We manage the disconnection of domestic utilities, such as
water or electricity, through metering. But metering is neither obvious
nor easy. Thomas Edison's dazzling electrical gizmos were of little use
to anyone until people had easy access to electricity in their factories
and homes. So at the peak of his career Edison diverted his attention
away from designing electrical devices to focus on the electrical
delivery network itself. At first, very little was settled about how
electricity should be created (DC or AC?), carried, or billed. For
billing, Edison favored the approach that most information providers
today favor: charge a flat fee. Readers pay the same for a newspaper no
matter how much of it they read. Ditto for cable TV, books and computer
software. All are priced flat for all you can use.
Edison pushed a flat fee for electricity -- a fixed amount if you are
connected, nothing if you aren't -- because he felt that the costs of
accounting for differential usage would exceed the cost of variances in
electricity usage. But mostly Edison was stymied about how to meter
electricity. For the first six months of his General Electric Lighting
Company in New York City, customers paid a flat fee. To Edison's
chagrin, that didn't work out economically. Edison was forced to come up
with a stop-gap solution. His remedy, an electrolytic meter, was erratic
and impractical. It froze in winter, it sometimes ran backwards, and
customers couldn't read it (nor did they trust the company's meter
readers). It wasn't until a decade after municipal electrical networks
were up and running that another inventor came up with a reliable
watt-hour meter. Now we can hardly imagine buying electricity any other
A hundred years later the information industry still lacks an
information meter. George Gilder, hi-tech gadfly, puts the problem this
way: "Rather than having to pay for the whole reservoir every time you
are thirsty, what you want is to only pay for a glass of water."
Indeed, why buy an ocean of information when all you want is a drink? No
reason at all, if you have an information meter. Entrepreneur Peter
Sprague believes he has just invented one. "We use encryption to force
the metering of information," says Sprague. His spigot is a microchip
that doles out small bits of information from a huge pile of encrypted
data. Instead of selling a CD-ROM crammed with a hundred thousand pages
of legal documents for $2,000, Sprague invented a ciphering device that
would dispense the documents off the CD-ROM at $1 per page. A user only
pays for what she uses and can use only what she pays for.
Sprague's way of selling information per page is to make each page
unreadable until decrypted. Working from a catalog of contents, a user
selects a range of information to browse. She reads the abstracts or
summaries and is charged a minuscule amount. Then she selects a full
text, which is decrypted by her dispenser. Each act of decryption rings
up a small charge (maybe 50 cents). The charge is tallied by a metering
chip in her dispenser that deducts the amount from a prepaid account
(also stored on the metering chip), much as a postage meter deducts
credit while dispensing postage tapes. When the CD-ROM credit runs out,
she calls a central office, which replenishes her account via an
encrypted message sent on a modem line running into her computer's
metering chip. Her dispenser now has $300 credit to spend on information
by the page, by the paragraph, or by the stock price, depending on how
fine the vendor is cutting it.
What Sprague's encryption metering device does is decouple information's
fabulous ease in being copied from its owner's need to have it
selectively disconnected. It lets information flow freely and
ubiquitously -- like water through a town's plumbing -- by metering it out in
usable chunks. Metering converts information into a utility.
The cypherpunks note, quite correctly, that this will not stop hackers
from siphoning off free information. The Videocipher encryption system,
used to meter satellite-delivered TV programs such as HBO and Showtime,
was compromised within weeks of its introduction. Despite claims by the
meter's manufacturer that the encrypto-metering chip was unhackable, big
moneymaking scams capitalized on hacks around the codes. (The scams were
set up on Indian reservations -- but that's a whole 'nother story). Pirates
would find a descrambler box with a valid subscription -- in a hotel room,
for instance -- and then clone the identity into other chips. A consumer
would send their box to the reservation for "repairs" and it would come
back with a new chip cloned with the identity of the hotel box. The
broadcasting system couldn't perceive clones in the audience. In short,
the system was hacked not by cracking the code but by subverting places
where the code tied into the other parts of the system.
No system is hack-proof. But disruptions of an encrypted system require
deliberate creative energy. Information meters can't stop thievery or
hacking, but meters can counteract the effects of lazy mooching and the
natural human desire to share. The Videocipher satellite TV system
eliminates user piracy on a mass scale -- the type of piracy that plagued
the satellite TV outback before scrambling and that still plagues the
lands of software and photocopying. Encryption makes pirating a chore
and not something that any slouch with a blank disk can do. Satellite
encryption works overall because encryption always wins.
Peter Sprague's crypto-meter permits Alice to make as many copies of the
encrypted CD-ROMs as she likes, since she pays for only what she uses.
Crypto-metering, in essence, disengages the process of payment from the
process of duplication.
