Registering copyrights

A good article on the state of play of copyrights by Hal Varian this morning — Copyrights That No One Knows About Don’t Help Anyone – New York Times. As Varian points out, there is no longer a need to register your copyright with the Copyright Office. Copyright is automatically given when the work (such as this blog posting) is created. Some of us voluntarily have adopted the Creative Commons copyright — but we don’t register our works with Creative Commons, just our general conditions for reuse.
The article discusses both the Copyright Office’s orphan copyright project (to track down owners) and Larry Lessig’s idea of requiring a positive act of registration after 14 years to continue a copyright. I support both of these ideas.
Varian also highlights the notion of creating a copyright registry:

Creating a registry is not that difficult from either a technological or a business perspective. The Copyright Clearance Center (www.copyright.com) was established by a group of publishers in 1978 to provide rights clearance for printed works. The Harry Fox Agency (www.harryfox.com) serves as a clearinghouse for those who want to make recordings of songs, and there are plenty of Web sites devoted to image search to ease the sharing of photographs.
But would the creators charge excessive fees if rights clearinghouses became widespread? I would argue that just the opposite would occur. An easy-to-use, efficient and competitive marketplace tends to push prices down. Reducing the transactions costs of acquiring reproduction rights potentially makes both creators and users of information better off.

Here I have to begin to disagree. I think there is a case for a public/private partnership in creating such a registry, not simply a competitive market. Basic access to information on who owns a copyright should be a governmental function — just like basic information on who owns a piece of property. But the bells and whistles of a search and data analysis process should be a private undertaking (“value added” is the phrase). The model is the EDGAR system of SEC filings. Anyone can get access to the basic EDGAR — it is public information. But a host of private value-added services have sprung up, such as EDGAR Online, to provide the additional analytical capability. The partnership works well: the government collects the basic information and the private sector competes to provide the best analytical tools.
(For more lessons learned from the EDGAR system, see our paper Creating A System For Reporting Intangibles — available as part of Appendix 9 in the EU study on an intangibles reporting registry.)
Having the basic data available to any vendor is the key to fostering the competition Varian talks about. But to do so means the registry system itself need to be an open public system. That sound like a job for the Copyright Office to me.

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Growth?

This just in from the BEA: News Release: Gross Domestic Product and Corporate Profits

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 0.6 percent in the first quarter of 2007, according to preliminary estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.5 percent.

0.6% ???? That is a major revision downward from the advanced number of 1.3% issued last month. It appeared that greater imports, lower government spending and a decline in housing. Of those three, that last two seem to be temporary downturns. As the Washington Post quotes:

The latest report “overstates the weakness of the economy,” said Nariman Behravesh, chief economist with the Global Insight consulting firm. He estimated that a rebound in exports and a rise in business spending mean growth for the current three-month period could be as high as 3 percent.

I’m less optimistic. But, the good news is that business investment seemed to pick up. Investment in equipment and software was up 2% after declining 4.8% in 4Q 2006.
And yes, you read that correctly — software is now counted as a “tangible” investment just like equipment. Of course, what those e GDP numbers don’t show are the real investment levels if you counted spending on other intangibles (like R&D and training) as investments. One step at a time.

The changing organization

Check out James Surowiecki’s talk on the future of the organization (based on his book, the Wisdom of Crowds) — at Power: 2012: Online Only Video: The New Yorker. Going back to the Theory X versus Theory Y, he argues that too many organizations are still run on the command and control model. But, new organizational models are emerging where work is self-organized. While more traditional organizations are trying to utilize better motivation devices, this new non-hierarchy type of organization may be the wave of the future. This new self-organization model runs up against deep seated positive response to power and status — and our faith in leaders and experts. That faith is often misplaced as “deciders” end up in a situation where their self-confidence results in bad decisions. Reconciling these factors will determine how organizations are managed in the future.
Very interesting.
You might want to also look at the other discussion in the 2007 New Yorker Conference “2012: Stories from the Near Future”.

When the brand becomes a lock in

Wal-Mart is running into a problem as it tries to go upscale — itself. According to an internal report (as reported in Is Wal-Mart Too Cheap for Its Own Good? – New York Times), the Wal-Mart model is hindering its growth:

A confidential report prepared for senior executives at Wal-Mart Stores concludes, in stark terms, that the chain’s traditional strengths — its reputation for discounts, its all-in-one shopping format and its enormous selection — “work against us” as it tries to move upscale.
As a result, the report says, the chain “is not seen as a smart choice” for clothing, home décor, electronics, prescriptions and groceries, categories the retailer has identified as priorities as it tries to turn around its slipping store sales, a decline likely to be emphasized Friday during Wal-Mart’s shareholder meeting.
“The Wal-Mart brand,” the report says, “was not built to inspire people while they shop, hold their hand while they make a high-risk decision or show them how to pull things together.”
The document, prepared in October 2006 by the company’s former advertising agency and based on interviews with scores of consumers, offers a candid, wide-ranging explanation for why Wal-Mart, the No. 1 seller of everything from laundry detergent to underwear, has stumbled badly when it comes to higher-end merchandise like silk camisoles and shag accent rugs.
The report contends, for example, that “our low prices actually suggest low quality” for products like high-definition televisions.

Brands have power. They convey certain meanings — whether you like it or not. Changing that meaning is very hard – if not impossible. Wal-Mart is just the latest to learn that truth. It took the Japanese decades of sustained effort to move “Made in Japan” from meaning “cheap” to “high tech” — and now they are embarked on an arduous shift to “fashionable.” We will see how Wal-Mart responds.

