Napster, Uber, AirBnB, and Bitcoin VERSUS Regulation


If you have Netflix and are a 90’s kid, watch the documentary Downloaded. The Napster documentary takes an interesting look into how a technology (peer-to-peer file sharing) single handedly brought the music industry to its knees. While watching it, I couldn’t help but think of two things: 1.) Shawn Fanning is the man (founder of Napster) 2.) several other industries are experiencing the same level of disruption today (taxi industry – Uber, hotel industry – AirBnB, and I would argue the financial payment industry – Bitcoin).

To give some quick background, when Napster came around, it was the music industry and its constituents that refused to understand and embrace the technology, and instead decided to sue the technology to high-heaven. This ultimately led to the downfall of Napster within two years of its humble beginnings, where its community reached as many as 60 million users (ridiculous). The music industry was colluding, i.e. all major labels were price-fixing the price of CDs at $15. It was the failure of an industry to innovate and diversify their business models that caused this technology to hurt revenues so much.

Now to today, all of the recent legislation and legal battles that this new wave of startups is facing, is similar to what Napster went through. Granted, technically, people were stealing music through Napster, but, the technology itself (peer-to-peer file sharing, decentralized file systems) was able to scale and could have been repurposed for a more legal use. The taxi industry, in one municipality or another, is fighting to keep Uber out. They are always finding these laws that have been setup over time that in some way shape or form make taxi-like services that aren’t sanctioned cab companies illegal. (Side rant: two reasons I despise our government. Too many laws; solution: for every law that we add, we get rid of another. Laws that are too protective of industries that disincentivize innovation. Technology is our friend, not our enemy). I feel like Uber has fought its way through a fair amount of regulation, legally, and will thrive.

The others AirBnB and Bitcoin are still in their infancy and possibly their first iteration of their service. The documentary brings this fact to light, where, although Napster failed, many copy-cats and enhanced legal versions of the technology popped up. Despite Napster failing, the technology and service survived, and ultimately thrived over the next decade (i.e. Spotify, Pandora, etc.). Despite the diminished success of AirBnB and Bitcoin, relative to Uber, don’t think that the technology will go away. Other startups will iterate and learn what worked and didn’t work for AirBnB and Bitcoin, and create a product that works. (Side note: I feel AirBnB will be successful, but it has much more legal mumbo jumbo to fight through, and ultimately change. Bitcoin is the wave of the future, yup.)

 

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