Internet Challenges to Business Innovation

Abstract:     
While the adoption of the licensing model in the hard goods arena is problematic from a legal standpoint, it is misguided from a purely policy-oriented one as well. The embrace of 'wrap agreements' and the licensing model (as opposed to the old-fashioned idea of a sale) by courts was motivated by a desire to encourage business innovation and deter bad faith business conduct. Unfortunately, many of the technology innovators of yesterday are the innovation stiflers of today, attempting to control what consumers can do with software through overreaching contractual clauses and overzealous legal departments. To make matters worse, companies in established industries, such as book publishing, are following the lead of the software giants by relying upon innovative contracting models rather than by developing innovative business models. The distributive power of the Internet and the relatively low cost of setting up a virtual community and online shop open up possibilities for writers, musicians and other artists that were unavailable just a few years ago. Consequently, the next wave of online business innovation may be driven by content providers who recognize their value and demand some sort of compensation, whether it be in the form of cash, royalties, or equity.

Number of Pages in PDF File: 6

Keywords: business innovation, entrepreneur, clickwrap agreement, contracts, licensing, Internet

Accepted Paper Series