Scarcity Is A Bad Thing, So Why Would You Want To Artificially Add Scarcity?

from the think-this-through dept

Thu, Dec 18th 2008 4:26am — Mike Masnick

If there were no such thing as scarcity in the world, there wouldn't be a need for property rights, because there would be no borders to worry about. The entire reason why we worry about property and ownership and borders and allocation is because these things are scarce and we're concerned about the most efficient way to split up those scarce resources, without having too many arguments over who controls what scarce bit. If there were no scarcity, everyone could have whatever they wanted, and there would be no reason to worry about the rest. That's why I've never quite understood the rush to create artificial scarcity, as in the scarcity created by intellectual property laws.

It's a situation where you have the opposite of scarcity. You have abundance, such that there need not be any argument over ownership, because everyone can have what they want... and suddenly people want to take away the good thing (abundance!) and replace it with limits and a situation that is worse for everyone. Why would you ever do that, unless you either don't understand economics or you dislike mankind and would prefer that the world have fewer resources and more arguments over ownership.

Apparently, some others feel the same way. Derek Reed points to an amusing quote in a post by Tycho over at Penny Arcade concerning Sony's Playstation Home:

"Chief among these bizarre maneuvers is the idea that, when manufacturing their flimsy dystopia, they actually ported the pernicious notion of scarcity from our world into their digital one. This is like having the ability to shape being from non-being at the subatomic level, and the first thing you decide to make is AIDS."

While an extreme quote, he's making an important point. If you are creating a new world, where unfortunate and damaging resource limitations of other worlds wouldn't be necessary, why would you arbitrarily add those limitations back in? Why would you arbitrarily shrink the resource pool?

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Filed Under: abundance, scarcity

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Harknell, 18 Dec 2008 @ 4:38am

The VIP Lounge
The main reason many people like to create this artificial scarcity is to create an illusion of elite/exclusive membership. A classic example is the "VIP" room of a club. Typically this area is not filled to capacity while the club might be busting it's seams--it's to make it's members feel better than others. The scarcity in this case is to reinforce the notion of the haves and have nots, with you as a have.

I can only imagine that someone at Sony thought by limiting the number of games and other areas that they would be trying to get this idea that these things were "premium" and therefore exclusive. Of course this doesn't work with pedestrian things like this and I doubt too many models are going to want to date you because you were the one able to get the bowling alley or game spot.....
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Chronno S. Trigger, 18 Dec 2008 @ 5:14am

Better odds
I'd put more odds on Sony just trying to get more money since their system is in the tank at this point. They need to make up the money somehow.

Why are things like XBL, second life, My Space, Facebook, and others so popular? There not exclusive, everyone has them, and anyone can join. Not sure what happened to PSN.
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Liam, 18 Dec 2008 @ 5:35am

Re: Better odds
XBL is exclusive, it was the one thing I was paying microsoft for, the only way they was getting money out of me, and they banned me for acquiring their games through other means.
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Anonymous Coward, 18 Dec 2008 @ 5:35am

I think you understand it just fine?
"That's why I've never quite understood the rush to create artificial scarcity, as in the scarcity created by intellectual property laws. "

I think you understand it just fine. Why be paid once for something, when you can be paid over and over and over and over again for it. Its not a complicated concept really? We exchange money for resources, if you can continually generate money without having to invest or create anything new (through artificial IP protection), then you can amass more of those scarce resources, with the cash you generate from selling artificial scarcity? Who wouldnt want to continue to be paid for work they had already completed?
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Anonymous Coward, 18 Dec 2008 @ 5:39am

The one thing that will always be scarce is time. Even though IP may be abundant because it is an idea or digital or whatever, the time it takes to create IP is scarce. So you are really paying for the time more than the IP. This is why even Mike charges for his time. What I don't understand is why he expects inventors, musicians, movie makers, etc to not charge for their time???
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TruthBringer, 18 Dec 2008 @ 5:41am

Re: Better odds
"Why are things like XBL, second life, My Space, Facebook, and others so popular? There not exclusive, everyone has them, and anyone can join. Not sure what happened to PSN."

Your statement seems completely backwards since its XBOXLive that creates artificial scarcity, even artificial necessity (by gimping its device to force the exclusive use of its network for IP based gaming) then charges its consumers for the honor of connecting to one another while SONY on the other hand offers an unGIMPed device and a free online service. Sorry, you have this one completely wrong
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Shohat, 18 Dec 2008 @ 5:43am

Ahem
Regardless of the issue at hand, I'd just like to remind everyone that artificial scarcity plays a big role in economics.

Many fruit and vegetables are either destroyed or bought by government and then destroyed, in order to keep agriculture around the world working, and not let prices slip into unprofitable range.

This applies even more for poorer countries, where the population is too poor to afford the food, so a significant portion is destroyed in order to not flood the market.
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Anonymous Coward, 18 Dec 2008 @ 5:47am

How do you make a world believable
"While an extreme quote, he's making an important point. If you are creating a new world, where unfortunate and damaging resource limitations of other worlds wouldn't be necessary, why would you arbitrarily add those limitations back in? Why would you arbitrarily shrink the resource pool?"

