Intellectual property and business life-cycles

A while back, we had a post arguing that long extensions for copyrights don't seem to produce increased value in properties created after the extension, but what about the costs of an extension? And who pays it?

New/small media companies tend to make extensive use of the public domain (often entailing a rather liberal reading of the 'public' part). The public domain allows a company with limited resources to quickly and cheaply come up with a marketable line of products which can sustain the company until it can generate a sufficient number of original, established properties.

Many major media companies have gotten their start mining the public domain, none more humbly than Fawcett. At its height, the company had magazines that peaked at a combined circulation of ten million a month in newsstand sales, comics that outsold Superman, and the legendary Gold Medal line of paperbacks. All of this started with a cheaply printed joke magazine called Captain Billy's Whiz Bang


Of course, Wilford Fawcett couldn't have reimbursed the unknown authors of those jokes even if he had wanted to. Disney, on the other hand, built its first success on a a title that was arguably still under copyright.

Mickey had been Disney's biggest hit but he wasn't their first. The studio had established itself with a series of comedies in the early Twenties about a live-action little girl named Alice who found herself in an animated wonderland. In case anyone missed the connection, the debut was actually called "Alice's Wonderland." The Alice Comedies were the series that allowed Disney to leave Kansas and set up his Hollywood studio.

For context, Lewis Carroll published the Alice books, Wonderland and Through the Looking Glass, in 1865 and 1871 and died in 1898. Even under the law that preceded the Mouse Protection Act, Alice would have been the property of Carroll's estate and "Alice's Wonderland" was a far more clear-cut example of infringement than were many of the cases Disney has pursued over the years.

In other words, if present laws and attitudes about intellectual property had been around in the Twenties, the company that lobbied hardest for them might never have existed.

Another company that went from near bankruptcy to media powerhouse was a third tier comics publisher that had finally settled on the name Marvel. The company's turnaround is the stuff of a great case study (though MBA candidates should be warned, Stan Lee's memoirs can be slightly less credible than his comics). Not surprisingly, one element of that turnaround was a loose reading of copyright laws.

Comic book writer and historian Don Markstein has some examples:

Comic book publisher Martin Goodman was no respecter of the property rights of his defunct colleagues. In 1964, he appropriated the name of a superhero published in the '40s by Lev Gleason, and brought out his own version of Daredevil. A couple of years later, he introduced an outright copy of a '50s western character published by Magazine Enterprises, Ghost Rider. It wasn't until late 1967, possibly prompted by a smaller publisher's attempt to do the same, that he finally got around to stealing the name of one of the most prominent comics heroes of all time, Captain Marvel. And this delay was odd, because the name of Goodman's company was (and remains) Marvel Comics."

(That would, by the way, be Fawcett's Captain Marvel so what goes around...)

(Fans of fantasy art should find the covers of the old Ghost Rider familiar)




This is how how media companies start. A small music label fills out a CD with a few folk songs. An independent movie company comes up with a low-budget Poe project. An unaffiliated television station runs a late night horror show with public domain films like Little Shop of Horrors and Night of the Living Dead. Then, with the payroll met and some money in the bank, these companies start getting more ambitious.

Expansion of the public domain is creative destruction at its most productive. Not only does it clear the way for new work; it actually provides the building blocks.

Behavioral Economics for Firms

On Friday I read this piece by Karl Smith on Apple and this piece by Matt Yglesias on Barnes and Noble.  I was struck by how both of these examples showed firms actually in the best interest of the executive (who get perks from working at the firm) and not the shareholders (who want to maximize return on investment).

I wonder if there is a limit to how well firms adhere to economic models>  We already have decent evidence that people don't necessarily respond rationally (or else why would they buy Apple shares?).  But the executives in the company create a principal agent problem, which may also cause issues at the level of the company itself.

This is not to knock economic models.  Epidemiology has many of the same limitations and we have to rely on some pretty challenging assumptions.  Rather it is to be careful, with any model, to recall the limitations and exceptions inherent in modeling a complex process.

