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Main => General Discussion => Topic started by: bytemaster on November 25, 2013, 09:31:30 pm

Title: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: bytemaster on November 25, 2013, 09:31:30 pm
A Libertarian Alternative to Patents and Copyright

I would like to introduce a new way for inventors, artists, musicians, writers, and scientists to become rich by sharing their ideas with the public without relying on government granted intellectual monopolies, trade secrets, non-disclosure agreements, or licensing fees.    This new solution would end all legal battles over intellectual property, make all music, software, and books free to download and copy while reducing the cost of physical books to the cost to manufacture them (almost 0).  The price of almost every good and service you consume on a daily basis would be dramatically reduced because there would be no licensing fees or artificial barriers to entry.   Every product you use would automatically include the best technology rather than inferior alternatives that are only used to avoid licenses.   But before I share this revolutionary solution, I would like to review some of the arguments for and against patents and intellectual property.

The challenge with being a libertarian, anarcho-capitalist, or voluntarist is that we are always asked to provide an alternative to all of the goods and services which people believe are necessary and can only be provided by governments.  Simply stating the market will ‘invent’ the solutions in the absence of government is usually not an acceptable answer because it is viewed as a religious belief in the power of the market and critics lack the faith required to accept that answer.

Many people have already addressed how the market could provide alternatives to roads, schools, healthcare, retirement, and courts.   But when it comes to intellectual property the only answer provided by the Libertarians and Austrian Economists is that intellectual property does not legitimately exist.   Patents and copyrights are a government grant of Intellectual Monopoly that allows the use of force to exclude others from exercising their own physical property rights.  In other words, intellectual property cannot exist without governments and this incompatibility simultaneously proves to libertarians that intellectual property is invalid and to statists that governments are necessary.

Without a legitimate free-market alternative to intellectual property, the statists can claim that without patents innovation would stop and new life-saving drugs would never be invented because the cost of research exceeds the cost to replicate the results.    The argument that trade secrets, non-disclosure agreements, and first-mover advantage is enough to reward inventors for their effort is seen as insufficient.   Unfortunately, there is little one can do to convince someone that this reward is sufficient and this leaves libertarians with the non-aggression principle pitted against the principle of utilitarianism and the greatest good for the most people.

The other argument used to defend patents is that big corporations can easily ‘steal’ ideas from the little guy and keep all of the profits.  The claim is that the government is protecting the little guy (isn’t that always the claim?).   This mindset means that new ideas and inventions are kept ‘secret’, as little information is shared as possible, and when patents are filed they are done so in a way that attempts to hide the secret in plain sight in such a way that most people are not able to replicate the patent. 

In the end, patents are so expensive to acquire and enforce that they do little to protect the little guy from large corporations.  In the mean time they create an environment that discourages the sharing of ideas and ultimately undermine the innovation they claim to enable.   

There mere existence of patents introduces a whole new category of risk that entrepreneurs must face.  Often times new inventions are not possible because they depend upon other inventions for which the license is either too expensive (due to monopolistic pricing) or not available for license at all.   Almost every study ever performed that does a cost-benefit analysis of patents has shown they do more harm than good, but this is of little concern to the rent seeker who wants to make make money by getting a government granted monopoly on his idea. 

Rewarding Inventors and Content Creators
Despite the flawed approach toward rewarding inventors via grants of government monopoly, patents do attempt to recognize the value of an idea and reward people for disclosing the idea publicly.   These are goals that are worthy to pursue.   So I would like to introduce an alternative to patents that would handsomely reward inventors, eliminate all intellectual property lawsuits, vastly reduce the price of manufactured goods, and allow inventors, artists, writers, and musicians to make money from their ideas without ever having to charge customers for the right to copy the song or operate a business that manufactures and sells their invention.

How much is an idea worth?   This is the question that we must answer because if you cannot answer it then how can you justify using government force to grant someone a monopoly on it?   

Quote
“The value of an idea lies in the using of it." - Thomas A. Edison
In other words, to maximize value to society an idea must be used to the maximum extent and any limitation on the use of an idea ultimately hurts society.     Generating new ideas is easy, recognizing the good ideas and then implementing them is the hard part.    In fact, an idea without recognition or implementation is effectively worthless.

So the challenge is to provide a means for the ‘little guy’ to make big money on his idea simply for sharing it freely and teaching as many people how to use the idea as possible without any restrictions.   