The simple answer is consistancy. People desire realistic consistancy in virtual worlds. That is not to say it has to be a mirror of the real world, this is not the case. However the world does need consistant rules and to move it too far from "reality" actually has a detrimental effect on the user . . . it ruins emersion and investment in the experience. I do not deny that there are also profit and property motives here as well, but the idea of consistancy is very real in virtual world design.
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Ima Fish, 18 Dec 2008 @ 5:50am

"why would you arbitrarily add those limitations back in?"

To make money? It worked pretty well for the De Beers diamond cartel.
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Chronno S. Trigger, 18 Dec 2008 @ 5:54am

Re: Re: Better odds
I said XBL not XBL gold. There is a hell of a lot of things to do outside of playing games online and almost all of them can be done with a silver account. I know, I didn't have gold until GOW2 came out.

"and they banned me for acquiring their games through other means."

XBL is their network and if you don't play by their terms of service than you will be kicked out. At least they didn't send the FBI after you for copyright infringement, or get them to try your ass for computer fraud.
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Yosi, 18 Dec 2008 @ 5:55am

Property have nothing to do with "managing" resources
Ask any 2-yrs old. "This is mine" is basic human behavior.
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Tod, 18 Dec 2008 @ 6:05am

"in the tank"? Read deeper
I don't even own a PS3, so I'm not a fanboy blindly defending Sony. However...

While worldwide the Wii and XBox 360 are each outselling the PS3, the PS3 is doing very well and until recently was outselling the XBox. ( http://vgsales.wikia.com/wiki/NPD_2008_in_review )

Not bad for a system which is marketed at twice the cost of its competitor.

Plus, I wish my company's sales were so "in the tank" we were up 60% over last year. :p
With software sales, the real monymaker, up 150%.
http://www.thebitbag.com/2008/12/11/playstation-by-the-numbers-12112008/

NPD numbers via GamePro
http://www.gamepro.com/article/news/208337/november-2008-npd-sales-figures-everyone-wins/
http:// www.gamepro.com/forums/topic/3964799/official-na-npd-console-sales-to-date-for-2008/

Year to date 2008 via NPD
X360 PS3
January 2008 | 229,000 | 270,000 |
February 2008 | 254,000 | 280,000 |
March 2008 | 262,000 | 257,000 |
April 2008 | 188,000 | 187,100 |
May 2008 | 186,600 | 208,700 |
June 2008 | 219,000 | 405,500 |
July 2008 | 205,000 | 225,000 |
August 2008 | 195,200 | 185,400 |
September 2008 | 347,200 | 232,400 |
October 2008 | 371,000 | 190,000 |
November 2008 | 836,000 | 378,000 |

Total:
X360 = 3,293,000 Units
sony = 2,819,100 Units

Now, lets throw in the PS2 and PSP from http://vgsales.wikia.com/wiki/NPD_2008_in_review

If you combine PS3, PS2 and PSP sales, Sony is doing very well.

NPD 2008 console sales figures
Console Yearly sales (as of November)
Wii 8,001,000
Xbox 360 3,295,400
PlayStation 3 2,818,900
PlayStation 2 2,092,300
Nintendo DS 6,910,000
Sony PSP 2,810,000

Nintendo 14,910,000
Sony 7,720,000
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David Claughton (profile), 18 Dec 2008 @ 6:06am

Re:
> What I don't understand is why he expects inventors, musicians, movie makers, etc to not charge for their time

The reason for your lack of understanding is because you
are completely wrong! Mike has consistently stated that musicians etc should be paid for their time - he merely advocates business models that don't place the emphasis on accumulating that money by trying to sell plastic disks.
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Ima Fish, 18 Dec 2008 @ 6:07am

Re: Property have nothing to do with "managing" resources
""This is mine" is basic human behavior."

You're proving Mike's point, toys are scarce, so kids get greedy. There are plenty of cultures which lack the concept of property rights because their society lack scarcity of basic necessities. Check out the movie The Gods Must Be Crazy to see what could happen when you introduce scarcity in such a culture.

Let me put it another way, I've never heard a kid or an adult claim that all the air in the room was his or hers. In fact, such a statement would be utterly absurd, unless the air was scarce for some reason.
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Tod, 18 Dec 2008 @ 6:08am

correction from editor
The last two lines aren't the last two lines. I had an arrow, which the editor (even though "Plain Text" was checked) thought was an open HTML comment.

Nintendo 14,910,000
Sony 7,720,000 -- PS2 + PS3 + PSP
Sony 4,910,000 -- PS2 + PS3
MicroSoft 3,295,400
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Matthew, 18 Dec 2008 @ 6:08am

The reason that they want to apply artificial scarcity to abundant media is because there are other goods and services that ARE still scarce. If you need money to purchase scarce goods and services and the product that you produce can be replicated in abundance, then you won't be able to make a living. Of course, there has been extensive back and forth regarding the validity of alternative business models - selling media as a service rather than as a good. Arguably, the industry has had plenty of time to adapt to this change, but for good or for ill, many producers of media still cling to the notion that media is a good.
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Ima Fish, 18 Dec 2008 @ 6:11am

Re:
"What I don't understand is why he expects inventors, musicians, movie makers, etc to not charge for their time???"

Mike thinks musicians, movie makers, etc should charge for their time. The problem is that people are not always willing to pay. Which leads musicians, movie makers, etc to want laws forcing people to pay. Which Mike (and I) strongly disagree with.

