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Archive: intellectual property

Dinosaur companies adapt to the Facebook era in the worst way possible

8 April 2008 23:22

Categories: Current affairs, Economics, Internet, Technology

Ever since Facebook Applications exploded onto the scene, there has been a problem. Well, I say it’s a problem, but in reality it is actually an amazing thing. It is only perceived to be a problem by old fashioned companies that just Don’t Get It.

For several months now the old Scrabulous saga has been playing out. Some smart guys thought it would be a great idea to be able to play Scrabble with your friends on Facebook. They were right. It became Facebook’s most popular application, and could even count Mark Zuckerberg among its users.

Unfortunately, the creators of Scrabulous didn’t own the intellectual property to the game. The people who do own the IP, Hasbro and Mattel, have gone on the assault. They are suing Scrabulous’s creators Rajat Agarwall and Jayant Agarwall. This is despite the fact that the brothers have undoubtedly done more than anyone else in recent years to raise the profile of Scrabble.

Do you think if Hasbro and / or Mattel had created a Facebook Application for Scrabble it would have been as successful as Scrabulous? I, for one, highly doubt it. Their reaction alone has demonstrated that they simply don’t “get” the internet. Just like the recorded music industry before them, board game companies, it seems, have woken up to find that the internet has eaten away at their old fashioned business model. They don’t know how to capitalise on the internet. It needn’t necessarily be a threat. But their head-in-the-sand behaviour ensures that it will be.

My personal pet theory is that old companies got far too cosy in the 20th century ways. With the intellectual property rights wrapped up, they have seen no need to innovate. They have rested on their laurels. As such, their products have stagnated. Remember, the optimal length of copyright is around 15 years. A similar length will apply to intellectual property. Scrabble can trace its history back to four times that length.

As was pointed out on the Freakonomics blog earlier this year, Mattel’s and Hasbro’s plans for the future of Scrabble are pretty lame to say the least.

The plans include adding anniversary labels to Scrabble packaging and introducing a folding edition of the deluxe Scrabble board.

In the meantime, the best thing to happen to Scrabble in generations is being targeted by Hasbro and Mattel simply because they were not smart enough to come up with the idea in the first place. They should have applauded and endorsed Scrabulous. That way, they would have ended up with a hell of a lot more respect and almost certainly more sales than under the current strategy of the companies.

In the latest stage of their assault, Mattel have finally launched their own ‘official’ Scrabble Facebook Application. But The Guardian reports that all is not well. And yet again, the problem can be laid at the door of intellectual property rights.

Seemingly, the new ‘official’ application is only endorsed by Mattel — not Hasbro. This means that you can not play Scrabble in the USA or Canada, where Hasbro own the rights. For this reason alone, the trust of Facebook’s users has been lost. If you can’t even play against your friends just because they happen to live in North America, why would you bother defecting from Scrabulous which currently has approximately 700,000 “daily active users”?

Today another Facebook Application has been hit by a similar corporate strangling. This time it is from a company that you would think would be able to cope with new technologies better.

Tetris Tournament was an early Facebook hit, and one of my favourite Facebook apps. It didn’t take long for its name to change to BlockStar, but it was still clearly derived from Tetris. The game itself was a bit clunky, but it did the job and was good fun.

Today it has become “Tetris Friends (formerly Block Star)“. Yes, it is now an official Tetris app. So, is this simply BlockStar with a shiny Tetris logo over the top? Far from it. The new game is utter, utter shit. Amazing when you consider that it is actually the official Tetris game. The original is a classic. This is a big pile of flaming hairy balls.

For one thing, the game now only lasts a maximum of two minutes. That’s right. No new levels. No game over as you reach the top. Just a high score after two minutes. It is ready to finish just when you get into the groove. Meanwhile, the graphics are cluttered and confusing. This game is intensely unsatisfying.

The reviews agree. The application’s wall has become a stream of obscenities while the reviews section has turned into a mere succession of one-star ratings.

In this respect, the users of Scrabulous have got off very lightly indeed. The best Tetris app on Facebook has been mauled out of all recognition.

