I came across two pieces of news today, one that made me optimistic about the future and one that made me see red with rage.  We’ll start with the good news:  Skype announced that it will be launching an initial public offering.  It’s shares will be traded on the Nasdaq.

Long-suffering readers have had to endure my pontifications on the virtues of Skype for years now. (Click here to view past posts on Skype.)  More than just a product, I view Skype as an embodiment of the creative destruction process.  Skype has lowered the cost of international calls to free in many cases and significantly cut costs in others.  This is painful for legacy telecom companies, but it is a boon to the consumer and to globalization itself.

Skype is already the biggest carrier of international  calls, and the initial public offering will only help it to expand.  This is great news.  (My only residual gripe is that I cannot use Skype on my AT&T Blackberry; currently, only Verizon customers have this privilege…not that I am bitter…)

Now for the bad news:  in an act of technophobia and luddism that is almost shocking, the Obama Administration’s Justice Department has threatened legal action against several American universities.  Their alleged crime?  Trying to help their students save money by offering their textbooks in electronic format on the Amazon Kindle rather than in hard copy!

The Justice Department’s  stated rationale is that e-readers discriminate against the blind, thus depriving blind students of their civil rights under the Americans With Disabilities Act.  (See article.)

I try to keep my blog posts apolitical; my beat is the financial markets, not Washington DC.  But the cynic in me can’t help but wonder if Obama’s Justice Department has ulterior motives.   Much like the original Luddites attempted to derail the Industrial Revolution by destroying factory equipment–all in an attempt to save obsolete craftsman jobs–could it be that the Obama Administration is retarding the Information Revolution as a way of paying back its supporters in academia?  Professors and college bookstores alike make a lot of money gouging their students with expensive text books.  Amazon’s ebooks cut into those fat margin, much to the benefit of the students that the universities are ostensibly there to educate.

It’s hard to believe that a move this heavy handed could really be about helping the blind. Surely, liberal-minded universities could find other ways to help their vision-impaired students.

At any rate, this just goes to show that every economic revolution has reactionary forces that try to hold it back.  In the end, new technology will win.  Obama’s Justice Department’s idiotic moves will be no more effective that King Canute’s attempts to command the tides.  EBooks will persevere.  Amazon, Apple and other sellers will make their products accessible to the vision impaired, or whatever disadvantaged group Obama’s Justice Department decides to champion next week.  It will make the products more expensive for the rest of us, of course.  But the end result will be falling costs and a wider spread of information.

Posted in : Creative Destruction 

Comments

"Progress vs. Luddism" -- C. Sizemore What's progress? Technological advancement which diminishes the need for labor? WHO's progress, capitalists' over labors'? I see a disastrous confluence of the newly discovered six billion person labor force, globe shrinking technologies and a pervasive anti-labor mind set among the wealthy and their courtiers.
Posted by officeletterbox@gmail.com | August 10,2010 01:09 PM

Charles, your politics are showing. You are more interested in bashing Obama then knowing what is really going on with these ebooks and the blind. This is not Ludditism at all, but rather getting the technology right in the first place to benefit the most people. Apple has done that and Amazon is close. And it does not increase the price of the products if done from the beginning (have you noticed the price of the iPhone and iPad). Your idea of separate but unequal access to books by blind students has been the practice with hardcopy books. Ebooks do indeed have great advantages over paper books, especially for blind people with a little addition to the technology as Apple and Amazon are showing. The situation is the exact opposite of your opinion: blind people (with the help of the Justice Department) are trying to advance technology, not retard it. You need to catch up with the technology and spend less time on Obama bashing.
Posted by tom.scanlan@earthlink.net | August 11,2010 08:35 AM

Tom, you will notice that I generally keep my political views to myself, and frankly, while I do not particularly like Obama, I don't find him to be materially worse than his predecessor. If the objective of the Justice Department is to improve access for the blind, then why not restrict paper textbooks as well? Why is an e-book reader fair game for attack while traditional paper textbooks are not? It doesn't make sense, and frankly, it raises a lot of questions. Either the Administration is being "influenced" by the publishing industry and/or academics who stand to lose the fat royalties they get from price gouging a captive audience in their students, or they are technophobes. Frankly, I'm not sure which is worse. Were the Administration truly liberally minded, they would address the unfairness of the price gouging of all students rather than make a flawed civil rights argument about blind students who are certainly no worse off with e-readers than they would be with traditional paper textbooks. That's my two cents, anyway. CLS
Posted by csizemore@hsdent.com | August 11,2010 09:52 AM

Neophyte, the labor/capital debate has been around forever, and alas, it will probably continue to be with us forever. The point I want to make is about technology. An innovation like Skype potentially lowers communications costs for everyone in the world. Because of Skype and its peers in the competitive telecommunications industry, I can now call a landline in Peru from Dallas for less money than it cost me to call Fort Worth ten years ago--and that doesn't adjust for inflation. These savings put money in my pocket and everyone else's too that can be spent on other things, and potentially employ people in new fields. This is real progress, and in my opinion, a cause for optimism! CLS
Posted by csizemore@hsdent.com | August 11,2010 09:57 AM

"These savings put money in my pocket and everyone else’s too that can be spent on other things, and potentially employ people in new fields." --C. Sizemore Depends on how fast those savings actually circulate. The more they're realized by the wealthy and big monopolist businesses, the weaker that argument is. Wealth is being concentrated more and more in fewer individual's hands and more importantly in fewer businesses. Big businesses don't seem to hire or create new business as much as smaller businesses. And wealthy individuals are already consuming as much as they want. Skype though isn't the best example of my point, I grant you that.
Posted by officeletterbox@gmail.com | August 11,2010 02:08 PM