Let me put it this way, would you support legislation to force people to pay beggars and bums? Of course the reason most people don't pay beggars and bums is because they do not feel their services are worth paying for. Which is exactly the same reason most people don't pay musicians, movie makers, etc.
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TechWeasel (profile), 18 Dec 2008 @ 6:13am

Yeah dude
"It's a situation where you have the opposite of scarcity. You have abundance, such that there need not be any argument over ownership, because everyone can have what they want... and suddenly people want to take away the good thing (abundance!) and replace it with limits and a situation that is worse for everyone. Why would you ever do that, unless you either don't understand economics or you dislike mankind and would prefer that the world have fewer resources and more arguments over ownership."

You're talking about a pure communist society. We aren't wired that way (it'd be really cool if we were). Humans create artificial scarcity because we generally want to better our situations; make more money, have a bigger house, have cooler stuff and more of it. We tend to make rational decisions that favor our own self-interest. The people who create intellectual property would like to be paid. The people who package, promote and distribute it would like to be paid too. As much as possible.

Even writers like getting paid as much as possible, right? If somebody started copying your articles and plastering them on other sites with his or her own advertising, and search-optimized them even further so your traffic started disappearing, and making it less profitable for Techdirt to employ you, that would suck, right? Even though your intellectual property can be reproduced endlessly, it still isn't nice.
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Busby SEO Test, 18 Dec 2008 @ 6:14am

like a blue ocean
oh well, there will always be new things to make and new things to discover. It is a matter of time when you use the blue ocean strategy. -- Busby SEO Test
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eleete, 18 Dec 2008 @ 6:17am

Re: I think you understand it just fine?
Lest we not forget that in addition to paying over and over and over 100 years that the "representatives" have stacked the laws in your favor. Now you are entitled to be paid that way and if you find out you weren't you can really lay the hammer down in the courts. Add to that the terms of your rights will be extended every 20 or so years and you have yourself one hell of a welfare system.
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Anonymous Coward, 18 Dec 2008 @ 6:22am

Re:
"What I don't understand is why he expects inventors, musicians, movie makers, etc to not charge for their time???"

I think they can charge for thier time, the issue arises when destinct means are used to create artificial scarcity in products and therefor artificial value in the creators time. What is thier time really worth, without government protections? How come you dont have to pay your barber continually for the haricut you gave him last month? Are you stealing from the barber, do you not value his time? Why is he not entitled to be paid over and over again for the creative work he placed on your head? The only reason is, becuase the government has not created artificial protections to allow him to do so.
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eleete, 18 Dec 2008 @ 6:23am

Re:
"What I don't understand is why he expects inventors, musicians, movie makers, etc to not charge for their time???"

What about artists, inventors and musicians that are dead? what time are they being compensated for. What about those that collect for 50 or so years, die and then their children begin suing, or a corporation that bought the creative works. When I can't sing Happy Birthday in a restaurant who benefits there ? The artists? They're loooong dead. Time Warner benefits from that. I think it is not that any of us want to see IP laws gone altogether, but with the other side arguing so vehemently for MORE control and a more complete monopoly, we all have to provide a strong argument against that. Especially as the laws are bought and paid for by the true beneficiaries of such litigation. The **AA
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Anonymous Coward, 18 Dec 2008 @ 6:23am

Re: Re:
Nice analogy. Funny, because that is probably the worst analogy I have ever heard. Granted you are probably a 13 year old who steals music, but whatever.
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Anonymous Coward, 18 Dec 2008 @ 6:24am

Re: Yeah dude
Don't bother, techweasel, he is a socialist through and through.
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eleete, 18 Dec 2008 @ 6:25am

Re: How do you make a world believable
Consistency ?
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Chronno S. Trigger, 18 Dec 2008 @ 6:27am

Re: correction from editor
The really important numbers you are missing are the games. Without selling games the system is going down. With as much as they lose on every console and as shitty of an attachment rate as the PS3 has (1.something), they aren't making any gains.

The Wii has always been making money off of every concole so the game sales don't matter as much and the 360 games are out selling the PS3's by almost 8 to 1, and the 360 is taking less of a hit even with the drop to $200.
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Killer_Tofu (profile), 18 Dec 2008 @ 6:30am

Re: Yeah dude
Well, you are obviously new here.
I will try to save Mike some trouble in replying to you.
People like you have addressed this again and again.
Mike has stated time and again, that he does NOT care if people copy his articles. There are some that already do. He encourages it actually. Most people who do copy, give credit. If somebody copies the content and does not give credit, then sooner or later (usually sooner these days) somebody will find out, and point it out. Then the person who was copying without giving credit gets bad rep from it. In the end, it can only drive more traffic to Techdirt than would have existed in the first place.
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eleete, 18 Dec 2008 @ 6:34am

Re: Yeah dude
I detest socialism and nationalization as much as anyone can. I think the US is going to hell in a hand basket so to speak with our latest bailouts and takeovers. I disagree however, with the notion that the concept Mike lays out is communist in any way. The opposite effect of letting things gradually (say over 5-10 years) enter the public domain is a system like we have now. One where the content owners push and buy laws that extend their rights (detracting from the rights of the public) so that they can milk the economy for more money. Consider that a corporation can copyright something for 120 years and what you are advocating is very dangerous too. Mike is not saying that people can't charge for music. But allowing full monopoly control over all iterations (derivatives) of that work for 120 years is quite an opposite from communism. I think what Mike advocates is a balance there. Only people on one extreme or the other would fight or struggle with that.
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eleete, 18 Dec 2008 @ 6:39am

