Information Law Possum

I’m much excited that the Herdict project, sponsored–among others–by the Berkman Center and the OII, is being pushed to the next level this summer!

The project is awesome because the software will allow users to benchmark the performance of their computers against their peers.  (See here for more information.)

My wish list for Herdict is short–it has only one item if I don’t count the best wishes for the Herdict team:

It would be awesome if Herdict could also periodically measure the available internet bandwidth. 

Here in Switzerland, there’s been a great deal of discussion concerning broadband subscribers who get much less bandwidth than they subscribed for, and I don’t think the situation is much different elsewhere–especially in the U.S. where the average bandwidth is lower than in Central Europe. One of the country’s telcos, Sunrise, already offers a “ADSL speedometer” on its website.

However, this service is inferior to Herdict in several ways:

• First, the company that offers it is not neutral by any measure;
• Second, users cannot benchmark test results;
• Third, it’s a web service, and each testing requires user activity.

The problem with lower-than-promised bandwidth is now, as I perceive it, an information problem–and also a problem of collective action.  Herdict can solve both of them:

• With Herdict, it would be easy for anyone to get good data about the actual bandwidth of his or her connection.  (The software might even include analyses as to the average bandwidth depending on the daytime, cross-provider comparisons, etc.)
• In cases where a provider doesn’t live up to its promises, users would see that they’re not alone.  Consumer organizations and the media, both being already interested in the issue, would be more than happy to use and publicize that information.
• Maybe even the OECD would be interested in high-level aggregates of the so-produced information in order to refine their broadband statistics.
• At least in countries that allow class actions, providers would be under a credible threat of legal action and could not hide behind the best efforts clauses in their Terms & Conditions any longer.
• All of this would eventually prompt providers to improve their services and increase quality competition in the broadband sector.  (In Switzerland, at least, there is little price competition since the physical landlines are owned by only two companies, Swisscom and Cablecom, in most parts of the country.)

Of course, where the potential impact of a software on a market is so high and much is at stake for big market players, the prevention of manipulations of all sorts deserves a great deal of attention.

P.S. The release version of Herdict should come in multiple languages, otherwise only a small percentage of users could use it outside the anglophone countries.

Less than two months after the Federal Supreme Court broke up the Swiss book price cartel, I received a sign that this move does indeed foster the access to knowledge–though not only in the way I argued earlier.

The news came in a letter from Rösslitor, St. Gallen’s biggest bookstore, which had been taken over by one of the country’s biggest book retailers a couple of years ago.

The letter started with a hymn to the importance and societal functions of public libraries and school libraries, follwed by a slightly more modest description of the bookstore’s achievments.

The important thing is that Rösslitor will allow all public libraries and school libraries a 10 % discount on all books and other media, and it will ship them for free.  The discount would not have been possible under the old regime of book price fixing.

Ten per cent isn’t a lot, given that libraries are likely the bookstore’s best customers.  But it’s a sign that the market is moving, and I’m pretty sure that competitors will follow.  Thus, the libraries’ consumer rents will increase (and hopefully politicians will allow them to spend the money thus saved to enhance their services otherwise).

P.S. for those who think I’ve been taken in by a PR stunt, please consider the following: My hope is that if book retailers see that customers are aware of the new competition in the book market, they will be more ready to toughen the competition.

Ten days ago, the Swiss Federal Council refused to exert its statutory power to exempt the Swiss price fixing scheme for German-speaking books from the general prohibition of cartels.  (Before that, the Federal Supreme Court had confirmed its illegality according to the Swiss Law against Cartels.)  To sing a counterpoint to the massive PR campaign by the (former) cartel members–publishers and bookstores–, I decided to write a letter to the editor of our local newspaper.

Hereby, I experienced how difficult it is to put forward libertarian arguments in a persuasive way.  It seems easier to argue why the still many small bookstores need to be protected against “ruinous” competition by Amazon and the big chains.  Plus, in a situation where prices for bestsellers will fall, but not those for books that are less popular but considered to be of greater cultural value, it is much easier to stress the (unfounded) danger that the latter book will become more expensive than to justify why “vulgarish” bestsellers should be cheaper.

After all, I tried my best.  If you happen to speak German, you may want to form your own opinion about the result. Here it is.

Fearing that straightforward economic arguments are not convincing to most people, I decided to add a cultural (and slightly patriotic) point: First, I observed that more people will be able to afford more books when prices fall as they already do. Then, I pointed out that–contrary to a popular argument by the cartelists–it is not the cartel that was responsible for the broad range of books Swiss consumers can enjoy to choose from, but rather our vivid “book culture”.  For the latter, not only authors and publishers should take credit, but all of us, as we buy their books.  I went on to say that the cartelists rightly point out that books are cultural assets.  If books become more affordable, enabling more people to buy more of them, this will strengthen our book culture, to the benefit of all of us–not least the publishers and authors who make a living from them.

My friend and colleague Richard Staeuber has been interviewed by TheStreet.com about the headwind Apple is facing in many European countries because of its non-interoperable DRM system (FairPlay).

The article also mentions that Steve Jobs has recently blamed the major labels for obliging Apple to impose DRM protection on iTunes, and that he would be happy to sell non-DRM’ed music.  EFF’s Jason Shultz doubts that this statement could be taken at face value.

At the current state of play it doesn’t seem to make much business sense to try to bind consumers to iPods through iTunes:  First, the vast majority of songs played on iPods is not DRMed, and–as anti-DRM activists rightly claim–it is logically impossible to prevent the use of non-DRMed music by selling DRMed music.  Second, iPods somehow appear to be cooler than a) iTunes files and b) MP3 players of Apple’s competitors, and they’re expensive:  If a consumer wants to replace her iPod, I surmise that it would be cheaper in most cases to replace it by a no-name player and either burn-and-rip her iTunes or buy the respective songs at another online music store, than buying a new iPod.

My take on the story is that Steve Jobs’ statement is compatible with Apple’s business interests–at least in the short or mid-term.  The situation would only be different if a) the next generation of iPods is a flop or if b) non-DRMed music were not available anymore.