Technology and Business Models

Here some thoughts prompted by the Q&A for Panel 1 at Southwestern’s Copyright Reform Conference.

One idea that came up was the way in which law and technology intersect. Nimmer claimed that the 1976 Act would have addressed DeCSS. Fred von Lohmann said no, Betamax and other cases would have said non-infringing uses mean DeCSS is allowed.

The part that I am not sure worked was when FvL ceded that DVDs would not have been offered had it not been for the DMCA, but that now we don’t need that protection. In other words, the DMCA was necessary in 1977, but not needed for continuing success of the DVD market today. DVDs would still be in play with or without the DMCA.

When I followed up with him he said that the point was that incumbent copyright industry often if not always overstates the way disruptive technologies will impact creation. That point makes more sense to me.

Yet, by ceding that at some point in time one had to have the DMCA to encourage the industry to pursue DVDs, a bigger point comes to the fore. One does not know what technology will or won’t be disruptive. Furthermore, because we don’t know we should allow for more open systems to see what happens. Nonetheless, at least with DVDs we may find that certain technologies will not be pursued without the law agreeing to protect an existing business model.

Put differently, I suggest that if the law is protecting a business model, it should do so for a limited time (and I think that is what FvL was trying to say). This explanation explains the seeming inconsistency with DVDs and the DMCA. One may have to offer protection to stimulate the incumbent or new endeavor. Once that model is flourishing, however, one should cease to offer that protection. Of course as a practical matter, once an industry has that protection, it will not give it up easily. The best question then may be: How do we assess when protection is necessary and when to remove that protection? Simply saying that industry in hindsight overstates the problem or is incorrect about the effects does little to help the system move forward. More on that in follow-up posts about the conference.

One thought on “Technology and Business Models

  1. Loved your post. You sound more like an economist than a lawyer — and this is intended as compliment. Reminds me of your neighbor David McGowan, who also has an economic bent to his IP law analysis.

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