2012 is the Year the Dark Ages get Dangerous

Last year at about this time, I wrote a post predicting that 2011 would be the year that “people will finally realise the pointlessness of dark ages competitive advantage”.

I went on to say this:

Competitive advantage from the dark ages is anything you do which denies access to resources to competitors.

Denying access to resources is dark ages because it hurts not only competitors but customers as well.

Copyright and patents are a dark ages response to protecting competitive advantage. If you’re the creator of something, you get to tell people when they can use it, usually in exchange for a fee. You get to tell competitors they can’t use it at all.

But in both cases, all you’re really doing is setting up a situation where everyone you constrain is highly motivated to break your constraints. I mean, you only have to look at the music industry to see this. That’s an industry that trained a whole generation that breaking the law is OK, entirely because of the constraints it attempted to impose.

At the time, I could not have predicted the patent wars that would go on between various players in the market. Nor would I have imagined that these battles would incarnate themselves in the tussles between Samsung and Apple. It started in the Spring last year, any by August, the two companies were engaged in 19 lawsuits in 9 countries. The ostensible reason for the litigation on both sides was to protect their intellectual property.

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That is not the real reason, of course.

The real reason is both companies are in a race to create network externalities based on consumption, and they both know that the player with the most customers, and therefore apps, is going to win in the end. It therefore makes sense to take any measure to slow consumption.

Even measures which actually hurt consumers. Which, in this case, is anyone who wants to buy and iPhone or a Galaxy device in countries where they’re presently banned.

But this is not the 50s and the 60s when consumers had little or no power of their own. No, its the age when consumers, linked together by the internet, can make decisions that make or break the big corporates. And that, I predict, is where 2012 is going to get dangerous for companies who rely on Dark Ages intellectual property protections.

I mean, look at the state the record industry is in now. Consumers did that, when they got fed up with copyright restrictions on their enjoyment of music.

So I think the timing of my prediction last year was premature, because quite patently, companies like Apple and Samsung have not seen the pointlessness of dark ages intellectual property protections yet. Even if consumers have.

I think 2012 is the year we’ll see consumers more actively begin to revolt against this stuff, particularly when it affects them in direct ways. Like, for example, when companies tell them which programmes they can watch on their devices, or which information they’re entitled to read. It isn’t so hard to put stuff in iTunes, for example, that’s not supposed to be there.

Or when banks decide based on some secret algorithm which loans might be available and at what price. It isn’t so hard to actually get a loan, if you know where on the Internet to look, particularly with the emergence of new models like peer to peer.

Or, when companies like Apple and Samsung use their patents to block sales of desirable electronics. Because, lets face it, there’s a grey market in every country where you can get anything you want, within reason.

The consumer rebellion that’s coming will,  I think, result in some very sore balance sheets this year. Especially for those companies who have relied on Dark Ages intellectual property protections to make yesterday’s innovation profitable.

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