The Laws of Disruption
By Larry Downes
Basic Books £15.99, 256 pages
FT Bookshop price: £12.79

If you thought the financial crisis was bad, just wait. The absence of credit will seem like nothing as industries are ripped asunder by the internet. And where will lawmakers be then? Cluelessly trying to apply industrial-age sticking plasters to digital problems, most probably.

That is the message of The Laws of Disruption, a book that promises a framework for business leaders, regulators, lawyers and consumers hoping to navigate their way through the coming bloodbath in many industries and areas of life.

Larry Downes first expounded the law of disruption – that technology develops exponentially while social, economic and legal systems change incrementally – in his 2000 bestseller Unleashing the Killer App. Nine years on, many companies face stark decisions as the internet tears up their business model: adapt or die.

The book explains how digital life has changed. Downes, a journalist and consultant, argues that two forces are driving the law of disruption: Moore’s law that computing power doubles every year or so, and Metcalfe’s law that the power of a network increases exponentially with each new user. We are forever playing catch-up. Downes then looks at nine areas where the law of disruption is causing havoc and offers solutions.

The book exposes many outdated laws and regulations that have been (mis-)applied to cases concerning online activity and technology. There are also some eye-opening passages that expose how consumers have become confused by illusions of privacy over personal data.

Sadly, the book is let down by the solutions it proffers. All too often, Downes suggests that the market should be left to its own devices, and that an absence of regulation would be best. However, this won’t work in industries where the market is clearly failing – such as the 200bn spam e-mails that clog the internet every day. Equally, in the privacy debate, a superb initial analysis is undermined by naive statements such as, “Even if governments wanted to know everything that happens in our lives ... there isn’t enough technology at their disposal to do it.”

Elsewhere, Downes seems to suggest that antitrust cases are pointless as technology supersedes the debate. Perhaps this is so but that is surely an argument for swifter action by regulators, rather than ignoring unfair practice. Most frustrating, perhaps, is the chapter on copyright. Downes trashes the law in its current form and has some fun on the way: I was astounded to discover that filming your family singing “Happy Birthday” infringes the copyright of Warner Music. But the transition for newspapers and film studios to digital content is not, as he suggests, simply a question of willpower.

Despite the book’s shortcomings, Downes eloquently expresses the problems that many industries face and shows how using old laws to maintain the status quo is futile. The digital revolution is here and we will make sense of it – somehow.

Rob Minto is the FT’s interactive editor