This is a point that we've been making for years (and often highlighting the research that proves this), but innovation and good ideas tend not to come from the proverbial "spark of genius." Study after study after study has shown that's almost never the case. Almost all good ideas come from people building on the works of others, with a minor tweak here or there, or a random decision based on a suggestion from someone new, after an idea percolates for months or years. The more open systems are to sharing ideas and spreading information and allowing those collisions to happen, the more likely that new good ideas and new innovations occur. That's why it's so harmful that today's intellectual property systems are built on the false assumption that innovation really does happen through that "spark of genius."
The key thing is to allow those hunches to connect with other people's hunches. That's what often happens. You have half of an idea and someone else has the other half, and if you're in the right environment, they turn into something larger than the sum of their parts. So, in a sense, we often talk about the value of protecting intellectual property. You know, building barricades, having secretive R&D labs, patenting everything that we have, so that those ideas will 'remain valuable' and people will be incentivized to come up with more ideas. But I think there's a case to be made that we should spend at least as much time, if not more, valuing the premise of connecting ideas and not just protecting them.
In the WSJ piece, he highlights an example of this in action:
Earlier this year, Nike announced a new Web-based marketplace it calls the GreenXchange, where it has publicly released more than 400 of its patents that involve environmentally friendly materials or technologies. The marketplace is a kind of hybrid of commercial self-interest and civic good. This makes it possible for outside firms to improve on those innovations, creating new value that Nike might ultimately be able to put to use itself in its own products.
In a sense, Nike is widening the network of minds who are actively thinking about how to make its ideas more useful, without adding any more employees. But some of its innovations might well turn out to be advantageous to industries or markets in which it has no competitive involvement whatsoever. By keeping its eco-friendly ideas behind a veil of secrecy, Nike was holding back ideas that might, in another context, contribute to a sustainable future--without any real commercial justification.
Of course, I think an even better example is the recent research on Alzheimer's that really only took off when everyone involved opened up their data and agreed to avoid patents. Or, how about the research on the human genome that compared patented and public domain gene research, and showed that the patents limited commercial viability. But when the genes were opened up to the public, much more value came out of it. The more you look, the more you find these results pretty much everywhere you look. And it's nearly impossible to find any evidence to support the idea of a "flash of genius" for key innovations in history. In fact, almost every key innovation in history has been shown to have come about to multiple people at once, as ideas are shared and the general progress of knowledge and innovation pushes forward.
This is important if you believe and support innovation. The fact that our entire regulatory system for innovation is based on a disproved theory that makes innovation more difficult should be seen as a serious problem and one worth fixing as quickly as possible.
from the gotta-go-with-the-librarians-here... dept
Rose M. Welch was the first of a few of you to send in the news that librarians have realized that Netflix is a great way to expand the catalog of DVDs that can be loaned out, even though it violates Netflix's terms of service. Netflix seems a bit ambivalent about the whole thing, saying that they don't like it, and they would expect librarians would obey the terms of service (which this does not), but that they really don't want to sue libraries -- perhaps recognizing how awful that would look from a PR standpoint. While I applaud Netflix not going straight to the lawyers, is it really that big of a deal that libraries are using Netflix in this manner?
"Stealth Mode" is the name of a start-up strategy where the founding team develops their product and business in secret. The tactic is based on the fear that, if their idea were to get out, other companies would copy it, and the originators would face competitors. The use of Stealth Mode has swung inand out of fashion in Silicon Valley over the past decade, but was hottest during the tech bubble at the end of the last century. Back then, .com startups were so hot that investors would salivate over the latest stealthy startup, eager to throw some easy money at it. But whatever the fashion, with few exceptions, I think that running a startup in Stealth mode is short-sighted, arrogant, and counter-productive. Here's why:
Founders who want to operate in stealth are usually of the opinion that their idea is soooo very unique, that to share it would be to divulge the crown jewels. There are two reasons that is naive:
Your idea is almost certainly not unique. Someone else has had the same idea, and if it's any good, someone else is working on developing it.
You are going to have to share your idea at some point in order to sell it, so your secrecy is short-lived at best.
