Free Software Foundation, Grokster, Strategy, and the MPAA

All of the Copyfight coverage
of the Grokster case is worth following. This one reminds me the
differing mindsets of executives and policy makers. I was lucky enough
to learn strategy from Mike Porter as he was writing Competitive Strategy. His course was the hottest course at the Harvard Business School.

Several years later, I went back to Harvard to get my doctorate at the
Business School. As part of that process I took the basic course in
Industrial Economics from Richard Caves
who was Porter’s thesis advisor and learned that Porter was possibly
even more clever than I already thought. Porter’s fundamental insight
was to take the academic research field of Industrial Economics and
invert it. Industrial Economics studies the question of market
failures. What conditions lead to markets that don’t conform to the
economic ideal of perfect competition? What conditions make monopolies
and oligopolies likely? The economists study this area with an eye
toward what public policies are useful and necessary to maintaining
competition in its close to ideal form.

Porter’s genius was to see that an economists’ market failure was a
CEO’s wet dream. Competitive strategy could be viewed as an effort to
create market failures. This is what executives are trained to do and
rewarded for. Absent the appropriate policy checks and balances, you
end up with the world that the RIAA and MPAA hope to preserve.

Free Software Foundation tears MPAA a new one in Grokster brief. Cory Doctorow:
The Free Software Foundation and New Yorkers for Fair Use have filed a
brief in Grokster, EFF’s Supreme Court case to establish the legality
of P2P networks. Eben Moglen, the author of the brief, really lights
into the RIAA and MPAA — he’s a fantastic writer:

At the heart of Petitioners’
argument is an arrogant and unreasonable claim–even if made to the
legislature empowered to determine such a general issue of social
policy–that the Internet must be designed for the convenience of their
business model, and to the extent that its design reflects other
concerns, the Internet should be illegal.

Petitioners’ view of what constitutes the foundation of copyright
law in the digital age is as notable for its carefully-assumed air of
technical naivete as for the audacity with which it identifies their
financial interest with the purpose of the entire legal regime.

Despite petitioners’ apocalyptic rhetoric, this case follows a
familiar pattern in the history of copyright: incumbent rights-holders
have often objected to new technologies of distribution that force
innovation on the understandably reluctant monopolist.

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