It’s interesting that the U.S. economy has moved away from manufacturing at the same time as computers have made it very easy to copy digital goods. We see the U.S. pushing China hard to enforce their copyright laws, because much of what the U.S. has to sell is easily copied. The U.S. has developed great skill at creating complex software. That skill itself is not easily copied, based as it is on many years of experience, but the end result of applying that skill is is difficult to control. Similarly, the U.S. leads the world in developing entertaining movies, but those too can not be controlled once they have been distributed. You can enforce all the copyright laws you want, but if a digital product is both expensive and desirable, it will inevitably be copied.

Software developers have reacted by increasingly tying software to some sort of service. That is a significant business advantage for offering cloud computing: your software works without requiring distribution, which means that nobody can easily copy it. If you’re going to sell virtual goods rather than manufactured ones, it’s important to not distribute them as part of using them. In other words, you have to sell a service.

Right now the U.S. is trying to push other countries to honor the agreements it needs to sell virtual goods. I don’t see how that can work in the long run. Better to focus on selling real goods or selling services. A simple service is vulnerable to competition, but there is plenty of space for selling complex services which are difficult to develop. That seems to be the likeliest trend for successful software companies going forward. It’s even if a possible path for entertainment companies if you think in terms of games.


  1. etbe said,

    March 7, 2011 @ 3:33 am

    Can you substantiate your claim that the US leads the world in producing entertaining movies? It sure leads the world in producing English-language movies, but there are a huge number of non-English movies that are worth the subtitle effort (EG everything by Luc Besson) and many Hollywood movies that are only good because they are copied from movies which were produced in other languages.

    I’m sure that Jackie Chan isn’t the only famous actor who did all their best work before going to Hollywood.

    If I was given a choice, never see another movie produced in the US or never see another movie produced in the EU then I’d definitely skip US movies, and the only thing I’d really miss is not seeing Pi again.

  2. fche said,

    March 7, 2011 @ 4:07 am

    “Software developers have reacted by increasingly tying software to some sort of service.”

    There’s also perhaps the open-source movement, where the easily-copied bits do not represent the bulk of the value, but an ongoing servicing relationship does. There are only few successful businesses in that area, and they are nearly all north american.

  3. Ian Lance Taylor said,

    March 7, 2011 @ 8:53 am

    etbe: The top global movie box office results are all Hollywood movies. Of course box office is only a proxy for attendance, since prices differ in different countries, but still: all Hollywood movies. I’m sure that Indian movies are more popular in India, and French movies are more popular in France, etc., but U.S. movies are the only ones with global appeal.

    It’s certainly true that popularity is not the same as quality. I would never claim that the U.S. makes the best movies. People like Jackie Chan and Luc Besson came to Hollywood, even though they didn’t do their best work there, because Hollywood controls the distribution channels. And they control the distribution channels because, on balance, they deliver the goods: movies that people around the world want to see.

  4. etbe said,

    March 8, 2011 @ 1:11 am

    The US entertainment industry definitely has a strong position in the distribution channels, particularly when you count the celebrity magazines which promote Hollywood stars endlessly.

    But things are changing in that regard. Now you can get movie reviews on sites like on the day of release which can discourage people from attending a movie that isn’t liked much. Also there are lots of other things to do which will over time decrease the importance of movies, I’d rather spend 90 minutes watching random Youtube videos than a Hollywood movie.

    Your original claim that the US leads the development of ENTERTAINING movies is what I dispute. Your later claim that the US leads in selling movies is something I agree with.

  5. Ian Lance Taylor said,

    March 8, 2011 @ 6:27 am

    I’m going to have to believe that the movies which most people go to watch are the most entertaining ones, even if you or I may not like them much. People aren’t being brainwashed into going to the movies.

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