When public information isn’t public or free

Are subway maps the private property of the subway system? According to the New York Metropolitan Transit Authority, I guess they are: this from the AP – Subway Authorities Eye IPod-Friendly Maps

It seemed like such a great idea: digitally shrink maps of major subway systems and put them online so people can download them to their iPods for free.
Tens of thousands of people have downloaded maps from http://www.ipodsubwaymaps.com since Web designer and blogger William Bright, 27, created it in early August.
San Francisco and New York City officials were less enthusiastic.
A lawyer for the Metropolitan Transportation Authority sent Bright a terse “cease and desist” letter in mid-September demanding he immediately remove the New York City subway map from his Web site.
. . .
An MTA lawyer sent Bright an e-mail Thursday offering him a one-year license to distribute the maps for free, as long as he promises to update them regularly. The catch: The MTA wants a licensing fee of $500.

$500 to get access to the subway map? What ever happened to the idea that public information should be available to the public? Maybe MTA next will want to put a screen in front of the maps and charge a quarter to look at it — like those old binoculars at tourist sites.
At least BART had a better rationale for wanting to maintain some control over the information:

BART’s chief complaint with Bright’s maps was that they didn’t reflect changes made to the transit system’s route alignment earlier this month.

Our information policy needs to separate the principle of control for accuracy from the need for rent-seeking ownership to create financial incentives. The purpose of conventional copyright is both. Rent-seeking is part and parcel of control.
However, an alternative model — the Creative Commons copyright system — allows a separation of the two. For example, this blog operates under the Creative Commons license. It allows me control over who gets to use this for what purposes – and attempts to ensure that appropriate attribution is given. That allows me to exercise some form of quality control. But since this blog is not sustained though royalties, under this system I have waived some of my rights for financial returns, if the information is used for non-commercial purposes.
Maybe the nation’s subway system should put their maps into the Creative Commons. Had they done so, it might have saved everyone a lot of aggravation.

Gaming as the techology of the future

When I was an undergraduate engineering student (many, many years ago), it often seemed that my colleagues and I were majoring in pinball. (FYI – pinball and foosball remain the staple of the high-tech company’s break-room – similar to the game room of my college dorm). Now, your really can major in pinball – or at least the digital version. According to a story in today’s Washington Post – Like Video Games? Now You Can Major in Them:

Carnegie Mellon University and the Georgia Institute of Technology, for example, now offer master’s degrees in game development. The University of Southern California offers a graduate degree in interactive media and an undergraduate program in game design. Locally, the University of Baltimore is putting together an undergraduate degree in video game development

This really should surprise anyone. As I mentioned in an earlier post (For the future of the music and movie industry look to video games), gaming is a multibillion dollar industry. According to the OECD study DIGITAL BROADBAND CONTENT: The online computer and video game industry:

Computer and video games is a young industry with rapid growth underpinned by technological development. The global market in 2003 was estimated to be over USD 21 billion compared with USD 32 billion for the recorded music industry; US games revenue in 2001 surpassed film box office ticket sales. The main segments in 2003 were the console off-line (73%) and PC-offline markets (17%). Online and wireless games are still relatively small (6.4 and 3.4% respectively). However, there is a trend towards online games in PCs and consoles. New games are released with some online capabilities, and it is expected that nearly all will become at least in part online. Computer games are R&D and innovation intensive and games programming and design are highly skilled occupations. Market expansion is coming through development of online network technology, diversifying content and developing large-scale online games. The industry is also increasingly seen as strategic by major media, Internet and consumer electronics firms.

