Before they will power 21st century business, technology innovations will first disrupt 20th century business models. As NYU media pundit Clay Shirkey puts it, disruptions don’t typically take us cleanly from current business model A to new business model B, but from business model A to chaos to business model B. It is often the case that before we can progress in a new direction we must retrace some steps and take time to map out a new route, and this likely will be the case in spades in the digital millennium.

Strikes and law suits are often signs of disruption.  When they are prompted by innovative digital technologies that threaten the status quo, defensive maneuvering by the establishment is not only expected but called for – until a new order emerges that capitalizes on the advantages brought by unstoppable innovations yet assures their fair and responsible use.

The billion-dollar law suit for “massive intentional copyright infringement” brought last year by Viacom against Google/YouTube for providing access to Viacom content illegally uploaded by fans is a case in point. To address the issue, Google introduced a copyright identification system called Video ID, which tracks unauthorized videos. It enables a copyright owner to either block the clip, leave it up, or enable YouTube to sell ads linked to the material and share the revenue. According to a CNET News blog post, “Google said on its blog… that copyright owners were choosing to turn a buck from unauthorized clips 90 percent of the time.“

The CNET News post quoted Google, “It’s clear to our (more than 300) Video ID partners that our technology has created a framework that allows copyright holders to sanction the creativity of their biggest fans…These partners now have a new way to successfully distribute and market their content online.”  The CNET News post went on to report, “Several start-ups are working on technology that will track unauthorized videos wherever they exist on the Web and then insert an advertisement into the clips.“

Digital content actually allows for tighter owner control then ever. In the past, media giants whose terms of sale legally prohibited certain personal uses of content could not discover such illegal uses nor enforce their claims, but now copyright owners can do so via the Internet. The Digital Millennium Copyright Act (1998) supports this new-found ability, a result of the powerful lobbying muscle of the media industry. Ultimately, though, the consumer will not be put back in his box, and a win-win solution, such as Google/Viacom’s, will be hashed out for the Writers Guild strikers in Hollywood (they so far won minor concessions for Internet distribution), the New York City cab drivers (they so far lost their battle to shun imposed GPS devices in their cars), and countless conflicts to come.

The immense disruptive potential of digital innovation, however, will take much time to address – 50 years, according to a gathering of prominent CEOs at the 2008 World Economic Forum in Davos – and I agree.

What do you think?