My brother is blind. He uses a cheap piece of software that reads his emails and oher online text back to him. It would work for eBooks too. Most blind students would use this already. It's much easier than learning braille.
Posted by msaleeba@tpg.com.au | August 12,2010 01:00 AM

Charles, your comment about limiting access to paper books for blind students makes no sense at all. It also shows a fundamental lack of understanding of e-reader technology and how it affects blind readers. A blind student must hire a sighted person (usually at government expense) to read a paper book or have an agency (usually a government one) transcribe it into braille or read it onto a recording. You should be happy that an accessible e-book reader as sought by blind people with the backing of the Justice Department will reduce that government spending. It is blind people behind this push for e-book access, not publishers. If you want to take on the price of textbooks, then do it directly and not on the backs of blind people. Please either stick to economics or finance (where I generally agree with you), or learn more about a subject before you stick your foot into it.
Posted by tom.scanlan@earthlink.net | August 16,2010 09:18 AM

Tomscanlan, I think we actually agree for the most part here; we just differ at the margin. I am personally quite happy that ereader technology has the potential to improve the lives of blind students and the vision impaired in general. Amazon, Apple, et al were well on that path already, before the Dept of Justice got involved. My issue is this: blind students were neither better off nor worse off under the Amazon pilot program. Their situation didn't change. They were no WORSE off. To me, it made no sense to kill an entire program -- and let us remember that it was a pilot program to test out the concept -- when no one was really "hurt" here. Other accommodations could have been made for blind students without killing the entire program. If the price of ALL textbooks were lowered due to ereaders, then there would be plenty of funds available to subsidize accommodations for the blind. In the end, it will be a moot point. With or without government mandate, the ereaders will continue to improve to be benefit of everyone, including the blind. The question then become, what new excuse will come out of the woodwork to derail progress? We'll just have to wait and see. CLS
Posted by csizemore@hsdent.com | August 17,2010 10:08 AM

Charles, you really need to look past your anti-government ideology to see what is happening here. It is not Obama, nor the Justice Department, not publishers that are pushing Amazon and others to make their e-readers usable by the blind. It is blind people, pure and simple. Blind people are not willing to settle for “no worse off.” Amazon and Apple improved their e-readers only when pushed to do so by the blind. Sometimes the free market needs a little push. The following section from a report by the president of the National Federation of the Blind, one of the organizations of blind people pursuing this issue, may help clarify it for you. “Last year, I reported to you that we created the Reading Rights Coalition, an entity consisting of more than thirty organizations interested in access to digital information. We created this organization to fight an attempt by the Authors Guild and the Association of American Publishers to turn off the text-to-speech function of digital book readers. We who are blind want access to electronic books in nonvisual form, and so also do several million other print disabled Americans. On March 9, 2010, we released an agreement which declares that books published in electronic form are to be as accessible to the blind and other print disabled as they are to everyone else. Most of the big publishers are acting in accordance with this statement, but some are not. They will find that we expect them to do the right thing, and we intend to continue to confront this problem until our expectations are fulfilled. “Last fall I was invited to participate in a meeting with the United States attorney general, Eric Holder, dealing with the rights of disabled Americans. The meeting was cordial, and the attorney general had invited department heads from the department of justice to participate. It appeared from all that was said that equal opportunity for disabled Americans is a priority for the attorney general. “Last year, I reported to you that some colleges and universities had started pilot programs using the inaccessible Kindle DX. We sued Arizona State University and filed complaints with the Civil Rights Division of the Department of Justice against Princeton University, Reed College, Pace University, and Case Western Reserve University. We also filed a complaint against the University of Virginia with the Office of Civil Rights of the Department of Education. In January of this year, Arizona State University agreed that it will not use any e-book reader that is not fully accessible to the blind. Princeton, Reed, Pace, and Case Western Reserve all entered into agreements with the Department of Justice, saying that they will not purchase or require the students to purchase or use inaccessible e-book technology whether made by Amazon or anybody else, and they will not require the use of inaccessible e-book reading systems in any part of their curricula. “So that the message would not be lost on other colleges and universities, we sent letters to the attorneys general of every state and the presidents of over 1,800 major colleges to remind them that, as colleges and universities move to electronic books, they must be fully accessible to the blind. “Some of the most popular e-books being distributed today are created under the name of Adobe Digital Editions. When Adobe stopped producing these books in a form that the blind can use, we reported this to the American Library Association, which adopted a resolution declaring that libraries should not acquire inaccessible e-books. The Los Angeles Public Library announced that it would abide by the resolution—no more Adobe e-books unless they are accessible to the blind. So that this message would not be lost, we wrote to 11,961 libraries, reminding them of their obligation under the Americans with Disabilities Act. Adobe has responded, promising that by the end of this year, it will introduce a new accessible version of Adobe Digital Editions. “The biggest player in the college e-book market is a distributor called CourseSmart. Both the electronic books distributed through CourseSmart and the technology to read them have been unusable by the blind. After long negotiation, CourseSmart is retooling its software and working with us to offer accessible e-textbooks within the next few months.” Making the e-readers usable to blind people does not increase their cost, as shown by Apple in its iPhone and iPad. In fact, Amazon and Apple prices are decreasing, even with the improvements to make them usable by the blind. Also the cost of e-readers has absolutely nothing to do with the federal/state funding of vocational rehabilitation for the blind.
Posted by tom.scanlan@earthlink.net | August 18,2010 09:09 AM

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