What is the ‘value’ of the idea for rectangular touch-screen cellphone with rounded corners?  Should Apple have a monopoly on this and be able to exclude all competitors from creating rectangular touch-screen phones via threat of violence?
What about the ‘value’ of slight variations on Apple’s design?   If you are rational you will recognize that there must exist some ‘price’ that would express the value these ideas have to society.   The trick is to find a way to discover this price.

The other insight one must gather is that the value of an idea changes over time.   The invention of the telegraph in the 1800’s was worth a lot more then than that same idea would be worth today.   In other words, patents also suffer most of the defects of ‘price fixing’ to the extent that they provide a constant benefit (monopoly) to a few at a fixed cost (exclusion) to the many for a fixed period of time regardless of the idea.   All ideas are effectively equal under the patent system.

Under the patent system there is some price discovery through monopolistic pricing of a single company or via fiat of a judge awarding damages for patent infringement.   Most sane economists would recognize that both of these methods are very inaccurate and inefficient for price discovery.  These methods are also  ex post facto and is almost impossible to price prior to implementation and success of an idea.   

The natural market response to such an environment is the phenomena of submarine patents who’s issuance and publication are intentionally delayed by the applicate for a long time, such as several years.   These patent holders take no market risk, allow others to prove the idea and increase its value, and then attempt to use patent law to collect handsomely on the ideas that they played no part in implementing. 

One last critique of the patent system is that it fails to recognize that many people can independently come up with an almost identical idea at about the same time.   The existing system is not flexible enough to handle this scenario and ultimately a judge must pick a winner and looser.   

A Decentralized Market for Ideas

I propose the creation of a decentralized prediction market to estimate the value of any invention, song or other work that is traditionally considered ‘intellectual property’.    A prediction market (also known as predictive markets, information markets, decision markets, idea futures, event derivatives, or virtual markets) are speculative markets created for the purpose of making predictions.   Assets are created who’s value tracks market consensus on the answer to a question or probability of an outcome.

Prediction markets work by having two people take opposite sides of a ‘bet’ on a future event.  This event could be the outcome of an election, or it could be the future price of a gallon of gasoline.  Value is redistributed from the loser to the winner of every bet based upon the eventual outcome.   

There are many kinds of prediction markets, but in this case it would be a continuous market with no trigger event.   You enter and exit via voluntary trades with market participants who both invest equal capital into their position.  The effectiveness of a prediction market depends upon many factors such as:

The depth of the market (amount of money and users)
The distribution of useful knowledge among market participants.
The clarity of the wording used to seed the market.

In our case we would like to structure the prediction market to tell us the value of an idea to society.    How valuable is the idea for a Pet Rock vs the iPod vs a specific cure to cancer?   By what standard could you hope to estimate the value of the idea?  The best standard I have come up with so far is to estimate the amount of money that someone would pay to acquire an enforceable monopoly on a concept.  In effect, the prediction market should estimate the value of the patent without actually granting said monopoly to anyone.     

So I propose that a new prediction market be created for every invention that is phrased something similar to:

“How much would a savvy investor pay to buy a monopoly on the use of this idea or any derivation from it?”   

This market could be created at any time and would allow speculators to bet on the future market consensus on the answer to the question.    Early in the life of a new idea, the estimated value of owning a monopoly on the idea would be low because few people would understand it and no one will have taken the risk to try the idea in the market.  Furthermore almost no one would be able to imagine all of the potential derivative ideas that others would generate.    This means that the inventor has the opportunity to buy a position in the prediction market long before its full value is fully recognized by the masses.   

Of course, every prediction market requires two parties taking opposite bets, therefore, before you can buy an idea, you must find someone who is willing to bet against an idea.   Fortunately, every inventor encounters more nay-sayers than supporters early on.  The greater the nay-saying the better deals the inventor can get because the idea is ‘non-obvious’ and thus ‘innovative’.   If everyone immediately estimates that owning a monopoly on a given idea would be worth trillions, then they would probably conclude that people would pay a lot to own a monopoly on a given idea and your ‘obvious idea’ would start out at a very high price point.    In a way, your rewards under this system are directly proportional to how innovative the idea is where innovative is measured by how few recognize the value of the idea early on.

A important nuance of this prediction market is that it must be a price someone would actually pay to acquire said monopoly.  If asked how much you would pay to acquire a monopoly on flux-capacitors that make time travel possible, most rational people would not pay anything because the idea is infeasible and thus they could make no profit by owning a monopoly in a non-viable idea. 

