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Team Republican's SOPA dilemma

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Will they vote for an innovation economy or for the government to interfere and preserve the staus quo?what will be the unintended consequences of the passage of the Republican's SOPA bill? Does the recent Republican outlash against capitalism and free markets lead by Gingrich, Perry and Santorum translate into support fior protecting large incumbent corporations from competition?

 

 

 

 

 

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JAMES ALLWORTH AND MAXWELL WESSEL

James Allworth and Maxwell Wessel are members of the Forum for Growth and Innovation, a Harvard Business School think tank developing and refining theory around disruptive innovation. Follow them on Twitter at @jamesallworth and @maxwellelliot.

The Real SOPA Battle: Innovators vs. Goliath

10:23 AM Wednesday January 18, 2012

by James Allworth and Maxwell Wessel | Comments (20)

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Looking around the web today, you're going to see a few things that are a bit different. Wikipedia is going dark. WordPress is too. Google has its logo blocked out. Twitter is absolutely abuzz. It all relates to legislation known as SOPA in front of the US House of Representatives, and PIPA in front of the US Senate. If you'd like to understand what the legislation would actually mean for the Internet, you can see HBR's earlier coverage about the bill from before it was renamed. But the purpose of this article isn't to explain what SOPA and PIPA will do. Instead, it's about explaining what's brought them about: SOPA and PIPA are prime examples of big companies trying to do everything they can to stop new competitors from innovating. They're also examples of how lobbying in the United States has become one of the most effective ways of limiting this sort of competition.

 

The argument over this legislation has essentially been characterized in the press as having two sides. The first side, which is generally represented by big content, is that piracy (and any new technology that facilitates it) is an existential threat to any business based on intellectual property. That's actually a line that has been used a few times before — most famously by Jack Valenti, head of the MPAA, when he testified in front of congress that the VCR was to the movie industry what the Boston Strangler was to women.

 

And on the other side of the argument? Well, they have been mostly characterized as the "technology industries." They've been making the case that SOPA and PIPA will chill innovation and threaten free speech.

 

But "content" vs "technology" doesn't do justice to describing the two sides. Tim O'Reilly, the CEO of O'Reilly Media — a very well-known publishing and media company that derives a large portion of its revenue from the sale of books — has been one of the most ardent critics of SOPA and PIPA. On the other hand, GoDaddy.com, the largest of the web's domain name registrars, was very much in favor of SOPA — at least until a boycott caused them to back down. Similarly, there are plenty of other technology firms that have supported SOPA.

 

So if "content" vs "technology" doesn't capture what's going on in this fight, what does? Well, SOPA makes much more sense if you look at the debate as big companies unwilling to accept change versus the innovative companies and startups that embrace change. And if we accept that startups are created to find new ways to create value for consumers, the debate is actually between the financial interests of "big content" shareholders versus consumer interests at large.

 

If you take a look at many of the largest backers of SOPA or PIPA — the Business of Software Alliance, Comcast, Electronic Arts, Ford, L'Oreal, Scholastic, Sony, Disney — you'll see that they represent a wide range of businesses. Some are technology companies, some are content companies, some are historic innovators, and some are not. But one characteristic is the same across all of SOPA's supporters — they all have an interest in preserving the status quo. If there is meaningful innovation by startups in content creation and delivery, the supporters of SOPA and PIPA are poised to lose.

 

Even for those SOPA supporters that are historic innovators, their organizations focus on improving products in the pursuit of profit. They innovate to increase prices and limit production cost. Even when new models and technologies give rise to huge businesses, these incumbent firms reject meaningful innovation.

 

On the other side of the debate, you'll see a few the most successful companies in recent history. Wikipedia. Google. Twitter. Zynga. What these firms have in common is they have upended entire industries — and many are still in the process of doing so. Each of these businesses has roots in embracing new technologies and building models to deliver value to customers at the lowest cost. They're fighting this legislation because they're aware it will tip the finely tuned balance of creative destruction against startups and very much in favor of companies unwilling to embrace change. For example, Viacom has been locked in a legal fight with YouTube — so far, unsuccessfully. If SOPA were to become law, however, Viacom would be able to entirely shut down YouTube's revenue stream while the case was in court. Balance tipped.

