Regulations Have No Expiration Date
March 12th, 2007 by Gordon Cook
Also from my list:
David P. Reed: The following could -have-been-so-story comes from Andy Lippman, who
says it didn’t happen. I call it the Parable of Xerox.
Xerox in the 1980’s discovered that the market for copiers was not growing fast enough, so it looked for other sources of growth. Market researchers asked what “adjacent and complementary value propositions” they could provide, and in the process learned that the pages being copied were bimodal - quite a few copies of low value items, and a small number of business critical items. Xerox got 5 cents per page no matter what. This was a problem. Surely those who were copying contracts for deals worth millions of dollars would pay for “quality of service”, the market for this new service was rated conservatively as $100/page, times hundreds of thousands of pages monthly. In other words, tens of millions of dollars per month, easy. Computer scientists were hired, and they proposed that with the proper AI techniques, the documents being copied could be digitally scanned and analyzed linguistically. Those that referred to money amounts larger than $1M would be recognized and charged $100 per page for added value.
The business did not succeed, a fact that Xerox chalked up to expiration of its patent monopoly. If it had succeeded, the Computer Scientists would have had a big win - because quality of service would have been delivered. No one would dare copy a crucial business contract without paying for quality of service.
When the customers who copied million dollar contracts were asked in focus groups if they would pay extra for quality of service, of course they said yes. They were used to paying for quality. Nothing less would do.
What was the quality of service that Xerox delivered for $100/page? The same quality of service given to those who pay full fare for airline seats. The right to pay more for the same thing. That’s added value in itself!
Instead, of course, Canon and others competed to print million dollar contracts for pennies on home copiers and SOHO copiers. If only the patents had lasted. Xerox would have been able to fund lots more research on how to charge more for new kinds of documents.
Lawyer: Catching up; great story. And Andy, as much as anyone, knows that the present telecommunications regulation system has achieved what Zerox never could. In this regard the Bells have been much wiser than Zerox: regulations have no expiration date.