On the other hand, if you asked how much you would pay to acquire a monopoly on something as general as ‘flying cars‘ without any specific reference to how such a flying car is made, then many people would bid very high and be hesitant to bet against the valuation of this patent.    The idea is just so obvious, clearly possible, and of such high value when it is possible that there would be little opportunity to profit from naysayers.  The prediction market would make bets in the billions even with no cars on the market. 

As you can see there is a natural selection of innovative ideas from non-innovative ideas that is directly proportional the how obvious the idea is to people upon hearing about it.   

Implications for Venture Capital Firms

Most venture capital firms face a significant challenge of identifying the good ideas from the bad because they are not experts in every domain.  As a result, venture capital firms tend to bet on people rather than ideas.   Unfortunately, this approach does not work well when the success of the company depends more upon the validity of an idea than the people attempting to implement it.    For example, investing in a company of great people who have an idea that violates a law of physics will fail regardless of how good the team is.   

A given mid-sized VC firm is presented 10,000 ideas each year of which 1000 may be invited to an interview and 10 may be funded.   The time available for evaluating these ideas is very small and many good ideas never get funding because the screeners at the VC firm never look close enough at the idea.    However, if a VC firm was able to observe trends in the prediction markets they would be able to quickly identify which ideas appear to have merit with crowds of people betting on them.  Instead of a team of 300 generalists reviewing proposals, the entire market of millions of specialists would be aggregating their knowledge via the prediction market.

VC firms also face another challenge, how can they hedge their bets?  Suppose a particular theoretical energy device requires a $1 billion upfront investment and has a 5% chance of some unforeseen law of physics making the entire concept unfeasible.   Well, if the idea was big enough, popular enough, and had enough people betting it would work then the VC firm could hedge their bets by taking out options or short positions in the prediction market that offset their investment into the idea.   

The VC can then fund the idea while having their position hedged in the event that it doesn’t work out as expected.   This has huge implications for the investing community and is something that patents are unable to provide.

Music, Movies, and Books

Copyright is the other form of intellectual monopoly that people simultaneously want and systematically violate the law every single day.  We want artists to be rewarded for their work, but few actually want to pay for it if they can get a copy from a friend for free.  Fortunately, prediction markets offer a far more useful tool for rewarding artists than copyright ever could.

Imagine an iTunes like music store where every song was ‘free to download’, but users could speculate on whether the song would become more or less popular.   An artist releasing a new song would bet heavily on its eventually hitting the #1 spot.  Their fans who hear the song and agree would also bet money on the rising popularity of the song.  Meanwhile those who think the song is ‘no good’ would bet against it rising in popularity.   This gives the fans financial incentive to share their music with their friends because they make money when the popularity goes up.

Observers of the market could then ‘discover’ new songs simply by watching the trends and seeing which songs are rising in value, downloading them, and see what they think!   

Here the artist makes money, users can support the artist by sharing the song, and observers can discover new music in a far more accurate method than letting the music labels and radio shows filter it for them.

Conclusion


Decentralized idea markets can provide a non-violent alternative to reward inventors and creators for their ideas while simultaneously encouraging the ideas to be adopted and spread wide and far.  They accomplish all of the claimed benefits of patents while creating an atmosphere of cooperation and openness and avoiding the use of force to shutdown innovation and production.   
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: pgbit on November 25, 2013, 11:03:17 pm
Would it best to separate out patents and copyright into different DACs? Two big topics...
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: pgbit on November 25, 2013, 11:13:57 pm
One interesting thing is that a DAC could automatically work out which ideas, over time, led to successful (popular or profitable) ventures. Protecting and rewarding successful ideas probably isn't something that is done very well at all the moment, in many countries around the world.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: cob on December 08, 2013, 06:54:35 am
How would it work in the case of music? How is the "bet" won or lost?
How would you calculate how popular a song is? Do you go after a songs position in a top 50 chart or something?

Amount of times downloaded or googled? That coukd lead to bots downloading and googling a specific song100000 times.

Any ideas?

What about art? Like a painting? What measurwnt would one take?
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: bytemaster on December 08, 2013, 11:10:02 pm
How would it work in the case of music? How is the "bet" won or lost?
How would you calculate how popular a song is? Do you go after a songs position in a top 50 chart or something?

Amount of times downloaded or googled? That coukd lead to bots downloading and googling a specific song100000 times.

Any ideas?

What about art? Like a painting? What measurwnt would one take?

The DAC would operate based upon a prediction market that asks the question:  "What would be the value of holding a perfectly enforceable copyright on X?"
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: cob on December 09, 2013, 04:27:26 am
Hmmmm i don't know.
How is one to value that? It couldn't be checked/compared with a parallel universe where a copyright IS enforced.
What about 30 years down the road, where the concept on patents and copyrightsno longer make sense to the new generation? How is one to really answer that question?