Update on Chrysler

Two articles on the future of Chrysler and design:
First, there is James Surowiecki latest column Car Trouble: Online Only: The New Yorker saying what many of us have been saying about Chrysler:

Cerberus, then, is going to have to do more than run a tight ship; it’s also going to have to figure out how to anticipate and react to fluctuations in consumer taste. That’s especially challenging in the auto industry, where change generally does not happen quickly: designing and building a new model takes years, retooling factories is complicated and expensive, and union contracts make it hard to shut down or trim back operations. In other industries, like steel, private-equity firms have restructured companies, cut back on (or, via bankruptcy, eliminated) pension and health-care obligations, and watched profits soar. But brand identity and cool design are not factors in the steel industry, so reducing costs and increasing production solves most problems.

And then there was this announcement in Business Week Shake-up at Chrysler Continues;

Following the recent acquisition of a majority stake in the Chrysler Group by Cerburus comes the announcement that there will be a reshuffling at Chrysler’s North American design offices. Joseph Dehner and Brandon Faurote will be taking over Vice President positions at the product design offices in Auburn Hills, replacing Thomas Tremont and David McKinnon.

Maybe something is happening? Or maybe not. Time will tell.

Return of old-line companies?

According to Business Week’s list of top 100 small business’s (The Shock Of The Old), old is new:

This year’s list, however, is dominated by Old Economy businesses: metal benders, defense contractors, and others that measure their history not in decades but in centuries.

But don’t let that misnomer “old economy” fool you. These aren’t your grandfather’s companies. Take for example the BW story’s poster child – Wabtec Corp. Wabtec is the spin off of Westinghouse’s locomotive part’s business:

A lot has changed since George Westinghouse dreamed up the idea of pneumatic locomotive brakes. Wabtec—still on Air Brake Avenue—mirrors the history of American business. It was bought by conglomerate American Standard Cos. (ASD ) in 1968, taken private in a management-led leveraged buyout 12 years later, and went public in 1995. Since then the company (No. 97) has grown by acquiring other railroad equipment makers, focusing on international markets, and reinvesting some $30 million a year in research and development. One result of that R&D: a cleaner-burning diesel locomotive that helps municipal transit authorities meet federal air-quality standards.
Wabtec Chief Executive Albert J. Neupaver can look out the window of the company offices and see the ornate stone castle that once served as Westinghouse’s headquarters. It’s now a museum devoted to George Westinghouse. The days of vertically integrated manufacturing are over. The foundry, which once cast steel parts, is a parking lot. Assembly lines where each employee added one bolt have been replaced by a single worker assembling an entire compressor or brake directly from a customer’s order. Employee empowerment is in. Several times a year, management and line workers hold brainstorming sessions in keeping with Japan’s kaizen philosophy of continuous improvement.

International markets? R&D intensive? Highly automated assembly lines that make parts to customer order? Employee empowerment? That sound a lot like a number of “high-tech” companies now days (can you say “Dell?”).
Here are some other examples:

Ceradyne Inc. (CRDN ) (No. 17), which makes ceramic plates for body armor, and Emergent Biosolutions Inc. (EBS ) (No. 27), whose products include a vaccine for anthrax. . . .
Genesco Inc. (GCO ), founded in 1924, once was one of the largest shoe manufacturers in the U.S. As low-cost imports flooded the market, the company became a retailer.

So, can we drop the misleading and distracting mindset of “old economy/new economy”? There is no such thing – at least not based on industry or product. There are companies that are leading edge and there are companies who are lagging behind. Often they are found in the same industry.
The public policy lesson is clear: our job is to help all sectors adapt to the I-Cubed Economy, not write off portions of the US economy as “old” and concentrate only on the trendy “new”. That may be a good strategy in the fashion world. But even there, it often pays to stick with the basics. So it is in economic policy. Too bad we often forget that and go chasing after the next big thing or the latest fad (can you say “nanotech”?). The new and the old — as in many things, balance is important.

Protecting the brand reputation

We all know that corporate reputation is a major intangible asset. Here is a great example of how corporate governance works as a part of that reputation — Allan Sloan – Aflac Looks Smart on Pay – washingtonpost.com:

When the public face of your company is a duck, you can’t afford to foul up your reputation. (Yes, you can groan now.) Take Aflac Insurance, best known for its ubiquitous quacking commercials.
Something funny happened at the company’s recent shareholder meeting: nothing. That’s because, unlike any other U.S. company with publicly traded stock, Aflac has been smart enough to voluntarily offer its shareholders a “say on pay.” Giving in to social-activist shareholders, as Aflac did, doesn’t make you popular among the CEO set. But boy, was it the smart thing to do.

Why did Aflac take this course? As Sloan explains:

despite being a big company ($1.6 billion of annual profits, $25 billion in stock market value), it prides itself on holding upbeat, family-type annual meetings. [Chairman Don] Amos told me that the company, founded in 1955 by his father and two uncles who went door to door seeking investors, has never had a dissident proposal on its proxy statement and didn’t want one this year.

But more than that was involved. Aflac’s top management knows that its reputation is built on more than a duck. The product it sell — disability insurance — depends on its reputation for delivering. Disability insurance is not something high on the priority list. If Aflac had a reputation of nickeling and diming its claimants, the reaction might well be “why bother.” But the ads stress how well the company takes care of people. Getting into a messy fight over CEO pay could undercut that reputation (by making them look like just another big greedy company). A whole flock of ducks couldn’t undo that damage.
And speaking of the duck, top management knows a good thing when they hear it:

“The duck’s the cheapest guy we’ve got working for us — and the most valuable,” Amos said.

So, when do shareholders get to vote on the duck’s pay raise?