Open Tech Today - Top Stories

Saturday, March 03, 2007

Enemies of Innovation

Empires are often built upon scarcity and control of distribution. Things like digital rights management (DRM) and proprietary ownership of standards are tools for protecting business empires. However, scarcity is the enemy of innovation. And the Internet is turning fortresses into sand castles.

The ultimate problem faced by companies fighting to maintain a death grip on their content (whether it's music, software code or news) is that the artificial scarcity of their content is disappearing. So are their distribution monopolies.

You do not need to watch CNN to see one of their news stories. You can find it online, and not only on the CNN website. It is likely posted on hundreds of blogs and other websites. It can be emailed to you, downloaded using BitTorrent, podcast or viewed on YouTube. The economics and business models of content are changing.

These new dynamics are explained with wonderful clarity by TechDirt in a series of articles about the economics of scarcity.

YouTube, open source, blogs, BitTorrent, Skype, Craig's List. They are all exploding old business models based on artificial scarcity, and shifting the competitive landscape for what value means in a wired world (and marketplace).

But this is not the end of the world. Scarcity is the enemy of innovation. Today, content scarcity is disappearing, but that only means that innovation can accelerate.

Categories: innovation, economics, DRM

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