Astronauts and aquanauts

I don't want to push this analogy too far (there are important differences) , but this NPR story got me to thinking about the exploration of the oceans and the exploration of space.

To take the pictures, researchers deployed a tethered robot from their research ship. About the size of a four-wheel-drive truck, the robot was outfitted with an array of high-definition video cameras and still cameras. The researchers would watch a bank of screens of pictures that the robot beamed up from the seabed.

Fifty years ago, exploring the oceans meant sending down manned bathyspheres and bathyscaphes and establishing undersea habitats like SEALAB and Tektite. Now exploration is done pretty much entirely by tethered robots and remote-controlled submersibles. For other than military purposes, manned deep water vehicles seem to have almost disappeared. Based on a good fifteen minutes on Wikipedia, it appears that serious bathyscaphe-based research ended with the Sixties. (the record for deepest dive has stood since 1960.)


We've all gotten used to the idea of exploring the oceans through a video screen rather than a portal and it's been ages since I've heard anyone talk about colonizing the seas. The cold, hard economic fact is that in extreme environments, machines can do more, and do it more cheaply than humans. That holds for space exploration as well.

It is possible to argue for manned exploration programs but those arguments invariably have to come down to a question, not of science, but of intangibles like what we want to accomplish as a nation. I'm actually sympathetic to these arguments but they have to be made in these terms. This really is something you do not because it's easy but because it's hard.

Stock Markets and Beta

Regular readers will know that I have a pet interest in personal finance.  One thing that I have thought a lot about is the contrast between structured saving vehicles (like the 401(k)) and government pension plans (like the Canadian Pension Plan).  One worry that I have had about government pension plans is that they seem to be under attack when times are bad (thus bearing political risk).  However, the last 12 years seem to suggest that it has not been a good time to invest in the stock market:

This means that historically, the stock market more than doubles your money in real terms every 12 years, but over the last 12 years, it’s down 20%.

That is a great deal of risk to bear as an individual investor.  Leaving the market in 1999 and purchasing an annuity (leaving the job market 12 years early) would produce a better retirement than saving for an additional 12 years.

Now add in the losses due to management fees and it can be a tough slog to put together a retirement account. Of course, you can't easily avoid the management fees as taxes are worse than these fees (which mostly seem to be a rather substantial subsidy to wall street).  So saving in personal accounts is also hard.

That leaves two possibilities -- a entity that can smooth out risk over decades (e.g. a government) or simply making more income.  Since it is not trivial to generate large pay increases, the former does seem like the only realistic way to mitigate time period risk for retirement.

Or am I missing something?

Doing something for non-traditional students

A few years ago I did a stint as an instructor at a large state school (fun work, terrible pay). Most semesters I taught at least one night course which meant lots of non-traditional students. They always impressed the hell out of me. Most were working full time jobs, many had kids to take care of, but somehow they always were the ones who got all their homework in, showed up for study sessions and managed to maintain the best attitudes.

I always felt that the university was not serving these students well, that we should have been finding ways to work around their schedules to make their lives easier and the path to graduation quicker. With that in mind, I liked a lot of what I heard in this NPR report on Western Governors University, a nonprofit online school designed to help adult students finish college.

Shackleford can also keep her costs down by finishing her coursework early. The average time to get a degree at Western Governors is much shorter than at a typical school, where students have to put in a set amount of "seat time."

But the truly unusual thing about this computer-driven system is that it provides a lot of one-on-one attention. Throughout her time at Western Governors, Shackleford will have her own personal student mentor — a combination guidance counselor, career coach and best buddy.

Shackleford has never met her mentor in the flesh, even though she lives about 90 minutes away, just north of Indianapolis. Her name is Stormi Brake, and she also works out of her home office, in a house filled with kids and pets.

When I show up for a visit, Brake is wearing a headset and talking on the phone with one of her 90 students. She is organized and energetic, jumping from student to student to head off any problems. She tracks their progress on a computer dashboard the school uses. She shows me that students who are completing required tasks on schedule show up in green, while those who are behind show up in red, a sign that the mentor needs to get in touch.

