Rupert Murdoch, after a short time of seemed like he understood the internet was a new and exciting tool, has since changed his medication and now sees it as the evil of all evils. He has been pushing, vocally, not through action, reinstating paywalls on his various media properties. The Wall Street Journal is one of the last major newspapers to have a paywall around most of its content.

Now Murdoch is claiming he will block Google from indexing the WSJ and his other media properties. Murdoch told Sky News Australia “If they’re just search people… They don’t suddenly become loyal readers.” He explained that traffic from search engines involve no loyalty – just view a few headlines and leave.

Removing a site from Google takes just a few lines of code in a robot.txt file, something Google and other search engines make no attempt to hide. So why is Murdoch waiting?

Maybe because even without loyalty, Murdoch knows traffic will drop significantly without search engines bringing tons of free traffic. Even if 99 percent of those people never return, there are 1 percent that stay and might return. It’s up to Murdoch and his websites to give these users a reason to stay and then find ways to monetize that traffic. Murdoch has previously said no news websites or blogs are making serious money, ignoring the massive enterprises behind Gawker, Huffington Post, PerezHilton, TechCrunch and hundreds of others who have embraced the internet to find more cost-effective ways to engage audiences and produce compelling content.

Techdirt points out that for all Murdoch’s grandstanding, his own websites have aggregators that link to other people’s content the same way he claims others are stealing his content. When others aggregate content it’s stealing. When Murdoch does it, its convenient? Maybe this will stop his crusade to overturn fair use in the courts since he’d be culpable too.

…but movie companies certainly don’t see that. Paramount Pictures released its study of the five million IP addresses it tracked who downloaded camcorded copies of Star Trek.  Writing to the FCC, Paramount says:

Just five years ago, one had to be computer literate and exceedingly patient to pirate movies. Today, literally anyone with an internet connection can do it. Clunky websites are being replaced by legitimate looking and legitimate feeling pirate movie websites, a perception enhanced by the presence of premium advertisers and subscription fees processed by major financial institutions.

So after years of suing and spending millions in lobbying, spying, and prevention, Paramount agrees it is easier than ever to download movies. Downloading movies “has advanced from geek to sleek” they say.

I interpret this as a sign that the movie companies’ campaign against piracy has not worked. It is easier than ever to download any movie, song, or game you want and it will only get faster and easier. More people are doing it and aren’t embarrassed by it. For all the propaganda (see last Sunday’s 60 minutes), file-sharing is what the market wants.

Paramount, of course, sees the opposite.  The spreading of file-sharing means movie companies need more laws to stop file-sharing, while never showing how these laws, assuming they worked (which they won’t), would encourage customers to go back to their former purchasing practices.

That’s why Big Champagne, a company that tracks online piracy, is urging movie companies to rethink their piracy strategies, claiming their own practices are encouraging file-sharing, especially in European countries where they might wait weeks or months for a TV show or movie to air. CEO Eric Garland tells CNET:

In the digital world, we don’t want to wait three months, six months. We’re just not accepting that anymore…we want it all, we want it right now and even Mom and Pa Kettle are getting to the point where they say if it’s not on, let’s just fire up the computer and watch it. If they want me to wait six months, I’ve got other options. And people don’t really have a conscious [sic] or qualms about that.

So we know waiting hurts (why wait when you don’t have to). But instead of searching for alternatives, movie companies want more windows, or at least maintain the ones they have. This goes against what customers are demanding. Instead of offering customers a compelling product, movie companies just want the government to pass laws supporting their obsolete business models.

For all the increases in file-sharing, movie production and revenue has risen (ignore the blatant lies in the aformentioned 60 Minutes segment), from 567 movies released in 2004 to 1177 movies scheduled for release this year.  Total revenue rose by about $300 million from 2004-2008 (this year hasn’t ended, and for reference 1037 movies came out in 2008).  So more movies, more money. I wish file-sharing would hurt my industry the same way.