A consistent Techdirt posit is that execution is far more important than idea. Whether you reveal your idea or not, how you execute versus direct competitors and near substitutes will determine whether you succeed or not (see bullet 4).
If execution is important, a critical part of execution is networking, getting your idea out there, meeting the right partners, employees, VCs, Angels, channels, and early adopters. In fact, this professional networking is the core of Silicon Valley culture, and "Stealth" is the antithesis of that culture. Ask yourself: Which culture worked better over the years: Silicon Valley's open idea sharing, or Route 128's tight secrecy and control?
Stealth mode prevents the creation of any kind of buzz around your company. Early in a company's life, buzz among the tech community (VCs, executives, industry insiders) is very valuable. You want to be the first name that rolls off of someone's tongue when your startup sector is mentioned, like Admob was for mobile ads, Slingbox was for place-shifting, or Loopt was for social LBS. This gives you tremendous advantage in word-of-mouth mentions, as a "must check" comparable before a VC invests in a competitor, as a target for any large partner seeking to adopt similar technology, or a corporate M&A effort seeks to buy a sector leader.
Stealth mode prevents feedback from savvy friends, the tech community, beta adopters. It limits the fresh thinking, free advice, and diversity of ideas that go into product cycles.
Suffice to say that I have found that more times than not, stealth companies miss the boat. Their idea isn't that special, and some other company has grabbed all the advantages of being the First Mover long before the stealthy come out of hiding. There are, of course, exceptions, ex: ideas that take years of R&D, rock-star exec teams, ideas that truly are unique, & a few others.
Partly as the result of this kind of thinking, Stealth Mode is out of fashion these days. Most VCs refuse to even sign NDAs with startups, not wanting to don legal handcuffs, while being less interested in a company that is counting on secrecy as one of the tenets of their success.
Part 2 - Case In Point: Checkpoint
I was reminded of the issue of stealth companies today when I read about CheckPoint at Wireless Week. CheckPoint is a startup that is in "Stealth Mode" and is building a mobile app for checking into retail stores, and then having the app suggest products to have a look at in that store. Wait... How is it that I can tell you what CheckPoint does if they are in Stealth? Well, I guess it's because stealth is such a lousy idea that the CEO himself revealed the company strategy to Wireless Week one month before coming out of stealth mode! Basically, with yesterday's Facebook's announcement that it is entering the location check-in sector, CheckPoint has realized that the party might be over before they even show up. They have missed out on the buzz grabbed by startups FourSquare and Gowalla as they dominated the sector before the giant Facebook stepped in to mop up.
CheckPoint's CEO tries to make the best of the situation by saying,
...[CheckPoint] has very little in common with them [FourSquare, Gowalla, Facebook] because they're primarily for social connections. CheckPoints is focused on tangible products and helping consumers connect with products that are interesting to them...There's no one really focusing on product in this space right now...
If he honestly thinks that, he really has been in hiding for too long! All of those Check-In services are clearly focused on driving product sales in the locations users visit. It's just that they are using your friends as the bait that makes the app sticky. First, get the bait, then move the product. CheckPoint's secret strategy is [shh] "First, push the in-store products, then offer discounts." It's like a scavenger hunt with discounts as the reward. I'm not saying it's a terrible idea, but I think the Facebook/FourSquare/Gowalla approach seems better.
Either way, CheckPoint's reaction to Facebook's sector entry is a cold reminder of the real threat for any startup: it's not that someone else will steal your idea - someone else probably already has it - nope, the real threat is that you will toil in obscurity as better-known and/or larger players execute on grabbing market share.
The key to the Alzheimer’s project was an agreement as ambitious as its goal: not just to raise money, not just to do research on a vast scale, but also to share all the data, making every single finding public immediately, available to anyone with a computer anywhere in the world.
No one would own the data. No one could submit patent applications, though private companies would ultimately profit from any drugs or imaging tests developed as a result of the effort.
This should hardly be surprising -- except to those who insist that without the possibility of patents no research would be done on curing diseases. In fact, the only thing that should be surprising about this is the fact that anyone is surprised by it, or that anyone continues to insist patents are necessary in this kind of research. We've already seen how large groups of scientists sharing data leads to faster advancement in those fields, and how data that is locked up leads to slower advancement in research.