Re: Re: Yeah dude
Nice point. I'd also point out that even though he has allowed total freedom over his content, he does still make a living and his site (as far as I've seen) is flourishing with new users. So the argument once again falls short and the proof is in the success of the site. I've never paid Mike a penny myself, yet I am not forced to feel guilty about that nor am I charged with being a pirate or criminal. It's actually a good feeling isn't it ?
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Xiera, 18 Dec 2008 @ 6:40am

Re: Re: Re:
It's not stealing if someone gives it to you...
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jonnyq, 18 Dec 2008 @ 6:41am

Re: Yeah dude
"You're talking about a pure communist society"

The only real reason that communism DOESN'T work is because of scarcity.

Look at Star Trek. They have replicators, transporters, and light speed. The replicator makes physical things abundant. Freedom to move around makes time and space abundant. That's why the "communism" on Star Trek works. As long as there's scarcity, communism does not work. However, that's not a reason to create artificial scarcity where there is none.
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Joe, 18 Dec 2008 @ 6:45am

Re: The VIP Lounge
Sounds like what Microsoft wants to do with Xbox live gold. I am a paying xbox live member, have been since launch but I never understood why I had to pay to play my games online. PC users get to play online for free, PS3 users get to play online for free, but gold member have to pay $50 a year? Back then it made more sense given voice chat etc, but the service sucked.

Now we pay to play person to person gaming (no dedicated servers) while the other options (PS3/PC) have dedicated servers that people use for free to allow a higher number of active players in a game.

I'm at a loss for explanation on that one.
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Anonymous Coward, 18 Dec 2008 @ 6:46am

Re: Yeah dude
"You're talking about a pure communist society."

Communism is a single party based political system, I dont see where it applies at all? I think you mean the economic system Socialism?
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Anonymous Coward, 18 Dec 2008 @ 6:46am

Re: Yeah dude
"You're talking about a pure communist society."

Communism is a single party based political system, I dont see where it applies at all? I think you mean the economic system Socialism?
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Evil Mike, 18 Dec 2008 @ 6:47am

Re: Yeah dude
You must be new here... (Or inattentive to basic facts aka ignorant.)

Mike's articles have been copied on other sites, and as long as said side give credit where credit is due, (especially via linking to the original article) there has not been an issue thus far.
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Anonymous Coward, 18 Dec 2008 @ 6:50am

Re:
What I don't understand is why he expects inventors, musicians, movie makers, etc to not charge for their time?

Sow my ONE of any of those who's paid on an hourly basis. Royalties per use != artists' time.
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Anonymous Coward, 18 Dec 2008 @ 6:54am

Re: Re: correction from editor
XBox 360 = 6.6 attachment rate
PS3 = 5.3
Wii = 5.5

Dunno where you got 1.something. This was from this past November.
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TruthBringer, 18 Dec 2008 @ 6:56am

Re: Re: The VIP Lounge
" I never understood why I had to pay to play my games online. PC users get to play online for free, PS3 users get to play online for free"

because Microsoft created artificial scarcity (or necessity in this case) by GIMPING your device (the XBOX) and preventing you from making peer to peer connections over the public internet wihtout first authenticating through them. This is GIMPING cannot be done on the PC for example so even though Microsoft TRIED to charge PC gamers for XBOXLive accounts, they quickly discovered (what was obvious to many of us from the get go) that without the GIMP removing any other options, PC gamers were not paying (since XBOXLive offers little to no actual value in an open market). They have since removed this charge for PC gamers, but they can keep it for XBOX gamers, becuase they have removed any choice from your device (creating an artificial necessity, instead of any real value).
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Anonymous Coward, 18 Dec 2008 @ 7:12am

Because scarcity, artificial or not, is a great way to connect the concept of doing work with the idea of receiving income for it.

It doesn't necessarily apply here, but you bring up the general case.
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Anonymous Coward, 18 Dec 2008 @ 7:13am

Re: Re:
And how do they get paid for their time if their product is free? Oh yea, t-shirts!
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Anonymous Coward, 18 Dec 2008 @ 7:17am

Re: Re: Re:
Now that is a great analogy because obviously musicians are beggars and bums! Why is it that every snot nosed punk thinks that they should have every song ever written because it is digital? What right does anyone have to anything someone else produces? If you want something make your own or pay someone else to do it for you. It is the thieves who are the beggars and bums here not the producers of IP.
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Anonymous Coward, 18 Dec 2008 @ 7:21am

Re: Re: Re: Re:
Because they are entitled brats that think work is for losers.
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Zac Morris (profile), 18 Dec 2008 @ 7:23am

Please reconsider perpetuating this kind of crap...
Listen man, I really appreciate you. I think your analysis is absolutely SPOT ON.

But I have to take offense as this particular post! This post just smacks of sensationalism, especially when the quote you chose contains a technically incorrect statement, which by repeating you perpetuate.

AIDS is not a "thing" to be recreated at the sub-molecular level, AIDS is a condition, a Syndrome, caused by a thing called HIV. Being HIV positive is NOT having AIDS. HIV can lead to AIDS, but with today's treatment it is possible to live an entire life with HIV and never have AIDS.