And can you  give a exact example please?

Let's say the song is "DACs drop da beat feat Jay-Z"
Alice thinks the song could make 10 million $ if copyrights existed.
Bob thinks it would makes 16$ cuz only jay-z's mom wojld be the album.

How are they getting paid? Can you elaborate on my example?

Thanks
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: bytemaster on December 09, 2013, 04:30:00 am
Hmmmm i don't know.
How is one to value that? It couldn't be checked/compared with a parallel universe where a copyright IS enforced.
What about 30 years down the road, where the concept on patents and copyrightsno longer make sense to the new generation? How is one to really answer that question?

And can you  give a exact example please?

Let's say the song is "DACs drop da beat feat Jay-Z"
Alice thinks the song could make 10 million $ if copyrights existed.
Bob thinks it would makes 16$ cuz only jay-z's mom wojld be the album.

How are they getting paid? Can you elaborate on my example?

Thanks

Thats exactly the point... Alice and Bob are purely speculating along with everyone else in the market.   You make money by speculating early and identifying the new songs before anyone else and then advertising them.  The speculation would be directly related to how popular the song is perceived to be.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: cob on December 09, 2013, 04:11:53 pm
So in my example, how much money would bob or alice make if the song is valued a lot or not a lot?

Because i thought futures depended on an exact price.

For example oil will be 150$ a barrel. And you can see after 30 days that oil is at 147$ a barrel and we now have a number.

What are those numbers? Can you use my jay-z song example haha?

I mught just not understand futures enough....
A concrete example with numbers would help!

Thanks in advance (:
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: cob on December 20, 2013, 06:28:10 pm
anyone?
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: bytemaster on December 20, 2013, 08:07:25 pm
In a bit.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: earthbound on January 21, 2014, 09:09:17 am
Perfect enforceability of copyright could mean:

"How much money could you make if you could compel everyone who had a copy of this song (at this immediate point in time) to pay you the full market value of a copy of the song?"

Then; value of perfectly enforceable copyright of the song = number of people (X) who have a copy of it times the market value of the song (Y), or:

Value = (copy holders X) times (song market value Y).

I think a point to underscore is that anyone who submits ideas to the DAC releases those ideas to the public domain?

I want this DAC made ASAP after real-world distributed exchange proof-of-concept. Why? If it works, it could unleash an explosion of creativity and innovation. Millions of users in the prediction market would respond to ideas; you are completely free to implement any of those ideas in any way you wish: you therefore only have to throw your resources into what you think the best implementation of the idea is.

Think what would happen if this works and people start floating DAC ideas in the prediction market. It could unleash enormous energy behind conceiving and executing the best DAC ideas.

And here's the best part . . . the genesis block could include a submission of the idea for the DAC itself.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: MaxPWR on January 24, 2014, 04:17:53 pm
I will need to read in detail before I can comment on the paper, but I was thinking of a similar application with existing coins.

A lot of the draconian elements of IP / copyright law (licenses, contracts, etc) come from the fear of not receiving credit in a debt-based system, which leads to fear of not seeing a return on investment of time and resources.  Current debt-based IP / copyrights are based on providing protection for ROI. 

Some certainty for ROI is needed as an incentive for initial research and development, before the market can appropriately value the quality and competitiveness of the future product.

In a wealth-based system, that can be replaced by trust in ROI instead of protection of ROI.  That requires a method to ensure credit is received for a piece of work, separate from any guarantee or protection of ROI.  This is as simple as a "universal signature" on a painting or document.

That is - a "libertarian" copyright would simply be a method for one organization to universally acknowledge, agree, and communicate that "X thought of Y first and intends for it to be used like Z". 

There can still be counterfeiters / violators / etc - there can be no protection in a lawless, borderless, unenforceable, distributed global economy.  But there can still be community enforcement, trust, and charity among virtual communities in a distributed economy, which can replace laws and contracts to increase ROI certainty for research and development in IP/copyrights.

This is typical already in software ("donations" in open-source vs. "license fee" in proprietary sw), but is more difficult in other applications because of time, traceability, communication of ownership, etc. 

Memorycoin, Namecoin, and Datacoin can help address this in a distributed economy:

Process: 

Intellectual Property (IP) Creator assigns MMC wallet address to a piece of owned IP.

IP / Copyright Organization Officials "vote" for IP address.  IP Organization publishes result and submits vote address and record to datacoin blockchain for independent archiving.  Creator maintains and registers record and DTC transaction ID with a namecoin dns registrar.

