Out of Control

A WILLIAM PATRICK BOOK

Addison-Wesley Publishing Company

Reading, Massachusetts Menlo Park, California New York Don Mills, Ontario Wokingham, England Amsterdam Bonn Sydney Singapore Tokyo Madrid San Juan Paris Seoul Milan Mexico City Taipei.

Copyright 1994 by Kevin Kelly. [[ bjc: The OCR errors are mine. Three pages OCR'd from three pages faxed to me by Grady Mehan 17 Aug 94. ]]

Page 214 OUT OF CONTROL

line running into her computer's metering chip. Her dispenser now has ~300 credit to spend on information by the page, by the paragraph, or by the stock price, depending on how fine the vendor is cutting it.

What Sprague's encryption metering device does is decouple information's fabulous ease in being copied from its owner's need to have it selectively disnconnected. It lets information flow freely and ubiquitously-like water through a town's plumbing-by metering it out in usable chunks. Metering converts information into a utility.

The cypherpunks note, quite correctly, that this will not stop hackers from siphoning off free information. The Videocipher encryption system, used to meter satellite-delivered TV programs such as HBO and Showtime, was compromised within weeks of its introduction. Despite claims by the meter's manufacturer that the encrypto-metering chip was unhackable, big moneymaking scams capitalized on hacks around the codes. (The scams were set up on Indian reservations-but that's a whole 'nother story). Pirates would find a descrambler box with a valid subscription-in a hotel room, for instance-and then clone the identity into other chips. A consumer would send their box to the reservation for "repairs" and it would come back with a new chip cloned with the identity of the hotel box. The broadcasting system couldn't perceive clones in the audience. In short, the system was hacked not by cracking the code but by subverting places where the code tied into the other parts of the system.

No system is hack-proof. But disruptions of an encrypted system require deliberate creative energy. Information meters can't stop thievery or hacking, but meters can counteract the effects of lazy mooching and the natural human desire to share. The Videocipher satellite TV system eliminates user piracy on a mass scale the type of piracy that plagued the satellite TV outback before scrambling and that still plagues the lands of software and photocopying. Encryption makes pirating a chore and not something that any slouch with a blank disk can do. Satellite encryption works overall because encryption always wins.

Peter Sprague's crypto-meter permlts Alice to make as many copies of the encrypted CD-ROMs as she likes, since she pays for only what she uses. Crypto-metering, in essence, disengages the process of payment from the process of duplication.

Using encryption to force the metering of information works because it does not conslrain information's desire to reproduce. All things being equal, a bit of information will replicate through an available network until it fills that network. With an animate drive, every fact naturally proliferates as many times as possible. The more fit-the more interesting or useful-a fact is, the wider it spreads. A pretty metaphor compares the spread of genes through a population with the similar spread of ideas, or memes, in a population. Both genes and memes depend on a network of replicating machines-cells or brains or computer terminals. A network in this general sense is a swarm of flexibly interconnected nodes each of which can copy (either exactly or with variation) a message taken from another node. A population of butterflies and a flurry of e-mail messages have the same date: replicate or die. Information wants to be copied. Our digital society has built a supernetwork of copiers out of hundreds of millions of personal faxes, library photocopiers, and desktop hard disks. It is as if our information society is one huge aggregate copying machine. But we won't let this supermachine copy. Much to everyone's surprise, information created in one corner finds its way into all the other corners rather quickly. Because our previous economy was built upon scarcity of goods, we have so far fought the natural fecundity of information by trying to control every act of replication as it occurs. We take a massively parallel copy machine and try to stifle most acts of reproduction. As in other puritanical regimes, this doesn't work. Information wants to be copied. ~Free the bits!" shouts Tim May. This sense of the word "free" shifts Stewart Brand's oft-quoted maxim, "Information wants to be free"-as in "without cost"-to the more subtle "without chains or imprisonment." Information wants to be free to wander and reproduce. Success, in a netnot by worked world of decentralized nodes, belongs to those plans that do not resist either the replication or roaming urges of information. Sprague's encrypted meter capitalizes on the distinction between pay an~ copy. "It is easy to make software count how many times it has been invoked,~ but hard to make it count how many times it has been copied," says software~ architect Brad Cox. In a message broadcast on the Internet, Cox writes: Software objects differ from tangible objects in being fundamentally unableto monitor their copying but trivially able to monitor their use.. So why not build an information age market economy around this difference between manufacturing-age and information-age goods? If revenue collection were based on monitoring the use of software inslde a computer, vendors could dispense with copy protection altogether. Cox is a software developer specializing in object-oriented programming.In addition to the previously mentioned virtue of reduced bugs which OOPdelivers, it offers two other magnificent improvements over conventionalsoftware. First, OOP provides the user with applications that are more fluid,more interoperable with various tasks-sort of like a house with movable"object" furniture instead of house saddled with built-in furniture. Second,OOP provides software developers the ability to "reuse" modules of software,whether they wrote the modules themselves or purchased them from someis, one else. To build a database, an OOP designer like Cox takes a sort routine,~ a field manager, a form generalor, an icon handler, etc, and assembles the program instead of rewriting a working whole from scratch. Cox developed a set of cool OOP objects that he sold to Steve Jobs to use in his Next machine, but selling small bits of modular code as a regular business has been slow. It is similar to trying to peddle limericks one by one. To recoup the great cost of writing an individual object by selling it outright would garner too few sales, but selling it by copy is too hard to monitor or control. But if objects could generate revenue each time a user activated one, then an author could make a living creating them.

