
Security in a Reputation Economy - phsr
http://www.schneier.com/blog/archives/2009/11/security_in_a_r.html
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mhb
I don't see the insight here. There is no new "reputation economy".

If his customers aren't as concerned about the security of their data as he
is, that can be explained by the different way they value the damage to their
reputations from a security breach. Presumably most of his customers sell
something other than security so the damage to their reputation will be less
than if their whole business was selling security.

If your business is painting cars, you'd expect that you'd be a lot more
focused on paint quality than a dealership that sends you a few cars to paint.

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nazgulnarsil
reputation effects are a foundational aspect of a healthy free-market. this
isn't some sort of new economy, it's just that the tech market exemplifies the
free-market better than others because it moves too quickly for regulators (so
far).

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timwiseman
No, its not new, in fact Schneir lists examples that have been around for a
very long time (restaurants in particular).

But it is taking on new aspects and new prominence in the IT field.

I do not think regulation will actually change much. Reputation will still be
immensely important. Obviously it will remain significant in quality of
service, and regulators can only establish a base minimum if they can do
anything at all in terms of quality of service. Regulators can (and should)
play a greater role on the security side, but even there they can only
establish base minimums and many will fall below that anyway. Companies will
always be able to exceed that minimum, and that will often be important,
especially to those that really care about security.

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nazgulnarsil
regulations can erect barriers to entry (the cost of complying with regulation
in many industries are massive, cars for example), meaning that existing
players can lower their service standards by a set amount (down to the point
where a competitor could expect that better service would gain enough of the
market to recoup the entry costs). a barrier to entry effectively changes the
risk/reward expectation of investors.

