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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.  (, 2009) (, 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.


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

Supernova Hub (2009) In Speakers, Retrieved Dec 4, 2009 from

The Laws of Disruption (2009) In Retrieved Dec 4, 2009 from

Book Review: “The Wealth of Networks: How Social Production Transforms Markets and Freedom” by Yochai Benkler

Posted in review by filizefe on November 16, 2009

Benkler, Yochai. “The Wealth of Networks: How Social Production Transforms Markets and Freedom” Yale University Press, New Haven, 200.

In his book “The Wealth of Networks: How Social Production Transforms Markets and Freedom”, Yochai Benkler examines the emerging social production in the digitally networked environment and how it transformed our most fundamental understandings of our society, economy and democracy. These new ways in which we produce and share information in the digital network, not only changed all of our lives but also the way information is capitalized, emphasizing on the commons-based peer production, the collaborative efforts, such as Wikipedia, Creative Commons and open source software, which are based on sharing information. (The Wealth of Networks is itself published under a Creative Commons license)

There are three parts to the book. In the first part, Benkler explains the emerging patterns of nonmarket individual and cooperative social behavior, and how this affects the economics of information production and sharing. The second part delves into the political economy of property and analysis to claim that these emerging practices offer defined improvements in autonomy, democratic discourse, cultural creation, and justice. The third section addresses the policies and questions the future of the internet and opportunities for democratic participation, and the creation of culture.

In the industrial society, information economy has been simply described as the information and services, rather than physical goods and services, which are based on the exchange of knowledge (DFEEST, 2008). Industrial information economy is now being displaced by the networked information economy. As Chris Anderson also argues the post-industrial information economy in his book “Free: the Future of a Radical Price”, the marginal cost of every product on the digital platform approaches zero, because once it is digitized it costs almost nothing to reproduce and distribute information. Information as a good and information technologies have replaced the goods which are made of atoms, and made a radical change in the way information is capitalized.

Benkler brings forward the possibility that “a culture where information were shared freely could prove more economically efficient than one where innovation is frequently encumbered by patent or copyright law, since the marginal cost of re-producing most information is effectively nothing.” (Wikipedia, 2009) He examines this radical economic change and how social dynamics drives the information production and information sharing to a non-market and decentralized framework. Previous communication technologies centralized communication, but the Internet and the declining costs of computation, communication and storage capacity provide new ways of social sharing and exchange of information. Although social sharing and exchange of information, is not a new phenomena. It’s not the first time we do good things to each other as social beings, but It’s the first time it is having major economic impact.

Information economy is shifting from physical products to decentralized and non-market information goods. Networked information economy, is not dependant on the market strategies. The most important components of the information economy – computation, storage and communications capacity – are now in the hands of population at large.

As a modality of economic production, social sharing and exchange is decentralized authority in a non-market based production framework. Below chart shows the four transactional frameworks and where this emerging networked information economy takes its place.

Benkler's four transactional frameworks

Benkler's four transactional frameworks

Benkler brings four economic observations:

1- The proprietary strategies of information economy are not as dominant as it is perceived. Most of education, arts, and sciences are merit based or volunteer based. Most of information is derived from non-market based systems.

2- The proprietary strategies make access to information resources more expensive for all as ownership becomes more restrictive.

3- As the information production, storage and sharing systems become cheaper and accessible, non-proprietary peer-production and sharing models become more attractive than ever.

4- The rise of peer-production: We coproduce and exchange economic goods and services, but we do not count these in the economic census. “The pooling of human creativity and of computation, communication, and storage enables nonmarket motivations and relations to play a much larger role in the production of the information environment than it has been able to for at least decades, perhaps for as long as a century and a half.” (Benkler, 2006, pg. 464)

In conclusion, Benkler in his book, brings a solid analysis to the emerging networked information economy, a detailed explanation to the social production and sharing dynamics, and discusses the social and cultural possibilities in the future. The book covers many important issues, such as intellectual property, copyright laws, personal freedom, and democracy, and it might worth to read through the whole book for a deeper understanding of the nature of the networked information economy. However, the length of the book and his long labyrinthine sentences are intimidating. I strongly suggest readers to have a look at his interviews, talks and lectures online to get the gist of his argument and warm up, before reading the book.


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.

DFEEST (2008). “What is the Information Economy?”. Creating Online Opportunity. Information Economy. Retrieved on Nov 15, 2009 from

Yochai Benkler. (Oct 13, 2009). In Wikipedia, The Free Encyclopedia. Retrieved Nov 16, 2009 from