SuitWatch/Monday, March 11, 2002
Working the front
We are quickly reaching the point where it's safe to consider Linux the main way the Internet extends upward into the operating system. Other OSes operate *on* the Net, but none are any more native *to* the Net than Linux. Like the Net, Linux is free. Nobody charges you a license for using HTTP, HTML or TCP/IP, and the same is true of Linux. In retail terms they are commodity stuff, meaning there's hardly any point to selling them all by themselves. But in practical terms, they are pure infrastructure, because you can use them to build pretty much anything. And build well, too. If you're not in the operating system business, and need a naturally infrastructural OS that make the Net an even sturdier platform, Linux is your option of first resort.
So Linux has naturally seeped upward into those business categories that have come increasingly to depend on the Net. In retail, for example, Linux has grown rapidly as a platform, thanks to several factors: 1) Linux-based retail and point of sale software; 2) device drivers for barcode readers and other retail peripherals; 3) strong support from major hardware vendors; and, of course, 4) cost.
Burlington Coat Factory has been running Linux in hundreds of stores for years, not only as a platform for retail solutions, but as a desktop for everyday productivity work as well. Last Fall, Kachingo, a customer rewards program involving 500 retail and 1700 point of sale (POS) terminals, was rolled out in New Zealand. There are now Linux/Java-based cash registers. Seven hundred of those are reportedly going in right now at Sam Goody stores. Musicland says it expects to have 7,000 point of sale (POS) terminals running Linux. And by 2003 Home Depot expects to have 90,000 cash registers and in-store terminals running Linux and Java. Internet Week reports that "about 15 of the nation's 20 largest retailers are looking at Linux."
The ability to run on modern new hardware and still leverage a store's existing legacy iron is a key argument for Linux as well. Retailers tend to be a frugal bunch, so it's not surprising to find that many POS cash registers being replaced today don't run on Windows, but on DOS.
Integration is another advantage. The Breeze/Max chain of ski rental shops uses POS systems made by Melchers GmbH of Germany. The store's POS software is from Apropos Retail Management Systems, with a database by Informix (tied into inventory and purchasing systems) and Compaq servers. In some cases the Compaq server functions as the brains of the cash register, and in other cases it sits in another room while the Melcher thin-client cash register works at the counter. The ease with which all this stuff works together on Linux has raised the percentage of Linux' business at Apropos from zero to 40% in two years.
What the Net has done (and Linux has accellerated), is lower the threshold for enterprise for nearly every business that consumes electrons. In fact it has literally created a perfectly flat and fair marketplace -- an intellectual, creative and business commons -- where Supply and Demand have equal power and are exactly one click apart.
Yet the big news right now is the degree to which certain entrenched industrial giants have been lobbying successfully to achieve with legislation what could not achieve in the marketplace, and now seek to replace this new Linux-enhanced commons with a legislatively defined and enforced distribution plumbing system for supply controlled "content".
Thanks to heavy lobbying by Disney, the MPAA and the RIAA, the DMCA -- the Digital Millennium Copyright Act <http://www.educause.edu/issues/dmca.html>, has already throttling effect on free speech, as well as the free market. Expressed in technology, its effects are not subtle. Harvard Law Professor and author Lawrence Lessig writes, "The DMCA outlaws technologies designed to circumvent other technologies that protect copyrighted material. It is law protecting software code protecting copyright. The trouble, however, is that technologies that protect copyrighted material are never as subtle as the law of copyright. Copyright law permits fair use of copyrighted material; technologies that protect copyrighted material need not. Copyright law protects for a limited time; technologies have no such limit. Thus when the DMCA protects technology that in turn protects copyrighted material, it often protects much more broadly than copyright law does. It makes criminal what copyright law would forgive."
The DMCA's influence has now extended to the new and growing business of Internet Radio. There are now perhaps as many as 100,000 internet radio stations webcasting on the Net. All the most popular stations -- the ones with the most to lose -- are extremely agitated about a report issued by the Copyright Arbitration Royalty Panel (CARP) last month <http://www.loc.gov/copyright/carp/webcasting_rates.html> "recommending rates and terms for the statutory license for eligible nonsubscription services to perform sound recordings publicly by means of digital audio transmissions ("webcasting")..."
