> AOM will certainly give much needed stability to the video codec market but this will come at the cost of reduced if not entirely halted technical progress. There will simply be no incentive for a company to develop new video compression technologies I don't think is correct. The driver for innovation in video compression technologies will continue to be the practical problems of encoding and distributing video. Th…
This means that codec development makes no sense for anyone who doesn't own either a large distribution platform or a large playback platform. (Much of the research has been done by middleware companies attempting to tax the two; their business goes from royalties to work-for-hire, at best, which is way less attractive for them). This is fine – in a macroeconomic sense – but of course it sucks if you're one of the co…
The logic of software patents systematically underestimates the existing incentive structures. That's because of the simplifications economists usually make. (See https://en.wikipedia.org/wiki/Assume_a_can_opener)
The assumptions underlying patents become less justifiable as
1) the pace of innovation in an industry increases, compounding first-mover advantage;
2) complexity increases, because integration of an invention into a viable product becomes much more difficult--often such that copyright and other IP protections alone are more than sufficient to provide a moat;
3) as financing becomes cheaper and potential markets larger the time horizon for and amount of ROI demanded by investors diminishes;
Those are especially applicable to many modern high-technology industries, software (Silicon Valley) and industrial (SpaceX).
Other industries have proven to be able to thrive without strong patent protections or even copyright protections for myriad other reasons. The fashion industry has thrived without strong patent or copyright protections, largely based on trademark and marketing. Likewise for the beverage industry and consumer foodstuffs more generally. Major automakers had poor copyright protections, and while they had stronger patent protections, as safety regulations increased they shifted to a market segmentation model such that the big auto manufacturers often freely license patents among each other long before the patent expires.
Economists, especially conservative economists, often argue against anti-trust, reasoning that as markets become larger (finance markets, consumer markets, etc), the typical lifetime of a monopoly become shorter--often shorter than the typical lifetime of anti-trust litigation.
I would argue that as markets grow larger and more fluid they're far more capable of discovering and leveraging sufficient incentives to support innovation in the absence of government-imposed monopolies. Especially in the realm of software, the circumstances where there's a legitimate market failure requiring patents are so uncommon that there's no reason to even entertain the notion of a software patent system.
In the absence of _manifest_, _systemic_ market failures, patent advocates make the same mistake Communists make--an inability to imagine how a market can support an endeavor is not evidence that a market is incapable of supporting that endeavor; it's merely evidence of one's own lack of information and imagination. And the surest way to introduce market failure is by dangling the prospect of government-imposed monopoly rents, artificially increasing the opportunity costs of discovering and leveraging all the non-obvious incentives that naturally exist or could evolve.