Using encryption to force the metering of information works because it
does not constrain information's desire to reproduce. All things being
equal, a bit of information will replicate through an available network
until it fills that network. With an animate drive, every fact naturally
proliferates as many times as possible. The more fit -- the more
interesting or useful -- a fact is, the wider it spreads. A pretty metaphor
compares the spread of genes through a population with the similar
spread of ideas, or memes, in a population. Both genes and memes depend
on a network of replicating machines -- cells or brains or computer
terminals. A network in this general sense is a swarm of flexibly
interconnected nodes each of which can copy (either exactly or with
variation) a message taken from another node. A population of
butterflies and a flurry of e-mail messages have the same mandate:
replicate or die. Information wants to be copied.
Our digital society has built a supernetwork of copiers out of hundreds
of millions of personal faxes, library photocopiers, and desktop hard
disks. It is as if our information society is one huge aggregate copying
machine. But we won't let this supermachine copy. Much to everyone's
surprise, information created in one corner finds its way into all the
other corners rather quickly. Because our previous economy was built
upon scarcity of goods, we have so far fought the natural fecundity of
information by trying to control every act of replication as it occurs.
We take a massively parallel copy machine and try to stifle most acts of
reproduction. As in other puritanical regimes, this doesn't work.
Information wants to be copied.
"Free the bits!" shouts Tim May. This sense of the word "free" shifts
Stewart Brand's oft-quoted maxim, "Information wants to be free" -- as in
"without cost" -- to the more subtle "without chains or imprisonment."
Information wants to be free to wander and reproduce. Success, in a
networked world of decentralized nodes, belongs to those plans that do
not resist either the replication or roaming urges of information.
Sprague's encrypted meter capitalizes on the distinction between pay and
copy. "It is easy to make software count how many times it has been
invoked, but hard to make it count how many times it has been copied,"
says software architect Brad Cox. In a message broadcast on the
Internet, Cox writes:
Software objects differ from tangible objects in being fundamentally
unable to monitor their copying but trivially able to monitor their
use....So why not build an information age market economy around this
difference between manufacturing-age and information-age goods? If
revenue collection were based on monitoring the use of software inside a
computer, vendors could dispense with copy protection altogether.
Cox is a software developer specializing in object-oriented programming.
In addition to the previously mentioned virtue of reduced bugs which OOP
delivers, it offers two other magnificent improvements over conventional
software. First, OOP provides the user with applications that are more
fluid, more interoperable with various tasks -- sort of like a house with
movable "object" furniture instead of house saddled with built-in
furniture. Second, OOP provides software developers the ability to
"reuse" modules of software, whether they wrote the modules themselves
or purchased them from someone else. To build a database, an OOP
designer like Cox takes a sort routine, a field manager, a form
generator, an icon handler, etc., and assembles the program instead of
rewriting a working whole from scratch. Cox developed a set of cool OOP
objects that he sold to Steve Jobs to use in his Next machine, but
selling small bits of modular code as a regular business has been slow.
It is similar to trying to peddle limericks one by one. To recoup the
great cost of writing an individual object by selling it outright would
garner too few sales, but selling it by copy is too hard to monitor or
control. But if objects could generate revenue each time a user
activated one, then an author could make a living creating them.
While contemplating the possible market for OOP objects that were sold
on a "per use" plan, Cox uncovered the natural grain in networked
intelligence: Let the copies flow, and pay per use. He says, "The
premise is that copy protection is exactly the wrong idea for
intangible, easily copied goods such as software. You want
information-age goods to be freely distributed and freely acquired via
whatever distribution means you want. You are positively encouraged to
download software from networks, give copies to your friends, or send it
as junk mail to people you've never met. Broadcast my software from
Cox adds (in echo of Peter Sprague, although surprisingly the two are
unfamiliar with each other's work), "This generosity is possible because
the software is actually 'meterware.' It has strings attached that make
revenue collection independent of how the software was distributed."
"The approach is called superdistribution," Cox says, using a term given
by Japanese researchers to a similar method they devised to track the
flow of software through a network. Cox: "Like superconductivity, it
lets information flow freely, without resistance from copy protection or
The model is the successful balance of copyright and use rights worked
out by the music and radio industries. Musicians earn money not only by
selling customers a copy of their work but by selling broadcast stations
a "use" of their music. The copies are supplied free, sent to radio
stations in a great unmonitored flood by the musicians' agents. The
stations sort through this tide of free music, paying royalties only for
the music they broadcast, as metered (statistically) by two agencies
representing musicians, ASCAP and BMI.
