Hal Finney writes:
>But when we deal with content protection which is provided on a
>competitive basis in the marketplace, it is another matter. In that
>case it is ultimately a question of satisfying the desires of the consumer
>which determines which products will succeed. [...]
>
>I understand that John and others worry that consumers will not actually
>be able to make choices and decisions, because all products available
>to them will have content protection built in. But this amounts to the
>belief that industry will form a cartel which seeks to sell products
>which make consumers unhappy, intentionally delivering devices which
>consumers dislike, smug in their belief that their cartel is 100%
>effective and that no competition is possible.
>
>Without the enforcement of laws like the DMCA, such a situation is
>highly unstable.
Free markets may be the best hope we've got (or they may not), but
in any case, wouldn't it be fair to say that reliance on free markets
to eliminate content protection is a little risky?
Unless I've overlooked something, the following example seems to
suggest that market subtleties may be quite possible in this context.
Imagine a world where 10% of all hard disk buyers are opposed to content
protection and utterly refuse to buy any content-protected hard disk,
but where the other 90% don't care either way. Now suppose that there's
basically one dominant hardware manufacturer, and the content industry
offers to pay a kickback to the manufacturer of 20% of the cost of a
drive, per drive sold, if the manufacturer agrees to stop selling
unrestricted hard drives.
In an idealized free market, the dominant manufacturer would grab the
content industry's money and run, losing 10% of their market share but
gaining 20% on the remaining hard drives, for total gain to them of 8%.
Meanwhile, the demand for unprotected drives from the now-driveless
10% of the world would stimulate the formation of a new hard drive
company selling unprotected drives (possibly at a premium). Life's
great for consumers, and their preferences rule the market.
However, in real life, markets aren't ideal. In particular, there
seems to be very substantial barriers to entry for new competitors in
the hard drive business. Thus, capture of only 10% of the market may
be insufficient lure to stimulate formation of a new, ``freedom-friendly''
hard drive manufacturer, and this equilibrium could well be fairly
stable. In this case, those that want unprotected hard drives lose
big, even though this would never happen in an idealized free market.
I'm sure that we can point to many unrealistic oversimplifications in
the above analysis, but it seems to argue that this issue could be more
complicated than the "coercive laws vs. free markets" dichotomy might
suggest, doesn't it? Do you agree?