While many countries continue to roll out faster and cheaper broadband, the U.S. remains locked in simply how to define broadband. For all our claims of technological superiority, our country is falling behind.  So how did Monticello, Minn, a town of less than 12,000, get some of the fastest and cheapest internet service in the country?

They tried to build it themselves.

In 2007, Monticello tried to build its own fiber-optic network recognizing that no business was going to using city bonds to fund the project. The local teleco, TDS Telecommunications, sued. And it sued over and over again up to the Minnesota Supreme Court claiming the town could only use bond money for specific reasons, like building utilities. The courts ruled the internet is a utility and the town could build its own.

Now TDS has launched 50Mbps fiber service to every home costing a fair $49.95.

TDS originally claimed it did not believe there was demand for faster speeds until after the town passed its referendum, but that does not explain why the company sued to the city rather than compete with its lead in the market.  But as we’re seeing around the country, lack of competition among internet service providers is costing Americans money for poor service.

Lafeyette, Louisiana launched its own fiber optic network and states they have saved their citizens $3 million because local cable provider Cox has not raised its prices even while raising them everywhere else.

Hopefully these examples will be a call to arms for local governments to recognize that their local cable and telecommunications provider is unlikely to improve their service (they’ve had more than a decade) even though prices keep rising.  These companies have had monopolies on their areas, and the lack of competition is costing us money while the rest of the world speeds past us.

The U.S. ranks 20th in the world for broadband penetration and pays higher prices for slower speeds.

CDs are dying, but the music industry is growing. Newspapers are dying, but journalism is thriving. DVD sales are dropping, but movie attendance is rising. Yet for all this, article after article says the music, news, and movie industry is dead or dying.

These industries are only dying if you classify them in ultra-specific and limiting businesses. CDs drop, but the music industry is selling more concert tickets and merchandise. The U.K. music industry’s own study (pdf) shows the music business overall has increased even though sales of record music has plummeted.  Even as newspapers suffer, hundreds of new journalism organizations are popping up producing original news, commentary, and fact-checking, all for a fraction of the cost, manpower, and time it takes traditional newspapers. And does everyone forget television news continues to grow in audience and revenue (well, at least cable news). And movies, well, attendance is up even in a down economy.

Technology and societal changes often causes radical shifts in how businesses do business. The death of selling plastic discs and packets of paper is, yes, dying, and for the time, these were the most effective ways to make money. With better computers and distribution channels, it is incredibly cheaper to make and distribute movies, music, and news articles.  This means more money to do other things. Or better, cheaper costs to consumers leading to a larger market – and then more fans to sell more stuff to.

The movie and music industries particularly have enjoyed monopoly pricing on their products, and without competition, fans paid the high prices. But competition from technology, even when used illegally, is forcing prices down. Originally, plastic discs were a scarce good the content industry could control, but the digital files on the discs are infinite goods now available free online no matter what.

Let’s remember, selling plastic discs (or records) for music is really only about 60-70 years old. Movies only entered home collections in the 1980s (and followed a significant legal battle where the movie industry claimed home video would destroy them). These industries made tons of money before and they can make even more money now by evolving their business models – recognizing they are in the music or movie or news industry, not just in the sell-discs-and-paper industry.

A paper from New York University researchers analyzes the methods used by the content industry to annoy and stop file-sharing on BitTorrent networks.  They found the practices of MediaDefender and other organizations presented no more than a nuisance to downloaders despite costing the content industry millions of dollars.

Prithula Dhungel, Di Wub and Keith Ross reviewed two specific methods use to slow down BitTorrent downloads. The first called “piece attack” involves trying to upload as many failed connections or hash fails as possible. Second, there is the “connection attack” where TCP connections are blocked preventing downloaders from accessing the actual content.  The researchers found these methods did slow download speeds, but not enough to deter downloading. Additionally, blocklists which can be easily found online increased speeds by 30-35 percent.  BitTorrent client uTorrent only encountered hostile connections 2 percent of the time while Azureus had only 18 percent.

