Louisiana Internet Software & Technology Association Blog : Louisiana Internet Software & Technology Association : LISTA Blog : LA Technology Law News & Updates

I realize that I may be overly focused in this blog on e-publishing, but I think this technology is ground breaking in a number of ways. An e-book reader encompass a number of important trends in technology hardware and software.

The equipment, an e-reader, is highly specialized in contrast to a notebook computer which may perform many different functions. As various aspects of hardware such as memory chips, storage, display technology, etc... decline in cost and shrink in size, the economics of highly specialized hardware improves. Any e-book reader is an expression of that fact. The continuing evolution of highly specialized hardware and software is very important. It reduces the complexity of using the technology and broadens the potential user base.

An e-book reader generally also uses mobile phone technology instead of Wi-Fi or broadband internet access to the web. Mobile phone technology access to the web is an extraordinarily important aspect of web connection. As a result, the user of e-book reader technology can access and purchase e-books from nearly any location. This approach to product delivery is extraordinarily important to any one trying to a make an electronic consumer sale of published materials.

The main players in this arena are Amazon and Sony. Amazon's Kindle 2, the market leading e-book reader, is competing with Sony's new e-book reader which has just been announced as an open format e-book reader using the e-Pub format. The new Sony reader is called the "Daily Edition." The USA Today had a great article in its Tuesday August 26, 2009 internet edition as part of the technology section. This article described what Sony is trying to do with its new e-reader. The article is entitled, Sony's Reader Daily Edition takes on Amazon's Kindle. In a very exciting aspect of Sony's announcement, the new Daily Edition will be able to download content in the e-Pub format from many libraries around the country for free. The Sony e-book reader is using AT&T's 3G network while Amazon is using Sprint's mobile phone network.  

The e-book reader regardless of who creates it is a college student backpack size reducer and a business person brief case size reducer. Such e-book readers are having an evolutionary impact on the future of print media. Now that the technology is mobile and is contained in a compact and easy to us device, the growth of e-publishing is going to be explosive and game changing.

Erich P. Rapp.

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Just read an interesting item in the July 20, 2009 Fortune Magazine on page 60 entitled, "No Free Lunch" (not available online at the Fortune Magazine web site when this entry was written). It concerned the now famous Stewart Brand quote about the freedom of information.

In 1984 at the first "Hackers Conference," Stewart Brand, famous also for the Whole Earth Catalog, stated, "information wants to be free" which is widely quoted as a call for free distribution of all information. Brand's actual statement was, however, far more ambiguous. He actually said in fuller context, "On the one hand, information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free because the cost of getting it out is getting lower and lower all of the time. So you just have these two fighting against each other."

In response, Steve Wozniak, the not so good dancer on Dancing with the Stars and co-founder of Apple Computer, replied to Brand that "Information should be free, but your time should not."

It seems like Wozniak captured more of the notional reality than Stewart Brand. While laws that protect intellectual property continue to create value in certain types of information and creative content, the reality is that this capture is less complete and shorter in duration than ever because of various technological tools.

As the value of information and creative content has itself declined, the value of interacting with the actual creator of the content seems to have gone up. For example, musicians are getting less and less value from their recorded music and more and more value from their live performances. The same trend also seems to impact on book authors and speaking engagements.

This dovetails nicely with Wozniak's comment that information should be free, but not ones time. While we may see a pull back in the years ahead from "free information" as we know it on the web today, the long term trend is pretty clear. Information and creative content are going to remain in a protected form that can be directly monetized for a shorter and shorter period of time.

The business and social cycle that turns most manufactured goods and most services into a commodity over time and which also tends to move most creative content over time into the public domain of free things is growing shorter and shorter. In contrast, the value of human input and attention measured as the time a person invests in a productive activity continues to exist at some level in the economic system and is likely to endure. In some sense, this reality is almost medieval and speaks to a time when the value of a guildsman or craftsman was at its highest. Of course, we have a completely different kind of guildsman today. All of the vocations that were performed by guildsman in medieval times are now performed by mechanical devices and a new type of guildsman is emerging with a different set of skills such as the design and development of software and web platforms.

As businessmen, we will over the long run have to adapt to this "retro-" reality. 

Erich P. Rapp.

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I am very concerned about the market for transferable Louisiana Tax Credits after reading about the problems that members of the New Orleans Saints have had. See Ex-Saint Kevin Houser says tax credit fiasco not his fault. 

Louisiana needs a "Tax Credit Exchange." I will propose to the membership of LISTA that they advocate the creation of a non profit corporation (need to check with my tax attorney friends on this concept) to operate a Tax  Credit Exchange that would make a market for certified tax credits and various grades of contracts to deliver tax credits at a future date.

The paper work and related contracts would be uniform and the status of the contracts would be verified with the appropriate arm of Louisiana government.  If the contract involves little more than a "hope and a prayer" that the person entering into the contract will apply for credits and undertake a creditable business venture in the future, those credits will be deeply discounted and the purchaser will understand that he is purchasing a very speculative contract.

Alternatively if the purchaser decides to buy an existing tax credit that is certified by the state, the value of that credit will be much less significantly discounted. The customers in the market will be better educated about what they are buying, and the process of selling the credits into the market will be orderly and uniform.

I will be reaching out to people with expertise useful in the creation of such a market in the weeks ahead. If you have such expertise and want to help create an orderly market for tax credits in Louisiana, I am looking for your help.