Creator has a mutable record of approval in MMC blockchain.  Independent permanent record of approval is stored in DTC blockchain, and can be encrypted.  Record retrieval details can be located through independent blockchain dns server.   

Creator has a universally available (NMC) certificate of a record (DTC) of approval (MMC) based on the reputation of the IP / Copyright organization.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: MaxPWR on January 26, 2014, 01:08:35 am
The most important points I see from the OP is a need for "traceability" / "credit" to source of a creation, and an "advertising" / "promoting" from any who use, develop, or build upon it further.  And an easy voluntary way for any user to send value back to source.

You're kind of talking about turning content creators into micro-celebrities within their business community...or professional networking.  "AngelCoin"?

Think of a creator as a "personal brand" and "co-branding" a use of their product.  Creator could benefit from short-term donations / contributions / etc or publicity.  Both benefit from an increase in "brand recognition", etc.  Creator uses that intangible to network / market / expand / etc.

You're looking for a system that could be long-term, unique, and traceable that people can easily send funds to - that's any virtual currency address.  But you also want a system where it could also be cheap to just show intangible support, or approval...or vote.  And where the source can do the same in return to "approve" or "sponsor".  With the price of a vote to be insignificant compared to the value that could also be donated (1 vote = 1 MMC Satoshi).

You register an account with MMC and say, "This address is me".  You create a document, specification, invention disclosures, patent application, blog post and assign it another MMC address.  "This address is this idea / IP / document / etc."

License something like:

"This is my creation.  Vote for Document MMC address if you support.  Send donations to Author Address to continue development. Document address shall vote for all approved supporters.  Author is available for professional consultation."   

The higher the reputation of your supporters, the higher the publicity for the creator.

It's basically "My approval is for sale and I am for hire.  My reputation is based on trust from my supporters. Look at all the people who voted for me that I could bring as potential customers / users / partners / etc." 

You're basically combining the seller feedback of eBay, the "for-profit" social networking of LinkedIn and employment sites, and the marketing of coin development.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: cob on February 06, 2014, 04:12:38 am
I'm am REALLY interested in the copyright DAC.
The thing is, I don't like the mecanism proposed. "how much would a monopoly on X be worth?" Seems like it's a statist way to think. I believe this question would make no sense in 50 years.

Does anyone have another way to track the value of a new song? How could you bet on it? This is the key!

This is driving me nuts. If we can figure out a simple way for your average joe to bet on a new song going viral, it will change the music industry more than napster did.

Bytemaster was saying there wouldn't need to be an end date to the bet. How exactly would that work?
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: bytemaster on February 07, 2014, 12:45:10 am
There is no end date because the only way to exit your bet is to sell your position to someone else.  Thus the market price is always the rate at which you win or lose based upon your starting market price.

As far as an alternative metric:  "How much revenue has been earned directly or indirectly from the application of this idea." 

 
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: clout on February 10, 2014, 06:05:03 pm
There is no end date because the only way to exit your bet is to sell your position to someone else.  Thus the market price is always the rate at which you win or lose based upon your starting market price.

As far as an alternative metric:  "How much revenue has been earned directly or indirectly from the application of this idea." 

 

Can this be applied to tangible production? That is to say a company sells its product for free, and instead of accruing profits from consumer payments it gets profits from a prediction market on the utility of that product. The more of a given product the company supplies the greater the stock in that prediction market. I don't know if all the incentives are there to make this feasible, but the more I think about the implications of DAC's and the way that computers have and will continue to reduce the need for labor, the continuity of traditional economics systems dependent upon demand to spur production seems impractical given that a large majority of the worlds population will not have jobs or disposable income to create the necessary demand.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: bytemaster on February 10, 2014, 06:17:52 pm
Demand is what produces all value, opportunity to meet demand creates a profit opportunity.

A company heavily invested in a prediction market on the value of a product has to sell their position in order to fund the manufacturing of the product they are giving away.  Unless the perceived value of the product rises faster than the manufacturing costs, it would be the equivalent of Apple doing an IPO and then giving free iPhones away and paying for it with the IPO.   It isn't sustainable...

But what is sustainable is selling the items AT COST.  Whoever can manufacture it the cheapest with the lowest margins can make a small profit on the sale and a larger profit if the idea takes off.   The laws of economics do not change, all we did is eliminate the barrier to entry that intelectual property creates and thus increase competition and bring down prices while still rewarding inventors.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: curiouser on February 14, 2014, 04:29:58 pm
Hello everyone...this thread is near and dear to my heart and so has motivated my first post.  I just signed up yesterday, am happily mining PTS, and am very intrigued by the whole bitShares paradigm.  Thank you, Dan, Stan and everyone for creating this.