Skill development is a key element in advancing the state of the industry, nor is the US the only country confronting the issue:

A pool of qualified personnel is a key element for the game industry, and although software and related ICT-skills are widespread, games skills are to some extent specific to the industry requiring a mix of advanced technological skills, creativity and specific knowledge of online games.
Most specialist games ICT skills are not obtained from formal university or tertiary institution degree courses. This is in part due to the difficulties involved in implementing change in educational systems and in part due to the rapid changes in specialist skills requirements compared with very long lead-times to change formal tertiary courses. Furthermore, in the domain of high-skilled software most skills are not acquired in formal education but usually on the job or in firm- or sector-specific training programmes (OECD, 2004g). Large firms often have training programmes to address current skills needs and to improve their internal software development processes. They recruit experienced programmers or new computer science graduates and provide their own practical training courses. The Electronic Arts University is a good example, providing software engineering courses and programmes in their various studios.
This does not, however, mean that the industry will solve all skill development requirements. Smaller firms may find extensive in-house training too costly if it covers a wide range of specialist skills. Also there may be insufficient training for the industry because employees can leave individual companies after training. To tackle these issues the Korean government has developed a formal game industry education programme. The “Game Academy” provides two-year educational courses as well as short-term improvement courses in game design, programming and related areas and produces 250 game specialists annually. This strategy was further strengthened in 2002 with the introduction of a certification system to evaluate qualifications of game industry technicians (Korean Ministry of Culture & Tourism, 2004). Korea further seeks to attract top educators in foreign countries, and plans international exchange programmes.
Other countries have also started to provide tertiary programmes or have identified skills and job training as key issues for industry development (Forfás, 2004). For example in the United Kingdom there are approximately 22 universities offering 72 degrees/courses in games. This proliferation of courses of various qualities has prompted the UK Department of Education and Skills, Skillset, the sector council for UK audiovisual industries, and bodies such as TIGA to call for industry accreditation of university games courses (Kerr, 2004a). To support the game industry in France, the Ecole nationale de jeux vidéo et des médias interactifs has been created at higher education degree level in Angoul&ecric;me, with first enrolments in September 2004 (Kerr, 2004a). In France as in other countries there are numerous media and multimedia courses which may provide raw graduates for the industry, along with specialised computer engineers.
Issues related to gender inequality in the game industry reflect a more general issue of womens’ professional training (OECD, 2004g). An important prior step will be to raise interest in technologies and the use of ICTs. A number of policies have been implemented, e.g. the e-skills UK initiative to offer Computer Clubs for Girls (CC4G) or its ITBeat scheme designed to encourage girls to rethink their attitudes to careers in information technology. Another local example was the competition by Wired Sussex, first run in 2003, to encourage teams of girls to produce a game design outline (Haines, 2004a).

Least you think that gaming is just a peripheral industry, look at the spill-overs. Technology advances are driving gaming. And, as important, gaming is driving technological advances.

Technology originally developed for games is increasingly used in other applications. Games developments in computer images, graphics resolution, high-speed interactivity, and touch feedback are used in other applications. Many of these technologies had theirs origins in defence (e.g. flight simulators, pilot helmets, etc.) and medical imaging where virtual modelling developed for training and computer image construction led to developments in game creation. Until recently, this was mostly one-way, with applications developed in more established industries being used in simpler forms in the game industry.
However, with advances in consumer hardware processing power this relationship is changing. Games imaging technology has potentially significant use for architecture, design and engineering applications, and games 3D-software in a range of training programmes and medical applications where interactivity is important. This trend is expected to intensify with advances in game software and hardware technology.

Even more exciting is the potential for advances in the gaming industry to feed into the educational process:

There has been growing recognition that games, particularly because of their interactive nature, may provide useful tools for education (KPMG for the Danish Ministry of Culture, 2004). The benefits come from the use of games technologies and experience in devising educational tools, rather than coming from using games devised for non-educational purposes, as there is no strong empirical evidence that critical learning skills from games are “transferable”. In part limited direct effects of games on education may be due to few games so far being specifically developed for education, and commercial games have only limited educational aims (Kerr, 2004b).
However, research on the potential of games to serve as learning tools concluded that “video games have the potential to lead to active and critical learning.” (Gee, 2003). Pilot schemes by the British Educational Communications and Technology Agency (BECTA) have shown that there are benefits from using games technologies in education. Research initiatives on the potential for games to be used in education include: The Education Arcade (educationarcade.org) a consortium of international game designers, publishers, scholars, educators, and policy makers investigating the educational potential of video games (the US MIT’s Games to Teach); the NESTA Futurelab projects in the UK; and the ECsupported Kaleidoscope (Network of Excellence), and the EC mobile M-learning project (see also section in the Policy Framework below). Furthermore, public interest and non-profit groups dealing with public health and humanitarian issues (e.g. UNICEF) have developed interactive games to reach the new Internet generation.