Brake has a strong background in science and teaching, but her job is to make sure her students get their degree. Students with questions about course content can turn to another kind of mentor — a course mentor — who's considered an expert on the subject.

Cash for Citations

Mark sent me this piece entitled Cash for Citations?. The title was a bit misleading when you click though and read the actual offer:

An astronomer at King Abdulaziz University (KAU) in Jeddah, Saudi Arabia, was offering him a contract for an adjunct professorship that would pay $72,000 a year. Kirshner, an astrophysicist at Harvard University, would be expected to supervise a research group at KAU and spend a week or two a year on KAU’s campus, but that requirement was flexible, the person making the offer wrote in the e-mail.

I am actually not sure that this rises to the level of a "scam" by modern standards.  The professor would, after all, work with the students at KAU and be residential for at least part of the year.  Sure, the salary is a bit high for two weeks worth of work but access to a top researcher can be worth a lot if he contributed remotely.  To rise to the level of an actual scam, the flexible requirement would have to be negotiable to no duties.

Now, the concern is that the astronomer would have to list the KAU affiliation on all of their papers.  On the other hand, if they are a salaried adjunct professor then that would actually be pretty normal.  Several of my colleagues have positions cobbled together from multiple places and the requisite need to list multiple affiliations.

The real issue is the ability of universities to purchase reputations.  It has long been true that extremely gifted and creative researchers have better employment options at least partially because of the prestige they bring to the hiring institution.  In a world with flexible work locations (consider MITx), these issues are likely to become larger over time.

But the idea of "cash for citations" is really a salary for research productivity.  The real question is how residential does a professor need to be to count as affiliated.

The sum of all fears = 183

Seeing the world from other perspectives is a good way to start the new year. With that in mind you should pony up the dollar for a download of this episode of This American Life. All its segments were strong, but for me the most affecting was the second act. It revolves around a reading from a book by a developmentally disabled man named Michael Bernard Loggins (published with the help of a remarkable arts program called Creativity Explored).

The book consists of a list of fears, in no apparent order, ranging from the trivial (needles) to the profound (a mother dying). The fears are specific and provide distinct glimpses into Michael's life, but they're universal at the same time; though the details may be different, Michael's fears are our fears.

This really is a powerful piece of writing, beautifully presented by This American Life and actor Tom Wright. You should definitely take the time to check it out and perhaps make a small contribution to TAL or Creativity Explored.

That's also a good way to start the new year.

Yes, another talking baby video, now with informed commentary

This is actually the first half of the conversation. They both come from a blog called Twin Mama Rama and they've generated quite a bit of discussion. I found these two particularly interesting:

Hope Dickinson, MS, CCC-SLP, coordinator of the Speech-Language Pathology Services at Children’s Hospital Boston at Waltham.

These two are babbling, specifically they’re demonstrating a behavior known as “reduplicated babbling,” because the sounds used are repeated, which you can hear in their use of “da-da-da.” In a more informal way, I guess I would describe it as turn-taking with babbling, or conversational babbling.

Play talk is a healthy way for kids to develop language skills

...

It really demonstrates how very young children communicate and know how a conversation works, even before they have the words to use. They will eventually begin to replace the babbling strings with words. If you listen closely, you’ll even hear a couple of words: One says “mama” when looking at the camera, and one or both say “up” more than once when picking up a foot.

One thing they are using wonderfully is turn taking, as in first one “talks” and then pauses and the other responds. They are also imitating the various intonations we use in conversation and speaking. There is fantastic rise and fall to their pitch and tones. Sentences or exclamations end loudly and emphatically, and there is also some questioning (rising) intonation. They are using gestures to supplement their talking, much like adults do. Their body distance is even very appropriate for most Americans; not too close, but not too far either.

And from the New York Times:

“Some people believe twins have the ability to generate their own detailed language, a twin language, but it doesn’t seem to be true in terms of a fully developed language system,’’ said Stephen Camarata, professor of hearing and speech sciences at Vanderbilt University School of Medicine. “They are going back and forth and enjoying each other’s company, but they aren’t saying anything specific like ‘Hey, Mom’s videotaping us. Look at her hair.’ “

...

