Decentralized Markets

[Tim May]

At 8:43 AM -0800 3/1/01, Blank Frank wrote:
>The company [EBay] also has instituted a policy to prohibit the
>               sale of anything recorded on a blank compact disc, and it
>               stops sales of certain types of DVD players and gaming
>               equipment that can be used with illegally copied media.
>
>http://www.usatoday.com/life/cyber/tech/2001-02-28-ebay.htm
>
>The RIAA must have some very scary lawyers.


This is a very good example of a problem which was predicted by some 
on this list, and which is now happening: the electronic agora is so 
much more visible than the traditional flea markets, so much more 
efficient, and thus is so much more targettable.

Ebay restricting DVD players, the French trying to prosecute Yahoo 
(and probably, soon, Amazon, Ebay, etc.) for selling thoughtcrime 
books and regalia, the Germans doing similar things.

This is the flip side of "regulatory arbitrage": a nexus of corporate 
control which can be sued, have executives threatened with jailing 
(*), and even RICO and other conspiracy suits.

(Wags usually say that France cannot jail a VP of Ebay or Yahoo, that 
the U.S. will not cooperate with French authorities and arrest and 
extradite. Ah, but the French can arrest any Ebay or Yahoo exec, or 
even middle manager, who lands on their shores. Or who passes through 
a similarly-minded nation with good relations with France. Recall a 
few years ago when Germany arranged to have a transitting thought 
criminal arrested in Denmark or Holland, I forget which, and then 
extradited to the Fatherland for political reeducation.)

This general situation of a "nexus of corporate control" is one 
reason Napster is about to go down for the count. By having a 
centralized service, and a suable corporate or partnership entity, 
and by essentially advertising themselves as a pirate music source, 
they were a ripe target.

Long-term list members will know that many of us said the same thing 
about Zero Knowledge Systems. I specifically predicted to Austin and 
Hammie in a meeting we had in late 1998 that ZKS would come under 
legal assault as soon as the Freedom Network became implicated in 
sufficiently serious crimes. Porn rings, pedophile networks, plots to 
kill the Canadian PM, extortion threats, etc.

(ZKS has "abuse" policies in place, but so long as Freedom nyms are 
not actually traceable, which is what they say and which no one has 
demonstrated otherwise, an after the fact cancellation policy is not 
a powerful deterrent for criminals and thought criminals. Do the math 
and see that the $50 for 5 nyms is a trivial cost for those 
incentivized to be untraceable.)

Back to suing corporations. Instead of suing a thousand individual 
flea markets for "allowing" sales of DVD players, just threaten Ebay 
with a lawsuit. Ebay backs down and issues an instruction, backed up 
easily by software filters. The efficiency of electronic agoras 
result in efficient threats agains those who run such centralized 
agoras.

As this process unfolds, expect lawsuits from Pez dispenser 
manufacturers claiming that bootlegs of their products are being 
sold. Expect sales of used machinery to be threatened by the original 
manufacturers (perhaps claiming that used generators and lawn mowers 
are "potentially unsafe"). Expect Saudi Arabia to sue to block sales 
of Islamic (and, obviously, anti-Islamic) materials.

Is it all hopeless? Are we destined to see a world of a few 
corporations like Yahoo and Ebay and Amazon being choke points for 
any tinhorn dictator threatening to sue them and arrest their 
employees?

The answer is, of course, decentralized networks, decentralized markets.

Gnutella, Open Napster, Freenet, Mojo Nation, Cypherpunks-style 
remailers. (Some of these still have elements of centralized control. 
But the centralized control and corporate points of attack may 
someday be discarded as unnecessary, pace the discussions we've had 
of "everyone a mint" in digital money systems.)

The Cypherpunks future lies with these decentralized systems. 
Obvious, but true.

Cyberspace has enough degrees of freedom that various markets can be 
instantiated without some corporation operating the "market." (Usenet 
is a primitive example.)

There really is no long-term need for an Ebay to be a "market maker." 
The future will bring more options for online auctions, for new 
pricing mechanisms.

(Personally, I can see systems like Mojo recasting themselves as 
alternatives to Ebay. I don't know if Jim and his friends are 
thinking along these lines, though.)

Centralized control is a more general problem than just "men with 
guns" controlling others. Centralized control is also a target for 
other centralized controllers. Ebay and Yahoo are finding this out in 
a big way.

Let a billion buyers and sellers bloom.


--Tim May
-- 
Timothy C. May         tcmay at got.net        Corralitos, California
Political: Co-founder Cypherpunks/crypto anarchy/Cyphernomicon
Technical: physics/soft errors/Smalltalk/Squeak/agents/games/Go
Personal: b.1951/UCSB/Intel '74-'86/retired/investor/motorcycles/guns