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Douglas Crockford
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DistributÚ, SÚcuritÚ, CommunautÚ
Doug Crockford
Electric Communities

Ted Selker: So here we are, and this afternoon we'll start off with no overhead projector. So we will start off with Doug Crockford. Doug Crockford and I first met when he and I were working in a strange laboratory called Atari Sunnyvale Research Lab. Alan Kay was our guiding light at that time. Some of the other people here were also involved in that enterprise, it was a fantastic place filled with incredibly creative energy. Anyway, I hope you all had a nice time at lunch. I ran into several people out at the singing chairs, looking out at the Loma Prieta epicenter of the earthquake of '89. And with that I will let Doug take over.

Doug Crockford: Is this on? Before I begin, I have to give you some background on this title, "Distribute, Securite, Communaute" what's it mean and why is it the title of the talk. The company is Electric Communities, it is this guy's fault. This is Chip Morningstar. He is my partner, one of the other founders of Electric Communities. He was actually asked to talk today. He couldn't make it so I am filling in for him. But Chip supplied the title. I don't know what Chip was going to talk about. I know some of the things that Chip had done. In 1985, at Lucus Film, he did a project called, "Habitat." It was the first graphic on-line community. People would get together in a network environment with avatar's interactivity and for all and what was an on-line social environment. We've been through several generations of these, and when we formed electric communities, we were thinking about creating our next one and what was the next step in the evolution of this thing going to be. One obvious dimension would be in graphics so we can obviously look much spiffier than we could back in 1985. But we discovered that there are many other dimensions that were important in social communities, and today I am going to be talking about just one of them. Chip was also the founder of the American Information Exchange which was the first information marketplace. It is a place where people could go to buy and sell information from each other. It was a much more dynamic model of electronic commerce than what we have today in that people could interact with other people. It was really a social environment where they had contracting and other mediation services which allowed individuals to trust each other in an information market place. So, when we created electric communities, we decided to develop new social systems based upon the principles of Distributae, Securitae, Communitae - creating systems which are highly decentralized, without compromising security in which most of all have a strong social orientation. Now the other thing I am going to talk about is big money on the information super highway. It is not all it is cracked up to be. This is sort of the present model and it is my contention that this model just does not work. It has got a lot of things wrong with it. I will be talking about one of the things that is wrong with it. Specifically, a lot of folks thought that the hard problem to be solved is getting that credit card number to go through the net without eavesdropping and all that kind of stuff. It turns out that it is really not all that difficult and we have just about have that one licked now. The other thing that can move through the network is content. Once you have bought some content, what is to keep you from reselling it yourself. That is a more fundamental problem. One way we as Americans have dealt with this problem is by name calling. In the entertainment industry, people who made LP's which were unauthorized, were first called bootleggers. A bootlegger is actually a pretty good word for it. It means making unauthorized or forbidden stuff. In fact that is what they were doing. Actually people kind of like the bootleggers because they were providing stuff you could not get elsewhere. So they had to come up with stiffer language. Therefore, now we call them pirates. We call them thieves, we call them all sorts of bad, nasty names. This is particularly interesting if you look at what is happening with compact disk duplication in China. This is an older technology but there is some instructive examples here. Our government is pushing on the Chinese government to do something about piracy of CD's and other such materials. Much more concerned with that than the proliferation and exploit of weapons and humans rights abuses. It is this copying stuff. These thieves are ripping us off. From the point of view of the guy who is doing the manufacturing, they built the factor, they bought the machinery, they are buying the raw polycarbonate, they are staffing it themselves, they are putting