The invisible hand, reversed: making altruism beneficial for personal ambition

December 20, 2011

When considering open innovation models, enterprise 2.0, open science and other similar concepts, we’re faced with the difficulty of explaining why should people and organisations open up to external collaboration. What should he/she gain from being open and giving free access to own ideas? What are the incentives to collaboration?

Yet from personal experience we know how positive it is to share knowledge. It leads to progress, better discussion, meeting interesting people, and visibility gains. I blog because I like it and it helps me to share early ideas with others, but then it turns out this is also a great way to gain a reputation.

Interestingly, this is the reverse of Adam Smith invisible hand, which states that “individual ambition benefits society, even if the ambitious have no benevolent intentions” (from Wikipedia). We could say that “collaboration benefits the individual, even if the collaborative person has no personal gain intentions.”


A fresh look at copyright and net neutrality

December 17, 2011

In the last few weeks I had the opportunity to read 4 interesting and unexpectedly interrelated books.

-       Tim Wu. The Master Switch

-       Robert Levine. Free Ride

-       Jaron Lanier. You are not a Gadget

-       Douglas Rushkoff. Programme or be programmed

As I read them on my beloved Kindle, I am happy to share my favourite excerpts: My Clippings.

In particular the first two provided me with a refreshing consideration of the issues of copyright and net neutrality, and with many contrasting feelings.

The first consideration is that the debate over copyright and net neutrality is ultimately an issue of industrial policy. It’s government somehow deciding which sectors of the economy should be priviledged.

There are 4 economic sectors involved:

  1. Content industry (possibly divided between authors and publishers such as RIAA);
  2. Internet companies (such as Google);
  3. Telecom (divided between incumbents and new players such as Telecom Italia and Tiscali); and
  4. Consumer electronics (such as Apple).

Decisions over net neutrality and copyright law affect each sector. Basically each sector is in favouring of opening up the other layers. Telecom favour non-restrictive copyright since free content drove broadband uptake and are against net neutrality; Internet players and consumer electronics favour net neutrality and low copyright enforcement; content industry favours strong copyright and net neutrality.

This leads to shifting alliances, particularly unstable since the actors continuously change position in the value chain (see the cooperation turned competition between Apple and Google).

Government decisions are based on various criteria, oscillating between political opportunism and genuine evaluation of societal benefits, and between robust evidence and popular wisdom.

At best, government decide based on overall societal benefits. Where can jobs and growth be created, in the long term? Are they generated by web companies, protected through “safe harbour” provisions and loose enforcement of copyright; or by protecting the content industry and making sure it is not wiped out by piracy?

This leads to the demand for evidence about the economic impact of the web: how many jobs are created? How many jobs are destroyed in the content industry? In the long term, does stronger copyright protection stifle innovation, by allowing legitimate services such as Spotify to emerge, or hinder it by lowering the freedom to experiment of services like Youtube? The same goes for net neutrality.

Obviously the direct economic impact is not everything: you then need to consider creativity, cultural identity, democracy and free speech, quality of life, indirect economic impact such as a better educated workforce.

At worst, government decide based on political opportunism. Who is better at lobbying between Telecom, Content industries and Internet Companies? Telecoms have certainly the strongest fire power, but Google has recently increased significantly its expenditure in lobbying. In addition, Google is effective in making look like its interest are the interests of democracy and free speech, while Telecoms are effective in claiming their importance based on number of employees.

Overall, I came out with a less ideological vision. It has confirmed my previous impression that the decision not to enforce copyright was largely an industrial policy decision in favour of telecoms, aimed at promoting the uptake of broadband.

More in general, I am no longer convinced that copyright enforcement and laws like Hadopi are bad and it’s clear to me that free music is not a basic human right. There is a legitimate argument that web companies and telcos are hijacking revenues previously going to content producers, and that these content producers start to lack alternative business model to justify production. Piracy hurts Spotify as well as Sony Music. It is true that open access is still without a sustainable business model; that newspaper are being destroyed by the decision to make their content available on the web. And evidence about the economic impact of the web, as I previously argued, is not robust – but the same went for ICT. This is why I particularly liked the take of Neelie Kroes in her latest speech, which focussed on “Who feeds the artist?

I have no final answer, and I very much enjoyed two opposite positions such as Wu and Levine. I am now more aware that my previous web-friendly position that dismissed the content industry as old-fashioned and “not fit for the web” was superficial and somehow driven by sympathy rather than evidence. At the same time, I remain not sympathetic with the telecom industries position, which seems to deter innovation and be overly influential in policies.

I think this discussion is crucial, and I now realize how important government regulation is to steer the industrial development.

But most of all, I want to thank Wu and Levine for the high quality of their arguments.


Does Europe need an “Europe Competes” Act?

December 1, 2011

I’ve been interested for quite some time in inducement prizes and organized a few (1, 2). I’ve previously analyzed the US government platform, called http://www.challenge.gov , which enables the organisation of competition by any federal agencies.

To encourage the organisation of prizes, the Obama administration has promulgated the America Competes Act to simplify and streamline the organisation of challenges by government, and to allow any agencies (previously only DARPA and few others could) to organize such challenges.

I wonder whether in Europe there are similar barriers to the large scale adoption of prizes as innovation policy measure. For instance, I know that in Italy there are specific burocratic obstacles to the organisation.

Do we need a “Europe Competes” Act, and why?

 


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