December 22, 2010

The power of regulation

A simple model will tell us that the media space is largely driven by three forces: regulation (what can and cannot be done at some point), consumer (what user want) and technology (how can users' wishes be better served).

Yesterday a couple of big legal events took place:

(1) in Spain, the so-called "Sinde Act" or "Ley Sinde" (named after the current Minister of Culture) was not passed by the Spanish parliament.

This legislation has been referred to as the "anti-piracy" one, since it would have allowed to shut down streaming/downloading sites - let's not forget that Spain tops the world rankings in piracy practices.

The parliament's decision has been widely celebrated among internet users, who regard the act as an instrument to limit users' freedom. On the other hand, content creators complain that their IP rights will continue to be breached and have stated that they will go to European instances to protect their rights.

It is obvious to me that piracy - not freedom - is what is at stake here. Piracy is a damaging problem to the Spanish media industry and measures must be taken to limit it. That being said, it would also be useful to re-regulate the way content creators' (writers, musicians, etc.) are compensated as it is a big "mafia" at present. And if the Spanish media industry acknowledged that it is a new era for content distribution and made a decisive move to become more up-to-date with the current state of play (i.e. changing or modifying traditional business models), that would also be beneficial and quite eye-opening.

(2) in the US, the FCC has voted in favor of net neutrality (subject to future actions by Congress and courts), which is a step towards an open and freer internet for all users, preventing big players from discriminating specific services and controlling "pipes" as they wish.

Regulation matters in any industry but in a fast-changing space such as TMT, its importance becomes exponential.

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