I have invented a radically different CPU microarchitecture.  While I am sure it would gather its fair share of skeptics and naysayers, a quite possibly larger group of those "skilled in the art" might agree that it is how future CPUs should be built.  So, it makes me nervous that my ability to profit would depend on being able to buy in cheap.  I have already "bought in" via many hours of my time and a fair amount of $, too.  By the way, I came up with this during a period of unemployment, so it is free of corporate entanglements.

Though I share in a dislike of today's statist IP system, it is what it is, and I have already applied for the patent.  How would this affect participating in a new scheme, and how in general would a transition be managed?

I like MaxPWR's ideas as  a concrete example of what could be done.

I would seriously consider using my invention as a test case for a new system...convince me!
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: earthbound on June 04, 2014, 09:33:50 am
THE EPIC! :)

curioser: If you are awarded a patent for your invention, I don't imagine that should interfere at all with bringing it into any open-license venture. But I do not say this as a Lawyer(TM).

The reason (according to my understanding) is that you can formally deed the patent to the public domain (via some registering/public record keeping entitiy), or license the invention in some copyleft way, etc. e.g. grant to everyone the right to use and license the technology for any purpose, provided that anyone who exploits this license grants the exact same license to everyone else in turn. Therefore, anyone may implement or improve the invention in any way to create invention X, freely, and anyone else may in turn further the process to create invention Y, and so on.

Bytemaster: I wonder if there are good use cases for intellectual/media/art products having less friction in their development cycle than e.g. physical products? If so, I wonder if there couldn't be a scenario where e.g. an artist could get more "bang for their buck" (in the proposed setting) by e.g. having an "IPO" for a newly released work of art, then "cashing out" their own investment in the work if/when others "pick up" the work (or the work becomes popular) -- and then using that sale to further development of their own work? Because the thing about artwork (where it can interface so much with digital media) is the intangibility of it. People can assign whatever value they wish to it, totally separate from e.g. material questions in physical product/invention development. It seems to me that fact provides a potential vector for any art (released in the proposed scenario) to relatively quickly (or even phenomenally quickly) go up in value.

A sort of similar model is seen where folks who make very popular internet videos receive a cut of revenue from advertisements displayed in the same page as the video. It is simply because the video is popular that more page views are received, ergo more ads are displayed and the proprietors of those ads pay for the appearance of the same (and the owners of the page that display the video give the creators of the video a cut of that advertising money). (This is one way that YouTube works--and many people have made quite good money at this, where they've been so fortunate to produce "smash hit" videos.)

With your proposed alternative, where a prediction market pegs the value of e.g. an item of intellectual property (or "IP," be that a work of art or a description of an invention), the popularity element would be represented by whatever value the prediction market assigns to the IP.

Suppose releasing a music recording (a digital music file of a recording) in this model. What kind of factors would people weigh, in assigning that value in a prediction market? Well, possibly, for one, consideration of how much e.g. the song is circulating on the internet. Is the song incorporated into any music videos playing anywhere on the internet? If so, how many people are playing that video from so many pages every day? Or is the song freely distributed at any "vetting" web sites, where people go to download the latest freely-distributed awesome music? (However the heck anyone defines "awesome?") If so, how many times is that song being downloaded from so many free, public web sites? Or is the song being freely remixed or "covered" by so many artists? If so, how many artists, and how widely are those derivatives based on the work being distributed, and how much do people love them?

cob: I don't believe there can be any easy ways to track the value of a song in any objective way. I think that the thing which makes a prediction market work is that it is absolutely transparent about the fact that it is based entirely on subjectivity. Which, when it comes right down to it, I think is the honest way to go for any invention/enterprise/work of art. To my thinking, the entire difficulty of ventures based on predicted return on investment, especially where media is concerned, is this silly idea of controlling how and where information is disbursed so that creators of it can get their "cut." The thing about e.g. a printed novel is that it's much easier to identify and control who created that paper brick and managed to sell it to people for far more than the paperweight value for the reason that people happen to find something very meaningful in all the abstract symbols printed on those pages (that's an overly elaborate way of saying that people like to read it). For that reason, it's relatively easy to discover how much people will pay for said paper brick, and also prevent anyone else who doesn't have copyright on its contents from selling the same thing.

