Property Rights on the Net

The Internet has often been compared to America’s expanding western frontier during the 19th century. Like all frontiers, it has the potential to create enormous wealth through the exploitation of new technologies by the cowboys of the digital domain. The creation of a global communication network has attracted millions of entrepreneurs who are eager to make a name and a dollar for themselves by finding new opportunities and business models that take advantage of the unique nature of the Net.

The Internet is not just a source of wealth – it is also a source for the creation of new kinds of property rights. Domain names, broadband access, website designs, digital databases, digitized content, and quasi-public networks are all becoming new and valuable virtual property with little or no existing guidelines for the assignment of property rights to their owners. As governments worldwide struggle to catch up and resolve disputes by establishing property rights in these new areas, businesses must often act to secure their property when the Law is unable to provide adequate protection. This applies to intellectual property such as music and images as well as to virtual property such as domain names and private networks.

The proper role of government in this new domain is to create new kinds of property rights to protect the new forms of wealth created by the Internet. Organizations like ICANN have been commissioned by the US government to oversee private corporations like VeriSign that have larger been relatively successful in establishing and protecting property rights on the Internet.

Two major challenges persist: the status of digital media such as music and movies, and the status of publicly available but privately owned networks, such as instant messaging services. Even a well-meaning, intellectual property-respecting consumer like me is bound to have a hard time knowing which actions infringe on someone’s rights – and I don’t mean knowing the law – simply knowing which actions are ethical requires some technical knowledge. For example, is it ok to copy CD’s to mp3 to play on your computer? Can you copy those mp3’s to another computer you own? What if you lose the original CD? What about posting text and images from online articles – how much is fair use and how much infringes on someone’s right? In a rational society, there would exist clear standards for what actions are ethical, but in our mixed-economy state, where respect for intellectual property is rare, there are bound to be rights violations both in infringing and in the attempt to protect private property. Organizations like RIAA often abuse the courts in their attempt to protect their client’s legitimate property. Everyone agrees that CD’s cost too much, but is their price market-driven, or is it made artificially high by a government monopoly?

Another area where property rights are hazy right now are instant-messaging networks. AOL has been struggling to shut own competitors using its protocols (and AOL’s servers) for years, and Yahoo and Microsoft have recently attempted to shut out third-party clients like Trillian. All three claim that they are only blocking their competitors because of security or technical reasons, and all three claim to be dedicated to establishing open-protocols, but it’s blindingly obvious that their goal is to preserve the revenues from the ads displayed in their clients. If AOL, Microsoft or Yahoo simply said “my network is private property, and you may not use a third party client to connect to it,” then a clear precedent would be established, but instead they offer pathetic excuses like this:

Perhaps Yahoo is reluctant to declare their network private property because it is planning to release its own multi-protocol client. Meanwhile, after failing to break into AOL’s IM protocol, and publicly releasing theirs to put pressure on AOL, Microsoft is clamping down on its own IM network. Personally, until a company says “private property, keep out ” I plan to keep using Gaim, a free multi-network IM client.

Posted by David at September 28, 2003 02:15 AM | TrackBack