Ring Fencing
There is a parallel between the use of barbed wire in the American prairies to establish property rights and the modern challenge of protecting intangible assets like intellectual property. Barbed wire allowed landowners to enforce title by fencing off land instead of branding ownership onto cattle. Decentralized technologies, such as blockchain, could transform the way intangible assets are protected, just like erecting fences around real estate, made it inherently resistant to trespass.
This article was first published in The Mint. You can read the original at this link.
Among the many inventions that Tim Harford refers to in his fabulous book 50 Inventions that Shaped the Modern Economy, the one I least expected to find in there was barbed wire. How it came to be in such august company is an interesting story.
In the early days of the American Republic, ranchers were the only people to be found across the vast expanses of the American prairies because they were ideally suited to the nomadic life of cattle-ranchers. Huge herds of cattle could roam freely across the great plains without cities or towns to impede them.
In 1862, in order to better develop these empty spaces, US President Abraham Lincoln enacted the Homestead Act. The new law allowed any citizen (including freed slaves and women) to own up to 160 acres of land in the western territories of the US. All they had to do to establish title was build a home and work the land continuously for five years.
Conflict
It wasn’t long before homesteaders came into conflict with ranchers. Free-ranging cattle have no conception of legal title. They go where their grazing takes them — even if it happens to be through land on which crops have been painstakingly planted. The only way to keep them out was to fence these farms, which, given the scarcity of wood and the vastness of terrain, was easier said than done.
This is why barbed wire came to assume such outsized importance. It offered land owners a strong yet lightweight fencing material that was surprisingly effective at keeping grazing herds at bay. As a result, it ended up doing what the Homestead Act couldn’t, making it possible for large tracts of previously common ground to be privately owned, effectively establishing a new way to enforce title on the prairies.
Ranchers, on the other hand, used an altogether different approach to asserting ownership over their cattle. They branded their cows with distinctive emblems that signified to all who cared to check whose property they were.
And so it came to pass that title on the prairies was established in two distinct ways: fencing, which physically barred access, and branding, which served notice of ownership. Branding was the only feasible option to establish ownership of cattle. Since they are constantly on the move, it is impossible to use sequestration to ensure ownership.
The problem was even though branding signified ownership, it was easy to ignore. Cattle rustlers did that all the time, purloining livestock whenever they could with scant regard for the brands on their backsides.
Intangible Property
Our modern approach to title over intangible property—books, music, art—is very similar to how title used to be asserted over cattle. All we do is slap a copyright notice on it. But just as burning a brand into the rear end of a cow does little to prevent it from being stolen, having a notice emblazoned on the front page of a copyright work does nothing to prevent it from being infringed.
But what if there is a way in which we can secure our intangible property using the other approach that was deployed on the prairies of North America. What if it is possible to erect a fence around our intangible assets to prevent it from being used in ways that are impermissible.
The problem is that much like cattle, we would like our intellectual assets to roam free. The easier it is for people to access our works, the better it is for us—after all, the income we earn from these works is a function of how many people pay to consume them. The problem is finding a balance between making intangible property accessible widely enough for the largest possible number of people to use, while at the same time ensuring that we have in place appropriate mechanisms so that it can’t be stolen outright.
The fences we have erected in the past—technological measures to prevent copying, digital rights management, etc.—have all eventually been circumvented. Even today, with online streaming forming the bulk of our media consumption, there is a rampant trade in usernames and passwords, as a result of which one person pays for a service that is effectively used by many.
This is why, despite its flaws, notice remains the primary way in which we exercise our copyrights. And why intellectual property violations continue to be policed by investigators searching for evidence of infringement.
Web 3
But this situation is on the verge of a permanent change. Today, decentralised technologies exist that make it possible for us to embed rights management technologies directly into the intangible property we produce. We are already seeing composability being built into the design of non-fungible tokens, allowing them to be remixed in infinite ways. Blockchain-based tools offer solutions that permanently and programmatically record evidence of the contributions of individual artists to a collaborative work, so that any revenue can be automatically distributed to all in the correct proportion.
These are platforms that will eventually transform our current Web 2.0 experience into the Web 3.0 future we have been promised. When they become the dominant mode of content distribution, all the music, video clips and art we consume will be self-policed in this way—determining themselves how they will be used and by whom.
Homesteaders erected fences around their property to protect enclosed objects. Web 3 technologies could allow us to build fences directly into intangible assets, making them inherently resistant to misappropriation, no matter where they might be.