But the thing about digital media is that it is ultimately impossible (or very nearly impossible) to control how or where it is copied. It is for that very reason that it becomes more difficult to identify how much people are willing to pay for that digital media--if you can even get anyone to pay for it at all. Supposing you succeeded in getting someone to pay for it--how the heck do you prevent them from doing the same, or simply copying it wherever they want to and however they want to? Hello World! Here's an awesome song I got! Take this copy of it! (ad infinitum). You could do some (BARF!) copy protection cryptography shenanigans with it (which would require somehow chaining it to something personally identifiable about the person you sold it to--say, their credit card number, and the CPU/ethernet card MAC address of the computer they downloaded it to--which is what iTunes does, by the way), but the more highly valued the song, the more likely it is that someone will circumvent the draconian information control/dispersal measures you try to impose on it. The only thing that it is usually relatively easy to establish about digital media is where _the_ first copy of it appeared, or who created the artwork. That is especially the case in this proposed solution--where it is registered in a distributed blockchain when it is released.

If, however, it is difficult or impossible to tell exactly how or where digital media is copied, depending on circumstances, it can be relatively easy to make some reasonable guesses at how often that media is copied or used, if it becomes very popular at all. Hints about it will show up on the internet. And people who are really, really expert at monitoring the internet can make relatively well-educated guesses about how popular any given work of digital media is. This kind of information would be one factor weighed in an invention/artwork prediction market. Highly unpredictable human subjectivity would also come into play. If an artist tried to "pump" their latest artwork, and they found a network of fools/spammers who tried to make it appear as if the work of art had any aesthetic value for most people, where in fact most people think it's crap :) then people who are expert at gauging aesthetic value would not fall for it (which, to some degree, means _everybody_--where "everybody is a critic"--or in other words, most people wouldn't fall for that trick).

Speaking which--my repeated description of this as an invention/artwork prediction market--I don't think that was in bytemaster's OP, but I believe that is a real potential. I think this model would work for any kind of idea, however they are formally embodied: whether they be ideas for inventions, or ideas expressed as works of art.

Moreover, cob: how on earth could this idea, or any form of it, work in any way that is _not_ statistical? Even the ideas for valuation/prediction methods I gave here which rely on folks "hunches" (ability to gauge aesthetic value) are also ultimately statistical: it's just that it turns into statistics of who likes which works of art, and how much, and which "gatekeepers" have good track records of accurately predicting who will like which works of art and how much.

Double moreover :) where we are dealing with ideas of valuation, again, how could any practical implementation of value prediction models work without being statistical? Yo! Dealing with money! That means 1) Beans 2) People who count beans 3) People who are very expert at finding ways to count beans in ways you could never imagine (for which they endured years of grueling education to learn how to do), and yet those very imaginings drive the gross domestic product of, like, THE WORLD :)

Triple moreover please forgive me if I grill you.

MaxPWR: Your ideas give me food for thought. I wonder about the feasibility of "votes." I think MemoryCoin well demonstrated that votes as backing for real-world production/labor/value creation utterly stink. As much as our votes and non-votes for politicians and the politicians we didn't vote for but now wish we did vote for stink. I'm very skeptical about the idea that real-world value can be created merely with votes. There must be some kind of independent power that can run enterprising machinations entirely apart from votes. (And where politics is concerned, that power can and should be checked by citizens who call up their representatives and say "Hey! The fiscal policies that you are refusing to burn to hell kind of imploded the economy! Fix it now or you're fired!") That's a real quandary.

Maybe it could be solved with a meta-DAC that manages contracts and milestones? If agent A provably satisfies requirements of contract X, shareholders [A-Z] shall disburse to agent A funds Z. How in the heck do you manage that?

Which is all leading me to believe that some kind of model perhaps similar to Kickstarter, only using blockchain technology, might be an effective (or the only way?) to support an implementation of an inventions prediction market (where there is much more concern for creation of physical material goods).

Which further leads me to wonder if the scenarios I describe for a digital media prediction market are missing a lot of material reality--or, in other words, I wonder if digital media enterprising couldn't also benefit from some kind of Kickstarter-esque blockchain technology.

Good night. Or, more properly, good morning.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: donkeypong on June 04, 2014, 04:32:21 pm
This is a great thinking exercise. I love the ideas, though I'm not sure they get us close enough to solving this problem. Unless the entire economy or credit system operated within the blockchain ecosystem, I think some external enforcement would continue to be needed.