Dr. Camarata says the video is rich with examples of how children develop language. It’s filled with canonical babbling that sounds like speech because it uses vowels, consonants and syllables to mimic words. Although most healthy babies go through the same phase of language development, most of the time the conversation is one-sided because they are interacting primarily with parents or older siblings. What’s special about the twins’ exchange, he notes, is that each baby has a peer with whom to practice language.

“The thing that is remarkable is that they both have this intonation pattern,’’ he said. “It sounds like they are speaking, making a statement, asking a question. They are using those broader markers we use in language.”

He says it’s possible that the twins are re-enacting conversations they’ve witnessed in the family kitchen.

“Children are very clever at watching and learning from adults,’’ said Dr. Camarata. “You wonder if there hasn’t been a conversation between the husband and wife or other people in the kitchen that they are mimicking. The intonation patterns were almost certainly learned from the parents.”

Dr. Camarata said he finds the video particularly delightful given that he often works with children who have delayed speech as a result of autism or another disability. He said he hopes parents who see the video will be reminded to celebrate the amazing developmental milestones of their own children.

“Here are these children interacting with each other in a very spontaneous and unguided way, and there are a lot of rich things going on that are really cool,’’ he said. “You wonder in this day and age of people programming their child’s activities if we’re losing a little bit of that. I worry that we’re not looking for and celebrating these kinds of spontaneous things that our toddlers do that are really exciting and fun.”

A quote from Coase

A nice quote from Ronald Coase:

If you torture the data long enough, it will confess.

While this comment can be taken too far and exploratory data analysis is interesting, it is a good warning to medical (and other researchers) not to over-interpret data.  Of course, this presumes that decisions are being driven by data and not based on expectations derived directly from a theoretical construct.

The world is a strange place and our minds seem to be pretty poor at "guessing" the correct answers.  

The scandal isn't that the New York Times is one of our worst papers; the scandal is that it's one of our best papers

In yesterday's NYT, Rachel Donadio had a report on Italy that included this sentence:

Germany has adamantly opposed what it sees as rewarding the bad behavior of southern rim countries like Italy, Greece, Spain and Portugal, which amassed high public debts and where tax evasion is rampant.

Except, of course, they didn't. Dean Baker (who first caught this) debunks:

Actually, of this group only Greece was consistently experiencing a rise in its debt to GDP ratio. In Portugal there was some increase in the debt to GDP ratio in the years prior to the recession, but Italy's debt to GDP ratio actually had been trending downward since 2000. Spain was running budget surpluses and had a considerably lower debt to GDP ratio than Germany.

It's not just that the NYT didn't bother to check these facts; it's that they had been debunked repeatedly in numerous places including this column printed less than a month ago in, you guessed it, the New York Times.

And Donadio is not some stringer who happened to stumble in the door. According to her NYT bio:

Rachel Donadio has been Rome Bureau Chief of The New York Times since September 2008, responsible for Italy, the Vatican and the broader southern Mediterranean.

In normal times, you would expect someone like the Rome Bureau Chief to be up on the details of what is arguably the biggest European story since the fall of the Berlin Wall. These are not, however, normal times for journalism. Standards (particularly those regarding accuracy) have fallen while journalists have (with very few exceptions) developed a disturbing herd mentality.

It's bad when journalists stop checking their own and each others' facts. It's also bad when journalists largely stop thinking independently and simply converge on a few standard narrative.

But when these two things happen together... that's catastrophic.