3 comments

Copyshite

28 December 2007 03:19

Categories: Current affairs, Economics, Entertainment, Film, Internet, Music, Technology

Copyshite

A series of posts

  1. Copyshite
  2. The entertainment industry’s wrong turns
  3. The future of music: gigs and t-shirts
  4. The future of music: pretty boxes

There is a really interesting post about intellectual property and the woes facing the entertainment industry by James Graham. Given that I have been meaning to write about this issue for a long time, I may as well use this as the opportunity to finally get round to it.

But first, a couple of notes on copyrights and patents. James Graham says:

Both global patent and copyright laws have been extended in recent decades. The original idea behind such laws appears to have been forgotten and pure greed has taken its place. Globalisation means that the earnings potential from a new idea has massively increased; yet at the same time we’ve artificially increased it further still, and long lives will extend this still further. To take one example, J.K. Rowling, a rich woman who can afford the very best in healthcare, is likely to have a very long life. Let’s assume she lives to 100, in 2065. The copyright on her books will stay with her estate until 2135. That means that her great-great-great grandchildren will still be profiting from their ancestor’s books. Is there really any justification for that?

I quite agree. The traditional justification for strong copyright laws is to encourage innovation. You come up with a great idea, and we’ll make sure nobody else can profit from it.

Sound enough at first. But how long should this monopoly last? Is “life plus 70 years” or even “life plus 50 years” justified? Is 50 years even justified? Hardly.

Copyright was big(ish) news in the UK last year when there was a push by artists such as Cliff Richard, Paul McCartney and Bono (where’s his “altruism” now?) to get copyright extended from 50 years. Coincidentally (or not), Cliff Richard’s and Paul McCartney’s most successful recordings are soon to enter the public domain.

And let us bear in mind that this was for copyright on the recordings. So the copyright extension would have meant artists earning even more money from something that they did once, over 50 years ago, regardless of whether or not they even wrote the song. If only the rest of us could earn so much money for so long from doing a job just once!

So do strong copyright laws encourage innovation? It is difficult to imagine that Cliff Richard entered the recording booth in 1958 thinking about the money he’d be making from it in 2007. He will have been most concerned about the money he’d make from it in 1958 and a few years after that. Nobody but the most egotistical and talented musicians would imagine raking it in for any longer than 50 years.

Having copyright lasting “only” 50 years didn’t stifle innovation in the 1950s and 1960s — the rock n roll and beat music booms happened regardless. And looking at the subsequent careers of these early innovators of pop music, it is difficult to argue that these strong copyright laws have done anything but stifle innovation. After all, why would you bother to make more great music if you are still making money from 50-year-old music?

That makes sense when you think about it. Copyright laws essentially ensure that an artist has a monopoly. And monopolies are detested because of their effects on social welfare.

Cliff Richard isn’t concerned about innovation. His only incentive is to get his grubby hands on even more money. What a relief that the government rejected the proposal in the end.

So what is the optimal length of copyright? A paper by Rufus Pollock suggests that it is approximately 15 years. A far cry from the life plus 70 years for some works, or the 95 years that Cliff Richard called for.

It is a similar story with patents. The justification for patents is more or less the same as that for copyright laws. But research (PDF) by James Bessen and Eric Maskin (who I wrote about a couple of weeks ago) suggests that protection of intellectual property should be more “balanced”.

The ideal patent policy limits “knock-off” imitation, but allows developers who make similar, but potentially valuable complementary contributions.

Empirical evidence backs this up, as an extension of patent protection into the realm of software in the USA in the 1980s did not lead to an increase in innovation.

An interesting point about Rufus Pollock’s research is that he suggests that copyright laws should be weakened as the costs of production and reproduction decrease. And the past decade has seen a massive reduction in the costs of production due to advances in technology — particularly the internet.

And it is the entertainment industry’s complete inability to adapt to this reality that has left it in the mess it is currently in. That will be the subject of my next post in the series.

« — Next in series »

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