 

To be fair to the big companies supporting SOPA and PIPA, they're acting rationally. From their perspective, investing in lobbying instead of business model innovation is a sensible investment. Jack Abramoff has recently detailed how a 22,000% ROI isn't unusual for firms hiring lobbyists.

 

But even if it makes sense for these companies to support SOPA and PIPA, do we want to censor the Internet and limit innovation? Should our legislative process be used to protect the business interests of firms unwilling to embrace change? A recent exchange on Twitter between Jack Dorsey, co-Founder of Twitter, and Steve Case, the Co-Founder of AOL, summed it up nicely:

 

Jack: Startups collaborate & redefine. As companies and organizations grow, they naturally tend to defend & react, both internally and externally.

Steve: Agree! Think of it as attackers vs defenders. Entrepreneurs attack/disrupt to maximize upside. Corp execs defend to protect downside.

 

SOPA is a legislative attempt by big companies with vested interests to protect their downside. And unfortunately, these companies have conscripted Congress to help them. What's worse is that even though limiting start-up innovation might help big content in the short run, it's not going to do them in favors in the long run. Nor is going to do America any favors. In the midst of one of the worst recessions in living memory, passage of legislation like this is just going to result in innovators moving to geographies where the regulatory environment is more favorable. Start-ups will be less competitive in the United States and we'll have effectively disabled one of the few remaining growth engines of the economy.

 

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Chris Allen

Today 07:15 PM

Great article.  I also find it troubling that the companies supporting SOPA/PIPA actually believe a change in the status quo will result in less piracy.  Did DRM help curb illegal music downloads?  And DVD encryption?  Pirates will always find a way around the system - laws have always been in place to protect the status quo.  I'll admit I've downloaded a few songs here and there back in the day, but it wasn't a legal issue that changed my habits, it was Pandora.  To add to your conclusion, SOPA/PIPA would keep a company like Pandora from starting in the US.

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BrewHo

Today 05:59 PM

I believe a lot of the legislators supported this because their perception was influenced by this sort of press:  http://www.bloomberg.com/news/... with a lead paragraph highlighting cybertheft of IP.  There is a crying need for the tools to investigate and combat the intellectual property theft that Bloomberg describes, and SOPA/PIPA used the right buzz phrases.  Now that those proposals are going down in flames, what next?  Will there be any of the opponents who now are willing to help with the heavy lifting to craft effective and acceptable cybercrime legislation that includes intellectual property protection?  Or is that now a dead issue?

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Aaron Ginn

Today 05:52 PM

Not buying the argument.  Amazon is opposed to SOPA.  Are they not a "Goliath"?  Of course,  they mainly sell real products (not content, although Amazon on Demand is a burgeoning business).

hide 1 reply reply

 

Alvis Matlija

Today 09:42 PM

Amazon is one of the most innovative companies of our time. They started as an online bookseller and became an ecommerce giant. They did not stop there but pioneered cloud computing, revolutionized the ebook industry and now they are becoming a huge player in content distribution. In a very short time they have entered, disrupted, defined and created whole new markets. They are very much interested in innovation and that is why they oppose SOPA.

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Scott Johnson

Today 05:44 PM

One obvious correction:  Wikipedia (actually, the Wikimedia Foundation--Wikipedia itself is simply an online encyclopedia, not an organization) is not a company--it's a nonprofit.

 

Certainly, it has upended quite a few business models--both directly of traditionally-edited general purpose encyclopedias (Britannica, etc), and in demonstrating that the collaborative, user-contributed-content model could create something of value; a fact that much of the modern web depends on.

 

But Wikipedia/Wikimedia isn't a business.

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Jake Leone

Today 04:16 PM

Thanks for pointing out that this whole thing is about business interests.  Sony was once in Google's shoes, fighting to protect their VCRs from government interference.  I am against SOPA and PIPA because of their broad reach, and their ability to limit free speech.  I wouldn't want a site, of political or scientific interest, to be shut down because of a SOPA violation (or even to be threatened by same).  Further, there is great fractionalization of information, almost to the point where sites are like extended living rooms, that is not something I think we want to regulate.  That kind of sharing is a great unifier of people, and has flowered beautifully in the last few years.  Existing laws are sufficient to shut down the gross violations, smaller violations are Beiberizations and our governments resources should not be wasted there.  What we really need is a bar, that allows sites that have political or scientific importance to be protected from such shutdowns (right now I know this is not the case, a certain new Jersey judge named Hurley has proven this.  And to protect citizens from being proscecuted for casual sharing (that is not unlike being in someone's living room).  Google has, in great hubris, forced this issue, Google is a pirate company (not for You Tube), but for Google books, which is a flagrant disregard of authors rights.  We can't let Google be the voice against this, because no doubt they will trample the rights of authors, as they have done time and time again.