Thankfully, it appears that some folks are getting the right idea about this, and have set up a similar deal for research into Parkinson's disease, and perhaps it can finally lead to a rethinking of patenting federally funded drug research and (dare we hope?) a rolling back of the disastrous Bayh-Dole Act, which resulted in this desire of universities to lock up basic research.
But the key results here highlight the same point many of us have made for years: openness and sharing of the underlying data allows overall advancement in the space to move at a faster rate (prior to this openness, research in the area had apparently stalled out a bit). And, even with the open sharing of data and the lack of patents, there are still plenty of incentives to do the research, because they know that there is plenty of money to be made in selling the actual treatments that come out of this.
Technology can certainly make for some interesting clashes with regulatory regimes. Social networking, for example, starts to bring up all sorts of questions about the fine line between certain regulated areas of advertising, and basic free speech communication issues. Eric Goldman points us to the news that the FDA is warning pharma giant Novartis (pdf) over its use of a "Facebook Share" widget on its site promoting the drug Tasigna (a leukemia drug).
The specific complaint is that the "share" feature includes promotional material about Tasigna, but not all of the associated risks (and, as with so many drugs, there's quite a list of risks). Because of the limited amount of space often used in "sharing" content, the FDA feels that some of the sharing options are misleading, not correctly noting that the drug is only approved for some users.
The shared content is misleading because it
makes representations about the efficacy of Tasigna but fails to communicate any risk
information associated with the use of this drug. In addition, the shared content inadequately
communicates Tasigna’s FDA-approved indication and implies superiority over other
products. Thus, the shared content for Tasigna misbrands the drug in violation of the Federal
Food, Drug, and Cosmetic Act (the Act) and FDA implementing regulations.
The FDA even picks on the specific word choices in some of the sharing features, such as calling the drug a "next-generation" drug, which apparently implies it's better than other drugs in the space when that might not be the case. Advertising and marketing for pharmaceuticals has always been a contentious area, and I believe that many countries ban it, while the US allows it. But with the internet and social networking, the line between advertising and communication can start to blur. Yes, it may be problematic if Novartis is suggesting people "share" misleading or incomplete info about the drug, but what if people just start sharing that info on their own? Where do you draw the line?
A few months back, we wrote a bit about Matt Ridley's new book called The Rational Optimist. I still haven't had a chance to read the book, but reader sehlat points us to an essay that Ridley has written for Reason Magazine that is adapted from the book, which is an absolute must read, on how innovation occurs. Many of the points won't surprise regular readers of Techdirt, since it talks about concepts and studies that we've discussed many times before. For example, it discusses some of the same research we recently wrote about how government funding of basic science research often does more harm than good for innovation. It also explains how money is often not a key ingredient in innovation. It's helpful, yes, but not the key ingredient. There's a nice bit on the fact, as discussed time and time again around here that intellectual property laws have never been shown to increase innovation:
Yet intellectual property is very different from real property, because it is useless if you keep it to yourself, and an abstract concept can be infinitely shared. These features create an apparent dilemma for those who would encourage inventors. People get rich by selling each other things (and services), not ideas. Manufacture the best bicycles, and you profit handsomely; come up with the idea of the bicycle, and you get nothing because it is soon copied. If innovators are people who make ideas, rather than things, how can they profit from them? Does society need to invent a special mechanism to surround new ideas with fences, to make them more like houses and fields?
There is little evidence that patents really drive inventors to invent. In the second half of the 19th century, neither Holland nor Switzerland had a patent system, yet both countries flourished and attracted inventors. The list of significant 20th-century inventions that were never patented includes the automatic transmission, Bakelite, ballpoint pens, cellophane, cyclotrons, gyrocompasses, jet engines, magnetic recording, power steering, safety razors, and zippers. By contrast, the Wright brothers effectively grounded the nascent aircraft industry in the United States by enthusiastically defending their 1906 patent on powered flying machines.
