Changing not just the aging Business Model!

Innovation, technology and extreme social connectivity are testing and pushing the bounds of public policy and law. First these “disruptions” exerted pressure on the traditional business models, forcing businesses to pause, and take stock of the changing user role and behavior. Some businesses reinvented themselves and changed the course. Those with more inertia just folded up.

But these changes still operated within the limits defined by the existing legal and policy frameworks.  But now those structures has started showing signs of strain under the onslaught.

Take for example, a situation where an innocent teenager, venting his frustration on Facebook, faces serious charges of “thinking” of committing mass homicide, and faces possible conviction. In the pre-Facebook era the youngster harmlessly airing of his annoyance would not have travelled beyond his friends with hardly any consequences.  But now a complete stranger “friend” can notice his remarks on the social network and trigger serious consequences for the boy! Paranoia amplified X times over social networks?  Now your careless rant in 140 characters can lead to loss of job, or, make you a defendant in defamation suits.

We are still figuring out how to deal with the ever-shrinking degrees of separation in social interactions! As separation vanishes so does the notion of privacy.

Building pressure for policy changes

The explosive growth of “Sharing economy” has cities scratching their heads as they see threat to the hospitality industry, auto rental and taxi services. Not only the cities are facing impact of lowering tax revenue, they are not sure how to balance the interest of all sides concerned. Airbnb massive popularity has polarized landlords, tenants, hotels owners and worker’s unions in cities like New York and San Francisco.

City of San Antonio is wresting with the issue whether Lyft is a taxi service or "a transportation network service powered by cell phones matching people with empty seats?”

Aereo is another interesting case where the highest court of the land is considering whether housing an antenna and a DVR in a remote location and accessing recorded broadcast TV content over internet, constitutes “public performance” violating the Copyright Act? At the heart of the matter is the practice of “channel bundling” that is getting increasingly unpopular.  Cable companies argue that viewers would not be able to discover the lesser known channels unless these were bundled with more expensive ESPN! Seriously? 

 And before you dive deep into legal definitions consider the survey from Nielson that shows  the trend in cable content consumption. It is anybody's guess if this trend is  responsible for giving rise to the practice of cable cutting.

                                                   More channels are not able to move the needle

 

Is providing internet services is akin to a utility? FCC is grappling with this question and its collateral fallout of the issue of net neutrality.  The rising demand of  videos hogging bandwidth is forcing a second look at how internet is “interconnected.”  Tech companies and VCs strongly believe that creating a paid for fast lane would kill innovation.

The idea of “digital ownership” is mired in confusion when you try to explore the limits of what an owner can do. Do you have a right to sell a used eBook? There is no line separating “new” and “used” digital property. You can’t hold a garage sale of your digital assets.

Or how about the question of searching a mobile phone, of a person arrested, without a warrant? Again Supreme Court is grappling with the issue of what is “private” in the era of Facebook and Twitter? Can the arresting office scan the Facebook entries on the phone without a warrant but not the private information held in the address book or the emails?

One interesting offshoot is the case of Outbox, a startup that was striving to clean up your mailbox by digitizing and providing a soft copy of your postal mail.  They met stiff resistance from USPS management because USPS felt that this step would go against the interest of those who flood junk mails in your boxes. As this report says, these junk mailers are the “real” customers for the Agency.

Change is constant: Its velocity is not!

 

Clearly we are in the midst of major transitions fuelled by a strange mixture of innovation and resistance to change.  Granted that the laws and policies take time to evolve, given the vested incumbency and the need to balance the coin on its edge. Taking the foot off the pedal is not an option.

Such disruptions define progress, and have been happening throughout the history.  Science drove groundbreaking changes to our understanding in the last two centuries.  Now innovation has taken the baton. 

What is amazing is that we have a perfect ringside seat to a multitude of fundamental “disruptions” compressed in a short period of time.