filizefe's blog

Book Review: “The Laws of Disruption: Harnessing the New Forces that Govern Business and Life in the Digital Age” by Larry Downes

Posted in review by filizefe on December 7, 2009

Revolution is coming, as well as the consequences of law and business in digital life. Innovative communication technologies disrupt the social, political, and legal systems. New forces, driven by these communication technologies, are replacing the government forms of the industrial age. Larry Downes, in his new book “The Laws of Disruption: Harnessing the New Forces that Govern Business and Life in the Digital Age”, explores this intersection of law and business in digital life, describes emerging principles that are shaping a new legal code, and draws a roadmap especially for policy makers and lawyers in this transformation period.

Downes is a consultant on developing business strategies in the digital age and the author of the Business Week and New York Times business best-seller, “Unleashing the Killer App: Digital Strategies for Market Dominance”, which was named by The Wall Street Journal as one of the five most important books ever published on business and technology.  (larrydownes.com, 2009) (supernovahub.com, 2009)

Moore's Law: Plot of CPU transistor counts against dates of introduction. The curve shows counts doubling every two years.

Moore’s Law and Metcalfe’s Law, show that the communication technologies are getting faster, cheaper, smaller, and the value of the network expands exponentially with the number of connected users to the system. Law, by design, changes slowly. Downes draws the central thesis of the book around these principles which is “technology changes exponentially, but social, economic, and legal systems change incrementally.” The normal evolution of legal systems is slow and incremental. But the innovative communication technologies disrupt the current system and ultimately demand dramatic transformation.

In particular, the book brings forward nine emerging principles for a new legal foundation, built on the information economy. These nine principles, divided into three groups, reflect the major components of digital life and form the laws of disruption:

Private Life

1.            Convergence – When Worlds Collide

2.            Personal Information – From Privacy to Propriety

3.            Human Rights – Social Contracts in Digital Life

Public Life

4.            Infrastructure – Rules of the Road on the Information Highway

5.            Business – All Regulation is Local

6.            Crime – Public Wrongs, Private Remedies

Information Life

7.            Copyright – Reset the Balance

8.            Patent – Virtual Machines Need Virtual Lubricants

9.            Software – Open Always Wins … Eventually

The exploration of these critical areas is not new to the reader; Yochai Benkler in his book published in 2006, “The Wealth of Networks: How Social Production Transforms Markets and Freedom”, examines the emerging social production in the digitally networked environment and how it transformed our most fundamental understandings of our society, economy and democracy. (Benkler, 2006) While Benkler is targeting academics about the same topics framing cultural reflections, Downes aims policy makers and business lawyers with up to date case-studies, and future predictions including warning sign.

Downes in his book, not only explores these nine critical areas in a very well structured outline with solid up to date stories from business and social life, but also suggests solutions to the emerging consequences. For example, in the last part “Information Life”, “Law Seven: Copyright”, Downes explores the history of copyright from its beginning to the present, and proposes a radical but simple solution, which is resetting the balance between information producers and users: He proposes setting realistic time limits to the legal protection on the content, restoring the concept of fair use, and undoing the Digital Millenium Copyright Act of 2000, which has done considerable damage to the balance between information producers and users and added no value. He emphasizes that markets do a better job than traditional forms of government in establishing rules in legal protection of digital content.

The metaphor of fast cars and speed limits to describe the state of copyright is a great one:  “It is now virtually impossible for average consumers to avoid violating copyright law on a daily basis. It’s as if every time cars were made faster, speed limits were reduced to minimize the incidence of speeding.” (Downes, 2009 pg 207). Almost everyone agrees that the copyright system is broken, “72 percent of Americans ages 18 to 29 don’t care whether the music they downloaded onto their computers was copyrighted or not”. (Downes, 2009 pg 207)

Metcalfe's Law: Two telephones can make only one connection, five can make 10 connections, and twelve can make 66 connections.

As Moore’s Law makes it possible to digitize and store information much easier every day, Metcalfe’s Law helps it to explain how the information is exponentially distributed within the network. Once the information is digitized, any user can make any number of perfect duplicates. Chris Anderson in his book “Free: the Future of a Radical Price”, has already predicted that revolution is coming, even happening right now. Anderson takes a business approach to frame the topic, where Downes takes it from the legal point of view.

Anderson explains new business models where every product on the digital platform is competing with the price of “free” and it is already happening now. Because once it is digitized, the marginal cost of a product approaches zero and so its price falls toward zero. However, it is not threatening profitability of a product. (Anderson, 2009) Downes agrees with it: “The Law of Disruption always challenges the existing rules and profit allocations of industries, but in the end it creates more value than it destroys.” (Downes, 2009 pg 218)

Communication technologies are dramatically rewriting the rules of business and social life. This is disruptive and revolutionary. As real life and digital life continue to converge, the rise of consequences in private, public and information life is inevitable. I highly recommend “The Laws of Disruption” to lawmakers, entrepreneurs and anyone who is interested in witnessing and taking advantage of the revolutionary change in our economic, social and private life that digital technologies and emerging ways of communication bring about.

References

Anderson, C. (2009). Free: The future of a radical price. New York: Hyperion.

Benkler, Y. (2006). The wealth of networks: How social production transforms markets and freedom. New Haven [Conn.]: Yale University Press.

Downes, L. (2009). The laws of disruption: Harnessing the new forces that govern life and business in the digital age. New York: Basic Books.

Law of disruption (Nov 30, 2008) In Wikipedia, The Free Encyclopedia. Retrieved Dec 4, 2009 from http://en.wikipedia.org/wiki/Law_of_disruption

Supernova Hub (2009) In Speakers, Supernovahub.com. Retrieved Dec 4, 2009 from http://supernovahub.com/speakers/speaker-info/?sid=109

The Laws of Disruption (2009) In larrydownes.com. Retrieved Dec 4, 2009 from http://larrydownes.com/the-laws-of-disruption/

Advertisements

2 Responses

Subscribe to comments with RSS.

  1. […] Laws of Disruption – Filiz, […]

  2. ctracey said, on December 9, 2009 at 8:32 pm

    Thanks for this great review! Now you’ve got me all excited and wanting to go read this book too! What you mentioned about Downes’ proposal to the solution for copyright is something I agree quite strongly. I think that the restoration of what copyright laws are meant to do should ultimately be the best solution for everyone. Yes, maybe some adjustments should be done to include the obviously evolved world. But in general a step back makes a bit more room for everyone involved.
    I do not necessarily think that people enjoy breaking copyright laws everyday. But the fact that people do break copyright laws everyday (without even really trying) says a lot about the inadequacy of current legislations.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: