Superdistribution?Wired Magazine September 1994 Idea Fortes |
Also see discussion of this article in Peter Huber's Forbes magazine column Two cheers for price discrimination, and in Kevin Kelley's book, Out of Control, The Rise of Neobiological Civilization. Kelly is Wired Magazine's Senior Editor. Also see Coalition for Electronic Markets
Stop selling software. Give it away. Get paid for its use. Meterware is so logical it could be the foundation of the new, networked economy.
It has become a maxim: intangible electronic goods - software applications, online magazine stories, clip art - are quite distinct from tangible goods like baskets, potatoes, and oil refinery machinery. Tangible goods are made of atoms; electronic goods are made of bits. While those who produce electronic goods must expend the same capital, labor, and knowledge as those producing tangible goods, their products can be copied in nanoseconds and transported at the speed of light. Given those considerable expenses, and the absence of any robust enforcement of property rights, reasonable people shy from producing electronic goods.
The hard-to-copy nature of tangible goods made the traditional pay-per-copy mechanism a natural choice. But an info product's ease-of-duplication so thoroughly undercuts the traditional notion of pay-per-copy that the possibility of an abundant supply of pre-fabricated information-age goods is nearly nixed.
But imagine a significantly altered market mechanism for electronic goods. Instead of treating ease-of-replication as a liability to be prevented - via labor-intensive copy protection and legal or moral restrictions - this new model treats ease-of-replication as the asset upon which a new foundation for software engineering could be based.
In Japan this new way is called superdistribution. Superdistribution lets information flow freely, without resistance from either copy protection or piracy. Eschewing the low-tech property-rights mechanisms already widespread (shrinkwrap software, license servers, dongles, demoware, shareware), superdistribution allows miners, refiners, fabricators, assemblers, distributors, and marketers to cooperate and compete as producers and consumers of electronic goods within a global information-age society.
Existing copyright law distinguishes between copyright (the right to copy or distribute) and useright (the right to "perform," or to use a copy once obtained). In the eyes of the law, when Joe Sixpack buys a record or CD at a store he's actually purchasing a bundle of rights that includes ownership of a physical medium along with a limited useright that only allows use of the music on that medium for personal enjoyment.
Large television and radio companies buy an entirely different bundle of rights. They often have the same media (whose only difference is a "not for resale" sticker on the cover) thrust upon them for free by publishing companies in expectation of substantial fees for the useright to play the music on the air. These fees are administered by ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Musicians Institute), who monitor how often each record is broadcast to how large a listening audience.
Similarly, superdistribution treats each personal computer as a broadcasting station whose "audience" consists of a single "listener." As pioneered in 1987 by Ryoichi Mori, head of the Japan Electronics Industry Development Association, superdistribution recognizes that electronic objects are fundamentally unable to monitor their copying but trivially able to monitor their use. For example, making software - whether it's Microsoft's Word or Mike's string compare subroutine - count how many times it has been invoked is easy, but making it count how many times it has been copied is much harder. So why not build an information-age market economy around this difference?
If revenue collection were based on monitoring the use of software inside a computer, vendors could dispense with copy protection altogether. They could distribute electronic objects for free in expectation of a usage-based revenue stream.
This, of course, raises the same hairy privacy issues that we trade off when we choose to use credit cards instead of cash or talk by telephone rather than face to face. The real risk to privacy here does not arise when usage information is used only for billing, but from any possibility that it might be used for other purposes, just as credit card and telephone billing information can be diverted to purposed for which customers never intended law enforcement, to nam one.
Treating ease-of-replication as an asset rather than a liability, superdistribution actively encourages free distribution of information-age goods via any distribution mechanism imaginable. It invites users to download superdistribution software from networks, to give it away to their friends, or to send it as junk mail to people they've never met.
Why this generosity? Because the software is actually "meterware." It has strings attached, whose effect is to decouple revenue collection from the way the software was distributed. Superdistribution software contains embedded instructions that make it useless except on machines that are equipped for this new kind of revenue collection.
Superdistribution-equipped computers are otherwise quite ordinary. They run ordinary pay-by-copy software just fine, but they have additional capabilities that only superdistribution software uses. In Mori's prototype, these extra services are provided by a silicon chip that plugs into a Macintosh coprocessor slot. The hardware is surprisingly uncomplicated (its main complexities being tamper-proofing, not base functionality), and far less complicated than hardware that the computer industry has been routinely building for decades.
Electronic objects intended for superdistribution invoke this hardware, which provides instructions. These instructions check that revenue-collection hardware is present, prior usage reports have been uploaded, and prior usage fees have been paid. They also keep track of how many times they have been invoked, storing the resulting usage information temporarily in a tamper-proof persistent RAM. Periodically (say monthly) this usage information is uploaded to an administrative organization for billing, using encryption technology to discourage tampering and to protect the secrecy of the metered information. (Think of your utility bill.)
Software users receive monthly bills for use of each top-level component - say, Microsoft Excel, Myst, or a Net-based rock video. When these bills are paid, payments are divvied up between the makers of the component and makers of subcomponents - in proportion to usage. For example, for the rock video, payment might go to MTV.com as well as to the artist. In other words, the end-user's payments are recursively distributed through the producer-consumer hierarchy. The distribution is governed by usage metering information collected from each end-user's machine, plus usage pricing data provided to the administrative organization by each component vendor. (The various rounds of payment resemble those made by Visa or MasterCard).