I know this has absolutely NOTHING to do with the thrust of your post, but as you know we get our information from all sorts of different sources, so I urge you to please make sure that anything you perpetuate be as accurate as possible.

THANKS!
-Zac
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Anonymous Coward, 18 Dec 2008 @ 7:23am

Re: Re: Re: Re: Re:
"Because they are entitled brats that think work is for losers."

Are you talking about content publishers that believe they should be paid over and over for the same work? I must admit, from thier point of view, work IS for suckers?
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Anonymous Coward, 18 Dec 2008 @ 7:44am

Re: "in the tank"? Read deeper
you forgot something:

sony is losing a LOT of money on every console they sell ad they aren't selling enough software to make that lost money back.
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Anonymous Coward, 18 Dec 2008 @ 7:48am

Re: correction from editor
if you are going to include multiple consoles for one company you have to include multiple consoles for all the companies, for example, the DS is also making a killing in the market. kind of puts it into perspective when a single point of Nintendo's profit is selling nearly double sony's entire gaming department.

Once you add that Nintendo makes money off of every console and game sold, while sony only makes money off of the games and you see why everyone is saying sony is doing so badly.
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Anonymous Coward, 18 Dec 2008 @ 7:50am

Re: Yeah dude
bad example, mike doesn't care if other people copy his articles because it usually brings more people here anyway.
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Anonymous Coward, 18 Dec 2008 @ 7:55am

Re: Re: correction from editor
"if you are going to include multiple consoles for one company you have to include multiple consoles for all the companies, for example, the DS is also making a killing in the market. kind of puts it into perspective when a single point of Nintendo's profit is selling nearly double sony's entire gaming department. "

Im a little confused is your argument that the success of Nintendos $150 handheld is a sign of the demise of Sonys $400 dollar console? Im not sure I see that? Plenty of people buy Hyundais, doesnt mean Ferrari is in trouble?
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R3d Jack, 18 Dec 2008 @ 8:06am

You've never been a programmer
As a programmer, I know *lots* of peers who love to create scarcity. They modify an existing set of programs or write something new, and they do it such a way that no one else knows what they did or why. Suddenly, they are the only ones that can work in that area. They fight bitterly to keep it that way. Why? Because they become invaluable. They can be lazy and unproductive, but management doesn't dare touch them. They are guaranteed income, prestige, etc. because of the scarcity they created.

I believe this principle applies to others, as well.
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Anonymous Coward, 18 Dec 2008 @ 8:07am

Re: Re: Re:
or maybe they get people to commission them to make X.

you can still sell X after you make it, but those who helps pay for the making through a donation get their copy at no extra charge. so for video games it would look like this:

customer A wants a game to be made, he contacts game developer and game developer has a list of all game people want it to work on, each time they choose one game (the most popular choice usually) to make. when it is done they sell it but give it everyone who helped make it.

this way the devs get paid while coding from the people who pre-purchase, and then even if the sales really tank for some reason the devs already got paid and don't have to worry about piracy.
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BigD, 18 Dec 2008 @ 8:12am

Why Won't Anybody Think Of The Children!
I agree that this is one of the more hysterical posts from Mike that I've seen. We're starting down the slippery slope of equating a dissimilar mindset or ignorance of the new realities of abundance with "hating mankind" or being "damaging".

From a pragmatic standpoint, the folks at Sony are in the business of maximizing profit. Unless I don't understand the purpose of PlayStation Home (Is it an exercise in maximizing social harmony in a digital utopia?), it is likely that they are sticking with what works for now. As much as folks like us like to spitball new business models, the marketing folks at Sony are faced with the scarcity of time and engineering resources to make PSH work.

Why would they remove a proven economic source of revenue? More profits = more resources to do cool things. Less profits = your project gets shut down and your hard work goes out the window.

It is also likely that they haven't figured out a way to make money from the absence of scarce real estate in an online world. Hopefully they will start experimenting with different ways. In the meantime, why would you kill one of your golden geese?

If the concern is "damaging resource limitations", I would be curious to see what kind of damage do you could expect. In-world riots? Cybercrime? I would argue that the cost/benefit analysis for Sony would lean in favor of more revenues via traditional scarcity models. They have created *artificial* scarcity in digital real estate. They can always add more later. That is the beauty of digital resources.

D
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Yakko Warner, 18 Dec 2008 @ 8:15am

What is being made scarce
Just to shed some light on what is going on here, since a lot of people are off on tangents like "they're doing this to make more money" or "to make it more exclusive".

Which, you know, you'd already get if you read the linked article, but c'est la vie...

You have this virtual world, "Home", which (if you haven't seen it) is kind of like "Second Life" in that you create a person and move this person around in a virtual world, populated by other people. You can interact with other people by talking to them, using gestures (waving, dancing, etc.). You can even go to a bowling alley with a group of people, go to a lane, and start a game of bowling. Or, you can sit down at a chess board with someone and play chess. Or, you can walk up to an arcade game cabinet and play a video game.

Where the "scarcity" complaint comes in, is that there are a fixed number of lanes in the bowling alley; there are a fixed number of chess tables set up in the courtyard; there are a fixed number of arcade cabinets in the game room.

