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Thursday, March 10, 2005

Closed System - Giving Way To Competition

Cory Doctorow provides a word of warning to DRM-crazed companies,somewhere out there is a competitor who will steal your customers with more open products. More interestingly, he believes that DRM is bad for business, too. Excerpts:
For the mobile industry DRM is bad as:
- If you want to predict whether or not technology or a business is going to be successful, you have to imagine whether or not it's doing what the underlying technology is designed for.
- The Internet and the computer are designed for making copies Computers are designed for is for slicing and dicing bits and moving them from one place to another. And if a phone does not make it easier to copy things, then you're going to be out-competed by someone who decides to start a business that's about using the Internet and computers to make copies.
- If you started a business to outfit locomotives with special horseshoes in order to keep the blacksmiths happy, you probably wouldn't have lasted very long. Likewise, if you're starting a business to outfit phones with special locks that make it hard to copy things in order to make the music industry happy, then you're probably not long for this world.
Customers often avail themselves of the services of companies that add new features to their devices even if the industry that created the devices doesn't want those features to be there, as anyone who's ever used a VCR-plus or a TiVO or had their phone unlocked knows.
When TV came along, the movie companies were completely convinced that no one would ever go to see a movie again so long as they could watch them on TV. And so they all got together in a smoke-filled room and they said, "There will never be movies on television. End of story." And for a couple years, it worked. But then one company got the jump on the rest of them: Disney. To start Disneyland, they needed to raise $17 million, and ABC offered them $10 million if they would open up their vaults to their network. It was a good partnership for both of them. Disney got a huge competitive advantage over the other entertainment companies.
Any smart executive needs to jump for the opportunity to sell your customers a better product that does more and costs less.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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