CARP requires commercial broadcasters who co-stream their over-the-air signals on the Net to pay .07 cents per performance, while Internet-only stations would pay double that:.14 cents. Noncommercial broadcasters would pay between .02 cents and .14 cents per "performance" depending on a variety of conditions -- plus an annual fee of $500 for each licensee. For the first time, Webcasters would have to be licensed for compliance with the DMCA. CARP would also impose an across-the-board license rate of 9% of performance fees due for any temporary recordings made to facilitate a Webcast.
I've written quite a bit about Linux-based webcasting recently in Linux Journal and on its Web site -- especially about the pioneering work being done by Radio Paradise and KPIG:
KPIG <http://www.kpig.com> is a highly popular local over-the-air station (serving the Salinas-Santa Cruz-Monterey region of California from 107-oink-5 FM), as well as perhaps a Webcaster putting out many streams in many formats. Radio Paradise <http://www.radioparadise.com> is a labor of love -- but also a business -- of Bill Goldsmith, who runs both stations whole system on Linux and other open source software. Radio Paradise brings in about $3000 per month from listener contributions, and at this point pays for itself, but with not much ability to handle additional costs. Here's what Bill says about CARP on the Radio Paradise site:
This might be fair if it were being applied to large webcasting corporations whose stations were loaded down with lots of expensive ads. But, given the state of webcasting today, the highest fees would be owed by stations like ours that are in no position to pay them. We would be required to cease operation - depriving our listeners of a source of great enjoyment, depriving station operators of the opportunity to grow our stations into profitability, and depriving the artists of the potential revenue that would flow from our success... Due to the nature of the proceeding, we are not allowed to file comments with the arbitration panel. Therefore we are appealing directly to the public, through the press. We invite anyone not familiar with the stations in question to go to the station directory at www.shoutcast.com and sample the programming from stations like Digitally Imported, Radio Paradise, WOLF-FM, Groove Salad, Mostly Classical, KPIG, Smoothjazz.com, and thousands of others. <http://www.shoutcast.com/> Nearly all of these stations would be forced to cease operation if this ruling is adopted. All of the station operators are hoping that a way can be found for reason and fairness to prevail.
Early this month Michael Eisner of Disney and Jack Valenti of the MPAA were also at work lobbying Congress to require that manufacturers burn digital rights management (DRM) right into silicon, so customers would have no choice about complying. Here they are:
Eisner: "Common standards will create a technologically predictable market to which content owners can bring their movies and other works. And common standards will make it reasonable to mandate that device manufacturers build he necessary hardware and software into their devices. <http://commerce.senate.gov/hearings/hearings.htm>
Valenti: "What's keeping the movie industry from making its creativity theft-proof? Simply put, in order to transport movies as agreed to by the consumer on a rent, buy or pay-per-view basis with heightened security, computers and video devices must be prepared to react to instructions embedded in the film." <http://www.washingtonpost.com/wp-dyn/articles/A62085-2002Feb24.html>
In other words, these guys want the feds to regulate what hardware vendors can and cannot make. To say the least it stifles innovation and forces solutions for every category to pay attention to stuff that has nothing to do with that category.
The Net and Linux threatens Eisner's and Valenti's old industrial system by putting it in the middle of a real marketplace where Demand has just as much power as Supply. This market is efficient, , dynamic, exciting, innovative and threatening to everything that isn't. Those who refuse to adapt have no choice other than to protect themselves by making what threatens them illegal. And that's just what these guys doing.
The two sides here are talking past each other because the real conflict is between two completely different visions of the Net itself. One sees it as a MEDIUM -- a plumbing system for pumping "content" from producers to consumers, controlled top to bottom, front to back, by suppliers. The other sees it as a PLACE where people and companies meet to make culture, do business and share stuff that makes life interesting.
Law professor and author Lawrence Lessig <http://cyberlaw.stanford.edu/lessig/> has taken the lead in defining the Net as a "commons", and in framing copyright and patent law once again in the place-based terms the founding fathers used back when markets were still bazaars and customers were still customers -- not "consumers" of whatever big suppliers feel like pushing down their distribution pipes.
The heroes over the next year or two will be those companies and customers who work to keep the Net open for all kinds of business. Not just the ones who are used to running the show.