it in boxes, they are putting it on trucks, taking it to market, they even paid $15 for the first CD that they are using as a master. From that perspective they have not stolen anything. However, we are running around in international marketplace calling them thieves. Where do we get the moral authority to be telling them that that is what they are. Well we do not get it from the Bible. This is my favorite commandment by the way. The second one or the multimedia commandment. The Bible says nothing about copying. It does not say thou shalt not copy. In fact the Bible is not a copyright protected work. These authors neglected to file and get a copyright on it. And as far as we can tell, they have not been damaged in any material way. So where does copyright come from. Before getting at that, let's sort of look at a little bit more about the history of copying. Unauthorized copying historically was a good thing. It was how information was preserved. It was how we accumulated knowledge, how we distributed knowledge, how we became civilized. This process of dissemination of knowledge went on for centuries. Until that fateful day when a technological innovation caused the end of the goodness of unauthorized copying. As many people know, that black day was Guttenberg and the printing press. Because in addition to inventing global type and printing, Guttenberg invented the publishing industry. The publishing industry exercized all kinds of abuses. They would take a pamphlet some guy had written and publish it and sell it to other guys, not giving anything back to him. Now in the past when it was copying of manuscripts nobody cared. There was just no money in it. Now there is money in it. Some of it is getting cut up. It didn't seem fair. So copyright was invented in the 18th century to deal with those abuses of the publishing industry. That is why we have copyright today. In this country, the source of copyright comes from the Constitution, specifically Article 1--Section 8, which says Congress shall have the power to promote the progress of science and useful arts by securing for limited times to authors and inventors, exclusive rights to their respective writings or discoveries. You might notice that it says nothing in there about music, cartoon characters, motion pictures, etc. Most of those things did not exist yet. Music however existed at the time the founders wrote the Constitution, in fact it had been around for as long as we can remember. Our first cultural memories are preserved in song. But the thing we know as the music industry today has only existed for a 100 years. It came about as a consequence as another one of these technological innovation, which was Edison's phonograph. That caused the invention of the music industry. And that music industry practiced the same kind of abuses that the publishing industry had practiced. Therefore, a lot of folks felt that just was not fair. Something needed to be done. Congress looked at it and said, "Well, if the founders had known we were going to end up with the publishing industry, they probably would have wanted copyright law to protect the composers and performers against those bad people." So copyright has been extended to include music and a whole bunch of other forms. So if you look at the trend that has been going on, originally, the beneficiaries of the copyright system were authors, who would have that benefit for a limited period of time. The Constitution says so. Over the years it has changed quite a lot. People that benefit the most are media companies. The amount of time that they benefit has been growing and growing. Currently, it is life + 50 years. We are about to see new legislation that pumps it up to 70 years. I think it is the Freeloading Relatives Act or something like that. The reason this comes about is because those relatives and the media companies who are behind them go to Congress and lobby very effectively and get this stuff changed. Nobody is lobbying on behalf of us and our need relative to media. I mean certainly not our elected representatives. There are actually some folks in the government who do it. The Supreme Court example and the BetaMax case. They decided that it was okay if the American people want to tape their TV shows. Let them have VCR's. So occassionally we win, very often we don't. A story that came out yesterday on the cover of the Wall Street Journal. The music industry is shaking down the Girls Scouts. They want every day camp to kick in an order of $500 or they can't sing "God Bless America" any more. They sent them a very stiff letter threatening them with fines and imprisonment. So clearly there are some problems in reuse and I expect, now that they have pissed off the Brownies, Congress is going to have to have some hearings and I will be watching that on C-SPAN. So getting back to the Internet...