Since communication is infrequent and involves only a small amount of metering information, the communication channel could be as simple as a modem that autodials a hardwired 800-number each month. Many other solutions are viable, such as flash cards or even floppy disks to be mailed back and forth each month.
Consider an author who wishes to distribute or sell a multimedia document that cannot be handled as a simple text file. Without superdistribution, the author's market is confined to those who have already purchased a program capable of displaying this document - a run-time version of Macromedia Director, for example. The same occurs at each lower level of the producer/consumer hierarchy. The market of a programmer who wishes to sell a reusable software component is restricted to those who have already purchased the components and tools upon which the software component relies. With superdistribution, the market is no longer restricted to those who own Director, because it will be acquired by the customers' operating system as if it were a part of the document. The creator of the document accrues revenue from those who read it, as does the creator of Director.
The user's operating system acquires subcomponents of the document, such as Director and any sub-components it relies on (QuickDraw, etc.), from the hard drive's cache, automatically loading it as needed from the network. The operating system can do this automatically and transparently because loading software involves no financial commitments when revenue is based on usage instead of acquisition of copies.
Superdistribution addresses the perennial implicit questions of those who might potentially provide the smaller-granularity reusable software components upon which an advanced software engineering culture could be founded: Where do software components come from? Why should I bother to provide them? Why should I engage in such gritty activities as testing and documenting reusable software components sufficiently that others might use them? What is in it for me?
Whereas software's ease-of-replication is a liability today (by disincentivizing those who would provide it), superdistribution turns this liability into an asset by allowing goods to be distributed for free. Where software vendors must now spend heavily to overcome software's invisibility, superdistribution would thrust software out into the world to serve as its own advertisement. Where the personal computer revolution isolates individuals inside a stand-alone personal computer, superdistribution establishes a cooperative/competitive community around an information-age market economy.
By separating revenue collection from acquisition of copies, hard drives and computers can disappear and become just part of the plumbing that conveys information-age goods between producers and consumers. Computers and telecommunications links become invisible, a transparent window through which individuals can communicate, cooperate, coordinate, and compete as members of an advanced socioeconomic community.
I read with enthusiasm Brad Cox's recent article ("Superdistribution," Wired 2.09, page 89). As a software publisher, I am interested in and excited by new forms of distribution: I find the current methods inferior, and also believe that somewhere in the amorphous concept of "meterware" there truly is a better way.
I am struck, however, by certain hang-ups that seem weightier than Brad Cox suggests. Provided that narrowband distribution is all that we currently have in the mass market, I fail to see how meterware is a viable concept. In a meterware situation, where a user is billed per use, I see no economic viability in sending CD-ROMs to people who want them before they pay for them. Yes, CDs are only about US$1.50 to me. But, if 1 million people want them, that is a big cash-flow hit.
Also, I'm troubled by the piracy issue. Any system developed to track billing will be a hot target for piracy. Knowing computer gamers, they will not only discover a way to break in, but will also spread this new method to all of their friends over the Net. As a publisher, I am in deep trouble if this comes to pass.
Revenue sharing is also a huge issue. Who is to decide the split? In a cable TV situation, revenue sharing is a negotiation between publisher, distributor, and local operator. Is there a likely parallel in the digital domain?
Finally, problems might arise when companies like Apple, whose QuickTime software is essential for viewing video (Apple currently charges developers a US$50 fee for a QuickTime license allowing for free unlimited distribution with a CD-ROM), may not be so generous in allowing QuickTime to be distributed on a mass scale over the Net. We will still need Apple's permission to do so.
I am intrigued by the possibility of meterware and how it could aid and enhance current forms of software distribution. But the issues of piracy and tampering are huge. With products developed by private enterprise, and with the potential to distribute a tampering method to millions of people, there are staggering implications, and publishers cannot afford to be watchdogs in this case.
David, your comments help to bring out several crucial points about superdistribution that I didn't have space to address in my article.
Superdistribution is not intended as a short-term solution to the practical CD-ROM problems you face today. There are simpler solutions available, such as calling an 800 number for a decryption key. Superdistribution's goal is to address two critical limitations of such acquisition-based approaches. The first is that once a customer decrypts a product, existing solutions provide no obstacle to making additional unpaid copies. The second is that existing approaches don't support revenue flows to subcomponent providers, only to the owner of top-level components such as computer applications.
Both of these problems are so fundamental that they're rarely articulated. But since they determine who can get paid for what granularity of product, they shape the entire software industry as we think of it today. Superdistribution's purpose is to provide a revenue mechanism that might allow the software industry to redefine itself, just as manufacturing redefined itself during the industrial revolution. That is, instead of each programmer fabricating everything he/she needs from first principles, they will instead assemble large components from stockrooms of prefabricated subcomponents.
You're "troubled by the piracy issue." You should be. Existing solutions leave you completely exposed to piracy. Your concern with superdistribution will manifest if the metering infrastructure is implemented in a tamperable form such as software. This is why the metered approaches I know of (Ryoichi Mori's Superdistribution system and Wave Systems's chip) emphasize tamper-resistant silicon technology.
As for your closing point regarding publishers as watchdogs, you may be correct in the short term, but you articulate a mind-set that can be exceedingly dangerous in the long. -
Brad Cox bcox@virtualschool.edu
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