The Wealth of Networks:
How Social Production Transforms Markets and Freedom
by Yochai Benkler, Yale University Press

Copyright 2006, Yochai Benkler.

Chapter 11
The Battle Over the Institutional Ecology of the Digital Environment

This online version has been created under a Creative Commons Attribution Noncommercial ShareAlike license - see - and has been reformatted and designated as recommended reading - with an accompanying Moodle course - for the NGO Committee on Education of CONGO - the Conference Of Non-Governmental Organizations in Consultative Relationship with the United Nations - in conjunction with the Committee's commitment to the United Nations Decade of Education for Sustainable Development, the International Decade for a Culture of Peace and Non-violence for the Children of the World and related international Decades, agreements, conventions and treaties.


"Human nature is not a machine to be built after a model, and set to do exactly the work prescribed for it, but a tree, which requires to grow and develop itself on all sides, according to the tendency of the inward forces which make it a living thing."

"Such are the differences among human beings in their sources of pleasure, their susceptibilities of pain, and the operation on them of different physical and moral agencies, that unless there is a corresponding diversity in their modes of life, they neither obtain their fair share of happiness, nor grow up to the mental, moral, and aesthetic stature of which their nature is capable."

John Stuart Mill, On Liberty (1859)

Chapter 11
The Battle Over the Institutional Ecology of the Digital Environment

The decade straddling the turn of the twenty-first century has seen high levels of legislative and policy activity in the domains of information and communications.

Much of the formal regulatory drive has been to increase the degree to which private, commercial parties can gain and assert exclusivity in core resources necessary for information production and exchange.

At each of these layers, however, we have also seen countervailing forces.

It is difficult to tell how much is really at stake, from the long-term perspective, in all these legal battles.

Institutional Ecology and Path Dependence

The century-old pragmatist turn in American legal thought has led to the development of a large and rich literature about the relationship of law to society and economy.

The basic claim is made up of fairly simple components.

The term "institutional ecology" refers to this context-dependent, causally complex, feedback-ridden, path-dependent process.

Systems that exhibit path dependencies are characterized by periods of relative pliability followed by periods of relative stability.

The first two parts of this book explained why the introduction of digital computer-communications networks presents a perturbation of transformative potential for the basic model of information production and exchange in modern complex societies.

A Framework for Mapping the Institutional Ecology

Two specific examples will illustrate the various levels at which law can operate to shape the use of information and its production and exchange.

There are four primary potential points of failure in this story that could have conspired to prevent the revelation of the Diebold files, or at least to suppress the peer-produced journalistic mode that made them available.

The second example does not involve litigation, but highlights more of the levers open to legal manipulation.

Combined, the two stories suggest that we can map the resources necessary for a creative communication, whether produced on a market model or a nonmarket model, as including a number of discrete elements.

As these stories suggest, freedom to create and communicate requires use of diverse things and relationships - mechanical devices and protocols, information, cultural materials, and so forth.

These are the physical, logical, and content layers.

In each layer, the policy debate is almost always carried out in local, specific terms.

The remainder of this chapter provides a more or less detailed presentation of the decisions being made at each layer, and how they relate to the freedom to create, individually and with others, without having to go through proprietary, market-based transactional frameworks.

Table 11.1: Overview of the Institutional Ecology

Enclosure Openness
  • Broadband treated by FCC as information service

  • DMCA ISP liability

  • Municipal broadband barred by states

  • Open wireless networks

  • Municipal broadband initiatives
  • CBDPTA: regulatory requirements to implement "trusted systems"; private efforts toward the same goal

  • Operator-controlled mobile phones
  • Standardization

  • Fiercely competitive market in commodity components
    Transmission protocols
  • Privatized DNS/ICANN
  • TCP/IP

  • IETF

  • p2p networks

  • DMCA anticircumvention;

  • Proprietary OS;

  • Web browser

  • Software patents
  • Free software

  • W3C

  • P2p software widely used

  • social acceptability of widespread hacking of copy protection

  • Copyright expansion

    • "Right to read"

    • No de minimis digital sampling

    • "Fair use" narrowed: effect on potential market "commercial" defined broadly

    • Criminalization

    • Term extension

  • Contractual enclosure: UCITA

  • Trademark dilution

  • Database protection

  • Linking and trespass to chattels

  • International "harmonization" and trade enforcement of maximal exclusive rights regimes
  • Increasing sharing practices and adoption of sharing licensing practices

