Is the DMCA-based notice and takedown a disruptive innovation for web sites to license content from copyright owners?
A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.
In contrast to disruptive innovation, a sustaining innovation does not create new markets or value networks but rather only evolves existing ones with better value, allowing the firms within to compete against each other’s sustaining improvements. Sustaining innovations may be either “discontinuous”[1] (i.e. “transformational” or “revolutionary”) or “continuous” (i.e. “evolutionary”).
The incumbent technology is manual negotiation between licensor and licensee, copyright owner and content distributor, media company and web site. The new one is for the web site to carry anything that crosses its path and remove anything the media company doesn’t want to be there.
This leads to lower quality content catalogs because the catalog of a DMCA-based distributor is full of holes. While a traditional distributor like HMV music stores could get copies of pretty much all the CDs that a purchaser might want, a disruptive distributor like the Gorilla vs Bear music blog lacks far more than it contains.
At the same time the web site is able to compete and win on its own terms. Using Gorilla vs Bear comes with far less friction than using Spotify.
Spotify is a sustaining innovation in that it doesn’t change the market for music recordings.