_Ruling the Waves_ by Debora L. Spar is a fascinating book on the history of business and politics in the fields of emerging technologies, one I honestly feel everyone should read, as it is invaluable for the sense of context and perspective it provides.
Much has been made about how truly revolutionary the internet is, how that its very existence breaks all the old rules, that it is going to steer the world towards a new social order, perhaps even sever the link between the market and the state. Many prophets have proclaimed how the internet will create a realm where government has no force, where big business is powerless, and where many things - such as music - will essentially be free.
Spar readily acknowledges that the net is indeed radical and that it will produce many changes in society, politics, government, and business. However, she sought through this book to show that the emergence of the internet is not without precedent, that it is perhaps just another arc along technology's frontier. By comparing the changes brought about by the development of transoceanic commerce during the Age of Exploration and the arrival of the telegraph, radio, satellite television, and publicly available encryption technology with the rise (and possible fall) of Microsoft (looking at both the issue of operating systems and web browsers) and the advent of MP3 technology, Spar showed how the worlds of government and commerce have coped again and again with what were at the time paradigm-shattering revolutionary developments. The end of the dominance of big business and government has been predicted several times before and in each case the prophets were wrong. In truth, there were significant changes and for a time governments were more or less powerless in some instances thanks to a gap between technology and policy, but these gaps did not last for long. While new technologies can wound government, they never kill it, and the very pirates and pioneers who for a time gleefully predicted its demise (or at least its powerlessness over them and their new realm of business) have in the end craved the stability and order offered by government. In essence, once they staked their claim in a new technological frontier, they wanted someone to protect that stake.
Each of these revolutions followed a predictable pattern as Spar brilliantly showed, beginning the book with an overview of this pattern and then in the following chapters showing how this pattern was followed in each instance (and along the way providing some fascinating history and anecdotes). The first phase is that of innovation, the stage of "tinkerers and inventors," not a phase marked by much if any commerce. It is populated by people interested in technology for its own sake, a world of fellow enthusiasts. Often in this early stage the new technology and its adherents are either largely unknown to the public or not accorded much respect. When Samuel Morse first demonstrated the telegraph to Congress in 1838, many just laughed. Generally in this stage most if not everyone involved is unaware of any real commercial use for the new technology; when the radio first appeared it was seen as perhaps a useful adjunct to the telegraph, a way to communicate with ships at sea, not as a mass market for broadcasting music.
The second phase is populated by pioneers, individuals who have moved into the new technological frontier and have seen ways to make profits - often very large profits - from the new technology, carving new empires and entire new fields of commerce where previously none had existed, out of the reach of government and existing businesses. This phase is truly frontier-like; speed is essential, as many scramble to stake their claim, the individuals in question often being quite young (Marconi was 20 when he started marketing his radio in the UK while Marc Andreessen was 23 when he founded Netscape). Pirates exist of course too, drawn by the new wealth and near complete lack of rules. There is little to stop them as public policy simply has not caught up yet with the new frontier (such as when Rupert Murdoch started to broadcast satellite TV into the tightly controlled British market in the early 1980s).
The third phase is what she termed creative anarchy. This is the stage when the pioneers, those who are seeking to make a profit, start to demand rules. Property rights for instance are not an issue in the first phase, as many early inventors -such as with the telegraph or the internet - essentially distributed their breakthroughs for free. As the technology matures and early pioneers establish profitable enterprises in the new frontier, they seek protection from the chaos and pirates of the second phase. For instance while the relatively few users of radio in the 1910s could transmit signals to their heart's content as the radio waves seemed infinite and owned by none, by the 1920s established radio stations were keen to protect their stretch of the airwaves as what had once seemed infinite was now congested and crowded and early radio stations sought to keep from being drowned out by amateurs or competing stations. Before government stepped in this new market was in danger of grinding to a halt with the constant din of rival signals. Similar problems occur over issues of coordination; whose standard is going to prevail in terms of say operating systems, and with competition, as often a single dominant pioneer emerges and creates a virtual monopoly, solving some problems but creating others (as with Western Union, Marconi, and Microsoft).
The final phase is the establishment of rules, when government reenters the scene, nearly always at the urging of the dominant companies in a new field. The original rush away from government has come full circle as "the rebels return to the state," needing the state to secure their new wealth, to enforce issues of contracts, property rights, and provisions for standardization. Spar believed that the internet will reach this phase.
