From: Petro <petro@playboy.com>
Date: Thu, 24 Dec 1998 02:20:14 +0800
To: Digital Bearer Settlement List <cryptography@c2.net
Subject: Re: dbts: Georecursive Auctions (was Re: Friedman (The Younger) Sings...)
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Message-ID: <v0401170eb2a6c55cbebe@[207.138.127.230]>
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At 5:42 PM -0500 12/21/98, Robert Hettinga wrote:
>Sure, Red Hat grosses $20 million, but that's more a function of the
>cost-domination of sneaker-netted CDROM over the still-scrawny lower
>capillaries of the internet. More to the point, I claim, it's the result of
>the cost of *credit-cards*, even *checks*, as a way to pay for code.
>Book-entry settlement, in other words, which is done "out of band", over
>private, hierarchical, and proprietary financial transaction networks.

	Redhat makes it's money for 4 reasons, and only the first 2 will go
way in the cryptoanarchic geodesic encrypted internetworked micromoney
market place of the future:

	(1) Redhat [debian, slackware, S.u.s.e (the best dist. IMO)]
contribute back to the Linux/Open Software community, and "We" pay them
back by buying their software.
	(2) As noted above, the last mile pipes to the cloud are still small.
	(3) How much of Redhats profit is in support contracts? Lots of
small to medium sized companies are starting to use Linux, and they like to
buy support, even if it is useless and rarely used. This one will go away
in the above cryptoanarchic geodesic encrypted internetworked micromoney
market place of the future because one will be able to purchase specific
consulting time from a wide variety of sources.

	--and--

>If it were possible to pay to download code, as you needed it, for
>instantaneously net-settled *cash*, and for sufficiently small enough bits of
>money, then the need, the price-economy, if you will, for large glops of code
>would go away.

	This is why I purchased a copy of RedHat (and later SUSE, Redhat
sucks):

	(4) Being able to grab code as you need it is all well and good,
but what do you do when the machine that ties you into the network fails?
When you need to get that machine back up +now+. Yes, you can burn your own
CD (or DVDrom, or whatever), but Media burners are more expensive than
readers, and not every one can afford them.

	The network can't help when you can't reach it.

>Finally, it even behoves huge companies who control large blocks of
>intellectual property, record companies, and Microsoft, for instance, :-), to
>compete in this new kind of market, precisely *because* the the transaction
>costs are so low and the initial profit margins are correspondingly higher.

	The problem with your line of thought is that in the cryptoanarchic
geodesic encrypted internetworked micromoney market place of the future,
the difference between "old" information (code) and "new" information
(code) in MARKET terms can be minutes or less, while it takes weeks to turn
out good new code.

	Why should _anyone_ buy at a higher price when one can watch the
value fall faster than gravity should allow?

	Yes, someone will make the _first_ buy, but that will be the last
buy at anywhere near that price, and that is going to force the developer
to reduce his costs etc.
--
"To sum up: The entire structure of antitrust statutes in this country is a
jumble of economic irrationality and ignorance. It is a product: (a) of a
gross misinterpretation of history, and (b) of rather nave, and certainly
unrealistic, economic theories." Alan Greenspan, "Anti-trust"
http://www.ecosystems.net/mgering/antitrust.html

Petro::E-Commerce Adminstrator::Playboy Ent. Inc.::petro@playboy.com