One of the single most important factors determining the future of business and society is the US legislative framework for innovation. US legislators shape the global patent landscape, due to the country’s dominant global role in both innovation and commercialization,. As covered in a New York Times article titled Two Views of Innovation, Colliding in Washington, Patent Reform legislation under consideration could shift the balance between large established corporations and smaller innovators, impacting how the patent landscape functions as a motivator of innovation.

As I wrote in my book Living Networks:

In the US alone, there are over two million enforceable patents. Only around 5% of those make money. The rest sit dormant, the documents quietly gathering dust on a shelf for the 20 year duration of the exclusive patent rights, or lapse due to lack of maintenance payments. Some of those patents are not applied because they don’t have a real commercial application. Probably many more are neglected because the patent holder is not interested in exploiting them, and they haven’t managed—or perhaps even tried—to match them with a company that could profitably apply them and would be prepared to buy or license them. This is not just a problem for the company that forgoes revenue on its portfolio of patents. It also means that part of the intellectual property landscape is unavailable, potentially squelching innovation by other companies. Because of the complexity and sheer number of existing patents, information about intellectual property has tended to flow extremely poorly. The promise of the next phase of the networks is that this flow will become far more fluid, resulting in better exploitation of our existing intellectual property, and a faster pace of innovation.

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The NSW premier has announced that Sydney and other regional cities in the state will get free WiFi in their central business districts in the next three years.This is great news for those in Sydney, especially since Internet Service Providers in Australia are not the best at providing plans at reasonable prices, with low broadband download limits (sometimes 100MB per month!) a dirty eccentricity of the local industry for many years now. Yet go to the WiFi Networking News blog, and in its daily Metro roundup there are four announcements about municipal wireless availability around the world on the same day, including a PR firm providing free WiFi throughout Leicester Square in London. On a global level, the free municipal wireless trend is strong and rapidly building momentum. So what are the implications for telecommunications firms (among others)? Last week a highly-quoted piece in the New York Times on mobile phones with WiFi capabilities discussed how free WiFi will allow mobile users to cut out the mobile phone companies completely and speak for free. In fact, there are many restrictions, including the limited coverage of even the broadest free WiFi initiatives, and even more the very high battery drain of WiFi devices, which allow only fairly short speaking time on mobile phones. However there is no question that initiatives like Sydney’s municipal WiFi will cut out many revenue opportunities for telcos that are still striving to squeeze money out of their customers. On the other side is the far more important issue: individuals and businesses will be vastly enabled in connecting, creating, and tapping new opportunities. This is an exercise in unleashing the potential of connectivity. It’s an important step forward for Australia, which is at best in the second tier of developed countries in terms of its mobile and Internet connectivity.

The head of Goldman Sachs‘ high-tech group has said that the IPO market is back for the right Internet companies. However the barriers are far higher, and we’re not likely to return to unprofitable or no-revenue companies getting piles of investors. Now that advertising is a viable business model, with further strong gains in online advertising dollars likely, many more online businesses can flourish, or at least fight for the advertising dollars available. On a related note, a group of prominent bloggers have united to create a blog aggregation site, which will compete with mainstream media and live on advertising revenue. They may not make a fortune, but just around now this has become a viable business model.

Avid watchers of the “social software” scene have been galvanized by Microsoft’s recent announcement that one of its research teams has developed the core of a product called “MyWallop”. Screenshots show that the software would allow people to map their social networks and personal similarities between people in their network, as well as to blog.

In the last 18 months a multitude of social software applications have blossomed, including Ryze, LinkedIn, ZeroDegrees, Spoke Software, and many others. If Microsoft entered this market, it’s an open question whether it would swamp or stimulate existing efforts. Either way, there’s no question that its imprimatur on this type of software – and its distribution power – would mean that there would be massive uptake and usage. This in turn would allow the true potential of social software to emerge. The more people that are connected with this software, the more it allows the networks to become visible, and for people to become connected in new and useful ways. In short, it would be a massive boost in bringing the networks to life.

All the hype aside, this is one of many dozens of research projects that Microsoft runs, all vying for attention and resources, so there’s no guarantee anything will happen with this. However the attention this is getting – at least with the people I speak with – may well prompt Microsoft to put this higher up their list of priorities.

Creative people now have far more choices about how to market what they produce. The New York Times yesterday reported about authors who have successfully self-published. One author, for just $99, had her book laid-out in a print-on-demand format, and on the basis of its succes shortly after got a large advance from a publisher. Another established author chose to self-publish a book that subsequently reached #1 on Amazon.com. As the article goes to pains to point out, these are the exceptions. Very few self-published books are more than moderately successful. However these new channels for distributing intellectual property (with parallels in music, art, design etc.) open up possibilities. In the chapter in Living Networks titled “Liberating Individuals” I described the generic model for distributing personal creative content.

In the first stage, people use digital distribution to attract attention and demonstrate to publishers (labels, distributors etc.) that they can generate an audience. They then achieve the peak of their career with major publishers, but subsequently go back to self-publishing in order to take a larger part of the rewards. The authors above are respectively at the early and late stages of this cycle. Many aging rock stars, like David Bowie and Todd Rundgren, are distributing direct to take more of the rewards than music labels would usually give them. One of the most important dynamics of this emerging model is simply how much content becomes available as everyone can market themselves directly. The publishers and labels do play a role of filtering that is useful, but they overplay their importance. Collaborative filtering, which helps us collectively to sort through what is out there and identify the best, will be at the heart of information flow moving forward. More anon