Adam Smith

At one point I used to be a huge advocate for re-examining Adam Smith's theories in the wealth of nations.  I was perplexed at how the words in the text did not seem to match the theories derived from it.  In particular, it seemed that nobody paid a lot of attention to his concerns with the actions of corporations.  I was reminded of this hobby of my youth will reading a comment by Dan Hirschman in Jodi Begg's blog:

Second, and more critically, be careful with Smith! Do you read historian of economic thought Gavin Kennedy’s blog, Adam Smith’s Lost Legacy? Kennedy devotes most of the blog to trying to fight the abuse of the idea that Adam Smith had some ‘theory of the invisible hand’. Kennedy has an excellent paper on the metaphor and how it became a myth (mostly blaming Samuelson’s influential textbook), Adam Smith and the Invisible Hand: From Metaphor to Myth. Long story short, that metaphor comes in the middle of the Wealth of Nations, and refers specifically to merchants who (because they are risk-averse) put their money in lower-yielding, but less risky, domestic investments and thus unintentionally stimulate local commerce. The “invisible hand” simply refers to an unintended consequence, not to some overarching thesis that self-interest leads to socially beneficial outcomes (a position held by an earlier author, Mandeville, and that Smith and his contemporaries ridiculed). For example, Smith himself lists 60 ways in which the government ought to intervene to produce better outcomes, from providing public education to regulating bank money creation. Smith also distrusted merchants, and thought they would (acting on their self-interest) readily conspire against the public (hence why he especially disliked trusts and large corporations, see Emma Rothschild’s Economic Sentiments: Adam Smith, Condorcet and the Enlightenment).

One of the interesting features of Adam Smith was how he focused on local and responsive government.  In a time with a lot less mobility, it made sense to pay close attention to local politics.  He had an excellent example of how lamp lighting in London was a public good, but that it would likely be done less well if it was done by a higher level of government than the city.

So I often get confused when he is cited by modern neo-conservatives.  The main thrust of the book seems to suggest a decentralized mixed economy rather than a scene out of an Ayn Rand novel.  

You have to wonder what they're thinking

Those of you with a low tolerance for cute might want to give this one a pass, but if you've got any interest in developmental linguistics, this exchange between two seventeen-month-olds is fascinating. Check out how they've picked up all the major non-verbal aspects of conversation.

If you're following Burn Notice online

Hulu slipped the last couple of episodes in under cover of darkness for unusually brief runs. You can still catch them if you hurry.

I think we also need to page Mark Palko

Today's new patent is from Apple, US patent #8,082,523.  It is best described as:

In other words, anything you’d recognize as a smartphone seems to be covered.

Matthew Yglesias asks the smart question:

The issue is that there's just no sound public interest case for granting monopolies over certain features to the first-to-market firms in this industry. Apple has already gained a very large competitive advantage from the fact that they were the first people to deploy a working touchscreen smartphone and even without patents clearly has a strong financial need to continue investing in improving its product lest lower-margin Android-powered phones eat away at its profits.

But the general trend seems worrisome.  Not only does it vastly increase business complexity (searching the patent office for thousands of potentially applicable patents), but it stifles innovation by making new entry into the smartphone field more difficult.

Mark?  

Does strong government help?

The comment thread on this piece is well worth reading.  In the piece, itself, Noah Smith is pointing out a possible reason for people to adhere to libertarianism -- the concern over the state protecting people from small group actions.  While this is not the only issue with this creed, I do want to look at it another way.

Why did primitive cultures lose to organized cultures?  It is pretty clear, for example, that the Gauls had a much less intrusive government than the Romans.  They had a lot of brave fighters and a fairly free society (as ancient world societies went).  While certainly a bit romanticized in literature, it is clear from reading Julius Caesar's accounts of his wars that strong central government was notably absent from the Gauls.

So why were they overrun by a high-tax society with a strong central government?

It is equally interesting to ask questions like why the residents of the American West sought statehood.  After all, did they not have a much freer society outside of the United States?

Or why do people seem to suffer so badly in failed states, which also have a lack of strong central government?

I think that these practical concerns need to be addressed.  A lot of what the state does is either protective (banning force and fraud) of individual citizens, a vehicle to allow disputes to be settled (the courts), acting as an insurance company for risks that are hard to use markets for, providing public goods, and mutual defense.  Perhaps the goal of government should be effective government and not minimalist government.

I wonder if libertarianism thrives because most of us have not seen a failed state in the first world?  People have a lot of mobility (if they are rich) and so there is less of a sense of how the government helps make a society function.