Emails from a few years ago estimate that music companies pay up to $4,000 for each month of MediaDefender protecting one album.  As many already suspected, this money is likely being flushed down the digital drain.  Downloaders are not being deterred and certainly not being encouraged to buy content in another way.  The content industry is spending massive sums of money to fight against consumers preferred method of distribution. The ethics of file-sharing are not the point – basic economics, as always, is. Consumers by the millions are using file-sharing networks to find the content they want and share that content with other people. This is a good thing that should be embraced, not fought.  As we’ve seen, embracing new technology increases the size of your market and the money you can make, not decreases.

Ars Technica’s Nate Anderson has written an excellent history of how the content industry has fought against pretty much every technological advancement over the past 100 years for fear it would end creative expression forever. As we know this isn’t true. Rather, technology helps increase the market for these creative works (and other industries) by decreasing costs and increasing efficiency. It is much cheaper and easier to create and distribute music than it was 10 years ago, let alone 100 years ago.

Anderson profiles the content industry’s fight against the gramophone and player piano. John Philip Sousa campaigned to Congress to ban these evil machines for replacing live performances, not recognizing that home recordings might increase the demand for those live performances. This gave birth to the compulsory license system, where the government set rates sheet music must pay to songwriters, we have still to this day, though it has been vastly expanded.

Photocopiers spelled doom for the print industry, with UCLA law professor Melville Nimmer saying “the day may not be far off when no one need purchase books.” While the U.S. and its courts upheld a fair use right to copying, Canada and other countries must pay royalties to collection agencies for every copy. Canada pays the same tax on rewritable CDs and iPods because they might be used for pirated content.

Movie companies famously referred to the VCR as the “Boston strangler” as it killed the movie industry. Universal sued Sony over Betamax all the way to the Supreme Court to ban the use of home recording. Once found legal, movie companies decided to sell copies of their own movies to home viewers, a revolutionary practice that led to the multi-billion dollar home video and rental market.

Pretty much every expansion into digital media has been fought tooth-and-nail by the content industry, from Napster to DVR to the iPod.

Anderson also left out some other highlights. Cable TV, when originally introduced, featured almost exclusively pirated content from network television. This allowed cable television to expand far enough that it could afford its own programming. Even the movie industry began by fleeing New York to Hollywood to escape enforcement of Thomas Edison’s patents and the high prices he charged to anyone wanting to make movies.

Presently, the DMCA makes sure technological innovations are few and far between to help the content industry.  While CDs were released without DRM and thus able to be ripped onto computers and people’s iPods, DVDs are copy-protected and thus illegal to copy in anyway. Even though it is easy to do so, no software or hardware can be released that can take advantage of people’s massive DVD collections.  Even though the content industry claims it would never sue to ban innovation, the industry has done so several times, and won these cases, holding back technology and innovation that consumers want and could do more to help expand the content market.

Musicians in the U.K. have been staking out positions for and against a proposed 3-strikes law where after 3-strikes, file-sharers of copyrighted material would be banned from the internet. Lily Allen (a personal favorite of mine) launched a blog in support of the 3-strikes law, but resulted more in a lesson to strong copyright supporters that no longer is copyright just an issue for those creating content.

To summarize the more than week long back-and-forth, Lily Allen began her blog, It’s Not Alright, a few weeks ago arguing file-sharing was stealing and hurting new artists writing “File sharing eats away at opportunity for new artists: by cutting off income at the most crucial, cash-strapped point in their careers and by limiting A&R’s ability to sign new acts outside of the mainstream.”

Allen’s blog quickly gathered a large community of copyleft and copyrighters debating Allen’s arguments and the merits of the laws she endorsed. TorrentFreak pointed out Allen copied an entire post from (another personal favorite) Techdirt without citation or a link. Techdirt’s Michael Masnick explained he didn’t care about the copying, but pointed to how hypocritical Allen’s was being.

A few days later it was revealed that Allen, while a new musician herself, released mixtapes online of her and other artists’ music, music which she did not have the copyright to. These mixtapes were still available on her website – entire songs. Allen defended this as her not understanding copyright law when she made them and that the songs were just excerpts.

