E-Commerce and the
Copyright Conundrum
By: JAMES DALTON and SUE WESTON
The Internet as…
Library
Marketplace or “New Agora”
Government Outlet
Gift versus Commodity
free exchange of ideas and
(common) knowledge
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the shareware movement
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among friends and family
donations to charities and
religious institutions
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V
S
knowledge as an uncertain
commodity
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economic rules of exchange
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global consumer society
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virtual capitalism
What is E-Commerce?
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“A generic term used to describe the buying and selling of goods
via the Internet and other interactive networks such as digital
television” (Bell 68).
“Business that is conducted over the Internet using any of the
applications that rely on the Internet, such as e-mail, instant
messaging, shopping carts, Web Services, UDDI, FTP, and EDI,
among others” (ecommerce-guide.com)
Online commerce between two businesses (B2B Internet)
“transmitting funds, goods, services and/or data” or between an
online business and a customer (B2C)(ecommerce-guide.com)
How it works/the Appeal
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Online businesses are able to
lower their costs by using “webbased ordering and the national
postal service, rather than retail
premises which have to be rented
and staffed, as a means of selling
to the public” (Bell 69).
This translates to reduced prices
to the public consumers.
The limited capacity of retail
outlets is no longer a problem as
online businesses are given
access to bigger warehouses to
store a wider array of products.
Important E-Commerce Terms
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Agents
Commerce Server
Cookies
CRM
Digital Cash
Digital certificates
Digital wallet
EBPP
EDI
ERP
FTP
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IPO
Net Cheque
Opt-in-Email
Page Impression
RSA encryption
SET
Shopping Cart
SSL encryption
Smart card
UDDI
XAML
Determining the relative importance of the Web economy:
Jobs
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“2.5 million workers supported by the Internet economy in 1999” (Web Theory 116)
The Internet economy > American Communications > Airline/property industry
Rate of growth for Internet-related work annually is 30%+ (Internet Indicators
2000)
Four divisions of Internet work
• Internet Infrastructure
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Internet service providers present 1/3 of the labor force of the Web economy (AOL, AT&T, Telstra)
• Internet Applications Infrastructure
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those who produce software and services that facilitate Web transactions, also includes web site
designers and consultants: 26% of Web employment (Microsoft, Oracle, Adobe)
• Internet Intermediary
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workers and activities that help mediate the movement of services and goods, consisting of content
providers, ad agencies, search engines, online brokers and travel agents (13%)
• Internet Commerce
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workers who are involved in companies that are actually selling products and services online
(Amazon.com, ebay) (30%)
The TIMES sector
•
Under the new economy work in Europe there is the TIMES sector…which is an acronym
for Telecommunication, Internet, Multimedia, E-commerce, Software, and Security) – it is
a multimedia sector that includes television, publishing, and music; it is also
characterized by very small companies. According to the Web Theory article, the sector
will undergo a period of relative stagnation or even decline, whereas all content-oriented
or creative work will continue to show high growth rates (Web Theory 117).
Determining the relative importance of the Web economy:
Revenues
Perception vs. Reality
The Web Theory article distinguishes that the
size of the Web economy may be less important
than the perception of the Web’s significance as an
avenue for business activity. There is a general
perception that all businesses need a web presence
in order to maximize profits and so there has been
expansion of Web businesses or Web business
Outlets (Web Theory 119).
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B2B Internet vs. B2C
(Business-Business Internet Use versus
Business-Consumer e-commerce)
The Multiplier-Effect
“As the revenues and the believed potential
revenues from the online economy go up, the
impact of the Web on the overall economy works
in a multiplier-effect: if actual producers and
service providers sell their wares directly online,
there is a breakdown of the divisions of retailing
and distribution that have organized the
traditional means of consumer production” (Web
Theory 119).
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The Audience Commodity
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Instead of the audience
paying for its share of
entertainment, it is given
programs for free.
The audience’s presence and
its viewing of commercials
“generates the economic
value in the system” (Web
Theory 120).
In order to determine the
value, there has to already be
a system in place that counts
the size of the audience.
• Cookies
• Hits
Evolution of E-Commerce
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1971 – NASDAQ is launched
3.19.1992 – AOL IPO
5.9.1995 – Netscape IPO
1996 – Lycos, Yahoo IPOs
5.15.1997 – Amazon.com IPO
9.24.1998 – Ebay IPO
1999 – peak of Web economy
4.21.2000 – “Black Friday”
The Pioneers
the Porn Industry
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“buying visitors” based on web
engine searches to get
subscriptions (2 or 3 of every 1000
visitors become subscribers)
Heavily advertised
• pop-ups
• emails
• varied choices
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Has employed many workers
after the dotcom collapse, but
teeters on “the line of legality”
• Heavily monitored by the
government and the major
Internet Service Providers
“Capitalism Unbound”
Fact or Fiction?
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Does the Web economy provide the perfect, ideal
marketplace?
• Although the Internet provides a new forum for shopping that
is more direct, more accessible, and with more choices
available that are cheaper for the consumer, there are still a
few drawbacks that prevent it from being the perfect
marketplace…
The Drawbacks
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Security Issues
• Hacking remains a counter
economy that deters many
potential e-shoppers from giving
away personal information like
credit card numbers.
• Piracy remains an issue between
the entertainment industry and
filesharers.
