Linden Lab has basically two value propositions that can not be readily duplicated elsewhere at this point (your competitive moat):
a) - a social network effect caused by the current user base (our friends are here)
b) - a fully functioning and somewhat trusted economy to sell and buy content in
a) is not going away anytime soon, but b) just might. b) the economy which is basically the payment system, the database (gotta work on that, guys!) and the DRM or permission system.
If you let your DRM weaken, than a big part of your 'competitive moat' will vanish as it will become an economy that we will not want to make and sell content in.
Someone will come along and create SL v2.0, and we will all happily write a conversion program for all our content and sell there. Sure, there probably won't be any protection of our assets in someone elses SL, but there are no protection of our assets here either so why the heck not.
And, yes, of course handling copyright resolution is a very hard thing to do, but that's also what makes it so very worthwhile. By working hard and solving the problem (it IS possible), you will be providing an environment which will keep content developers much more loyal to SL and greatly deepening your competitive moat.