So what is it that leads to innovation? Well, it's the sharing of ideas and building upon them -- again, a point raised here time and time again. Ridley describes it as "ideas having sex." This isn't a new idea (though it's "newish"). In the past thirty years, a growing number of economists have recognized that economic growth comes from the collision of information and new ideas, shared openly. As Ridley notes: "Innovators are in the business of sharing." While he doesn't bring this up, there's actually a tremendous amount of research that show that communities that more widely and openly share ideas tend to have greater innovation (and, no, that doesn't mean through such false disclosure systems like a patent system -- which teaches little, and doesn't let anyone really make use of the knowledge shared). But the key point that Ridley makes is that innovation happens when people keep building on what's been done before:
The secret of the modern world is its gigantic interconnectedness. Ideas are having sex with other ideas from all over the planet with ever-increasing promiscuity. The telephone had sex with the computer and spawned the Internet.
Technologies emerge from the coming together of existing technologies into wholes that are greater than the sum of their parts. Henry Ford once candidly admitted that he had invented nothing new: He had "simply assembled into a car the discoveries of other men behind whom were centuries of work." Inventors like to deny their ancestors, exaggerating the unfathered nature of their breakthroughs, the better to claim the full glory (and sometimes the patents) for themselves. Thus, Americans learn that Edison invented the incandescent light bulb out of thin air, when his less commercially-slick forerunners, Joseph Swan in Britain and Alexander Lodygin in Russia, deserve at least to share the credit.
It's a great read that really highlights and ties together many of the points I've written about here for years.
Glyn Moody points us to the news that BP has apparently been hiring up a bunch of local scientists associated with various Gulf Coast universities to study the impact of the oil spill. While some might suggest at least BP should be paying for some of the analysis of the damage it has done, the details suggest that this is more about silencing the scientists. That's because part of the contract it's making them sign is an agreement that they won't publish or share their data for at least three years. That's generally not how scientists work. They look to share data with others and to publish frequently. When one university told BP it couldn't accept such confidentiality requirements, BP went elsewhere. In other words, it's pretty clear that this has nothing to do with actually understanding and letting the world know what has happened. It's about keeping it quiet for as long as possible.
Reader Dementia points out this amusing example of newspapers and their paywalls, combined with the newspapers clearly not even realizing what their stories and headlines say. In this example, it's the Leader Telegram newspaper in Eau Claire, Wisconsin, which has an article entitled Bronze Star stories worth sharing. Sounds great, right? Only problem? If you open up the article, you get two paragraphs deep before you're hit with a paywall. So, apparently, the stories are only worth sharing if you pay, and then the people you share them with will have to pay as well. That seems rather obnoxious, doesn't it? "Hey, why don't you share these stories and make your friends and family pay to read them?" Generally speaking, if you're suggesting people "share" your stories, how about you make them shareable?
Stephan Kinsella sends over a fascinating talk by Dr. Terence Kealey, a UK biochemist and professor, discussing why -- contrary to what most people think, "science" is not a public good, and that government-funded science actually tends to do more damage than good for global economies:
Many of the points raised actually apply to issues related to patents as well. For example, he starts out by quoting Francis Bacon, who defended the idea of governments funding science by claiming (as we often hear about patents), that if an individual invests in research, it will cost a great deal to do so, but any competitor can then copy the results for free. And thus, Bacon concluded, science was a form of a public good which the government should fund. Sound familiar?
The problem, it turns out, is that as with patents there is no actual data to back this up. Kealey points out that there is no historical or econometric data anywhere that supports this claim. For example, he points to the OECD's sources of economic growth report (pdf), where it found very high correlation between economic growth and countries that had high levels of private R&D. When it came to publicly supported R&D, the report found no impact on economic growth... but, more worrying, it found evidence that public funding of science tended to crowd out private funding of R&D, which (again) correlated highly with economic growth. Now, of course, correlation is not causation, and there may be many other factors at play here. However, it is interesting that there doesn't appear to be any direct evidence that public expenditure in science leads to economic growth.
Dr. Kealey points out that many people believe in the importance of public funding of science based on the same thinking as Bacon above: the idea that science is a public good. That is, that once it's out there, anyone can use it -- and thus, it either needs to be enclosed and limited in some manner, or funded by the government. In the last couple decades, however, more and more economists have begun to realize that this thinking on public goods is not only overly simplified, but it's often wrong. It appears to be the case here again. Kealey points out that science is not, in fact, a public good.