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The “Digital Divide”
• The gap widens not only between
the rich and the poor but between
the educated middle class and the
uneducated lower class.
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Because online products are
cheaper, the poor are put at a
disadvantage.
Service
There remains issues with
delivery: when shopping
online, you base your
purchasing on an image
that could be fabricated or
inaccurate at the very least,
which could result in
annoying back-and-forth
returns or cancellations.
Much of what is available for sale on the Web is
not just goods and services, but also information
and entertainment…
The Copyright Conundrum
“The Congress Shall have Power to promote the Progress of Science
and useful Arts, by securing for limited Times to Authors and
Inventors the exclusive Right to their respective Writings and
Discoveries” (Article 1, Section 8, The US Constitution).
What is the purpose of copyright?
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To give those who create original work the right to
protect it, in accordance with the United States
Constitution:
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Early US copyright laws required compliance with a
variety of formalities such as registration, copyright notice,
and renewal as a condition of copyright protection. Today,
copyright is issued at the moment of creation.
Then in 1997 and 1998, Congress quickly enacted three
different approaches to protecting digital intellectual
property, all designed to stop illicit copying through the
Internet:
• the No Electronic Theft Act (1997)
• the Digital Millennium Copyright Act (1998)
• the Copyright Term Extension Act (1998)
Legal Battles
MGM Studios
vs.
Entertainment Industry
vs.
“Mind-boggling” copyright infringement vs.
SHARING
vs.
Grokster
P2P software makers
the future of product innovation
COPYING
On March 29, 2005, the U.S. Supreme Court heard the case MGM
Studios vs. Grokster Ltd. The court is expected to rule in the summer.
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In the case, MGM wants the court to hold peer-to-peer software-makers
liable for infringement by the technology’s USERS. P2P-maker Grokster
counters that such liability would deter future product innovation, not only
in P2P, but in related industries (e.g. iPod).
The stakes are high for both sides:
• At the core of the MGM case is secondary liability. In the Sony case
(1984), the high court ruled that Sony could not be held responsible for
what its VCR users were doing with its product as long as the device
could be used for legitimate purposes.
• The entertainment industry lost that case. This time, it argued that more
than 90 percent of the P2P technology is for copyright infringement
purposes. It said the Sony ruling requires BALANCE between
copyright protection and innovation protection.
• The Sony ruling has been called the tech industry’s “Magna Carta.”
• Says Deirdre Mulligan of University of California, Berkeley, law
school: “I do think at this point the Sony doctrine has provided a lot of
stability. It has allowed the technology industry AND the contentowning industry to really flourish. It’s not like we have had a dry spell
in either.”
Commerce versus Content
E=
2
MC
The entertainment industry is particularly sensitive to copyright
infringement and always has been:
- from player-piano rolls (1880s) to videocassette recorders
(1980s).
An interesting side note, copyright DOES NOT protect ideas.
- For instance, Einstein’s famous equation can not be protected;
only the document in which it was published.
Works Cited
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Bell, David. “e-commerce.” Cyberculture – Key Concepts. New York: Routledge,
2004.
“E-Commerce Times.”
http://blackboard.swarthmore.edu/webapps/portal/frameset.
jsp?tab=courses&url=/bin/common/course.pl?course_id=_19716_1. 2005.
Lessig, Lawrence and Oppenheim, Matt. “Copyright Conundrum.” Online
NewsHour. PBS.
http://blackboard.swarthmore.edu/webapps/portal/frameset.jsp?tab=course
s&url=/bin/common/course.pl?course_id=_19716_1. June 2003.
McCullagh, Declan. “Perspective: The Copyright Conundrum.” News.com.
http://news.com.com/Perspective:+The+copyright+conundrum/20101071_3-961818.html. 14 Oct. 2002.
“Supreme Court to Hear Digital Copyright Case.” Online NewsHour. PBS.
http://www.pbs.org/newshour/media/digital_copyright/index.html. 7
March 2005.
“Top 20 E-Commerce Terms.” ecommerce-guide.com.
http://blackboard.swarthmore.edu/webapps/portal/frameset.
jsp?tab=courses&url=/bin/common/course.pl?course_id=_19716_1. 2005.
“The Web Economy.” Web Theory. New York: Routledge, 2003.
Wisconsin Engineer. Wisconsin:
http://homepages.cae.wisc.edu/~wiscengr/november03/copyright.s html.
Nov. 2003.
Yoon, Kim. “Digital Copyright: Teaching an Old Dog New Tricks.”
“The New Agora”
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The Web Theory article
describes the Web as a
“virtual agora” through its
emphasis on representation
and presentation found
within traditional forms of
commerce (e.g. bartering).
At the same time, this virtual
marketplace tears down
restrictive barriers established
by traditional institutions by
eliminating the middle man.
Because of this apparent
boundless commercial
freedom, the online
marketplace has been viewed
as the ideal marketplace.
Library System
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The Web mirrors a
library system in that
practically everything is
accessible to be
borrowed in the public
domain of cyberspace.
However, the issue of
copyright in relation to
the shareware movement
and such concepts as
intellectual property is
critical.
Role of the Government
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Initially the Web originated
through the American
Defense Department, but
through the explosion of
online commerce, the
government has used the
“information superhighways”
to push educational needs
while at the same time
pushing initiatives so that
societies are not left behind in
the digital divide, according to
the Web Theory article.