May 12, 2009

The promise of the Internet is to facilitate sharing, more precisely the sharing of information. While sharing generally conveys a positive connotation, it is not without its downside. We have entered an Age based on information and unbounded sharing threatens the capacity to make money from creating information in the first place. For content creators, sharing is piracy, pure and simple, and no means is mean enough to suppress it, witness the painful labor to deliver the French HADOPI law (1).

For those who want to share what they do not own, French has just the word, "partageux", rooted in "partager", to share. Are we then seeing the latest avatar of the perennial struggle between a propertied class and the corresponding proletariat? Such a Manichean perspective is tempting. It gives each side the moral comfort of being on the side of the good battling the evil while simplifying the analysis of neutral observers.

Privacy however must be accounted for. This concept may be part and parcel of our humanity but the Information Age has given it a new life as eprivacy, the right to the information we generate. And alongside sharing and money, privacy creates a third conflicting value.

Conflict it does with sharing. Not so much because of the superficial antithesis, which hides a deeper complementarity (would sharing be a value if privacy did not exist?), but because privacy must be managed. The corresponding effort comes at a cost which burdens sharing and today's online consumer culture would rather be burden free.

Consumers may view privacy as a chore to avoid. It does not follow information providers like privacy. For it is privacy which protects pirates from their police and thus cut down deeply into their money making models. Even worse. Many information providers profit by aggregating consumers' personal information to package and sell to advertisers. This time privacy prevents providers to reap their raw data source for free.

Take the long view and the whole situation appears unsustainable. If information creators cannot earn a living, information creation will decrease. If advertising becomes synonymous with spying, advertisers will live under the constant threat of uncontrollable backlashes. Yet some conflictual situations are quite resilient as conflict tends to sustain itself through the accumulation of grievances.

Applied today, this tripolar model of the Information Age enables one to take better stock of current developments such as the launch of Amazon's Kindle DX. As an engineer, I would rather read Paul Taylor describe the technical advances of electronic book readers (*). Who would not wonder at the progress made over two decades, from the first Franklin electronic pocket dictionaries (2) to the promise of flexible displays by Plastic Logic (3)? What propels the plot though is the impact on business models. At first glance it's all about money.

As reported by Brad Stone and Motoko Rich (**), "three newspapers, The New York Times, The Boston Globe and The Washington Post, will offer a reduced price on the Kindle in exchange for a long-term subscription". Perhaps the Boston Globe readers will think twice before tieing themselves long-term with a newspaper its owner threatens to close. The Globe notwithstanding, do better electronic readers really offer "a ray of hope for newspaper barons" as the title of Andrew-Edgecliffe-Johnson and Kenneth Li's article (***) puts it?

Online newspaper publishing models have disappointed so far. But an eReader is not a computer. With neither print nor export command on the menu, this information sink cannot easily be turned around into a source, the dream solution to kill sharing for good (4). As reviewers remarked on the Amazon site, public libraries cannot buy copyrighted content to lend on the Kindle and US families who want to share an electronic Sunday newspaper are out of luck. Not only they need as many devices as there are simultaneous readers, they must buy as many subscriptions.

Even by paying full price one cannot give an eBook to a friend. One may only send money for the friend to buy it under his or her own account. Amazon's control over the users is complete. Contrary to the Microsoft mouse, a harmless sideline from the desk top monopolist, the Kindle is a weapon vital to Amazon's future. It is the ultimate tethered appliance described and feared by Jonathan Zittrain. Its success would transform a bookstore which must compete on every book it sells into a for profit lending library which locks in a client for life with every Kindle peddled (5).

Given the price of eReaders, most buyers will indeed be content to buy one device only. This means that success by Amazon kills privacy as surely as it does sharing. For thanks to its monopoly over eBook purchases by each Kindle user, unpolluted by gifts to third parties, Amazon can hope to accumulate highly detailed, truthful profiles of its clients, the kind to fetch high prices from advertisers. Corporate recruiters for instance could target Kindle users who buy books whose content reflects the technical skills needed to fill a position, as proposed by Hire Reach, a Boston startup (6).

Mastering privacy and sharing is thus the means to maximize money making. The profit however accrues to the company controlling the tethered appliance. Today Amazon is said to leave only 30% of the corresponding revenues to the owners of the newspapers it distributes. No wonder that, according to Andrew Edgecliffe-Johnson and Kenneth Li, Rupert Murdoch declared "we don't believe in the Kindle business model". What is good for Amazon is not so good for the Wall Street Journal. For Steve Brill, "[newspapers] need to own [the] customer relationship".

Whether a de facto monopolist emerges like the AT&T of yore or, more likely, the market is divvied up among a few oligopolists like today's cellular phone services, the closed combination of an eStore and its eReader thus threatens to create a wall between consumers and written content providers. Adding insult to injury, sharing is also alive and well as search engines siphon the extrinsic value of news content, i.e. the advertising revenues it generates. Kenneth Li tells us American print barons are actively conspiring to bend antitrust laws so that they can fight back (****).

Who would have thought Google is but a partageux and Amazon a true champion of privacy? Are we suffering from some tripolar disorder?

Philippe Coueignoux

• (*) .......... Amazon's Kindle DX set to test next generation e-reader market, by Paul Taylor (Financial Times) - May 7, 2009
• (**) ........ Amazon Unveils a Large-Screen Kindle Aimed at Textbooks and Newspapers, by Brad Stone and Motoko Rich (New York Times) - May 7, 2009
• (***) ...... Technology offers a ray of hope for newspaper barons, by Andrew Edgecliffe-Johnson and Kenneth Li (Financial Times) - May 8, 2009
• (****) .... US newspapers eye government support in battle for survival, by Kenneth Li (Financial Times) - May 11, 2009
• (1) see le projet de loi HADOPI in the French Wikipedia.
• (2) see Franklin Electronic Publishers in the Wikipedia.
• (2) see Plastic Logic in the Wikipedia.
• (4) the Kindle does offer limited means to duplicate pages by scanning and extract text for quotation.
• (5) allbeit a library which does not need the borrowers to return their books since they have no material embodiment and price the loans accordingly.
• (6) see US patent application no 20090106105