  • Musicians distribute music freely

  • Creative Commons; other open publication models

  • Widespread social disdain for copyright

  • International jurisdictional arbitrage

  • Early signs of a global access to knowledge movement combining developing nations with free information ecology advocates, both market and nonmarket, raising a challenge to the enclosure movement

For readers interested only in the overarching claim of this chapter - that is, that there is, in fact, a battle over the institutional environment, and that many present choices interact to increase or decrease the availability of basic resources for information production and exchange - table 11.1 may provide sufficient detail.

A quick look at table 11.1 reveals that there is a diverse set of sources of openness.

Another characteristic of the social-economic-institutional struggle is an alliance between a large number of commercial actors and the social sharing culture.

Over the past few years, we have also seen that the global character of the Internet is a major limit on effective enclosure, when openness is a function of technical and social practices, and enclosure is a function of law./5

The Physical Layer

The physical layer encompasses both transmission channels and devices for producing and communicating information.

Transport: Wires and Wireless

Recall the Cisco white paper quoted in chapter 5.

Since the early 1990s, when the Clinton administration announced its "Agenda for Action" for what was then called "the information superhighway," it was the policy of the United States to "let the private sector lead" in deployment of the Internet.

Broadband Regulation

The end of the 1990s saw the emergence of broadband networks.

The following two years saw significant regulatory battles over whether the cable providers would be required to behave as commons carriers.

The AOL-Time Warner merger requirements, along with the Ninth Circuit's finding that cable broadband included a telecommunications component, seemed to indicate that cable broadband transport would come to be treated as a common carrier.

Since 2003 the cable access debate - over whether competitors should get access to the transport networks of incumbent broadband carriers - has been replaced with an effort to seek behavioral regulation in the form of "network neutrality."

This regulatory concept would require broadband providers to treat all packets equally, without forcing them to open their network up to competitors or impose any other of the commitments associated with common carriage.

Open Wireless Networks

A more basic and structural opportunity to create an open broadband infrastructure is, however, emerging in the wireless domain.

As discussed in chapter 6, from the end of World War I and through the mid-twenties, improvements in the capacity of expensive transmitters and a series of strategic moves by the owners of the core patents in radio transmission led to the emergence of the industrial model of radio communications that typified the twentieth century.

As chapter 3 explained, by the time that legislatures in the United States and around the world had begun to accede to the wisdom of the economists' critique, it had been rendered obsolete by technology.

My point here is not to consider the comparative efficiency of a market in wireless licenses and a market in end-user equipment designed for sharing channels that no one owns.

The development of open wireless networks, owned by their users and focused on sophisticated general-purpose devices at their edges also offers a counterpoint to the emerging trend among mobile telephony providers to offer a relatively limited and controlled version of the Internet over the phones they sell.

Municipal Broadband Initiatives

One alternative path for the emergence of basic physical information transport infrastructure on a nonmarket model is the drive to establish municipal systems.

The incumbent broadband providers have not taken kindly to the municipal assault on their monopoly (or oligopoly) profits.


The second major component of the physical layer of the networked environment is comprised of the devices people use to compute and communicate.

The major regulatory threat to the openness of personal computers comes from efforts to regulate the use of copyrighted materials.

One major dimension of the effort to stop copying has been a drive to regulate the design of personal computers.

The efforts to regulate hardware to fit the distribution model of Hollywood and the recording industry pose a significant danger to the networked information environment.

The political economy of this regulatory effort, and similar drives that have been more successful in the logical and content layers, is uncharacteristic of American politics.

Regulation of device design remains at the frontier of the battles over the institutional ecology of the digital environment.

The Logical Layer

At the logical layer, most of the efforts aimed to secure a proprietary model and a more tightly controlled institutional ecology follow a similar pattern to the efforts to regulate device design.

This basic open model has been in constant tension with the proprietary models that have come to use and focus on the Internet in the past decade.

The Digital Millennium Copyright Act of 1998

No piece of legislation more clearly represents the battle over the institutional ecology of the digital environment than the pompously named Digital Millennium Copyright Act of 1998 (DMCA).

The central feature of the DMCA, a long and convoluted piece of legislation, is its anticircumvention and antidevice provisions.

