Friday, February 09, 2007

Steve Jobs on DRM

Steve Jobs posted this week on the Apple site a letter in which he argues for the abolition of digital rights management (DRM) software for online music. If DRM were abolished, then any songs purchased from iTunes could be played on any device, and vice versa -- music purchased on any other sites could be played on iPods.

Not too long ago, I wrote a post on why it could be in Apple's interests to prevent iTunes songs from playing on other devices. My basic argument had to do with assumed pricing of songs on iTunes. I argued that Apple was pricing songs above marginal cost, but below the price they would set if they were not also selling iPods. Essentially, Apple was, I argued, trying to prevent new entrants into the portable music player market from getting the benefits of relatively cheap songs from iTunes. New entrants obviously would find entry into the device market easier with a full iTunes library at low prices ($.99).

So what might have changed, in order for Jobs to call for no restrictions on songs purchased on-line?

Three possibilities. One, if Jobs' description of the contracts with the music publishers is correct, then they could shut down the iTunes site within weeks of a determination that Apple's DRM has been hacked. That is a big albatross to have circling over one's head all the time. It is not clear that Apple will be able to stay ahead of the hackers. Jobs may have had to agree to this contract clause when nobody knew whether iTunes would take off, but I suspect he has a bit more negotiating clout at this point.

Two, with more and more online music sellers, we are likely to approach marginal cost pricing of songs. With marginal cost pricing, and more music available, the ability to deter entry into the device market by keeping iTunes songs only for the iPod disappears.

Three, I don't think the incentive to deter entry into the device market is nearly as strong as it was when the iPod was new. Apple has a huge lead, both technologically and in the marketplace, and it is moving on to a whole new competitive arena with the iPhone. The advantages to Apple of having (cheap) songs from other sellers able to be played on its iPods and iPhones outweigh the advantages to Apple of having its songs not be playable on other devices.

I predict that Jobs' recommendation will be accepted.

The Consensus on Global Warming

A really good blog to keep up on science of climate change that you won't read elsewhere is Roger Pielke's blog.

Roger notes two attempts to remove state climatologists -- David Legates in Delaware and George Taylor in Oregon -- because of their failure to follow the consensus views on global warming. Roger also gives the cite to Heidi Cullen's (of the Weather Channel) post where she speaks about having the American Meteorological Society remove their seal of approval from meteorologists who "can't speak to the fundamental science of climate change" and about the inability of some meteorologists to differentiate between "solid, peer-reviewed science and junk political controversy." Take a look at Roger Pielke's resume and tell me if you see anything other than solid, peer-reviewed science. About all you will see on his site is peer-reviewed science, and it is good stuff.

So what kind of consensus is this, if by speaking out against it you are vilified?

Wait -- another late breaking item, Ellen Goodman from the Boston Globe says

"I would like to say we're at a point where global warming is impossible to deny. Let's just say that global warming deniers are now on a par with Holocaust deniers, though one denies the past and the other denies the present and future."

Now if you read my post on warming from February 1, you will see I agree that global warming (that the average global temperature has increased in the last 100 years) is tough to deny. But that, I don't think, is what Ms. Goodman means when she refers to the deniers of global warming. I suspect that if I said to her that maybe the best response to warming is to make sure that the world economy grows at a good rate for the next 100 years so that our children have the capital and capacity to adapt to climate change, she would consider me a denier. Or if I said that it simply did not make good economic sense to spend a lot on reducing CO2 given the cost of reductions and the relatively minor benefits that would be forthcoming, she would consider me a denier. Or if I said that it was not clear just how much of the warming of the last 100 years was due to anthropogenic greenhouse gas emisssions, she would consider me a denier. Read her editorial and tell me if I am wrong.

At any rate, bringing the Holocaust into the argument over climate change is just going way over the edge.

Thursday, February 01, 2007

The Eiffel Tower is Dark!

The news media is in high gear in anticipation of the IPCC summary for policymakers that will be issued tomorrow. I think I will have to go into hiding for a couple days or my blood pressure will go through the roof. Leave it to the French to darken the Eiffel Tower to reflect the seriousness of the event.

So about 12 years ago, in my Environmental Economics course at Tuck, I had a "skeptic" in to class to discuss climate change -- Robert Balling. Now in the interest of balance, I also invited to the class Donella Meadows (Limits to Growth) and she did attend. It was one of my all time favorite class sessions. The students who were there probably still do not realize how lucky they were to see Balling and Meadows square off -- and agree on much of the science, but not on the policy implications!

So it sounds like one of the news bytes will be that mankind is "very likely" to be a cause of some (how much?) of the warming we have observed. Twelve years ago, Balling, a skeptic, would have agreed to that. I remember him going through the data, with a focus on moderate warming, especially at night and in winters, and more rainfall generally. That, he said is global warming. The question then, and now, is what we should do about it.

So the IPCC summary will try to make a big deal out of the "very likely" language, and all the media will try to use it to say that all skeptics have been discredited. I don't know of any skeptics who deny the theory of climate change (i.e., the causal relationship to CO2) or indeed any who would not agree that some of the warming we have observed in the last 100 years is "very likely" due to human influence.

That is just not the point.

It will be interesting to see the spin if, as I expect, the expected temperature increase and expected sea level increases both fall from previous expected values. How do you spin that into more of a crisis?