Re: Fear of Life (was Microsoft, Automation)

Hal Finney (
Sun, 3 May 1998 15:45:21 -0700

There are a few ideas which have been proposed to provide renumeration
to artists even without government intellectual property (IP) rules like
copyrights and patents.

One possibility is to enforce IP via contracts. When you buy a work
of art, the purchase contract obligates you not to sell it. This is
a voluntary transaction and you are free not to buy the artwork if you
aren't willing to accept this restriction. But if you do buy it, you
are bound by the terms of the contract not to resell the art.

The problem with this one is the difficulty of enforcement. It may happen
that someone "somehow" acquires a copy of the artwork. Since he has
not signed any contracts, he is free to reproduce it and sell it at will.
Sure, someone must have broken his contract somewhere along the chain
which led to this person selling it, but how can you know who did it?

One proposed solution is fingerprinting/watermarking. Each work of
art is made different in some subtle way, and so if one is found being
reproduced then it is possible to know who originally purchased the copy.
They can be held responsible for violating their contract.

Various cryptographic techniques exist for digital watermarking of digital
goods, but this is an area of ongoing research and it is not clear at
this point whether techniques can be found which prevent thieves from
forging or erasing watermarks.

It may also be difficult to distinguish between a person who voluntarily
violates his contract, selling the artwork, versus a person who gets
his copy of the art stolen. In either case it ends up being widely
reproduced. In the latter case you can still argue that the victim of
the theft was guilty of negligence, but traditionally that would have a
less harsh penalty than someone who intentionally violates his contract.
So it may be difficult to fully recompense the artist once this happens.

Another idea which has been proposed for selling IP is a "recursive
auction". I've just seen informal descriptions of this idea so I don't
know how the details are supposed to work. The general idea is that the
artist initially creates his work of art (a new novel, say), and sells
it for a lot of money to one buyer. This is the whole compensation to
the artist so it may have to be hundreds of thousands of dollars or more,
for someone who is really successful.

That first buyer gets to be the first person to read the novel. But of
course it has cost him a lot of money. Now he can get it back by selling,
say, just two copies, to two different people. These people pay about
half as much as the first person, to get the rights to be the 2nd and
3rd people to read it. This compensates the first person and he ends
up not having paid anything excessive for his special role. Now, each
of these two people reads the book and then sells it to two more people,
for 1/4 the original purchase price, covering their own costs.

This carries on recursivelly, each person buying the book and then selling
two copies for half the price he paid. By the time a few thousand
people are able to read the book, it is selling for practically free,
each person involved has had to pay only a tiny amount, and the artist
got an adequate fee.

This is obviouslly a simplistic explanation, and as I said I have
not seen any kind of rigorous writeup which might explain whether it
could actually work. Clearly it would be more suitable for some works
than others. Items by a famous author for which having one of the first
copies would be truly worthwhile would probably be best suited for the
recursive auction, as would articles with time value, for which getting
the information early is better than getting it late.