Entrepreneurs Tell The White House To Focus On Innovation, Not IP Enforcement
techdirt.com
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Innovations which must be shipped in whole to the client--like new music, new movies, new games, packaged software, client device software, pharmaceuticals--are not so blessed.
For example: most video game companies ship their entire IP directly to the customer. What keeps from making a copy of Skyrim and selling it on my website for half the price of the original? The legal enforcement of IP protections.
I think it is really easy to fall into a bubble where "innovation" comes to mean "the latest hosted social web service". There's a lot more to innovation than that. Which was more innovative--The Dark Knight, or Triggit? I would say TDK, which was a major cultural event in the U.S. Or how about Gardasil vs. I Can Haz Cheezeburger? One will prevent thousands of cases of uterine cancer, the other hosts user-generated cat pictures.
On the other hand, industries that rely on shipping an easily duplicable product with high up-front costs for development are likely to benefit from strong copyright enforcement. They are not on this list, in spite of being arguably more innovative.
Neither result is surprising, but saying "Entrepreneurs" and "innovators" are generally in support of less copyright legislation is disingenuous.
Where did that claim come from? What are you referring to?
Having said that, the list of signers does have a very people-who-don't-have-this-problem feel to it.
Extrapolating the trends of automation I see fewer and fewer people involved in the production and distribution of physical goods. Distribution is set for a major workforce implosion with automated packaging and transportation. Production is already largely automated, and becoming more so. Meanwhile, demand for physical goods is at or near peak capacity in much of the world, so cheaper distribution will not mean more goods will be needed.
So, I suspect the majority of the workforce will not be involved in the physical part of the economy, not in production, distribution or services. The economy requires scarcity, but it does not require physicality. What is more scarce than digital live performance? Why couldn't NPC's in games be real people? Why should it be strange to earn a living live-acting a role in a game, and then spending most of your money on live-created digital goods?
The current IP laws make an assumption of mass-distributed centrally-produced IP, and that's why they won't hold in this individualized IP future. Currently the digital economy is run by the agents of mass-distribution: the MPAA, apple, microsoft and so on. While they may seem all-powerful now, in a 100 years their model of everyone owning the same product will seem quaint and archaic. Why would you want the exact same product as your neighbor?
The point in the article is that any additional laws or powers represent a failing strategy when the problems of many industries are due to a failure to meet changing consumer demand; and furthermore that the opportunity cost of strengthening IP law is the collateral damage to innovation.
You are also wrong to suggest that server code cannot benefit from IP protection. If code is misappropriated (e.g. disgruntled employee with git access), only copyright prevents it being released/sold and subsequently operated by others. Furthermore, it is those protections that allow the legitimate developer to confidently sell their business to a third party.
They don't write big checks to politicos every two years.
More likely the fact that the odds are low that your pirated Skyrim does not contain at least one of malware, spyware, botnet trojans, viruses, or other crap no one wants on their computer.
The warez scene was cool when it was novelty, but now it's more likely to be an attack vector of some sort.
It's just an easier user experience just to buy the software and know it will install and run without any problems.
(Note: This is not a dig on the current White House occupants who I voted for and will vote for again, just politics in general).
Besides which, the point of the letter was to argue a single point: innovation over enforcement. Why stuff it up with topics like taxes, healthcare, or any other unrelated topic that would only serve to dilute the core message?
The way taxes are structured, lower taxes is a second-order incentives issue, not a first-order availability of funds for expansion issue.
EDIT: What we see now is the exact opposite of that - some companies sitting on huge hoards of cash, just waiting. Waiting for what, I'm not quite sure, but there's nothing stopping them from 'expansion' right now.
A thriving startup will be reinvesting in R&D and marketing expense, thus bringing profits back down to $0 (or lower if you've got investor funds).
It's absolutely dishonest to pretend that corp income taxes matter to startups in any meaningful way. If you're on track to make $1.2m next year, aim to increase your average monthly spend by $100k, and you'll make no profit (and thus pay no corp income tax), while retaining ownership of an asset whose value is increasing at a multiple of the revenues.
Innovation and IP laws matter to entrepreneurs. Corporate income tax rates are close to irrelevant for entrepreneurs.
That said, even after moving the goalposts (and pretending you didn't make your initial claims), your argument is still false just slightly less obviously so. Corporate income tax always costs rentiers more than innovators.
Corporate income tax is a very separate issue.
Taxes do not matter to young startups, and I get frustrated hearing politicians (mainly from the right) argue that we need to cut corporate tax rates on behalf of entrepreneurs - when the primary beneficiaries are clearly large, established corporations.
Only if your plan is to build a paper valuation and then get acquihired by Facebook.
If you plan to build a sustainable business that eventually makes a profit, you certainly care about how high the corporate profits are.