There are two distinct problems with this way of presenting what the DMCA does.

The second problem with the DMCA is that its definitions are broad and malleable.

Another case did not end so well for the defendant.

The point here is not, however, to revisit the legal correctness of that decision, but to illustrate the effects of the DMCA as an element in the institutional ecology of the logical layer.

The more general claim, true for any country that decides to enforce a DMCA-like law, is that prohibiting technologies that allow individuals to make flexible and creative uses of digital cultural materials burdens the development of the networked information economy and society.

The Battle over Peer-to-Peer Networks

The second major institutional battle over the technical and social trajectory of Internet development has revolved around peer-to-peer (p2p) networks.

Peer-to-peer technologies as a global phenomenon emerged from Napster and its use by tens of millions of users around the globe for unauthorized sharing of music files.

The genie of p2p technology and the social practice of sharing music, however, were already out of the bottle.

As the technologies grew and developed, and as the legal attacks increased, the basic problem presented by the litigation against technology manufacturers became evident.

In other words, p2p is developing as a general approach toward producing distributed data storage and retrieval systems, just as open wireless networks and distributed computing are emerging to take advantage of personal devices to produce distributed communications and computation systems, respectively.

How important more generally are these legal battles to the organization of cultural production in the networked environment? was the first major music distribution site shut down by litigation.

It is harder to gauge, however, whether the litigation was a success or a failure from a social-practice point of view.

From the perspective of understanding the effects of institutional ecology, then, the still-raging battle over peer-to-peer networks presents an ambiguous picture.

Prediction aside, it is not immediately obvious why peer-to-peer networks contribute to the kinds of nonmarket production and creativity that I have focused on as the core of the networked information economy.

Recorded music began with the phonograph - a packaged good intended primarily for home consumption.

Musicians and songwriters seem to be relatively insulated from the effects of p2p networks, and on balance, are probably affected positively.

The movie industry has a different industrial structure and likely a different trajectory in its relations to p2p networks.

The harder and more interesting question is whether cheap high-quality digital video-capture and editing technologies combined with p2p networks for efficient distribution could make film a more diverse medium than it is now.

The battles over p2p and the DMCA offer some insight into the potential, but also the limits, of tweaking the institutional ecology.

The Domain Name System: From Public Trust to the Fetishism of Mnemonics

Not all battles over the role of property-like arrangements at the logical layer originate from Hollywood and the recording industry.

None of this institutional edifice could be built without the U.S. government.

The degree to which the increased appropriation of the domain name space is important is a function of the extent to which the cultural practice of using human memory to find information will continue to be widespread.

Domain name disputes have fallen into three main categories.

The point here is not to argue for one type of answer or another in terms of trademark law, constitutional law, or the logic of ICANN.

The Browser Wars

A much more fundamental battle over the logical layer has occurred in the browser wars.

Microsoft's dominance over the operating system and browser has not, as a practical matter, resulted in tight control over the information flow and use on the Internet.

Free Software

The role of Mozilla in the browser wars points to the much more substantial and general role of the free software movement and the open-source development community as major sources of openness, and as a backstop against appropriation of the logical layer.

Software Patents

Throughout most of its history, software has been protected primarily by copyright, if at all.

From the perspective of the battle over the institutional ecology, free software and open-source development stand to lose the most from software patents.

The Content Layer

The last set of resources necessary for information production and exchange is the universe of existing information, knowledge, and culture.


The first domain in which we have seen a systematic preference for commercial producers that rely on property over commons-based producers is in copyright.

Right to Read.

Fair Use Narrowed.

First, it is important to recognize that the theoretical availability of the fair-use doctrine does not, as a practical matter, help most productions.

Second, in the past few years, even this uncertain scope has been constricted by expanding the definitions of what counts as interference with a market and what counts as a commercial use.


Term Extension.

No de Minimis Digital Sampling.

Contractual Enclosure: Click-Wrap Licenses and the Uniform Computer Information Transactions Act (UCITA)

Practically all academic commentators on copyright law - whether critics or proponents of this provision or that - understand copyright to be a public policy accommodation between the goal of providing incentives to creators and the goal of providing efficiently priced access to both users and downstream creators.

The following few years saw substantial academic debate as to the desirability of contractual opt-outs from the public policy settlement.

