Felten on Property Rights Management

by Henry Farrell on August 14, 2006

This is a very interesting “post”:http://www.freedom-to-tinker.com/?p=1052:

bq. The second trend I identified in the talk was toward the use of DRM-like technologies on traditional physical products. … some printer makers have their printers do a cryptographic handshake with a chip in their cartridges, and they lock out third-party cartridges by programming the printers not to operate with cartridges that can’t do the secret handshake. … Doing this requires having some minimal level of computing functionality in both devices (e.g., the printer and cartridge). Moore’s Law is driving the size and price of that functionality to zero … so it will become economical to put secret-handshake functions into more and more products. Just as traditional DRM operates by limiting and controlling interoperation (i.e., compatibility) between digital products, these technologies will limit and control interoperation between ordinary products. We can call this Property Rights Management, or PRM. … A pen may refuse to dispense ink unless it’s being used with licensed paper. … A shoe may refuse to provide some features, such as high-tech cushioning of the sole, unless used with licensed shoelaces. …Will these things actually happen? I can’t say for sure. I chose these examples to illustrate how far PRM might go. …What we can say, I think, is that as PRM becomes practical in more product areas, its use will widen and we’ll face policy decisions about how to treat it.

There’s an economic case to be made that this would be efficient and promotes innovation (see “Austan Goolsbee”:http://www.nytimes.com/2006/04/27/technology/27scene.html?ex=1303790400&en=37d41d9406c1d512&ei=5090&partner=rssuserland&emc=rss in the _NYT_). I think that the negative distributional consequences (i.e. the transfer of bargaining power from consumers to producers that it would lead do) would be more important. Other opinions?

Update: Link to Felten’s post added. Duh.