T207 w Ryland – Fall 2013Midterm Study Sheet – V 2Industry structure and business models:TelegraphEarly experimental period while on patentNeeded other things to be successful before telegraph could take offbatteries had to be inventedgrowing knowledge of electricity and things through wiresneeds transmitter and receiver pointsneeded inventors to wire countrySamuel Morse took 5 years to get the telegraph polishedPatent in 1840No interconnectibilityPeople weren’t sure messages were being deliver properlyCompetition and decentralized networks when the patent lapsedUS postal service was its main competitorWasn’t bound by any issues like telegraph wasCustomers wereMilitaryNewspapersBanksPatent was used to control rollout of technologyWhen it was up, companies camePre-and post-Civil War consolidation, especially by Western UnionWestern UnionNorthDid great business during Civil WarSet up lines anywhere troops wentSouthern telegraph companies began to failWestern Union – a natural monopoly?Entered into exclusivity agreementsMade a partner in the associated pressEarly abuse of market powersExclusivity of newsWU achieved monopoly in 1866No antitrust regulation at this timeThe appearance of a new competitor, telephone, and how WU handled itWU did not see it as a threat at firstKronos effectDominant industry player wants to keep dominanceWU tried to buy up other technologies to incorporateTelephoneEarly business strategy while on patentPatent achieved in 1876 by Bell companyElisha gray & Europeans also discovered at timeCompetition and decentralized networks when the patent lapsed; rural vs. urbanBell offered to sell patent to WU for 100kWU had deployed 56k telephones by 1878WU still had patents, money, power, influenceBell sues WU for infringement -> J. GouldUrbanHigh prices, urban focus of telephones1/255wanted dividends not reinvestmentbell wired only the east coast where he saw most money and most peopleAT&T’s business actions – the fair and the ‘dirty’ onesAcquisition strategy – especially when they went too farAT&T didn’t want to set up wiresFarmers galvanized wires and fences to setup telephone linesSetup party lines3 mil independents vs. 2.5 mil bell in 1907as one company bell was still doing a lot1909 – At&t buys out WU = monopoly in 2 industriesofferes independents interconnectivity if they adopted bell standardscross- subsidizingable to change prices based on areascould get more money out of suburbscharged less in independent areas so that rural companies would die offRadioVery early uses – point to point communicationThe amateur radio periodGueirmo Marconi father or radioTranslated first dot to dot messageLee de Forest discovered things already discoveredBrought broadcast radio to American publicEdward Armstrong wanted to enlighten peopleDavid Sarnoff created a communications companyGuerilla radio stations that operate without a licenseThe very first ‘broadcasts’1907 – Ferrar was first singer to be heard on radioConsolidation around the clear channels1920 – all inventors pooled their patentsAM vs. FM fightsBlocked by business manipulationStolen and adoptedAMInfo embedded in height of frequenciesFMInfo embedded in distance of frequenciesAM vs. TVBlocked by business manipulationRCA+NBC+CBS= public campaign against tvFCC wouldn’t allow use of electromagnetic frequencyLater, stolen and adoptedSarnoff and RCA talked bad about tv, but were stealing Farnsworth’s ideas and creating a tv of their ownMusic DistributionEarly storage technologiesWhen artists began to get paid from radio (It’s in the Master Switch book)Before and during the adoption of the internetDial-up -> broadbandHad to adopt technology of computersModern music distributionHow we get our musicEach person who joins the network increases value for previous usersTorrentsVariety of different programs to download different forms of filesWho decides the hitsPayolaRecord labels had to pay independent promoters to promote a cd and if you didn’t your cd wouldn’t be taken seriouslyPitchforkPeople were able to pick the music that they wanted to listen to and wanted to hearHow artists make their moneyWhat copyrights are in musicComposers’ rightsPerformers rights in recordingsDerivative works in musicWhat sampling and sample licensing are and the basics of how they are integrated into the industryLegal Issues:Whether and when each telecom and media technology was protected by patentsWhether big business owned or litigated each patentTelegraphLarger telegraphy companies started to buy up smaller onesNo interconectibilityTelephoneBell sues WU for patent infringementJ Gould comes and pulls rug from under WU & allows Bell to win lawsuitWU got set of licensing fees because they had already improved telephoneSherman Antitrust ActSome parts of AM RadioFM1915 patent fightsdivided up the marketboth were using eachothers patents illegallymilitary blocked patent disputs in WWIgolden age of radio inventionall inventors pooled their patents in 1920RCA was createdTelevisionRCA began to create electronic tv (didn’t own patent)Farnsworth sued and won suit in 1940Government regulations of each industry – what and whyTelephoneAT&T Antitrust problemsAT&T as a Gov’t regulated monopolyRadioThe Radio Act of 1912mandated that all radio stations in the United States be licensed by the federal government, as well as mandating that seagoing vessels continuously monitor distress frequenciesWWI military controlThe founding of RCA as a patent pool that pushed British Marconi outThe Federal Radio CommissionThe Federal Communications CommissionTVThe Federal Communications Commission – when they hurt and when they helped the technology spread.FCC treated it like a dangerous experimental technologyWouldn’t allow use of electromagnetic frequencyFCC made standards & deemed only two license availableSet up industry for vertically integrated dominanceIntellectual PropertyA 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 devicesHistorical origins in the legal system we absorbed from EnglandMonarchy control of expression and exclusive rightsGuild coordination with a centralized registryPrinting press necessitated copyrightBible was the most copied bookThen in 1710, a statute that finally gives