Hundred of people commented on her blog and many bloggers posed questions for Allen to justify her position on file-sharing while she herself had no problem copying blog posts and file-sharing songs herself. Further, she used free services like Blogger, MySpace, and Twitter to share her music and connect with fans, turning her from a new artist to a famous artist. And she didn’t respond to questions from Masnick and others asking how Allen balanced her belief that file-sharing was harming music when the U.K.’s music industry’s own study showed the music industry was growing.

Allen discontinued her blog claiming Masnick and other copylefters were bullying and attacking her (one person said Masnick of “leading” his “internet army” to attack her while being angry.

But all this really teaches us that copyright affects more than just musicians. There is a growing fervor among consumers that copyright and the content industry are expanding too far onto individuals and their civil rights. Recording companies keep increasing the penalties for file-sharing, yet file-sharing keeps growing because that’s what technology and the market demands. No amount of government intervention will force people to buy CDs again.

Because Allen stopped blogging and has ended her career does not mean copyright isn’t working. The music industry in the U.K. has significantly grown as technology has made it easier and cheaper to make and share music. Allen herself took advantage of these free and cheap tools to make herself famous, and only when famous does she change her tune (see what I did there) on copyright. While I’ll be very sad to not have any more of her music, there are thousands of new artists eager for space on my iPod.

Today I continue my feature on universities, crediting them as a key part of the United States’ economic future. But that future will likely look different from the present.

As we are seeing the price of information plummeting for news organizations, information from universities is seeing a similar albeit slower disruption to their century’s old business model.

Higher education costs have skyrocketed over the past few decades, jumping almost 10-fold since 1978, far more than the 3-fold increase in cost of living and the 6-fold increase in the cost of healthcare. What’s more surprising in recent years is technology is pushing the cost of providing education down while the costs of receive the education continue to skyrocket.

The Washington Post published a analysis of the business model turmoil in store for universities. Online universities still possess a stigma of being inferior to brick-and-mortar colleges, but as more and more students attend, that stigma will decrease (see online dating or online retail).

Thus far online courses have remained as expensive as their terrestrial counterparts, sometimes more expensive with additional “technology fees” added on even though these classes cost a tiny amount to offer. But a new company profiled by the article called StraigherLine aims to toss the higher education model for a whirl.  The company offers all-you-can-study for $99. If you can take four classes in two months like a woman did, it will only cost you $200 compared to thousands upon thousands for the same education at a regular university.

This is not good or bad – it is basic economics. Just like the newspaper or music industry, technology is making it cheaper and easier to spread and share information. Professors and experts are offering open source, free, or cheap textbooks online in addition to blogs and interactive teaching materials that work in and outside of the classroom. Collaboration tools allow students and teachers to be fully engaged even without being in the same room or even state, saving money and time.

Universities (and certainly textbook publishers) have been timid to adapt amid growing demand for cheaper education. While several universities offer free online courses, these are not for actual credit. Other universities that offer online courses in addition to their regular offerings do so with similar or more expensive pricing (the technology fee). But these classes cost the university less and can lead to more, not less, efficiency. There is no limit to the student space and professors have more time to respond to student’s questions, allowing for more students and more questions. These online courses can easily handle introductory classes or  even small writing seminars (just email other students your essays) and in-person classes can focus on more complex, discussion or debate heavy classes (as wonderful as Twitter and Skype are, a rousing round table is still best in person).

Top universities offer something more than knowledge. Much of their value comes from reputation and the quality of their student body, a key scarce good that allows them to now and for a long time charge a premium for their service.  State and middle-tier schools face the most threat as competition from online universities convince more and more students (and employers) that their education is as good but significantly less costly. And as society requires more and more students to complete higher education degrees, the need for affordable education will become more in demand – and more affordable because of the greater supply.

All the manufacturing jobs leave the U.S. for China, India, South America, and eventually Africa, the U.S. will face more economic competition for both products and minds. To remain and be a knowledge leader throughout the next century, the U.S. has one massive industry that cannot be easily copied – universities.