Speaker: Given the name of your firm it seems like I heard something that maybe you can comment on. Is it true that when you play the Internationale, the hymn of the Communist Party, that you also have to pay copyright?

Doug Crockford: I don't know. Something I forgot to tell you at the outset. I laugh at danger. The internet with respect to content is an information lubricant. Content goes through it like Olestra through a goose. It means that anybody can be a media bandit now. It is really easy or it will soon be very easy. You don't have to do the stuff that the Chinese are doing. You don't have to build a factory. You don't have to buy the machinery. You don't have to buy the raw polycarbonate. You don't need trucks, you don't need distribution, you don't need markets, you don't need nothing. You can just put the stuff on the net and away it goes. So from the perspective of copyright holder, that is a little worrisome because it means that once someone has their bits, vroom. How do you control that? How do you make a market out of selling content? Here is a little bit of irony. Copyright can still be used very effectively against media companies because they are big and visible and legal targets. But copyright is going to become much more ineffective used against individuals who are ripping then off because of issues like the granularity of infringement gets much smaller, consuming of identity gets much easier. It is just going to be really hard to track all those folks down, especially all of us.

Speaker: Do you believe if you measure this by the amount of use that the balance will be getting only a small part of it or that will hitting most of it by going against the media?

Doug Crockford: I don't know that. I would say that it is too early to call.

Speaker: A lot of theory which says that it doesn't make any difference if you have a lot of small ones. Like supermarkets don't care about the small stores because they are going to make the money.

Doug Crockford: I am mainly concerned with the worst case here. We will get later on to some of the other mitigating factors here. Some folks would say, "We have to control the bits and we will use cryptography to do it." Cryptography is the science of secret codes and what you can do is take your pictures. This is a copy of James Earl Jones picture which I pulled off Bell Atlantic's web page and I am using it without compensation or authorization. There is a story I can tell you about that later. Then I encrypted it so nobody knows what it looks like. Then I decrypt it. So what this does is say that you can do the first sale because someone in the world will have to pay to get the key to do the initial decryption. After that it is hard to say that you are guaranteed to get any additional money. The problem basically is because this stuff is digital and as we know, bits is bits. You can copy them and you can manipulate them, and that is the way bits are. In a world that has general purpose programmable computers in every house.

Speaker: What about stegnography to indicate where each copy you give out is a little different?

Doug Crockford: I will be getting to that. In fact that is called watermarking. What that does is put a secret code into the stuff so that you can then track down and destroy the person who has been copying that. That has some problems with that as well. First one is that it requires that the customer identifies himself sufficiently that you can go back and destroy him. So it means that you cannot buy intellectual property and other works of art anonymously. You have to identify them and say, "Please, tell us who you are and where we can locate you because we may decide we want to prosecute." That will be part of every transaction you do, every television program that you pull off the net, everything. I contend that a lot of consumers will say that they will just keep reading the paper one then because nobody has any business knowing what I am reading or looking at. Certainly, I don't want to expose myself. There also issues of what happens if someone steals a credit card for the purpose of buying that stuff. Even if you do go ahead and buy a copy and you send it China and they make million copies of it. What is the penalty I am going to have to pay? Am I going to have to make good on the profit on one million copies? Is that a reasonable thing to do in enforcement? These are all unknowns. Beyond that you can strip the codes off. Some of the more trivial forms of watermarking you can just run through a filter and the stuff goes. Some of them are more difficult to get rid of. It requires that you buy two copies. You compare them and that tells you the differences are where the code is. You can blank that stuff out and you got it. If you have a really resiliant code, you might have to buy four or eight copies, but eventually you will get it clean. If something is that well marked, it very well may lead to scarring. This is particularly a problem in musical works because you are dealing with audio files and those people are crazy. If they know that there are secret bits in their music they are just going to go crazy because they will hear it. What they are doing is creating psycho-acoustics for some other kind of psycho experience. That is what they pay for. But the big problem is that this is it. It is big--we are talking about the whole thing and it just is not going to be feasible to go to other countries, to knock these people out. It is not effective to go and litigate in some countries. Some countries don't respect our copyright laws. They have their own notion of who owns what. If it isn't even real, who is to say that any crime has occurred. Our government could respond by sending in the Marines, but we know that there are some places that we are afraid to send the Marines. They could get hurt. I just want to point out that this is not my fault. It is not my fault. I did not cause any of this to come into being. I am not saying I am favor of it, I am not saying it is a good thing. I laugh at danger, but it is also not my fault. In fact, if I had to point a finger at anybody, I would say it is your fault. Because you guys have enabled cheap personal computers and all this stuff that connects them together, that is really the source of this problem. The important thing is that it is not my fault. So what do you do about it? The experience we had with AMEX was we were selling words mainly in those days; words are the easiest thing. AMEX was selling words. Words are the hardest thing to protect because they are so compact. You can just copy then off the screen. The software is not friendly. But we manage to have an information marketplace in which people are buying and selling and contracting for information. One of the ways we were able to accomplish that was we had this contracting framework. This shows the state diagram of the interaction between the buyer and the seller in negotiating an agreement on purchasing or creating information. This is highly simplified. The real protocol was much more complex than this. It allowed for adjustment and dispute resolution and a whole bunch of other things that are not fully shown here. We had that because it enabled a very broad set of relationships between people. We could quite flexible, quite dynamic in the way we can struture things and the way we can put people together. Also, you may not see it here, there are mediation services implied in this as well. You can have an entrusted third party who is holding stuff in escrow or has other powers. He could be holding our true identities if we want to be doing business anonymously, but we still want accountability. Everyone is so excited about this intermediation, but it turns out the middle man is sometimes really useful. So the AMEX frameworks allowed for a middle man. You can contrast this with what we have today in electronic commerce. It is really limited. It may be sufficient for buying content out of a vending machine, but that is it. I don't want to be saying anything bad about vending machines because where else are kids going to get their cigarettes. However, we need to have the flexibility so that we can be transacting with each other because that turns out to be really important.