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scottmonty

Today 03:25 PM

Please take another look at the source of the companies you claim are supporting SOPA/PIPA. It's actually from a letter signed in September (three months prior to the legislation being crafted) that expresses a need for rogue site legislation. There is nowhere in the public record that demonstrates we support the specific legislation that has been presented. 

 

Ford has expressed the need to protect our intellectual property, as there are hordes of counterfeiters and pirates out there who make Ford parts and goods that are not officially licensed. This takes business away from our licensees to whom we have a fiduciary duty to protect.

 

While we want to ensure that our IP is protected, we do not encourage legislation that fundamentally changes the Internet. We have expressed interested in working together with Congress to find a balance that keeps the Internet open yet protects intellectual property.

 

We hope you'll clarify this in the original article, as it currently states that Ford expressly supports SOPA, which we do not.

 

Scott Monty

Global Digital Communications

Ford Motor Company

 

hide 3 replies reply

 

Wize Adz

Today 08:53 PM

I'm glad to see real dialog with a company like Ford.  To often, big business reuses engage in discussions with their customers, which is something that I personally find infuriating.  Glad to see that Ford is at least engaging the community during PR crisis periods -- I'd like to see this dialog continue under normal circumstances, especially with your most enthusiastic customers -- those who frequent on automotive owners and enthusiast forums.

 

You all can change your brand from slogans and design languages, into an actual person-to-person relationship where detailed information about the product is exchanged in both directions.  Truth be told, I trust Internet communities a lot more than big business, so a big business like Ford could gain trust by openly participating in Internet communities and sharing information in a peer-to-peer fashion, just like the rest of the community.

 

Talk to you later!  

 

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Marsha Blackburn is out with a warning that she will work on another bill.



Write her and tell her to just walk away.



Anonymous crashed the DOJ website as well as several others last night.


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Anonymous crashed the DOJ website as well as several others last night.

 

DOJ/FBI/RIAA/MPAA/Universal/BMI sites were all hit due to Megaupload being raided yesterday by the FBI.

 

A Justice Department spokesperson, who did not want to be identified, said its Web server was "experiencing a significant increase in activity, resulting in a degradation in service."

 

Just admit it you tool, your site got torched.

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Quote:

Originally Posted by superstriper View Post

 

reps are always crying for free market capitalism then something touches a nerve and they say gov must step in lol

 

Two of my representatives are no longer in support.  One is a Democrat.

 

 

 

 

 

Who represents you in congress/senate and where are they on this now tabled legislation?

 

 

 

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SOPA is dead.

 

Thank you Wikipedia/Google/Anonymous/everyone who wrote their politicians (that includes you Little!)/etc.

 

 

Lamar Smith is almost as bad as Ted Stevens and his big truck references

 

“We need to revisit the approach on how best to address the problem of foreign thieves that steal and sell American inventions and products. The problem of online piracy is too big to ignore. American intellectual property industries provide 19 million high-paying jobs and account for more than 60% of U.S. exports. The theft of America’s intellectual property costs the U.S. economy more than $100 billion annually and results in the loss of thousands of American jobs. Congress cannot stand by and do nothing while American innovators and job creators are under attack.

 

“The online theft of American intellectual property is no different than the theft of products from a store. It is illegal and the law should be enforced both in the store and online.

 

“The Committee will continue work with copyright owners, Internet companies, financial institutions to develop proposals that combat online piracy and protect America’s intellectual property. We welcome input from all organizations and individuals who have an honest difference of opinion about how best to address this widespread problem. The Committee remains committed to finding a solution to the problem of online piracy that protects American intellectual property and innovation.”

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SOPA is dead.

 

Good. No need for the gummit to micro-manage/legislate/control the internet. If someone is stealing your stuff, you sue them, just like any other business.

 

 

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... there's a republican candidate for president who opposes it....

 

I believe Santorum was the only one who didn't oppose it - his mouth initially said he does, but then make out an argument as to why he thinks its necessary

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