Of course, we have been down this road before. Television was touted as having great potential for education. In fact TV has had a large impact on education — it is just that TVs overwhelming use for entertainment and marketing has eclipsed its educational activities.
I suspect that gaming will do the same. The vast majority of activity will be entertainment oriented. That should not blind us to the potential for using the technology for other purposes. Those kids getting their degrees in gaming at Carnegie Mellon University and Georgia Tech might just as easily come up with the next generation’s equivalent of McGuffey Readers.

WIPO’s upcoming annual meeting

For those of you interested in the future direction of international intellectual property rights, I recommend this summary of the upcoming annual meeting of the World Intellectual Property Organization (WIPO) from the blog Intellectual Property Watch – WIPO’s Future Work, Past Credibility On Table At General Assemblies.
WIPO has a big agenda, including: IP in development; patent law harmonization; a new Broadcasters’ Rights Treaty; the issue of Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore; and the Convention on Biological Diversity.
Another resource is the Consumer Project on Technology WIPO information web site, especially the web page on the Broadcasters Rights Treaty.

It takes a network, part 2

I was at an EDA conference yesterday where a major topic of discussion was the report of the Strengthening America’s Communities Advisory Committee, which was released in July. The SACAC, as it has become known in economic development circles, was established by the Secretary of Commerce earlier this year to take a look at the nation’s economic development programs – as part of the Administration’s proposal (called “Strengthening America’s Communities) to consolidate economic and community development programs (which the critics fear is really a way of cutting the funding for these programs).
The report notes the problems with the 2004 hurricane recovery efforts in Florida and talks about the numerous Federal programs. The SACAC endorsed the concept of consolidation but also called for the creation of a Cabinet-level inter-agency council to coordinate programs. Apropos my earlier posting (It Takes a Network) – I strongly agree with the coordinating council. No amount of consolidation will ever eliminate the overlap and duplication – and over-consolidation would stifle flexibility and innovation. I continue to believe, however, that a specific agency tasked with focused recovery activities is needed to cope with natural or, as Phil Singerman calls them, unnatural disasters (plant closings, based closings, etc.). That would free up EDA and other agencies to focus on longer-term activities.
By the way, the report also repeats what I and many others have said about the importance of intangibles in economic development, specifically mentioning human capital, higher education and amenities as key regional assets.

. . . and too much information

While the Professors at Wharton are asking about whether technology is too complex (see previous posting Unusable technology), David Wessel of the Wall Street Journal is asking whether we have too much information –Better Information Isn’t Always Beneficial:

How about the service offered by LegalMetric LLC, a start-up founded by patent lawyer Greg Upchurch? Contemplating a patent-infringement case in Delaware? For $795, Mr. Upchurch will tell you which judges rule most swiftly and which tend to favor patent holders. Making a motion for summary judgment? Mr. Upchurch can tell you how the judge has ruled on similar motions versus his peers.
These data always have been available in court files, but putting the pieces together was so expensive no one did it. Now, it’s on the U.S. federal judiciary’s Web site. Mr. Upchurch and his two employees download dockets, key information into a database and push a button so their software generates detailed reports.
For lawyer and client, this knowledge can be very valuable. But does it increase the chances that the judge will come to a just decision?
It is the sort of information that Nobel laureate Kenneth Arrow labeled “socially useless but privately valuable.” It doesn’t help the economy produce more goods or services. It creates nothing of beauty or pleasure. It simply helps someone get a bigger slice of the pie. Sure, if the product helps win cases, then both sides will buy it — just as both sides in high-stakes product-liability cases invest in jury-selection experts and software — and neither will have an unfair advantage. But does that make the society better off?

Too much to contemplate right now. Suffice it to say that the old saying “more is not necessarily better” applied to information and technology and the rest of the I-Cubed Economy.