Why? Because of a combination of social mores and the need to do your own research to understand what others are doing:
The standard story... was that science was a public good, in the sense that anybody can go to the journals -- or the internet today -- and pick up the Journal of Molecular Biology and read the papers for free... We can get it for nothing. Or we can go to the Patent Office, which very kindly publishes all this stuff... and read all the patents... and get ideas, blah blah blah.... We all know that "science is publicly available," and therefore is easy to copy and all the rest of that.
But hold on a second.
How many people in this room can read the Journal of Molecular Biology. How many people in this room can read contemporary journals in physics? Or math? Physiology? Very, very few. Now the interesting thing -- and we can show this very clearly -- is that the only people who can read the papers, the only people who can talk to the scientists who generate the data, are fellow specialists in the same field. And what are they doing? They are publishing their own papers.
And if they try not to publish their own papers... If they say, 'we're not going to get engaged in the exchange of information; we're going to keep out of it and just try to read other people's papers, but not do any research of our own, not make any advances of our own, not have any conversations with anyone,' within two or three years they are obsolescent and redundant, and they can no longer read the papers, because they're not doing the science themselves, which gives them the tacit knowledge -- all the subtle stuff that's never actually published -- that enables them actually to access the information of their competitors.
This is a huge point that fits with similar points that we've made in the past when it comes to intellectual property and the idea that others can just come along and "copy" the idea. So many people believe it's easy for anyone to just copy, but it's that tacit knowledge that is so hard to get. It's why so many attempts at just copying what other successful operations do turn into cargo cult copies, where you may get the outward aspects copied, but you miss all that important implicit and tacit information if you're not out there in the market yourself.
He then goes on to discuss the Royal Society of London, which encouraged scientists to publish their own research, and points out that while initially, people might think that it was better to not be a member, not publish your information and just scoop up what others had done, in practice that wasn't the case. Why? Because the members of the society beyond publishing themselves, also had much greater access to all the other members as well, allowing them to continually further their own knowledge. In other words, the argument that researchers or competitors will prefer to keep their inventions secret via trade secrets goes out the window when companies realize that by sharing more freely their own inventions, they also get greater access to the inventions of others.
What's interesting here is that this story of the Royal Society and the benefits of membership actually fit -- almost exactly -- the research on why Silicon Valley became such a huge success when compared to other, similar arenas. What that research showed was that due to a lack of noncompete agreements in Silicon Valley (where they are outlawed), the rate of job shifting was much higher. And, partly because of that, information flowed much more quickly between competitors. While one might normally think this is a bad thing, what actually happened was it allowed all the companies in that space to grow much faster, because the knowledge sharing led to faster and faster advancements for all. Rather than being limited to just what one group could figure out, they could all effectively build on each other's knowledge as well -- and the end result was much greater growth for all.
But, still, as with the situation that Dr. Kealey describes, there had to be a level of expertise from everyone involved. It wasn't as if some other party, with no knowledge of the space at all could just copy it. So too, it appears to be, with scientists:
You can't access the science of others unless you're part of the game. It is only the molecular biologist who is publishing his own papers, getting invited to the conferences, having the discrete conversations with other fellow molecular biologists, who can capture the work of others. And so you don't get the information for free. You pay a very high price to access the information of your fellows. Science is not a public good.... It costs as much to access information as it does to make it. It's just that the cost of accessing is the subtle parallel cost of the work you have to do before you're ready to read it. And, as a part of that, you're contributing to the common pool of knowledge.
From there, he discusses the famous story of how the Wright Brothers and their patents effectively killed the aviation industry in the US until the government stepped in to force them to open up. And from there, he makes the point that I was discussing above about the research on Silicon Valley:
What is really interesting about the exchange of knowledge, is the work of von Hippel and others at MIT Sloan Management School: industrial scientists collude -- or I don't know what word you want to use -- exchange information all of the time. Even competitors. It's a straight quid pro quo. Just like academic scientists. von Hippel showed, for example, the 12 leading steel makers in America... 11 of them routinely met discretely, and exchanged information as quid pro quos. It's a very nice model, economically. There is actually shared knowledge amongst scientists. One of the leading economists of science -- I'm not going to name all the names because it's boring -- but he's showed that there are no industrial secrets in America or in Britain or in the West. Scientists at the level of research, in companies, exchange so much information, that no secrets exist more than about a year, a year and a half....