If, in real life, some friends and I go to the bowling alley, and all the lanes are in use, we have to wait our turn. That's the way the real, physical world works. But in the virtual world, one would kind of expect launching a "bowling alley application" and getting a new, virtual "instance" of a lane to play on. Being entirely digital, it doesn't cost anything extra to create this space on demand. However, Sony has instead implemented real-world scarcity by forcing you to wait for one of the limited number of lanes to open up.

Same deal with the chess boards. Or the arcade games. These make even less sense. I can use MSN Messenger to invite anyone to a chess game, and a new instance of "chess" is created for the two of us. Microsoft doesn't have some limited number of chess boards, forcing us to wait until one of those is free before we can play.

The arcade games, I've heard compared to browser games in their complexity and quality. So why make me wait in line to play a browser game? I can go to popcap.com and start playing a game immediately, no matter how many people are already playing ahead of me. There's no reason why someone in Home playing an arcade game should prevent me from playing the same game at the same time.

Exclusivity? Money? PlayStation Network is free, and Home is currently an "open beta", meaning absolutely anyone with a PlayStation and an internet connection can get it for no charge.

Realism? Or, as another poster put it, consistency [with the real world]? That's the whole point. There's such a thing as "too real". Shouldn't a virtual world, especially on a game console, be more about having "fun"? Why would you want to introduce problems and inconveniences of the real world?
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Anonymous Coward, 18 Dec 2008 @ 8:22am

Re: Re: Re: correction from editor
my point is two-fold

you claim Sony's gaming sales are excellent and to back it up you use misleading figures. In the real world people call you on doing things like that. you are combining a legacy system that is still popular with a two new systems that have failed to grab a sizable market portion and haven't made back the money spent to make+sell them and comparing it against a single set of a competitors product. You also neglect to include anywhere the actual profit from the gaming department and instead just list the sales. sadly if you included the net profit from all of sony's gaming divisions from the costs+sales of the PSP and PS3 it would be in the negative. microsoft and Nintendo are moth profitable right now they are making money with every sale they make, to quote pure sales is extremely misleading and inaccurate.
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Anonymous Coward, 18 Dec 2008 @ 8:30am

Even in a world where the absence of scarcity is the rule, it is nonetheless populated by people who must expend their individual labor to survive. Assuming, for example, that the supply of seeds is infinite for growing food necessary for life to exist, there will always be individuals who will choose to spend their time pursuing other endeavors...some useful and some not. Thus, the infinite resource, seeds, yields by the labor of a few a scarce resource, the resulting food.

Ideas are to my way of thinking an infinite resource limited only by one's imagination. The means (infinite, of course) are likewise readily at hand to act upon one's ideas and expend their labor to yield a useful product, be the product either tangible or intangible.

In the former a scarce tangible product results. In the latter a scarce tangible or intangible product results. Under either circumstance it seems to me that scarce goods are created nonetheless.

Quid pro quo being an ordinary human expectation, it is difficult to see a situation where the one who expends his/her labor should be denied the opportunity to profit from the expenditure of such labor.

I am neither an economist nor a philosopher, so perhaps my above musings are off the mark to varying degrees. But it does seem to me that even in a world where the absence of scarcity is the rule, by the labor of individuals scarce goods will nevertheless arise, be they "food" or the implementation of "ideas". Thus, even in the absence of scarcity I believe that the notion of "property" would nevertheless naturally arise.

I am not sure the above makes any sense, so any comments concerning where I may have missed the boat would be appreciated.
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DanC, 18 Dec 2008 @ 8:34am

Re: Yeah dude
You're talking about a pure communist society.

He isn't talking about a communist (or socialist) system at all. Both of those systems rely on collective ownership of resources, which isn't what Mike's describing. Instead, he's describing a situation where a resource exists in abundance, so much so that everyone can have their own.

Humans create artificial scarcity because we generally want to better our situations; make more money, have a bigger house, have cooler stuff and more of it

Neither money nor housing are artificially scarce.

Even though your intellectual property can be reproduced endlessly, it still isn't nice.

Why not? This is the moralistic objection that people keep bringing up, but it doesn't make sense. The only reason it "isn't nice" is because it undermines what would otherwise be an unsustainable business model. If your business model fails, you choose another - morality doesn't enter into it.
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Darryl, 18 Dec 2008 @ 8:36am

Re: What is being made scarce
Good post I was wondering why it took so long for someone to point that out.

One thing to add, is that number of lanes, pool tables etc is very small. I think I saw 4 pool tables in the arcade, this is for a service that thousands of people could use, unless they are launches a new world for every few people. And there are no queues, at least in a real bar you put some coins on the table edge to mark your turn.
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Anonymous Coward, 18 Dec 2008 @ 8:36am

Re: Re: Re: Re: correction from editor
"you claim Sony's gaming sales are excellent and to back it up you use misleading figures. In the real world people call you on doing things like that. "

This is a missunderstanding, I did not make that claim (I am a different poster). I have no idea what SONYs sales figures are and I make no pretense that I know what they should or need to be for SONY to remain in buisness? I will state though that I remember reading a year or so ago that Microsoft had yet to actually realize a profit on its XBOX program or infact its entire Home Entertainment division? Is that true . . . I dunno . . .can you tell from sales numbers . . . aparently not?