If you think I am making a mistake with this recommendation, I would also like your input. I think we need a more orderly market that discourages the type of problems the New Orleans Saints players have had (but for the grace of god go I), but I want to know what y'all think. I want to start a discussion of the problem. Please write comments on this blog entry and send me email correspondence with your thoughts on this subject.

I am very open to discussion about this subject. Please comment.

Erich P Rapp.

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Senate Bill 277 concerning digital interactive media has been formally sent to the Governor for his signature on Thursday June 25, 2009. We hope that the Governor will act soon on this important piece of legislation.

Unfortunately, a proposed amendment to the new digital media program allowing a digital media tax credit recipient to have the state convert the tax credit to cash at $0.90 on the dollar did not complete the legislative process on Thursday before the formal deadline for adjournment. This concept was presented to LISTA by the Baton Rouge Area Chamber of Commerce. We felt this option was an excellent addition to the program proposed in SB 277. LISTA regrets that this amendment was not adopted by the legislature as a whole. We will review this concept again in two years at the time of the next Louisiana fiscal legislative session.

In the coming weeks, the original members of LISTA will meet to discuss the future direction of the organization. One of my first proposals to the membership will be opening membership up to a broader group of interested people and companies. The original members were asked to make substantial financial contributions in order to get the organization started. I will now propose to the membership that the average cost of membership be reduced significantly and that the organization make efforts to enlist many new members.

As with any government sponsored business incentives program, the new digital media program will not survive unless it is beneficial to the state as a whole. Determining whether the program is successful requires an expert in economics and financial analysis to review and analyze all of the available relevant data. I would like to see LISTA join with other economic development agencies and organizations in Louisiana to sponsor a university professor's effort to track all available data on the digital media industry in Louisiana from July 1, 2009 and forward to determine whether the digital media act is fulfilling its potential for the state.

I would also like to see LISTA and such a university professor track the geographical distribution of the beneficiaries of the digital media act in the state. Our goal at LISTA is to encourage and support growth of digital interactive media businesses throughout the state. We thus want to know the extent to which this goal is being fulfilled.

The new digital media program will also lead to the adoption of related rules for the administration of the program by the Louisiana Department of Economic Development. LISTA and its members will actively participate in and comment on the development of such rules. 

Additionally, LISTA and my law firm, Kean Miller, will undertake a series of presentations inside and outside of the state on the use of the digital media tax credit program. Further still, LISTA and Kean Miller will begin offering educational seminars on topics of interest to the digital media community. 

Again, I offer my thanks to all of the people who assisted with the adoption of SB 277. It has been an educational and ultimately gratifying experience for me.

Erich P Rapp.   

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The Louisiana Governor's office declared its support today for Senate Bill 277 concerning digital interactive media business incentives in Louisiana. After several weeks of negotiations and discussions with the leadership at the Louisiana Department of Economic Development about the exact language to be contained in Senate Bill 277, Senator Duplessis, LISTA, the Department of Economic Development and the Governor's office have reached an agreement on the terms of Senate Bill 277.

The Ways and Means Committee of the Louisiana House of Representatives will hold a hearing on Senate Bill 277 on Monday June 15, 2009 at 9 AM. If you are involved in this business and interested in supporting Senate Bill 277, please come to the committee hearing to show the committee members the business community support for the bill. If we as a digital interactive media industry in Louisiana fail to show our interest, we may find the committee members find it hard to care about our bill. Let's show our support.

The most exciting part of the bill is the definition of "digital interactive media." Under the new program, the digital interactive media incentives would be available for the development of many different types of software and web platform development as well as the development of video games and interactive animation. Under the existing law, the incentives have largely been limited to video game development. We are very excited about the potential for new businesses in the broader community of digital interactive media moving into Louisiana. In the years ahead, we anticipate new developer/programmer and new design jobs coming to Louisiana in material numbers.

The next most exciting thing about Senate Bill 277 is the proposed incentive parity with the film and television production incentives program. Under the existing digital interactive media program, the benefit was 20% transferable tax credits on in-state expenditures and the percentage declined over time. The new program would allow 25% transferable tax credits on all in-state expenditures and a 10% bonus for expenditures on labor residing in Louisiana for 35% transferable tax credits on expenditures on labor residing in Louisiana without any declining  benefit over time. As a practical matter, this combination of benefits effectively reduces the cost of developing many types of software and web platforms in Louisiana by over 30%.

It will take time to educate the digital interactive media industry about the benefits of this new program, but the program will eventually be a significant draw for new software and web platform development business in Louisiana.

Once this legislation becomes law, we must begin thinking about qualified workforce development by education and by transfer of qualified labor into Louisiana and we must work to change the perceptions about the workforce potential in Louisiana. Louisiana, however, can overcome these problems and build a digital interactive future.

I offer a prediction. With the proposed digital interactive media program enacted, Louisiana will be transformed from a digital interactive media backwater to a top five state player within ten years. Louisiana will be a leader in software and web platform development.

Erich P Rapp.

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The former McGlinchey Stafford Law Firm building on Magazine St in the Central Business District of New Orleans is reopening as the I.P. Building. This new office building is the result of the vision of the Idea Village and GNO, Inc. They are seeking to create a work environment in New Orleans that has the creative technology vibe of Silicon Valley.

Six anchor tenants have agreed to or have leased space in the building including Carrollton Technology Partners, TurboSquid, Launch Pad and iSeatz.com. The Idea Village will also be relocating into the I.P. building.

For more on the opening of this new building see the New Orleans Times Picayune news article by Kate Moran on April 13, 2009 entitled, Former McGlinchey Stafford Building becomes hub for entrepreneurial companies.

Erich P. Rapp.

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