Scientists discovered a very long time ago that their own self-interest is assured if they share knowledge with competitors. Because the ones that don't share knowledge, whether they're academic scientists looking for their Nobels or business scientists looking for money, that if they don't share, they will absolutely get left behind.
It's great to see that there's even more research on this particular subject than I had been aware of before, but which confirms many of the points that I've been making for years.
I've been noticing a trend lately of content creators who discover unauthorized copies of their works are being shared actually responding somewhat reasonably to it. In almost every case, the story starts out with a claim of how they were upset and annoyed at first... but quickly got over that. In the past few days, I've come across two more such examples. The first, from the LA Times, involves the producer of the movie Unthinkable, starring Samuel Jackson. Apparently, due to the studio that financed the flick going under, the film suddenly was without domestic US distribution rights, and couldn't find any fast enough. So it went direct to DVD. But... before the DVD came out, the film leaked, and it's now one of the most talked about films on IMDB, even though it hasn't even been released!
The producer notes that he had very mixed feelings about the whole thing:
"I've been unbelievably torn over the whole thing," says [producer Cotty] Chubb, best known for having produced such films as "Eve's Bayou," "Dark Blue" and "To Sleep with Anger." "It's tremendous to go on IMDB and see that our user rating is 7.3, which is the highest rating of any movies in the current Top 10 there -- you have to go down to 'Iron Man 2' to find a higher rating. But on the other hand, while everyone is debating all these important moral questions, I want to ask them another important question -- hey, guys, what about the morality of watching this movie on the Internet for free?"
Of course, rather than freak out, or threaten to sue, Chubb just asked people exactly what he wanted to ask. He posted a comment himself, politely asking those who had seen the movie directly on IMDB about what their feelings on downloading the film were, and whether or not there was a price they would pay for it, while also noting that he was quite "grateful" for all of the attention the movie was getting due to the downloads.
After tons of people responded -- almost all of whom saying that there's nothing wrong with downloading a film -- Chubb didn't freak out, but recognized the onus is on himself and the industry to respond:
"We've got to come up with a new model, because the old one just isn't working anymore," says Chubb. "You just can't fight against a model where the movie is available for free. People clearly want to download movies online, so it's time we figured out how to get some money out of it."
My initial reaction was shock - how dare someone rip off something that I put so much work into? For a moment, I completely understood Lars Ulrich, the Metallica drummer who years ago became the poster boy for the anti-file-sharing establishment when he and his bandmates sued Napster.
Fear not, though - my anger was short-lived, and not just because I'd like to avoid becoming a self-important douche like Lars at all costs. I'm certainly not the first author to get pirated, and I won't be the last. It's an inevitable reality that everyone today must face. And no, I don't think any number of Draconian copyright laws are going to change this. Technology has let the cat out of the bag, permanently.
As someone who has partaken of the occasional Torrent, it would be hard (and thoroughly hypocritical) for me to be angry. I'm also not of the mind that file-sharing necessarily hurts the artist or creator. In my experience, most people who download something for free weren't going to buy it anyway, or they already have and just want a digital copy, so it's not exactly a lost sale. Moreover, if they like the product they've downloaded, they may recommend it to someone else, who in turn may actually choose to buy it. In a way, the so-called "pirate" can become a good sales advocate.
In fact, he then notes that there are plenty of examples of authors using such publicity to their advantage, while also realizing that some of the problem is that his book doesn't have an official ebook version yet, though he's now working hard to make that happen as soon as possible.
I think it's completely normal and natural for people to have that initial negative reaction -- especially if they don't follow some of the details of what's happening and how such file sharing has helped some do much better than they would have otherwise. But it's especially nice to see more and more content creators get over that initial shock, and then start to logically look at the situation, and realize that what consumers really want is something different than is being provided, and the responsibility is on the content creator to better provide consumers what they want.