10 08 2013 T207 w Ryland Fall 2013 Midterm Study Sheet V 2 Industry structure and business models Telegraph Early experimental period while on patent o Needed other things to be successful before telegraph could take of batteries had to be invented growing knowledge of electricity and things through wires o needs transmitter and receiver points needed inventors to wire country o Samuel Morse took 5 years to get the telegraph polished Patent in 1840 o No interconnectibility People weren t sure messages were being deliver properly Competition and decentralized networks when the patent lapsed o US postal service was its main competitor Wasn t bound by any issues like telegraph was Customers were Military Newspapers Banks o Patent was used to control rollout of technology When it was up companies came Pre and post Civil War consolidation especially by Western Union o Western Union North Did great business during Civil War Set up lines anywhere troops went Southern telegraph companies began to fail Western Union a natural monopoly o Entered into exclusivity agreements o Made a partner in the associated press o Early abuse of market powers Exclusivity of news o WU achieved monopoly in 1866 No antitrust regulation at this time The appearance of a new competitor telephone and how WU handled it o WU did not see it as a threat at first o Kronos efect Dominant industry player wants to keep dominance WU tried to buy up other technologies to incorporate Telephone Early business strategy while on patent o Patent achieved in 1876 by Bell company Elisha gray Europeans also discovered at time Competition and decentralized networks when the patent lapsed rural vs urban o Bell ofered to sell patent to WU for 100k WU had deployed 56k telephones by 1878 WU still had patents money power influence o Bell sues WU for infringement J Gould o Urban High prices urban focus of telephones 1 255 wanted dividends not reinvestment bell wired only the east coast where he saw most money and most people AT T s business actions the fair and the dirty ones o Acquisition strategy especially when they went too far AT T didn t want to set up wires Farmers galvanized wires and fences to setup telephone lines Setup party lines 3 mil independents vs 2 5 mil bell in 1907 as one company bell was still doing a lot o 1909 At t buys out WU monopoly in 2 industries oferes independents interconnectivity if they adopted bell standards cross subsidizing able to change prices based on areas could get more money out of suburbs charged less in independent areas so that rural companies would die of Radio Very early uses point to point communication The amateur radio period o Gueirmo Marconi father or radio Translated first dot to dot message o Lee de Forest discovered things already discovered Brought broadcast radio to American public o Edward Armstrong wanted to enlighten people o David Sarnoff created a communications company Guerilla radio stations that operate without a license The very first broadcasts o 1907 Ferrar was first singer to be heard on radio Consolidation around the clear channels o 1920 all inventors pooled their patents AM vs FM fights o Blocked by business manipulation o Stolen and adopted AM Info embedded in height of frequencies FM Info embedded in distance of frequencies AM vs TV o Blocked by business manipulation RCA NBC CBS public campaign against tv FCC wouldn t allow use of electromagnetic frequency o Later stolen and adopted Sarnof and RCA talked bad about tv but were stealing Farnsworth s ideas and creating a tv of their own Music Distribution Early storage technologies When artists began to get paid from radio It s in the Master Switch book Before and during the adoption of the internet o Dial up broadband o Had to adopt technology of computers Modern music distribution o How we get our music Each person who joins the network increases value for previous users Torrents Variety of diferent programs to download diferent forms of files o Who decides the hits Payola Record labels had to pay independent promoters to promote a cd and if you didn t your cd wouldn t be taken seriously Pitchfork People were able to pick the music that they wanted to listen to and wanted to hear o How artists make their money What copyrights are in music o Composers rights o Performers rights in recordings o Derivative works in music What sampling and sample licensing are and the basics of how they are integrated into the industry Legal Issues Whether and when each telecom and media technology was protected by patents Whether big business owned or litigated each patent Telegraph o Larger telegraphy companies started to buy up smaller ones o No interconectibility Telephone o Bell sues WU for patent infringement J Gould comes and pulls rug from under WU allows Bell to win lawsuit WU got set of licensing fees because they had already improved telephone o Sherman Antitrust Act Some parts of AM Radio FM o 1915 patent fights divided up the market both were using eachothers patents illegally o military blocked patent disputs in WWI o golden age of radio invention all inventors pooled their patents in 1920 RCA was created Television o RCA began to create electronic tv didn t own patent Farnsworth sued and won suit in 1940 Government regulations of each industry what and why Telephone o AT T Antitrust problems o AT T as a Gov t regulated monopoly Radio o The Radio Act of 1912 mandated that all radio stations in the United States be licensed by the federal government as well as mandating that seagoing vessels continuously monitor distress frequencies o WWI military control o The founding of RCA as a patent pool that pushed British Marconi out o The Federal Radio Commission o The Federal Communications Commission TV o The Federal Communications Commission when they hurt and when they helped the technology spread FCC treated it like a dangerous experimental technology Wouldn t allow use of electromagnetic frequency FCC made standards deemed only two license available Set up industry for vertically integrated dominance Intellectual Property A patent is a right to exclude others from using a newly invented technology The businesses in this class often have these to protect distribution methods and devices Copyright often protects content the stuff being sent through the telecommunication systems and media devices Historical origins in the legal system we absorbed from England o Monarchy control of expression and exclusive rights o Guild