Clay Shirky gave a fascinating speech at the NFAIS Annual Conference where he showed how society has difficulty understanding abundance. Our entire economic theory is based around allotting scarce resources – money, natural resources, tangible property.  Shirky says: “Abundance breaks more things than scarcity does. Society knows how to react to scarcity.” As a society, we are used to only having a few books, CDs, and DVDs, but now it is possible and even feasible to have tens of thousands of each.

As Michael Masnick adds, abundances has not been an issue for most of history. Now technology is introducing abundance and infinite goods into society and we’re struggling to make sense of it. As Masnick says, “It’s a ‘divide by zero’ sort of problem.”

This is why we’re seeing so many companies trying to force scarcity in order to hide abundance. DRM serves that exact function – to make an infinitely reproducible digital file scarce. mp3 and eBook retailers are simply taking brick-and-mortar mentalities of selling single items into a digital space.  Shirky explains how this radical change requires completely new ways of thinking, not just the old system on a new platform.

It’s easy to say “preserve the best of the old and combine it with the best of the new,” but in revolution, the best of the new is incompatible with the best of the old. It’s about doing things a whole new way.

Business models disrupted by abundance (recording industry, newspapers, software and game developers, etc.) need to scrape their old way of thinking. Paywalls for newspapers and more release windows for movies are examples of old businesses trying to force scarcity onto abundance.  These systems do not make sense when anyone can easily copy, share, and view every newspaper article or movie with the few clicks of a mouse.

Of course, when more abundance (well, less scarcity) is introduced, businesses eventually find they can make more money because they have more stuff to sell and more people willing pay for it. Shirky had a great example last year showing how the printing press, and small innovations on printing methods, led to more books which, in turn, made literacy more valuable and thus created more readers. Books were then cheaper to make, but with more readers, publishers could make even more money.  VHS and home video, a great example of the movie industry trying to stop abundance, rather helped to expand the movie market and make it billions more dollars.

Shirky ably frames one of the major problems facing the next generation – changing our understanding of abundance. What once was scarce is now infinite and that requires a whole new approach to business.

One of my favorite sayings is “Those who can’t innovate, litigate.” Many patent defends claim the patent system protects small inventors, but it more often seems as a way for large businesses to stifle competition. Look at recent lawsuit announcements and it’s a who’s who of no longer relevant companies who ceded their market leads by failing to continue innovating with market.

Apple has seemed like a company more focused on innovation. Even as Jobs proudly announced more than 200 patents related to the iPhone, Apple appeared to want to seriously compete in the mobile space by offering a more compelling product.  Those 200 patents did little to stop the many patent lawsuits lodged by marketplace losers against Apple including most recently Nokia (think, what was the last good Nokia phone).

Now Apple, rather than continuing to fund and innovate on the iPhone, has sued HTC, the maker of many Google Android phones, over several patents.  HTC and Google Android have been stealing much of Apple’s thunder in the mobile space and are both growing very rapidly (thanks, in part, to Google’s free and open-sourced operating system allowing HTC and other phone manufacturers to innovate and create compelling phones). Apple apparently thinks its worth spending millions of dollars on lawyers to sue HTC rather than spend that time and money making an even better iPhone.

Apple suing HTC, and by association Google, is a thinly veiled way of saying they’re scared of competition. Yes, Apple has a legal right to sue over patent infringement (even though most patent lawsuits are not over willful infringement but because two companies came up with the same idea but one patented it first), but what is gained from these lawsuits, aside from making lawyers richer. Rather than out-innovate and compete in the marketplace, as is object of capitalism, Apple would rather sue to keep quality products out of consumers hands. Enjoy that AT&T 3G. We might get stuck with it.