I would suggest since we are not privy to internal information about the goals, budgets and metrics of these corporate projects, we stop pretending we know who has failed and who has succeeded. I think one thing we can all agree on is that having all these players in the market, benefits consumers, so lets hope they all continue to do well enough to stay.
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Lucretious, 18 Dec 2008 @ 8:40am

If anyone has had the displeasure of trying Sony's "Home" recently, I suggest reading the entire piece by Tycho. While his commentary can sometimes be ego masturbation at its most grotesque, this particular piece hits the nail squarely on the head.
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Anonymous Programmer, 18 Dec 2008 @ 8:41am

Re: You've never been a programmer
I, on the other hand, Am a programmer.

I make no money from the people who use my programs except for my standard salary that I receive for showing up to work. I also devote time to open source projects so I can point to examples of my work if I ever need to find a new job*. I also used to write programs for friends and other individuals and I charged based on the complexity, anywhere from favors and lunch to a few hundred dollars (usually they wanted something simple or I would point out how long it will take to do in my free time) and then let them give it away or do whatever they want, but I have my name in the program and I would occasionally get other people who would like something.

my point in all this is that I make my self indispensable by marketing myself to potential employers as someone who can work with other peoples code and gets things done fast, efficiently, and well done. not all programmers are the lazy kind.

*most of my developments are in-house applications that few people outside the company see
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J, 18 Dec 2008 @ 8:44am

What
Your dumb. You ususally post well articulaed articles that while being incredibly one sided; ignoring other valid points of view, usually offer some well constructed thoughts and views. So I read them with a grain of salt. But make no mistake, although you do present compelling arguments "SOMTIMES", you are the king of the strawman. This article in peticular is Retarded, so much so that I won't even go to the trouble of explaining why. I assume you know better!
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DanC, 18 Dec 2008 @ 8:44am

Re:
To make money? It worked pretty well for the De Beers diamond cartel

Until it stopped working, which is why they had to change business models. And they're making more money now with 40% of the market then they were when they controlled 80%.

For those that don't want to register for the NY Times:

Mr. Penny was among a group of Young Turks at De Beers who conducted a strategic review that helped persuade management that the company had to change. It stopped buying third-party diamonds, and focused instead on selling its own diamonds — though to only around 100 dealers who agreed to play by its rules. (It didn’t give up control entirely.) And it became a company that focused on increasing demand rather than controlling supply. Today, De Beers has about 40 percent of the diamond market — but it is far more profitable than under the old regime, when it controlled 80 percent of the market.
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Anonymous Coward, 18 Dec 2008 @ 8:53am

Re: Re: Re: Re: Re: correction from editor
that is a fair point. we can only infer based off of cost of hardware vs. the price the hardware is sold for and then balance that by making a rough estimate of how many games (and at what profit) were sold.

currently both microsoft and nintendo make a profit on every console sold (though microsoft only recently hit that point). we know sony loses hundreds of dollars on each console it sells and that at the rate of game sales they have received it is unlikely to have turned profitable yet.

anything more than that and we don't know for sure.
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Killer_Tofu (profile), 18 Dec 2008 @ 8:55am

Re: Re: Re: Yeah dude
It's actually a good feeling isn't it ?
Yes it is.
Thanks for adding some additional good points of thought as well.
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Chronno S. Trigger, 18 Dec 2008 @ 9:23am

Re: What
Well, I don't know better. How about you explain it to me.

I had the same exact response to Home as the Penny Arcade people. Why the hell would I be willing to pay $0.99 for a digital chair that can be recreated indefinitely? Why would I spend $4.99 for a house that anyone can live in at the same time?
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DanC, 18 Dec 2008 @ 9:24am

Re:
Quid pro quo being an ordinary human expectation, it is difficult to see a situation where the one who expends his/her labor should be denied the opportunity to profit from the expenditure of such labor.

You're basing this on an incorrect assumption - that not inflicting artificial scarcity denies the ability to profit from non-scarce goods. But that simply isn't true - it just makes business models based on artificial scarcity unfeasible.
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Anonymous Coward, 18 Dec 2008 @ 9:25am

Re: Re: Re:
Concerts (for musicians), tard.
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Mike (profile), 18 Dec 2008 @ 10:01am

Re:
The one thing that will always be scarce is time.

Exactly. So charge for time.

Even though IP may be abundant because it is an idea or digital or whatever, the time it takes to create IP is scarce.

Right, so charge for that. But that's not what's being done. They're charging for the copy, which is not scarce.

So you are really paying for the time more than the IP.

No. You're not.

This is why even Mike charges for his time. What I don't understand is why he expects inventors, musicians, movie makers, etc to not charge for their time???

Actually, I *do* expect them to charge for their time.
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Chronno S. Trigger, 18 Dec 2008 @ 10:08am

Re: Re: What is being made scarce
I was talking with a coworker of mine about this vary issue and he said that they set it up that they have separate instances of Home for a specific number of people. Like a new instance per 100 or so people who connect.
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Mike (profile), 18 Dec 2008 @ 10:10am

Re: Yeah dude
You're talking about a pure communist society.

A bunch of others have already said this, but that's not true. Communism (or, really, socialism) is about collective ownership of resources. What we're talking about is not collective ownership at all, but individual ownership. If a resource is abundant, everyone can own their own piece. Quite different.

