Standards such as, say, a common language, a common currency, a set of laws, dates, times, volumes and 18,000 other things covered by the International Organization of Standardization have made everyone wealthier by reducing transaction costs, reducing barriers to entry and upping innovation.
So why haven’t the tech and film industries got their acts together?
What if there was no widespread agreement to use file extensions like .mp3? The nascent digital music industry would never have gotten off the ground.
That’s what standards do. They permit whole industries to be born and flourish so that we’re not trapped in an economy where "more pie for me means less for you." Where new options that create new value in the economy for the benefit of all can evolve. If the former was true in a modern economy, we would all still live in cold caves, and most of us would be dead by age 40.
Everything that erects walls between us makes us poorer, in fact – barriers to trade and exchange, barriers to the free trade of ideas, barriers created by gated communities of all sorts.
Walt Disney acquired many of his fine ideas for animated films from the public domain, such as Sleeping Beauty and Snow White, among others. But today the Walt Disney Company and Affiliated Companies is a leader in pushing the envelope of intellectual property protection, extending endless copyright on the Mickey Mouse character by lobbying the U.S. Congress to extend it, for what looks like, forever.
What if hip-hop artists, rappers or electronic music producers were never allowed to sample or remix old tunes?
The music world would be a much poorer place.
Last year, we wanted to make a 60-minute, non-commercial video using clips from Hollywood films to demonstrate entrepreneurial concepts like how to sell using pieces such as Ben Affleck in Boiler Room doing his ‘Don’t Pitch the B__ch’ speech. It’s funny, profane and to the point.
But to legally use it, you need the permission of the film’s director, each of the actors, the producer, the studio, the screenwriter and – the coup de grâce – every musician and the conductor and composer for all background music played during the clip. An impossible task.
Hollywood should develop a standard that lays out what you need to do to license parts of their films for remixes. Huge spurts of economic growth and creativity would result. As well, a whole new revenue stream would materialize from thin air, overnight.
A new segment of the industry would be born: film publishing rights.
It’s no fluke that today the most profitable part of the music industry is publishing. It’s because it has made it possible for young artists today to reuse and remix old music. In the end, everyone benefits: music publishers and older artists receive royalties, while younger artists can build upon the work done by others.
The listening public, by extension, enjoys more choice.
In my opinion Steve Jobs and Apple, at the peak of their power and influence right now, are sowing the seeds of their own demise by gating much of the Apple universe of products and services. (It’s why I think Google will win the upcoming war between the two.)
Meanwhile, developers now have to write different versions of their mobile apps for each of Symbian, BlackBerry, Apple and Android. Imagine the gains in efficiency and economic well-being if one app could work everywhere, on every device, much like a compact disc in a standardized CD player.
If there were no Tim Berners-Lee and no hypertext circa 1989, there would be no communication between HTTP clients and servers, no standard way of communicating using computers and, hence, no Internet, wiping out a huge part of human well-being. It would be a poorer world in every way without the Internet, wouldn’t you agree?
Of course, Mr. Berners-Lee patented his concept and prevented others from using it without first paying him a royalty for every click, making him the wealthiest person on the planet. Right? Sure, in an alternate universe, perhaps. Thank goodness.
Information wants to be free. I prefer the MIT model over the Harvard one: MIT makes all its courses, case studies, assignments and research available, free to all over the Internet. They have made a determination that the ‘delta factor’ that they are really selling is not their IP but the opportunity to go live into a classroom with their talented faculty and super bright students, to debate, discuss, question and learn in much the same way that Socrates and his acolytes did circa 400 BC.
All this is to say that businesses and business models based on open standards will win.
I am sure of it.
Professor Bruce M. Firestone, Entrepreneur-in-Residence, Telfer School of Management, University of Ottawa, founder, Ottawa Senators, Executive Director, Exploriem.org, broker, Partners Advantage GMAC.