Speaker: Aren't there some systems like the well know e-cash or one of these that has mail to you saying that you make this transaction, you confirm that and then the vendor is paid from your account?

Doug Crockford: There may be other systems that have another box lit up but generally we have not seen anything that comes close to that level of completeness. So anyway, the most important currency running through the network we think is going to be the expression of relationships between people. It is really not about content, it is about us. You contrast that with the current model, which is selling the content--pumping it through the hose. But again, the problem is once it gets out the hose, there it goes. So one way to change it is instead of thinking about selling content, you are offering services. Those services will add value to your bits so that you are not dependent on valuing your stuff on the stuff you can't protect that anyone can get a hold of. There are other things that make it intrinsicly much better. Let's go through some of those. One is price. This is the one that no one wants to hear first because if you are currently publishing, you know that the pirates are going to be able to beat your price because you have to pay some small portion of what you are getting to the creator. The bandits don't necessarily have to do that. Therefore, competing on price is going to be difficult. But there are things that you can compete on. One is awareness. If you are the creator of the work and people know that and that is what people are looking for, they have a good reason to come to you first. So it is not completely hopeless. Once the bits get out there, it doesn't mean that you are not going to make any sales. Also issues for some forms of timeliness that the information has value because it is now. Very often people don't want to lose the latency of the time it takes the pirates to get a hold of the stuff and repackage it. They can come to you first and get the stuff when it has greater benefit. Then there is authenticity. That it is so easy to forge works on the internet that having some digital certificates that come with the work that says it is a genuine article--this came from the New York Times or this was in fact written by the person who claims to have written it. You can also imagine offering authentication services so that you could submit a work to somebody and for a fee they will come back and tell you whether or not it came from them. That is a way of adding value and cleanliness so that you know that when you buy a work from this particular person that you are going to get what you paid for, that it does not turn out to be something else or contain material which is objectionale. So that when people go to Disney Online and buy stuff, they know that they could buy something they don't recognize and be pretty sure that it is not going to be disgusting. Another is convenience. It is easy to get this stuff. You don't to have to wait for the server to link up to you. The stuff is downloaded reliably and is easy to get to. Utility is another one. You don't want to have copy protection on it because that limits what you can do with it. Particularly when that stuff does not work any way. One way that a pirate could add value to a work is to strip the copy protection off. That means you can now use it any way you want. Then privacy as we mentioned before. How much of yourself do you want to reveal in order to buy these bits? Some people will prefer to be anonymous. As with the discussion we had about e-mail this morning shows us, it's one really good reason for why we want to be anonymous. Even worse than revealing your credit card number and your name, if you had to reveal your e-mail address, you know what the consequences of that is. You are going to get even more e-mail. So you may want to figure out a way you can buy stuff without revealing that because you just don't want all that clutter. On the other hand, some people do want that stuff. They want that these next three have worked pretty well for the software industry, which was the first industry to encounter this problem that once the bits get on the PC, you really can't control the distribution any more. We tried early on with dongles and bad sectors and other sorts of things that didn't really work very well. All they did was annoy our customers. Eventually we just dropped all that stuff and went to other ways of enhancing of our value. So we can sell you the latest information update with constant improvement support, spell checking, and other sorts of things that enhance the value that you are unlikely to get from a pirate. There is another class of reasons for why people might want to do business with you relative to a pirate. One is a sense of loyalty or even affection. They might like you. They might like that you are making music or writing interesting stuff and want to respect you personally for doing that. Because of the disintermediation aspects of the internet, it is going to be possible for composers and writers and folks to be dealing directly with their customers without having to pay the huge general costs that they currently pay to the publisher. So instead of 90% of what they make or more going to the channel, much less goes and it is under their control, and they have a closer relationship with their customers. You can also imagine providing some level of personalization such as digital autographs or other sorts of things expressly for your audience -- things which again increase the value of those bits to them. Finally, the most important one is creating relationships. You can think of your customers not as being consumers, not as being captives, but as a community of people who have an interest in working with you on a sustaining basis. You all benefit from this relationship. So it is really a people-to-people thing. It is not delivering bits to folks, it is not connecting to databases, it is connecting people to other people. That is what will keep the value in the system even when copy protection is an uncertainty. I am here talking about community. Community is a really interesting topic right now. We are finding new ways in which we can engage each other for our mutual benefit on the network. This involves a whole lot more than 3-D graphics and a lot other stuff. It is tied in exchanging things of value with each other in the network environment. If we do that a new mass medium will reveal itself. The most massive mass media we have ever seen. Also the most participatory mass medium in which potentially anybody can be a maker of something which we all share together. And that is the end. Thank you very much.