While contemplating the possible market for OOP objects that were sold on a "per use" plan, Cox uncovered the natural grain in networked intelligence: I.et the copies flow, and pay per use. He says, 'The premise is that copy protection is exactly the wrong idea for intangible, easily copied goods such as software. You want information-age goods to be freely distributed and freely acquired via whatever distribution means you want. You are positively encouraged to download software from networks, give copies to your friends, or send it as junk mail to people you've never met. Broadcast my software from satellites. Please!"

Cox adds (in echo of Peter Sprague, although surprisingly the two are unfamiliar with each other's work), "This generosity is possible because the software is actually 'meterware.' It has strings attached that make revenue collection independent of how the software was distributed."

"The approach is called superdistribution," Cox says, using a term given by Japanese researchers to a similar method they devised to track the flow of software through a network. Cox: "Like superconductivity, it lets information flow freely, without resistance from copy protection or piracy."

The model is the successful balance of copyright and use rights worked out by the music and radio industries. Musicians earn money not only by selling customers a copy of their work but by selling broadcast stations a "use" of their music. The copies are supplied free, sent to radio stations in a great unmonitored flood by the musicians' agents. The stations sort through this tide of free music, paying royalties only for the music they broadcast, as metered (statistically) by two agencies representing musicians, ASCAP and BMI.

JEIDA, a Japanese consortium of computer manufacturers, developed a chip and a protocol that allows each Macintosh on a network to freely replicate software while metering use rights. According to Ryoichi Mori, the head of JElDA, "Each computer is thought of as a station that broadcasts, not the sottware itself, but the use of the software, to an audience of a single 'listener."' Each time your Mac "plays" a piece of software or a software component from among thousands freely available, it triggers a royalty. Commercial radio and TV provide an existence proof of a working superdistribution system in which the copies are disseminated free and the stations only pay for what they use. Musicians would be quite happy if one radio station made copies of their tapes and distributed them to other stations ("Free the bits!")because it increases the likelihood of some station using their music. JEIDA envisions software percolating through large computer networksunencumbered by restrictions on copying or mobility. Like Cox, Sprague,and the cypherpunks, JEIDA counts on public-key encryption to keep thesecounts private and untampered as they are transmitted to the credit centerPeter Sprague says plainly, "Encrypted metering is an ASCAP for intellectualproperty." Cox's electronically disseminated pamphlet on superdistribution sumsup the virtues very nicely: Whereas software's ease of replication is a liability today, superdistribution makes it an asset. Whereas software vendors must spend heavily lo overcome software's invisibility, superdistribution thrusts software out into the world to serve as its own advertisement. A hoary ogre known as the Pay-Per-View Problem haunts the informationeconomy. In the past this monster ate billions of dollars in failed corporateattempts to sell movies, databases, or music recordings on a per view or peruse basis. The ogre still lives. The problem is, people are reluctant to pay inadvance for information they haven't seen because of their hunch that theymight not find it useful. They are equally unwilling to pay after they haveseen it because their hunch usually proves correct: they could have livedwithout it. Can you imagine being asked to pay after you've seen a movie?Medical knowledge is the only type of information that can be easily soldsight unseen because the buyers believe they can't live without it. The ogre is usually slain with sampling. Moviegoers are persuaded to paybeforehand by lapel-grabbing trailers. Software is loaned among friends fortrial; books and magazines are browsed in the bookstore. The other way to slay the problem is by lowering the price of admission.Newspapers are cheap; we pay before looking. The ingenious thing aboutinformation metering is that it delivers two solutions: it provides a spigot torecord how much data is used, and it provides a spigot that can be turneddown to a cheap trickle. Encryption-metering chops big expensive datahunks into small inexpensive doses of data. People will readily pay for bits ofcheap information before viewing, particularly if the payment invisiblydeducts itself from an account. The fine granularity of information-metering gets Peter Sprague excited.When asked for an example of how fine it could get, he volunteers one sofast it's obvious that he has been giving it some thought: "Say you want towrite obscene limericks from your house in Telluride, Colorado. If you couldwrite one obscene limerick a day, we can probably find 10,000 people in theworld who want to pay 10 cents a day to get it. We'll collect $365,000 peryear and pay you $120,000, and then you can ski for the rest of your life." Inno other kind of marketplace would one measly limerick, no matter how bawdy and clever, be worth selling on its own. Maybe a book of them-an ocean of limericks-but not one. Yet in an electronic marketplace, a single limerick-the information equivalent of a stick of gum-is worth producing and offering for sale.