The reason that ProCD and UCITA generated so much debate was the concern that click-wrap licenses were operating in an inefficient market, and that they were, as a practical matter, displacing the policy balance represented by copyright law.

Trademark Dilution

As discussed in chapter 8, the centrality of commercial interaction to social existence in early-twenty-first-century America means that much of our core iconography is commercial in origin and owned as a trademark.

Three factors make trademark protection today more of a concern as a source of enclosure than it might have been in the past.

In 1995, Congress passed the first federal Anti-Dilution Act.

Ironically, the increase in the power of trademark owners to control uses of their trademark comes at a time when its functional importance as a mechanism for reducing search costs is declining.

Database Protection

In 1991, in Feist Publications, Inc. v. Rural Tel. Serv. Co., the Supreme Court held that raw facts in a compilation, or database, were not covered by the Copyright Act.

Sustained and careful work, most prominently by Jerome Reichman and Paul Uhlir, has shown that the proposed database right is unnecessary and detrimental, particularly to scientific research./37

There is, then, mounting evidence that rights in raw data are unnecessary to create a basis for a robust database industry.

Linking and Trespass to Chattels: New Forms of Information Exclusivity

Some litigants have turned to state law remedies to protect their data indirectly, by developing a common-law, trespass-to-server form of action.

Beyond the roundabout exclusivity in raw data, trespass to chattels presents one instance of a broader question that is arising in application of both common-law and statutory provisions.

The simplest instance of such a case involved a service that Microsoft offered - - that provided access to, among other things, information on events in various cities.

The general point is this: On the Internet, there are a variety of ways that some people can let others know about information that exists somewhere on the Web.

International "Harmonization"

One theme that has repeatedly appeared in the discussion of databases, the DMCA, and term extension, is the way in which "harmonization" and internationalization of exclusive rights are used to ratchet up the degree of exclusivity afforded rights holders.

Take a simple provision like the term of copyright protection.

International agreements also provide a fertile forum for ratcheting up protection.

Countervailing Forces

As this very brief overview demonstrates, most of the formal institutional moves at the content layer are pushing toward greater scope and reach for exclusive rights in the universe of existing information, knowledge, and cultural resources.

Alongside these institutionally instantiated moves to create a self-reinforcing set of common resources, there is a widespread, global culture of ignoring exclusive rights.

The Problem of Security

This book as a whole is dedicated to the emergence of commons-based information production and its implications for liberal democracies.

One concern is that open wireless networks are available for criminals to hide their tracks - the criminal uses someone else's Internet connection using their unencrypted WiFi access point, and when the authorities successfully track the Internet address back to the WiFi router, they find an innocent neighbor rather than the culprit.

However, security concerns need not support proprietary architectures and practices.

More fundamentally, the security concerns represent a lack of ease with the great freedom enabled by the networked information environment.


1. Paul Starr, The Creation of the Media: Political Origins of Modern Communications (New York: Basic Books, 2004).

2. Ithiel de Sola-Pool, Technologies of Freedom (Cambridge, MA: Belknap Press, 1983), 91-100.

3. Bridgeport Music, Inc. v. Dimension Films, 2004 U.S. App. LEXIS 26877.

4. Other layer-based abstractions have been proposed, most effectively by Lawrence Solum and Minn Chung, The Layers Principle: Internet Architecture and the Law, University of San Diego Public Law Research Paper No. 55.

5. The first major treatment of this phenomenon was Michael Froomkin, "The Internet as a Source of Regulatory Arbitrage" (1996),

6. Jonathan Krim, "AOL Blocks Spammers' Web Sites," Washington Post, March 20, 2004, p. A01; also available at

7. FCC Report on High Speed Services, December 2003 (Appendix to Fourth 706 Report NOI).

8. 216 F.3d 871 (9th Cir. 2000).

9. National Cable and Telecommunications Association v. Brand X Internet Services (decided June 27, 2005).

10. Turner Broad. Sys. v. FCC, 512 U.S. 622 (1994) and Turner Broad. Sys. v. FCC, 520 U.S. 180 (1997).

11. Chesapeake & Potomac Tel. Co. v. United States, 42 F.3d 181 (4th Cir. 1994); Comcast Cablevision of Broward County, Inc. v. Broward County, 124 F. Supp. 2d 685, 698 (D. Fla., 2000).