Speaker: I would be interested in what you would say to an audience this large about what you guys are actually doing to launch your communities.

Doug Crockford: We developed virtual communities. We have been doing it for over 10 years. We have a new architecture -- a distributed object model which we believe has some very interesting scalability properties, some very interesting security property. We have an object model which deals extremely effectively with objects in common, which we think is an ideal representation of places and things and mutual interest in a network community. Our first commercial system will be available early next year and we will be making our software available to other folks who want to make similar sorts of things.

Speaker: Thank you for a very entertaining talk. I think I disagree with just about everything you said though. Are you really saying that protection of intellectual property is futile and, therefore, we should not even try to do it?

Doug Crockford: No, I am not necessarily saying that. I think we need a lot more flexibility in our systems than we currently have. Certainly nothing in my architecture prohibits anybody from trying to get away with anything they can. The second amendment guys have an argument. I generally don't buy much of what they do. However, they do have one which stumps me. That is that if you ban assault weapons, the only people who are harmed are honest people who want assault weapons. It hurts normal people but it doesn't hurt the bad guys. A better example would be the crypto thing that says we are not allowed to export cryptography because it will benefit foreign powers, but in fact the foreign powers already have perfect cryptography. Therefore, the only people that are being restricted or damaged by the export restrictions are us -- the good people. I think there is a similar thing in intellectual property too. Most of the copy protection schemes, if they are effective, like watermarking, will only be effective against the big infringers. They are easy enough to go after anyway. Making things more difficult for little folks, I think, is just going to turn out to be anti-competitive. They are not compelled to embrace the new digital technology. If they find they are treated better down at the video shop, they will just keep doing that.

Speaker: I have two stories to tell about fair use. One is the ACM had a policy for awhile which was that you couldn't have something that they had copyright on on a web page that was accessible to more than 800 people. That is 1% of the membership of the ACM. So I wrote to Peter Denning that I was putting the basic paper on this on my web page and the ACM could sue me if they liked. The reply was that I hereby give you permission. A more recent one is that a statistician in Canada put a paper on his web page that he was publishing in a collection published by Academic Press. They bullied him into taking it off. I found something curiously enough on my web page that had been of mine that had been published by Academic Press and I sent them e-mail saying they could sue me if they wished, but I have not received any reply. Now I think that the right to maintain one's own things on a web page is one of the aspects of fair use as is the ability to put things on evanescent news groups so that they are going to disappear after awhile anyway.