Higher education in the U.S. is unmatched by any country. U.S. universities dominate international rankings. Shanghai Jiao Tong University awards the U.S. with 54 spots on the top 100 with the U.K. trailing with 11, Germany at 6, and downward. Many of our universities are famous and respected because of centuries of history and the prestige and connections that provides, something not easily replicated by young yet also top schools in India, China, and other emerging powers.

First, I bringing this up as, amid the global recession, universities are at risk. California is slashing university funding and endowments at Harvard and other universities have seen 27 percent losses. Also most threatening is the drop in foreign applications to U.S. universities, the first drop in five years (when the last drop had more to do with 9/11 than economics). Prices for U.S. universities have skyrockets, more than three times more than inflation, while the government makes attaining visas even harder.

But we should want foreign students coming to study in the U.S. This encourages the next generation of business leaders, scientists, and artists to spend four or more years in the U.S., spending money, learning our culture (and selfishly, learning English), and then hopefully staying to work here or, at least, doing business with us.

This is why limiting H-1B visas is so dangerous for the U.S. economy. One out of four tech companies are founded by immigrants who then create far more jobs than they take away. Even without starting companies, our current tech companies cannot fill all the high-tech jobs they need, but are limited to only a few foreign hirers. Instead, these highly trained and would-be highly paid immigrants return to their native countries to start companies there.

Monday, I will discuss how universities structure, from price to format, is undergoing a radical shift that requires forward-thinking and evolution.

Hank Williams, author of the blog Why Does Everything Suck, has a cynical view of the recent economic crash claiming that it has more to do with technology making people and their jobs obsolete. But the numbers, and some history, show this to be completely untrue.

Williams writes:

The problem is that we are in this awful in-between phase of our planets productivity curve. Technology has vastly reduced the number of workers and resources that are required to make what the planet needs. This means that a small number of people, the people in control of the creation of goods, get the benefit of the increased productivity. When we get to the end of this curve and everyone can, in essence, be their own manufacturer, things will be good again. But until we can ride this curve to its natural stopping point, there will be much suffering, as the jobs that technology kills are not replaced.

The fact is technology, throughout history, has increased the number of jobs, not diminished them. Further, the new jobs created are often higher paying jobs.  ATMs, for instance, do away with bank tellers, but then we need people to make and maintain the ATMs.

I wrote about this trade off several months ago. I linked to a Slate article listing the dozens of industries put out of business by new technology over the last century. Yet instead of declining jobs and growth, the  last century has been one of prosperity.

Technology helps make us a more efficient society, allowing fewer people to do one task and devote time to another. The U.S. used to employ the vast majority of its citizens in food production, but now less than one percent of our GDP comes from agriculture yet we produce more food than before. All those people once focused on growing and harvesting food went on to build new industries like movies, air transportation, computers, and the internet.

Speaking of the internet, how did that Dot Com Boom go? A massive increase in job creation in an all new industry not seen before. Yes there was a crash, millions of jobs lost. And you know what? We recovered and built sustainable jobs in that same all new industry.

Of course, it would help if Williams looked at where the jobs are actually being lost.  The financial industry hasn’t lost more than 300,000 jobs because of better technology, but rather unregulated greed, corruption, and bad investments. The mortgage and construction industries have lots hundreds and thousands of jobs because of more than a decade of over investment and now a large drop in people not wanted to buy new houses.

The jobs lost are not just low-skilled or low-income jobs. This economic crash is the result of many, many issues including many industries not adapting to new technology rather than simply being made obsolete (see the auto and newspaper industries). After the end of this recession, the U.S. and most other countries will have reprioritized their resources, both in terms of dollars and labor. Maybe more people will be available to research and build a massive green technology industry. How about turning stem-cells into a viable business? What haven’t I thought of? Who would have thought 10 years ago that writing 140 characters would be a billion dollar business? By removing some jobs, we free up resources, both people and dollars, to do more in other places.