Footy fight shows how cloud computing can kill your business

Yesterday's court decision allowing Optus’ TV Now service to continue operating shows why you need to rethink cloud computing before someone uses it to kill your business.

The Federal Court yesterday handed Australian business a lesson: cloud computing can be a devastating disruptor that you need to understand deeply before someone uses it to kill your business.

An Optus ad for TV Now

The lesson came in the Court’s decision that Optus’ TV Now service can continue to operate.

TV Now is like a video recorder in the cloud. If you want to record a show, you program the service to capture it. You can then watch it at your leisure, up to 30 days later, on your mobile phone.

The court case centred on whether the service is legal for football games, as the NRL and AFL have sold their online and mobile rights to Telstra for rather impressive sums. TV Now means anyone can watch footy on their mobiles, making Telstra’s rights rather less valuable.

Yesterday’s ruling said that recording programs for personal use has been legal for ages and that TV Now is really nothing more than a VCR or PVR. The fact that it lives in the cloud is neither here nor there.

The impact of the decision on football codes is profound.

But every business needs to think about what this means for their operations.

To understand why, consider this opinion piece from Marc Andreessen, the founder of Netscape Communications and programmer of the first graphical Web Browser. It’s no understatement to say that Andreessen bears very considerable personal responsibility for public and business adoption of the Internet.

Andreessen’s piece is titled “Why Software Is Eating the World” and explains how the music business was turned into a software business by Apple’s iTunes, how advertising was turned into a software business by Google ads and how photography went from being all about chemicals and films to being all about software.

The TV Now logo

TV Now shows how even something most of us consider dependent on an appliance that sits in your home – recording TV shows – can be re-cast as software.

An appeal has already been lodged about yesterday’s decision, which is fair enough.

But it’s also doomed to fail in the long term, because once software hits an industry consumers change behaviour. Threatened industries instinctively seek to quash disruptive innovation by running for legal cover.

To understand this, think back a decade to when record companies lectured us all about the evils of digital music and how it enabled piracy. Did that stop a single iPod sale? And of course it was the innovators who are winning now, not those who filed lawsuits.

The TV Now case is therefore a massive wake up call for Australian business. For several years now, business and especially small business has been told that cloud computing means lower costs, greater flexibility and unlimited possibilities.

Now we know that cloud can also bring massive and damaging disruption, because if your business can be turned into software someone will eventually figure out how to do it and eat your lunch almost before you notice it.

So by all means buy some cloud services for your business. Enjoy the lower costs.

But don’t let that aspect of cloud computing stop you from thinking very deeply and very strategically about just what the cloud really means for business.

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