Unusable technology

The latest posting on the Knowledge@Wharton asks an important question:
Are We Developing New Technologies Faster than Consumers Can Use Them?.
My answer: probably. A lot of new product development (most, in fact) ultimately fail. What bothers me with the new technologies is that usability often falls victim to geek coolness. It is what I call the “electronic swizzle-stick” approach: yes, technologically we can do that, but why?
While you ponder that, read what the good folks at Wharton have to say about over-engineered and over-complex products.

Property rights as an institution .. and an intangible asset

I have long respected the work of Hernando DeSoto and recommend his books highly. His work on the importance of property rights, especially the property rights of the poor, the excluded and the dispossessed, in economic development has had a major impact. He has pointed out that a major barrier to development in many countries is the inability of the poor to document, control and financially leverage the assets they have. In many ways, the poor are richer than they seem, but are unable to build on that wealth. They remain locked in the informal economy.
However, I’ve always had trouble reconciling DeSoto’s work with what I know about the importance of intangible assets in economic development – not just physical property and financial assets.
At a speech yesterday at New America Foundation, DeSoto helped me understand the connection. (Click here for a webcast of the conference, including the session with DeSoto’s speech at the end of the conference.) His main message is that what counts with property rights isn’t just the property. It is the commitment to the rule of law in economic transactions and the sense of inclusion within and under that rule of law. It is about the social contract, not just about the real estate.
In contrast to many, DeSoto does not believe you can create a middle class and reduce poverty simply by creating a market system. Nor can you create markets by fiat. Building markets is very difficult. Markets are legal institutions as much as markets. For example, you need property rights and contract law to allow for market transactions. The market institutions, as Noble-laureate Douglass North argued, are key. These must be developed from the ground up, not imposed from top down, so that they actually work out in the field.
During the question and answer period, De Soto acknowledged the importance of the standard types of intangibles: human capital, education, reputation as a factor of creditworthiness. (His comments on intangibles come at 1 hour and 4 minutes into the session – including his answer to my question on human capital.)
But, in essence, he had already pinpointed the key intangible: that social contract – the respect for the rule of law and the myriad of social organizations and institutions that make the economy work.
Without all the intangibles wrapped up in those institutions, which we in “developed” countries take for granted, economic development is simply not possible.

Innovation everywhere

Innovation isn’t just the “next big thing” – to quote the mantra of the dot-com boom. It is everywhere and in many areas. Witness the examples from the recent Asian Innovation Awards, as reported in today’s Wall Street Journal – “Necessity Meets Creativity”:

Forget, for a moment, the idea that an innovation has to be something new, either in terms of the problem it solves or when it was invented.
Just ask Mohammad Saidullah, an Indian honey seller in his 60s, who has been peddling his amphibious bicycle around the flood-prone plains of Bihar — and once or twice across the Ganges — for the past 30 years.
It’s not much to look at — a sky-blue tangle of spokes, paddles and wooden floats — but it has finally gotten some recognition. Discovered by an Indian organization called the Honey Bee network, which collects data on such initiatives via a web of students, nongovernment groups and volunteers, his contraption earned Mr. Saidullah a life-time achievement award in January from India’s National Innovation Foundation. And now he’s one of 12 finalists for this year’s Asian Innovation Awards, presented by The Asian Wall Street Journal in association with Global Entrepolis@Singapore. The awards honor people and companies who improve quality of life or business productivity.

What is more remarkable is the staggering amount of innovation:

The Honey Bee project has discovered more than 50,000 innovations in the Indian backwoods, some of which have also made it to the AIA’s final 12.

And that is just in India! You should read about the innovations from other Asian countries.

