[Infowarrior] - "Big Content" Is Strangling American Innovation

[Richard Forno]

"Big Content" Is Strangling American Innovation

11:45 AM Thursday March 31, 2011 
by James Allworth 

http://blogs.hbr.org/cs/2011/03/big_content_is_strangling_amer.html


Innovation has emerged as a key means by which the US can pull itself out of this lackluster economy. In the State of the Union, President Obama referred to China and India as new threats to America's position as the world's leading innovator. But the threats are not just external. One of the greatest threats to the US's ability to innovate lies within: specifically, with the music and movie business. These Big Content businesses are attempting to protect themselves from change so aggressively that they risk damaging America's position as a world leader in innovation.

Many in the high technology industry have known this for a long time. Despite making their living relying on it, the Big Content players do not understand technology, and never have. Rather than see it as an opportunity to reach new audiences, technology has always been a threat to them. Example after example abounds of this attitude; whether it was the VCR which was "to the American film producer and the American public as the Boston strangler is to the woman home alone" as famed movie industry lobbyist Jack Valenti put it at a congressional hearing, or MP3 technology, which they tried to sue out of existence. In fact, it's possible to go back as far as the gramophone and see the content industries rail against new technology. The reason why? Every shift in technology is difficult for them. Just as they work out how to make money using one technology, it changes.

The sensible thing for them to do would be to learn how to deal with the change. Instead, their approach to every generation of technology is either to attempt to stymie it so badly that nobody wants it, or to stop it altogether through their influence with lawmakers in Washington DC.

Now, in the past, these efforts might have impacted technology that only involved the consumption of movies and music. But as the technology used to display movies and listen to music converges with other technology — technology where America has historically led — Big Content's attempts to protect their business model threaten innovation at the very heart of America's competitive advantage.

Let's take a look at one specific example: the industry's repeated attempts to introduce innovation-chilling legislation. The latest is COICA, designed to allow the Government to take down any website that infringers copyright — and lock the domain. Fortunately, a number of American legislators have taken a more clear-headed view of the problem. It was defeated late last year in Congress, after being described by Senator Ron Wyden as a "bunker buster cluster bomb." But it's back again. In a recent interview, Silicon Valley Congressman Zoe Lofgren describes the back and forth with the content industry and their requests for legislation like COICA as increasingly draconian.

These laws won't just have the power to stop copyright infringers. They have the potential to stop legitimate uses that the content industries don't like — examples like YouTube and even the early MP3 players are examples of legitimate uses that big content have gone after. As Senator Wyden put it: "the collateral damage of this statute could be American innovation, American jobs, and a secure Internet."

The result of laws like this? Startups — the engine of America's growth — will just go elsewhere. China and India are creating environments extremely conducive to disruptive innovation. Even Europe is benefiting — one of the most promising recent music services, Spotify, is hosted in Europe. It's still not available to American consumers.

Unfortunately, a subset of what COICA proposes is already in existence today. Immigrations and Customs Enforcement (known as ICE) has been simply seizing domains of websites suspected of copyright infringement at taxpayer expense. Because of the sheer number of sites the content industries want taken down, they innovated — by bypassing due process altogether. ICE have taken down entire sites for only linking to files — for example, torrent-finder.com. The sites have no opportunity to stop this process until after they have been taken down.

If you're the next YouTube, would you want to locate here in the US and risk having the government simply switch off your site at the behest of Big Content? Or might it not be easier to find a more benign environment to create your business in?

The ultimate irony in all of this is that if we stop giving the content industries what they want — sweeping, blanket protections — we may actually be doing them a favor. They wanted the VCR banned. It turned out to be one of the most profitable technologies for the movie industry in its history. Ignoring their requests may turn out to be cruel to be kind — instead of focusing on trying to fight the technology, they'll be forced to find ways of profitably embracing it.

The next generation of technology companies are already starting to shift overseas. Before conceding to any more demands for protection from Big Content, America would do well to consider what it places at risk.

James Allworth is a Fellow at the Forum for Growth and Innovation at Harvard Business School.