the Samuelson text, I was also shopping for a copy of the current Baseball Prospectus, which is available for $13.97. Is the comparison unfair because I am comparing apples and oranges? I could purchase Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics by Henry Hazlitt, which has the disadvantage of being written in plain English and doesn’t feature the gaudy 3-D charts and graphs of Samuelson’s econ text, but serves as a good introduction to the dismal science nonetheless.
I am, of course, not alone in making these observations. Even politicians have taken notice, and in 2007, the Washington Post wrote about an effort by Christopher Peace, a Virginia legislator who planned to create a state-sponsored digital database of print-on-demand textbooks. A company called Flatworld Knowledge has been formed by publishing industry veterans, and is apparently an attempt to provide e-textbooks using the open source model. Textbook file-sharing sites also about: the most popular of these was Textbook Torrents. The site is currently down, but its rule page once exhorted users who saved money downloading textbooks to use the money to buy a scanner and use it to scan as many textbooks as possible. Although this site’s blatant copyright infringement practices makes them an easy target for the enforcement arm of the publishing industry, one wonders whether similar sites will do to the textbook publishing business what music file-sharing did to the recording industry over the last decade.
In any case, it seems unlikely that the college textbook cartel is going to manage to put the genie back into the bottle here. What is going on is a revolution in the dissemination of information, and it is not restricted to music, newspapers, or textbooks. The textbook business, and academia in general, has been shielded from these changes, as the middle class continues to send their children to colleges and universities (and foot the exorbitant bills), but the recent economic downturn may very well strike a fatal blow to these institutions. The fact is that a college education is no longer the ticket to a higher income that it once was. Proponents of a college education will note that on average, college graduates earn more over their careers than non-college graduates, but as any first-year statistics student would know, this is merely confusion correlation with causation. Kathy Kristof has written about this in some detail in her Forbes article, The Great College Hoax, so I won’t reiterate her argument here. But her central finding is worth repeating: “A correlation between B.A.s and incomes is not proof of cause and effect. It may reflect nothing more than the fact that the economy rewards smart people and smart people are likely to go to college. To cite the extreme and obvious example: Bill Gates is rich because he knows how to run a business, not because he matriculated at Harvard. Finishing his degree wouldn’t have increased his income.” It is only a matter of time before the middle class realizes this, and it becomes reflected in lower enrollments and colleges and universities closing their doors. Those who do enroll will likely be more budget conscious.
What emerges after the fallout is something on which we can only speculate. Gary North writes about the possibility of Wal-Mart getting into the higher education business and charging $30 for an online PDF textbook instead of $150 for a hardcover book. Education would be vastly cheaper and more efficient than it currently is. So far, Wal-Mart has not expressed any interest in such a venture, but I tend to agree with North the technological revolution of the 1990’s will eventually result in a complete restructuring of higher education. What is clear is that there is still a need for an educated workforce, whether or not they receive their education from a traditional 4-year college or not. Paying $140.65 for Samuelson’s econ text, however, is something that we can all live without.
In spite of the options offered by commercial radio – including terrestrial and satellite options – I often find myself listening to non-commercial Internet radio. One of my personal favorites is Radio Free Dishnuts, a 24-hour Internet radio station that also simulcasts the Skyscanner satellite radio network. Last night I was listening to Electric Cafe when I noticed that Bill Allen, the longtime host of the show, was back in the saddle after taking a six month leave of absence from hosting the show. When I realized this, I logged into the IRC chat room for RFD/Skyscanner. Bill is a self-described fan of analog technology, and supposedly, the only computer involved in the production of the show is the one that does the streaming. The rest is done with analog equipment – cart machines, turntables, and so on. My mentioning of this in the IRC sparked an interesting discussion of analog versus digital technology, with several people in the IRC coming down on the site of analog.
Skepticism of new recording technologies is probably not something that started with the transition from analog to digital. The late Gary Bourgois put together an interesting radio serial called “Floating Flash Frisbone, Radio Ace,” which tells of the amusing and ongoing saga of a radio DJ who cannot hold down a job. In one episode, he finds himself working for a station in Florida called Edison 78, a station that has not changed its format since 1922, and their disdain for anything new extends to their broadcasting facilities. All of the station’s spots are recorded on wax cylinders (“[t]hey tried to get us to use one of those newfangled wire recorders, you know,” muses morning man Victor Windup, “ehh, they’re nothing but trouble; always breaking down.”). But the early technology was so limiting in many respects that the need for improvement was obvious. 10-inch 78 RPM records, for example, were limited to about 3 minutes per side, and were rather fragile. 12-inch records allowed for a slightly longer track length, and some artists took advantage of this, releasing songs that were over four minutes long. The introduction of 33 RPM and 45 RPM records in the late 1940’s brought records with lower surface noise and longer playing time to the masses. 78 RPM records were still issued alongside their 33 and 45 RPM brethren for a number of years, but the 78 was a dying format and was more or less gone by 1960, although some children’s records continued to be issued on 78 until the 1970’s. The introduction of high-fidelity LPs, however, helped extend the hegemony of analog music, which would go largely unchallenged until the introduction of the compact disc in 1982, which brings us to the present debate over analog versus digital.
Indeed there are several factors working in favor of analog technology, at least as far as audiophiles are concerned. One is the lack of aliasing in analog technology – the tendency of different continuous signals to become indistinguishable from each other when sampled, as well as the distortion that results when a signal is sampled and reconstructed as an alias of the original signal. Another is the lack of quantization error – the error that results when analog input voltages are converted to digital (since digital signals are ultimately binary, a voltage that is smaller than the least significant bit will be rounded to either 0 or 1, while in the analog world, the original value would be preserved). Fans of digital technology, of course, will note the high quality of digital sound reproduction, along with the sensitivity of analog media to physical degradation (digital media is not immune to physical degradation, as anyone who has old CDs and DVDs can attest to, but overall they seem to have held up pretty well – I have CDs that are 20 years old that still play).
I straddle the line somewhat on this issue. On the one hand, I realize that the dynamic range of digital media is limited and that analog, under ideal conditions, can be better. [I remember hearing Neil Young’s “After The Gold Rush” on a linear-tracking turntable about 15 years ago and thinking how much better it sounded than a CD.] On the other hand, I don’t share the enthusiasm that some analog aficionados have for clicks and pops, wow and flutter and tape hiss – in other words, the defects of analog media. I was listening to the Stiff Records Box Set recently, and it pained me that the version of “Yankee Wheels” by Jane Aire and the Belvederes contained surface noise (actually, it pained me more to think that the master tape of the song might be lost and that they apparently used a vinyl record as the source).
Still, to some technophiles, I’m probably considered a dinosaur. After all, I still use my fourth-generation iPod even though I have a fifth-generation iPod; I swoon over my still-functioning Sparcstation LX. And the VT-100 manual that I rescued from the garbage at work is something I’ll be hanging onto for awhile. And updating this blog is hard to do on my VIC-20, so I guess I’d better wrap up this article.