12. The locus classicus of the economists' critique was Ronald Coase, "The Federal Communications Commission," Journal of Law and Economics 2 (1959): 1.

13. City of Abilene, Texas v. Federal Communications Commission, 164 F3d 49 (1999).

14. Nixon v. Missouri Municipal League, 541 U.S. 125 (2004).

15. Bill Number S. 2048, 107th Congress, 2nd Session.

16. Felten v. Recording Indust. Assoc. of America Inc., No. CV- 01-2669 (D.N.J. June 26, 2001).

17. Metro-Goldwyn-Mayer v. Grokster, Ltd. (decided June 27, 2005).

18. See Felix Oberholzer and Koleman Strumpf, "The Effect of File Sharing on Record Sales" (working paper),

19. Mary Madden and Amanda Lenhart, "Music Downloading, File-Sharing, and Copyright" (Pew, July 2003),

20. Lee Rainie and Mary Madden, "The State of Music Downloading and File-Sharing Online" (Pew, April 2004),

21. See 111 F.Supp.2d at 310, fns. 69-70; PBS Frontline report,

22. A. M. Froomkin, "Semi-Private International Rulemaking: Lessons Learned from the WIPO Domain Name Process,"

23. Jessica Litman, "The Exclusive Right to Read," Cardozo Arts and Entertainment Law Journal 13 (1994): 29.

24. MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993).

25. Lawrence Lessig, Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity (New York: Penguin Press, 2004).

26. Jessica Litman, "Electronic Commerce and Free Speech," Journal of Ethics and Information Technology 1 (1999): 213.

27. See Department of Justice Intellectual Property Policy and Programs,

28. Eldred v. Ashcroft, 537 U.S. 186 (2003).

29. Bridgeport Music, Inc. v. Dimension Films, 383 F.3d 390 (6th Cir.2004).

30. 383 F3d 390, 400.

31. Mark A. Lemley, "Intellectual Property and Shrinkwrap Licenses," Southern California Law Review 68 (1995): 1239, 1248-1253.

32. 86 F.3d 1447 (7th Cir. 1996).

33. For a more complete technical explanation, see Yochai Benkler, "An Unhurried View of Private Ordering in Information Transactions," Vanderbilt Law Review 53 (2000): 2063.

34. James Boyle, "Cruel, Mean or Lavish? Economic Analysis, Price Discrimination and Digital Intellectual Property," Vanderbilt Law Review 53 (2000); Julie E. Cohen, "Copyright and the Jurisprudence of Self-Help," Berkeley Technology Law Journal 13 (1998): 1089; Niva Elkin-Koren, "Copyright Policy and the Limits of Freedom of Contract," Berkeley Technology Law Journal 12 (1997): 93.

35. Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 349-350 (1991).

36. Directive No. 96/9/EC on the legal protection of databases, 1996 O.J. (L 77) 20.

37. J. H. Reichman and Paul F. Uhlir, "Database Protection at the Crossroads: Recent Developments and Their Impact on Science and Technology," Berkeley Technology Law Journal 14 (1999): 793; Stephen M. Maurer and Suzanne Scotchmer, "Database Protection: Is It Broken and Should We Fix It?" Science 284 (1999): 1129.

38. See Stephen M. Maurer, P. Bernt Hugenholtz, and Harlan J. Onsrud, "Europe's Database Experiment," Science 294 (2001): 789; Stephen M. Maurer, "Across Two Worlds: Database Protection in the U.S. and Europe," paper prepared for Industry Canada's Conference on Intellectual Property and Innovation in the Knowledge-Based Economy, May 23-24 2001.

39. Peter Weiss, "Borders in Cyberspace: Conflicting Public Sector Information Policies and their Economic Impacts" (U.S. Dept. of Commerce, National Oceanic and Atmospheric Administration, February 2002).

40. eBay, Inc. v. Bidder's Edge, Inc., 2000 U.S. Dist. LEXIS 13326 (N.D.Cal. 2000).

41. The preemption model could be similar to the model followed by the Second Circuit in NBA v. Motorola, 105 F.3d 841 (2d Cir. 1997), which restricted state misappropriation claims to narrow bounds delimited by federal policy embedded in the Copyright Act.

42. New York Times v. Sullivan, 376 U.S. 254, 266 (1964).