Sprague ticks off a list of other fine-grained items that might be traded in such a marketplace. He catalogs what he'd pay for right now: "I want the weather in Prague for 25 cents per month, I want my stocks updated for 50 ( cents a stock, I want the Dines Letter for $12 a week, I want the congestion report from O'Hare Airport updated continuously because I'm always getting stuck in Chicago, so I'll pay a buck per month for that, and I want *llagar the Horrible' cartoon for a nickel a day." Each of these products is currently either given away scattershot or peddled in the aggregate very expensively. Sprague's electronically mediated marketplace would "unbundle" the data and deliver a narrowly selected piece of information to your desktop or mobile palmtop for a reasonable price. Encryption would meter il out, preventing you from filching other tiny bits of data that would hardly beworth protecting (or selling) in other ways. In essence, the ocean of information flows through you, but you only pay for what you drink.

At the moment, this particular technology of disconnection exists as a $95 circuit board that can slide into a personal computer and plug into a phone line. To encourage established computer manufacturers such as llewlett-Packard to hardwire a similar board into units coming off their assembly line, Sprague's company, Waves, Inc., offers manufacturers a percentage of the revenue the encryption system generates. Their first market is lawyers, "because," he says, "lawyers spend $400 a month on information searches." Sprague's next step is to compress the encrypto-metering circuits and the modem down into a single $20 microchip that can be tucked into beepers, video recorders, phones, radios, and anything else that dispenses information. Ordinarily, this vision might be dismissed as the pipe dream of a starry-eyed junior inventor, but Peter Sprague is chairman and founder of National Semiconductor, one of the major semiconducter manufacturers in the world. He is sort of a Henry Ford of silicon chips. A cypherpunk, not. If anyone knows how to squeeze a revolutionary economy onto the head of a in, it might be him.

THIS ANTICIPATED INFORMATION ECONOMY and network culture still lacks one vital component-an ingredient that, once again, is enabled by encryption, .and a key element that, once again, only long-haired crypto-rebels are expermenting with: electronic cash.

We already have electronic money. It flows daily in great invisible rivers! from bank vault to bank vault, from broker to broker, from country to l try, from your employer to your bank account. One institution alone, thel Clearing House Interbank Payment System, currently moves an average of a trillion dollars (a million millions) each day via wire and satellite.I But that river of numbers is institutional electronic money, as remote from electronic cash as mainframes are from PCs. When pocket cash goes digital-demassified into data in the same transformation that institutional money underwent-we'll experience the deepest consequences of an mation economy. Just as computing machines did not reorganize society until individuals plugged into them outside of institutions, the full effects of an electronic economy will have to wait until everyday petty cash (and check) transactions of individuals go digital. We have a hint of digital cash in credit cards and ATMs. Like most of my generation, I get the little cash I use at an ATM, not having been inside a bank in years. On average, I use less cash every month. High octane execube tives fly around the country purchasing everything on the go-meals, rooms, cabs, supplies, presents-carrying no more than $50 in their wallets. the cashless society is real for some. Today in the U.S., credit card purchases are used for one-tenth of all phone sumer payments. Credit card companies salivate while envisioning a near future where people routinely use their cards for "virtually every kind of transaction." Visa U.S.A. is experimenting with card-based electronic money terminals (no slip to sign) at fast-food shops and grocery stores. Since 1975, Visa has issued over 20 million debit cards that deduct money from one's bank account. In essence, Visa moved ATMs off of bank walls and onto the front counters of stores. The conventional view of cashless money thus touted by banks and most, futurists is not much more than a pervasive extension of the generic credit,, card system now operating. Alice has an account at National Trust Me Bank.l The bank issues her one of their handy-dandy smart cards. She goes to an~ ATM and loads the wallet-size debit card with $300 cash deducted from herl checking account. She can spend her $300 from the card at any store, gas| station, ticket counter, or phone booth that has a Trust Me smart-card slot. What's wrong with this picture? Most folks would prefer this system over passing around portraits of dead presidents. Or over indebtedness to Visa or, MasterCard. But this version of the cashless concept slights both user and merchant; therefore it has slept on the drawing boards for years, and will | probably die there.l Foremost among the debit (or credit) card's weaknesses is its nasty habit| of leaving every merchant Alice buys from-newsstand to nursery-with aI personalized history of her purchases. The record of a single store is not

Copyright 1994 Kevin Kelly

Date: 26 Aug 1994 10:50:12 -0800
From: "Kevin Kelly" kevin@wired.com
Subject: Re: contact with kk
To: "Brad Cox @ GMU/PSOL" bcox@virtualschool.edu
X-Mailer: Mail*Link SMTP/QM 3.0.0

        Reply to:   RE>>contact with kk

You may use my book text as you wish as long as there is a "Copyright 1994
Kevin Kelly" notice on it.