A business that can acquire customers with an LTV of $1,000 for a cost of $500 (read: a good, sustainable business) isn't going to just sit on $1,000,000 of profit. They're going to buy 2,000 customers.
And then next year they're going to buy even more. And then even more.
Your hypothetical process of continually reinvesting all the profit can't continue forever. Even if it could, the company would have no investors. Why throw your money away?
It's exactly backwards of what briandear was claiming.
As for the rest of your nonsense, you're arguing against things that weren't said or implied.
No, they merely reduce the incentive to innovate.
Taxes don't harm you while you innovate (which is a good thing - don't get me wrong), they harm you when you try to reap the proceeds of innovation.
If you (like briandear) believe that including anti-tax arguments in a response would increase the efficacy of the response, I'd strongly suggest that you avoid a career in marketing or sales. Not trying to be snarky, but I can't think of a polite way of expressing how ineffective the inclusion of general anti-tax sentiment would be when attempting to persuade the target audience.
We need to keep the rate the same, but close a whole bunch of loopholes. Your expenses are already counted out before you pay the corporate tax.
Most of the proof I've seen involves companies not paying a ton of taxes because of their gigantic losses the previous year.
Companies are not paying taxes because they are reporting losses. Tax losses are not the same thing as economic losses. Tax losses are good and desirable; economic losses are not. GE, for example makes billions in profits each yet, yet is able to pay a negative tax rate. Apple and Google make billions each quarter, but avoid taxes on it by parking it overseas.
Guys, it took a near shutdown of the internet to get congress to back off on SOPA/PIPA. I don't think a mere letter is going to sway anybody that matters.
For those that disagree, I challenge you to open source all of the code you're working on for your companies. Then, I'll set up an exact clone of your application (including using your logo) and start making money from your work. That would encourage you to innovate right? Cool, innovate, then I'll use the new code you made, along with the new logo and continue making money from your work.
How is THAT fair?
If you bake amazing cookies and sell them in a shop, should that cookie recipe be given away to a competitor? Intellectual property is a critical piece of developing a competitive advantage. Take away that competitive advantage and we might as well be the Soviet Union.
If you create something, you should have the right to profit from it. If you look at the innovation in China, especially in software, it's very flat because the protections there are almost non-existent. You build something there and it's copied almost instantly, so the incentive to innovate is much, much lower.
Be careful what you wish for.
So what if Samsung and Apple both make use of a light-weight rectangular touchscreen? Consumers benefit more when there are competing interests than when there is a monopoly. Consumers benefit when there are two separate branches iterating outward and improving something very basic.
Why do copyrights need to last hundreds of years?
...yet.
>If I spend $1 million to develop something innovative and the guy next to me stole that innovation; he effectively stole $1 million from me. That's a huge disincentive to spending another million to innovate.
The two are not (directly) related to each other, if you make a profit on the 1 million dollar investment, it doesn't matter how many people "steal it" (bullshit rhetorical term), you WILL invest the next one million dollars. You are totally discounting incentives such as first to market.
>For those that disagree, I challenge you to open source all of the code you're working on for your companies. Then, I'll set up an exact clone of your application (including using your logo) and start making money from your work. That would encourage you to innovate right? Cool, innovate, then I'll use the new code you made, along with the new logo and continue making money from your work.
This is a ridiculous straw man, nobody here is talking about abolishing all aspects of intellectual property law including trademarks.
> Intellectual property is a critical piece of developing a competitive advantage. Take away that competitive advantage and we might as well be the Soviet Union.
It can just as easily be said that intellectual property is a critical piece of tactics to stifle competition, take that away and we have a freer market.
>If you create something, you should have the right to profit from it.
You have no right to profit from anything, the market decides these things (when free of government distortion). I want to profit from posting on HN all day, but that's just not in the cards.
>If you look at the innovation in China, especially in software, it's very flat because the protections there are almost non-existent.
another completely unproven assertion, their are numerous indications that the lack of protections is exactly what is powering Chinese economic growth[1], and powered American industrial growth pre 1900s[2], and powered German chemistry and pharmaceutical industries in the early 1900s[3].
Look, i'm not saying abolish all forms of "intellectual property". Simply that you should not start from the A Priori position that intellectual property is always beneficial.
[1] http://deepblue.lib.umich.edu/handle/2027.42/39400
[2] http://www.cipr.org.uk/papers/pdfs/study_papers/sp1a_khan_st...
[3] http://online.wsj.com/article/SB1000142405297020454240457715...
Innovation happens when you push the boundaries for what is possible - if you are nowhere near the boundaries then the fastest way to get there is to copy your neighbors map and use that to find the border. Creating protections will just make it harder for them to catch up and will make it take longer for them to get competitive innovation.
I'd really like to see tech companies get off their moral high horse and buy my politicians. Their current handlers are about to destroy the 21st century.