Last night I attended a presentation by Doug Hyatt, Business Economics Professor at the University of Toronto’s Rotman School of Business. Although billed as focusing on the music industry, his comments were actually more broad ranging, even abstract.

I guess that is a telling indication of how early we are in the process of adapting to the digital era. When very smart people who make their careers from studying these problems speak in abstract terms, you know we have a long way to go.
Prof. Hyatt painted a fairly stark landscape, featuring two diametrically opposed camps: those who see to find ways to preserve intellectual property protections and the economic benefits that accrue from those protections, and those who believe that all creative expression should be free in the most literal sense possible.

I will sum up his relatively brief presentation this way: if society as a whole doesn’t find a way to protect and economically reward the production of intellectual property on public networks, then that property will move “off net”. In other words, it will continue to exist but it will be distributed through highly controlled channels.

Clearly this isn’t applicable to the music business, where a large audience is essential to success. It might be applicable in some specialized markets, but it’s not an option in the domain of mass media content.

It is also interesting to note that the fundamental assumptions of both camps are deeply flawed.

The property protection camp seems to think that some Digital Rights Management Magic will save their revenues. It won’t. Those who think it will should read Digital Rights Management is a Waste of Time first. The fact is that the entertainment industry is going to have to adapt to revenue shrinkage, unless it finds new ways to make money.

The “information is ‘capital-f’ free” camp seems to take as axiomatic that the more available information is, the more valuable it is. As Hyatt said “funny, that’s not what my broker tells me.” The only way this statement can be true is if its proponents aren’t using “value” in the sense of “economic value.”

So is there a middle ground? Probably. I’m certain I don’t have the answers, but it’s a theme worth exploring in subsequent posts.