JEIDA, a Japanese consortium of computer manufacturers, developed a chip
and a protocol that allows each Macintosh on a network to freely
replicate software while metering use rights. According to Ryoichi Mori,
the head of JEIDA, "Each computer is thought of as a station that
broadcasts, not the software itself, but the use of the software, to an
audience of a single 'listener.'" Each time your Mac "plays" a piece of
software or a software component from among thousands freely available,
it triggers a royalty. Commercial radio and TV provide an "existence
proof" of a working superdistribution system in which the copies are
disseminated free and the stations only pay for what they use. Musicians
would be quite happy if one radio station made copies of their tapes and
distributed them to other stations ("Free the bits!") because it
increases the likelihood of some station using their music.
JEIDA envisions software percolating through large computer networks
unencumbered by restrictions on copying or mobility. Like Cox, Sprague,
and the cypherpunks, JEIDA counts on public-key encryption to keep these
counts private and untampered as they are transmitted to the credit
center. Peter Sprague says plainly, "Encrypted metering is an ASCAP for
Cox's electronically disseminated pamphlet on superdistribution sums up
the virtues very nicely:
Whereas software's ease of replication is a liability today,
superdistribution makes it an asset. Whereas software vendors must spend
heavily to overcome software's invisibility, superdistribution thrusts
software out into the world to serve as its own advertisement.
A hoary ogre known as the Pay-Per-View Problem haunts the information
economy. In the past this monster ate billions of dollars in failed
corporate attempts to sell movies, databases, or music recordings on a
per view or per use basis. The ogre still lives. The problem is, people
are reluctant to pay in advance for information they haven't seen
because of their hunch that they might not find it useful. They are
equally unwilling to pay after they have seen it because their hunch
usually proves correct: they could have lived without it. Can you
imagine being asked to pay after you've seen a movie? Medical knowledge
is the only type of information that can be easily sold sight unseen
because the buyers believe they can't live without it.
The ogre is usually slain with sampling. Moviegoers are persuaded to pay
beforehand by lapel-grabbing trailers. Software is loaned among friends
for trial; books and magazines are browsed in the bookstore.
The other way to slay the problem is by lowering the price of admission.
Newspapers are cheap; we pay before looking. The ingenious thing about
information metering is that it delivers two solutions: it provides a
spigot to record how much data is used, and it provides a spigot that
can be turned down to a cheap trickle. Encryption-metering chops big
expensive data hunks into small inexpensive doses of data. People will
readily pay for bits of cheap information before viewing, particularly
if the payment invisibly deducts itself from an account.
The fine granularity of information-metering gets Peter Sprague excited.
When asked for an example of how fine it could get, he volunteers one so
fast it's obvious that he has been giving it some thought: "Say you want
to write obscene limericks from your house in Telluride, Colorado. If
you could write one obscene limerick a day, we can probably find 10,000
people in the world who want to pay 10 cents a day to get it. We'll
collect $365,000 per year and pay you $120,000, and then you can ski for
the rest of your life." In no other kind of marketplace would one measly
limerick, no matter how bawdy and clever, be worth selling on its own.
Maybe a book of them -- an ocean of limericks -- but not one. Yet in an
electronic marketplace, a single limerick -- the information equivalent of
a stick of gum -- is worth producing and offering for sale.
Sprague ticks off a list of other fine-grained items that might be
traded in such a marketplace. He catalogs what he'd pay for right now:
"I want the weather in Prague for 25 cents per month, I want my stocks
updated for 50 cents a stock, I want the Dines Letter for $12 a week, I
want the congestion report from O'Hare Airport updated continuously
because I'm always getting stuck in Chicago, so I'll pay a buck per
month for that, and I want 'Hagar the Horrible' cartoon for a nickel a
day." Each of these products is currently either given away scattershot
or peddled in the aggregate very expensively. Sprague's electronically
mediated marketplace would "unbundle" the data and deliver a narrowly
selected piece of information to your desktop or mobile palmtop for a
reasonable price. Encryption would meter it out, preventing you from
filching other tiny bits of data that would hardly be worth protecting
(or selling) in other ways. In essence, the ocean of information flows
through you, but you only pay for what you drink.
At the moment, this particular technology of disconnection exists as a
$95 circuit board that can slide into a personal computer and plug into
a phone line. To encourage established computer manufacturers such as
Hewlett-Packard to hardwire a similar board into units coming off their
assembly line, Sprague's company, Waves, Inc., offers manufacturers a
percentage of the revenue the encryption system generates. Their first
market is lawyers, "because," he says, "lawyers spend $400 a month on
information searches." Sprague's next step is to compress the
encrypto-metering circuits and the modem down into a single $20
microchip that can be tucked into beepers, video recorders, phones,
radios, and anything else that dispenses information. Ordinarily, this
vision might be dismissed as the pipe dream of a starry-eyed junior
inventor, but Peter Sprague is chairman and founder of National
Semiconductor, one of the major semiconducter manufacturers in the
world. He is sort of a Henry Ford of silicon chips. A cypherpunk, not.
If anyone knows how to squeeze a revolutionary economy onto the head of
a pin, it might be him.