Creating an intangible asset

For most people, the term “intangible asset” brings to mind intellectual property — patents, copyrights, trademarks — what we call intangible goods. It may, for regular readers of this blog, also bring to mind what we call intangible competencies, such as leadership, creativity, innovative processes, etc.
However, accountants have long recognized an extensive list of intangible goods — rights that can be bought or sold. Some of these are customer contracts, client lists, distribution networks, distribution rights, development rights, food recipes, franchise agreements, noncompete covenants, leasehold interests, procedural manuals, solicitation rights, subscription lists, and supplier contracts. For a full listing see our white paper, Reporting Intangibles.
The examples listed above are based on organizational know-how, business relationships and contracts. However, a number of intangibles are government created, in the form of a grant of a right. These include airport gates and landing rights, broadcast and other FCC licenses, permits, and use rights such as drilling, water, air, mineral, timber cutting, and route authorities.
A new example of a government created intangible comes from the Administration’s new plan for tradable fishing rights— see Rule Changes Are Proposed for Fisheries — New York Times:

The Bush administration on Monday proposed using market-based incentives to govern saltwater fishing in certain areas, a tradable ticket to fish designed to impose order in waters prone to overfishing.

A version of the system is already in operation — see Bush Aims for Market Approach to Fishing – Washington Post:

In Alaska, for example, fishermen are granted a portion of the allowed halibut catch and can trade these quotas among themselves; in most U.S. fisheries, regulators govern the annual catch by limiting how many days fishermen operate and how much they collect each trip.

Needless to say, the proposal is not universally endorsed:

But the move to give fishermen private property rights to a public resource, along with the administration’s overfishing plan, angered many environmentalists who say Bush’s proposal does not do enough to protect overexploited fish stocks.

There is nothing new in government creation of private property rights to a public resource. Tradable pollution rights have become a stable of market-based environmental protection systems.
In fact, some argue that the entire intellectual property rights system is the government creation of private property rights to a public resource. It is certainly a government created property right — a state grant of an economic monopoly, as Judge Richard Posner, a leading conservative/libertarian thinker has pointed out. (For more on Posner’s views on IPR, see Landes and Posner, The Political Economy of Intellectual Property Law.) The argument that ideas are a public, rather than a private, resource is a little more involved (see for example James Boyle, The Second Enclosure Movement and the Construction of the Public Domain).
The question I have is whether once created, the government can eliminate or take away these rights? If the market place is to operate efficiently, the stability of property rights and contracts must be adhered to. On the other hand, these grants were given for a specific public purpose — in this new case to prevent overfishing. Do these rights then become so entrenched as to out live the public good they were meant to improve? Isn’t that partially what happened in 17th and 18th Century France when so many state-granted rights not only impeded economic development but help spark a revolution?

Mixing and matching tangible and intangible assets

A great story in today’s New York Times about the combination of tangible and intangible assets – Controlling Quality: The Hard Road to Building a Brand:

When Craig and Randy Rubin started Hi-Tex Inc. in November 1993, they never intended to open a factory. “Our charter was no bricks and mortar,” said Ms. Rubin. The business, in West Bloomfield, Mich., was set up, she added, to be a branding and a technology company.
Now, 12 years later, they have more than $25 million in annual sales, 52 employees and a hard-won appreciation for how much day-to-day control it takes to turn a promising technology into a reliable brand. And, yes, they have a factory.

The story relates how the company had started with a technology and a trade name — for a fabric that was breathable yet tough, impervious to liquid, stain-resistant and antimicrobial. Production was contracted out. But, at some point, the production process broke down. Deliveries were late and the product failed because a key step in the process was skipped. By losing control of the production process, the owners lost control of the intangibles that made them an early success: quality and reliability

An outside contractor had been fine when producing Crypton was a relatively simple business of running uniform white fabric through a series of coatings. But the company’s growth added complexity. The mills’ Jacquard fabrics needed pretesting to make sure they could be transformed into Crypton and inspecting to verify that the process worked. Hi-Tex itself was adding new fabrics with different weights, requiring experimentation and separate runs. Besides, if sales kept growing, the business would eventually be too big for a single contractor.

So, they did the unthinkable – they started doing it themselves.
Lesson one: intangibles like brand are only as good as the tangible product behind them.
Lesson two: control of the production process is an important intangible
Lesson three: tangible products (and the production processes behind them) will always remain an important part of the Intangible Economy. Product, brand, design, technology – all are an integral mix.
When anyone tells you we can survive as a service economy (or what I’ve called a royalty economy) based on our “innovation” alone — tell them the story of Craig and Randy Rubin.