Unlocking Technology

I recently read an opinion piece on Wired, Beyond Unlocking: Don't Let Them Kill the First Decent Copyright Reform by Kyle Wiens. The author touts the bill as "not a band-aid," but "a solution" because

[it] would allow all consumers to circumvent the digital locks on their mobile devices. Anyone could access and modify software on their devices, in the same way they already modify and repair hardware.

On the surface, this seems like pretty clear position. I bought my hardware, I own it, I should be able to take it apart and use it however I want! The only reason tech companies would want to put digital locks on whatever devices they sell is because they want to maintain complete control of their platform and make more money. Those damn corporate fat cats! How could you not want to support such a clear and open policy?

But I argue (in homage to Freakonomics) that there is a hidden side here.

One of Wiens "side effects" of the current "faulty approach" to copyright is "scientists who can't install Linux on game consoles to build affordable supercomputer cluster for research purposes." This is my first clue that something is quite wrong here. I've seen some cool stuff with GPU hacking, but what the hell do these guys need with the controller that comes with each console? For a 25-core system, you'd get 25 disc drives, 25 hdmi ports, and 25 hard drives when you're probably using an entirely separate data store.

The answer? Video game consoles are cheaper than the parts inside of them. If you google "video game console lose money", it's pretty obvious that consoles like the Xbox 360 and Playstation 3 end up at a market price that is well below the cost of the parts and labor required to produce them. This probably shouldn't come as a huge surprise; it's not a secret that these consoles are sold at a loss to generate greater demand for the games.

So what about these scientists, who aren't purchasing any games for their PS3s? In economic terms, these uses are receiving a subsidy towards their hardware. The cost of this subsidy is shared between consumers who purchase games and the producers of the consoles (the ratio of which is dependent on the demand elasticity of the console). Gamers should be upset about this. Their games are both more expensive and also receive less R&D funding because others are abusing an arbitrage.

I think everyone can agree that generally, stealing is bad. Property law is one of the main functions of government, and intellectual property is difficult. But when someone hacks a PS3 or unlocks their iPhone, they are not only stealing from the likes of Sony or Apple, but also from consumers. So how about a compromise. Require all technology to have the ability to be unlocked, which is available at a market driven price (along with a likely change or loss of warranty). This allows manufacturers to reclaim their losses on consoles that won't be used for their intended use, and still allow anyone to use their technology however they want. But I want to use my iPhone with the app store, and I want to use my XBox 360 to play Mass Effect and Portal, and I want that subsidy because I'm OK playing by the rules. The economic impact of this policy would be a sharp increase in price of all of our devices; that means less people will buy them, less money will be spent on apps (and threaten the emerging cottage industry), and less money will be spent on the R&D on technology as a general.