The law is strangling innovation

(written by Lawrence Krubner, however indented passages are often quotes)

A great post on how the law is strangling innovation:

The White House is asking us to give them ideas on what is blocking innovation in America. I thought I’d give them an honest answer. Here it is:

Current intellectual property laws are blocking innovation.President Obama just set a goal of wireless access for everyone in the US, saying it will spark innovation. But that’s only true if people are allowed to actually do innovative things once they are online.

You have to choose. You can prop up old business models with overbearing intellectual property laws that hit innovators on the head whenever they stick their heads up from the ground; OR you can have innovation. You can’t have both. And right now, the balance is away from innovation.

Let’s take some specific examples to show why that is so. When Napster first showed up, it was innovative. Heaven knows it changed the world. And instead of letting this creativity flourish, make money, and create jobs, the law was used to kill it. And kill it it did. The law is still trying to kill or at least marginalize peer-to-peer technology, and so it has never been used to the full.

To understand why that is a loss to innovation, you might want to watch this 2005 panel discussion on peer to peer software, “P2P: Pirates, Producers, & Purchasers: Toward a New Ecology of Music and Entertainment,” one of the most depressing you can watch if you actually care about innovation. You can view it as a video here. It was at a conference on innovation and IP law that I attended that was sponsored by the University of North Carolina, and I’ll never forget Gene Hoffman, who had been the CEO of eMusic, who talked about how innovation was being restricted and contained by the law and pointed out how much money could have been made with the new technology for enjoying music if fear had not blocked innovation. He and others on the panel also talk about some economic advantages of peer to peer and how it can reduce the costs of bandwidth in distribution, which is a real factor that could help independent startups.

Today, thanks to the heavy hand of the law, not much new was allowed to happen, and eMusic’s customers are of an average age of 39, and of course it’s young people who can make a music business hugely successful. Trying to figure out how to offer music legally and also in a way that will appeal to young people hasn’t yet been completely solved, mainly because no one is trying to, and most all the innovation has been going into trying to block piracy instead of thinking about ways to appeal to customers, and it’s holding innovation back. Peer to peer, as one panelist points out, makes it possible to offer esoteric music that is not otherwise made available for cost reasons. The panel convinced me that shortsightedness was a block against innovation, and it’s even more depressing to view today than it was five years ago. When Grokster was decided in 2005, it really was a death knell for a certain kind of innovation in the music space.

That was a choice that America made. They could have changed the law, if they had had the foresight to realize this was a new way to make money from technology and for artists, but instead it chose to protect the old business model. So it used a legal hammer to force technological innovation to cease, go underground, or self-limit what it could otherwise do.

Now, you can make that choice. It’s up to a society to dec