Outside the Box

Outside the Box

IMITATION is the highest form of flattery, but in the network economy there is a fine line between imitation and the copying of ideas, creative content and new processes that can spell commercial disaster for the innovators.

Intellectual property rights are more important today than they have ever been. The speed with which new ideas travel via the web, plus the ease with which information or content can be captured and repackaged digitally, as well as the networks and fluid relationships now linking markets, competitors, suppliers and customers, all point to how vital it is to protect innovation.

Innovation is risky. It's often an intangible asset that creates real value for a company and yet it can be easily copied unless originators have sought to protect it.

Some companies enhance their revenue streams through the use of their intellectual property. Others use their registered trade marks and patents to fight against the uncontrolled distribution of their products, which could damage their carefully cultivated brand images.

In a business world dependent on intangible assets and digitised information, regulators across all industries face the task of recognising the difference between protecting their return on investment and flouting competition laws.

The marriage between TimeWarner's rich content and AOL's global reach to the end consumer promised significant rewards. But, while seeking to develop market-leading products using a new brand, the newlyweds found themselves continually being watched by the regulators. They duly decided to impose restrictions that would reduce the merged company's market share and influence, guarantee inter-operability with competing services and provide rivals with access to customers.

Applying existing competition laws in the more complicated environment of digital TV can prove difficult. In the UK, for instance, Nickelodeon is concerned that the BBC's plans to revamp its digital channels and provide more content for children will threaten its own offerings.

Research confirmed that if the new BBC channels took a 10% share of the young audience, the net present value of the children's commercial sector would be halved. If it took a 20% share each, the value of the commercial channels would be wiped out. Consistent regulations to cover all media could be the answer and Labour aims to achieve this through Ofcom.

But, whoever is in charge, it's entirely likely that the tension between protection and competition will become a fact of digital life.

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