Speaker: I think a lot of systems that work are sort of based on the assumption that you have to accommodate antagnostic relationships. In the government you have to accommodate people wanting to beat each other up and that is what part of money is about. You can't sort of trust somebody to give you something back that is worth roughly what you gave them today. You kind of give some money because you just don't trust us. I think that is the kind of thing people are trying to address with this kind of intellectual copyright issues and stuff like that on the net. So yes, there is a place I think for community building and trusting one another, but I just don't think that the whole thing can be built on that alone. I am talking sort of vaguely here.

Doug Crockford: I apologize here if I said this is all there is to it. We are living in a very complex world and there are all sorts of ways that things go together. With the interest of trust in a transaction is an important one, especially on the internet because you are transacting with an address. It could be anyplace in the world; it could be anybody in the world. How do you know if you send them any money that something comes back. That is the kind of thing that a mediated marketplace can facilitate. Therefore, even if you never discover who you are, you can still have persistent identities and still develop a relationship. Even if it is ephemeral. But sufficient that you still can complete a transaction successfully.

Speaker: I very much enjoyed your talk and I am wondering what you have said to large media companies about this proposal, and if so what are your arguments to Disney or Time-Warner, Viacom, companies like that who are quite concerned about digital media and the issues of copyright. What does your scheme really address? It is clear in McCarthy's case that stuff that one puts on ones own web page -- that is pretty straightforward. But for media that is mass and popular already, that people are already making a lot of money off of, how does your scheme address that so they are happy and the consumers are happy too?

Doug Crockford: First off, I just want to reiterate that it is not my fault. A company like Disney knows that it is doing more than selling stuff. They have a compact with the families that they will deliver things of a certain kind and many of their businesses are already service businesses -- the theme parks for example. That motive-making translates very well into an internet environment.

Speaker: I think your model breaks down with books. As I looked at the list of criteria in which value-added could be had, books because of their nature, they are long and take a long time to write, people don't write thousands of them the way Disney can produce thousands of characters. I think under your model, then, that books are sort of out. So if we take your conclusion then we would say that what the internet has done is not your fault, it is to kill books.

Doug Crockford: I don't think the internet is going to kill books or even threaten books until our display technology gets a whole lot better. We have had the bandwidth for a long time to transport books over the net and it has not happened. I think it is just because screens are so hard to read.

Speaker: But there is no solution in the model you propose. You arguably propose a model how a songwriter can preserve a song no less so an album. but it seems like you don't have a model on how to protect books.

Doug Crockford: I am not claiming to.

Speaker: I want to grotesquely simiplify what you have said because basically I first off completely agree with you on your model because the market is migrating from so called proprietary information to proprietary relationships and that is what you are really trying to build. You are trying to increase the switching cost involved here. So if I can rephrase what you are saying, I think your business model is not like you are saying that intellectual property rights are not important. What you are trying to do is lessen its importance in the scheme in which you try to make money. The way you are trying to capture value is with the relationships you create versus or in conjunction with the intellectual property you wish to supply. So in a way you are trying to punt the issue of intellectual property because if that is copied it does not matter because you are going to make your money on the quality of your relationships. Is that an unfair restatement of your business model?

Doug Crockford: No that is pretty good. In fact I was much more harsh on the system than I needed to be mainly because Ted wanted it to be interesting. I hope that I was.

Speaker: All of us that have a VCR have seen the notice that comes along with the tape. This must not be reproduced or else. All of us reproduce them. The other day I was at a Price Club and there was machine with two VCRs side by side for just that purpose. What I am saying is that I agree with what you have to say about copyrights that you have huge forces that are going to try to copyright and restrict and all that. They are very powerful and very big. I suggest that all of us be pirates. Copy stuff and use the stuff if we can get away with it.

Doug Crockford: I would just like to reinforce that by saying I don't advocate that at all.

Speaker: It is my undertanding that with respect to VCRs that there are software in the VCR that degrades significantly the quality of that second copy called macrovision and but in fact a DVD community is trying to see how they can try to preserve such copy protection in the future. So it is not a concern to people because they have the protection they want. DVD is a different issue.

Speaker: DVD is very successful in that consumers may decide not to pick it up. It is not inevitable that they are going to be successful in the market any more than that or minidisks or that other thing was.

Ted Selker: I would like to close on time here. Thank you very much, Doug.

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