A lot of the transactional stuff can be handled through DACs. But when it comes to physical products, goods, food, personal property, etc., those aren't codable. You can create a title to something like a house or a car or even a supply contract for coffee or corn. You can mess up someone's blockchain "credit" or take away their play money. But as long as there are physical items, then there's always the chance of theft or broken promises, because people can always transact in physical goods on a human level. That, combined with the fact that greed is part of human nature, will keep the cops in business. The government may need a stiff kick, but there are good reasons to have a government and this may be one of them.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: earthbound on June 05, 2014, 06:13:50 am
The thought strikes me that possibly one way to have a DAC reliably enforce terms of fulfilling contracts is by leaving that up to people as much as possible.

Example: entrepreneur X receives pledge from sponsors [A-Z] to each donate amount Y on fulfillment of the terms of contract Z, but the only way the contract can be verified as met is if some percent (say, 60%) of sponsors sign a transaction that verifies they consider the contract is met. The only part that the DAC handles is confirming what it can about the contract criteria (for example, if it was done by a certain deadline), and putting the multi-party statement that the contract is fulfilled into the blockchain (so that payment is sent to the contractor).

This way, sponsors won't even put up a promise to pay unless the entrepreneur can offer some promise of value and the requisite infrastructure to report or manage the development of that value with the sponsors. This way, it stays a pure prediction market: no sponsors will sign on unless they've got some compelling reasons to. Furthermore, an agreement about the subjective value of the enterprise is all "hashed out" in the real world. The DAC is simply mediating the agreements that people make in the real world, which hopefully is reflected in any kind of store/trade etc. value in the associated digital assets/shares/whatever (with the origins and situation of all this verifiable via cryptography/the blockchain).

If thoughts like these have been hashed out in some or many threads I missed, I welcome anyone to point me to them :)
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: donkeypong on June 05, 2014, 02:31:37 pm
The sponsor idea could have potential. Also, if it was a purely voluntary association, the way the whole open source movement has become, maybe the rights owner could be persuaded to take less money to do things the right way. Dolphin-safe tuna and sustainable lumber started that way, too, and those have grown enough to encompass much of their industries. Dolphin-safe tuna and sustainable lumber are marketing things now, with conscious consumers demanding a product that bears a trusted third party seal of approval. Being voluntary, this system wouldn't cover all IP rights, and it might not be strong enough to prevent offline theft/fraud/black-marketeering, but it might get the ball rolling if people believed in the end goal.
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: liondani on June 07, 2014, 06:23:55 pm
Does anyone have another way to track the value of a new song? How could you bet on it? This is the key!

buying "shares" of it?
Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: Empirical1 on June 08, 2014, 07:16:04 pm
Does anyone have another way to track the value of a new song? How could you bet on it? This is the key!

buying "shares" of it?

Edit: I just gave a bad explanation of how prediction markets work and plus I see now the question is like 6 months old...

Probably best to look at all the information on Truthcoin if anyone is interested in prediction markets...

https://bitsharestalk.org/index.php?board=60.0

But basically we should be able to ask almost any question you can think of, and if there is a big enough market, bet on the outcome. The closer you are to being right the more the share price should move in your favour and vice versa.

Title: Re: A Libertarian Alternative to Patents and Copyright (DAC)
Post by: bitsceptic on July 07, 2014, 08:40:56 pm
The OP is very interesting and I'd like this discussion to gain momentum.

How would it work in the case of music? How is the "bet" won or lost?
This question hasn't been answered satisfyingly so far IMO.

There is no end date because the only way to exit your bet is to sell your position to someone else. Thus the market price is always the rate at which you win or lose based upon your starting market price.
As I understand prediction markets, there *has* to be an end date. A prediction ends when the event to be predicted takes place. The result should be easily verifiable by anyone after the event. These conditions are not fulfilled by the OP's proposition.

I guess bytemaster's idea will above all lead to speculative bubbles. The nature of such a prediction market reminds me of a pyramid scheme.

Even if it would work out, I fear that the viral nature of this approach rewards mainstream a lot more compared to niches than today's music industry does. The participant has a higher incentive to bet on mainstream than on the long tail (http://en.wikipedia.org/wiki/Long_tail#Chris_Anderson_and_Clay_Shirky) (even if the participant is only listening to free jazz himself). The opportunity cost for discovering 'good music' in niches is much higher. I think there should be some kind of reputation system to reward those that pay a constant effort to dig up music that certain groups of people like. Maybe some kind of copy trading (http://en.wikipedia.org/wiki/Copy_trading) could provide those discoverers with a following and help the long tail to pay off.

But still: I doubt the functionality of such a prediction market.