Humans create artificial scarcity because we generally want to better our situations; make more money, have a bigger house, have cooler stuff and more of it.

But artificial scarcity does exactly the opposite of that. It gives people less money and less stuff.

We tend to make rational decisions that favor our own self-interest. The people who create intellectual property would like to be paid. The people who package, promote and distribute it would like to be paid too. As much as possible.

There's a HUGE fallacy here. You're suggesting I said people who create IP can't get paid without artificial scarcity. That's simply untrue, as we've shown time and time again.

Even writers like getting paid as much as possible, right? If somebody started copying your articles and plastering them on other sites with his or her own advertising, and search-optimized them even further so your traffic started disappearing, and making it less profitable for Techdirt to employ you, that would suck, right? Even though your intellectual property can be reproduced endlessly, it still isn't nice.

We've said time and time again, that this is fine. We have no problem with it -- because we've set up a business model where that doesn't really matter to us. Since you're obviously new here, I'll cut and paste from here:

http://www.techdirt.com/article.php?sid=20070412/183135#c612

We have no problem with people taking our content and reposting it. It's funny how many people come here, like yourself, and assume you've found some "gotcha." You haven't. There already are about 10 sites that copy Techdirt, post for post. Some of them give us credit. Some of them don't. We don't go after any of them.

Here's why:

1. None of those sites get any traffic. By itself, they offer nothing special.

2. If anything, it doesn't take people long to read those sites and figure out that the content is really from Techdirt. Then they just come here to the original source. So, it tends to help drive more traffic to us. That's cool.

3. As soon as the people realize the other sites are simply copying us, it makes those sites look really, really bad. If you want to risk your reputation like that, go ahead, but it's a big risk.

4. A big part of the value of Techdirt is the community here. You can't just replicate that.

5. Another big part of the value of Techdirt is that we, the writers, engage in the comments. You absolutely cannot fake that on your own site.

So, really, what's the purpose of copying our content, other than maybe driving a little traffic our way?

So, if you really want to, I'd suggest it's pretty dumb, but go ahead.
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Anonymous Coward, 18 Dec 2008 @ 10:51am

Re: Re:
How can they charge for their time when their product is free? No money for the product, no money for the time.
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Mike (profile), 18 Dec 2008 @ 11:06am

Re: Re: Re:
How can they charge for their time when their product is free? No money for the product, no money for the time.

A musician gives away his or her music and charges for a concert (his or her time). A musician gives away the music, but charges for the creation of new music (see how Jill Sobule's latest album was created).

There are many, many, many ways.
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Killer_Tofu (profile), 18 Dec 2008 @ 11:09am

Re: Re: Re:
Try looking back over the previous blog posts ont his site.
We easily get a few a week.

One such method is charging people for your time before you make the product. I believe it was Jill Sobule who used this? People pay her, and when the amount hits a certain level, she then takes time and makes the cd then gives it away to everybody who donated. Or something like that. It is just one example (that I admitedly don't remember all the specifics to).
There are plenty of methods that have been covered here.
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Anonymous Coward, 18 Dec 2008 @ 11:14am

Re: Re: Re: What is being made scarce
Yes instancing is exactly what they plan to do but it doesnt change the issue of consistency. There will still only be 8 bowling lanes per instence, so if you want to bowl and they are all taken, well much like real life, you will have to wait your turn. Or, like real life, you might politely ask a group who is playing, if you can join. This sort of "real world" consistency and social interaction is largely the point of fully realized virtual worlds and I dont think there is anyone really knows more about it, or has done more work in this area then SONY.

You may not realize how much the little irritations of life, like having to share things, actually enhance our existence by forcing us to interact with one another.
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TechWeasel (profile), 18 Dec 2008 @ 12:33pm

Re: Re: Yeah dude
All of this makes sense, and I do not advocate artificial scarcity as a business model. Rather, I'm answering the question that you posed in your article about why people create artificial scarcity for good which are not naturally scarce. Because the people who make that decision, and continually try to enforce the status quo, benefit from the status quo. They earn, or believe they earn, more money from keeping things as-is than they would earn by letting "their" content be reproduced endlessly and freely.

With the proper business model, this is not true (a previous poster pointed out the De Beers example). You mention community as a point of difference for your content as opposed to copied content, which is viable. I probably should have referred to a hypothetical writer rather than a TechDirt writer, who doesn't have an established audience, and who really would be hurt by somebody jacking his content, to have a more easily generalizable example.

And I never said that people who create IP won't get paid without artificial scarcity - they're in a unique position to get paid more, and more easily, than anyone else if their goods are endlessly replicated (by offering add-ons like access, truly scarce physical products and momentos, concerts, etc). The people who won't get paid as much without being a lot more agile are the people who package, promote and distribute media in physical form; the people who pay the salaries of the RIAA and MPAA.

The point of my post is that those people are not mindlessly evil or totally ignorant; they have a reason for doing what they do, even if it is not viable in the long term and there are better ways to make money.
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TechWeasel, 18 Dec 2008 @ 12:34pm

Re: Re: Yeah dude
And yes, I'm new here, if that wasn't obvious.
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DanC, 18 Dec 2008 @ 2:38pm

Re: Re: Re: Re:
Why is it that every snot nosed punk thinks that they should have every song ever written because it is digital? What right does anyone have to anything someone else produces?

Why is it that people who don't know what they're talking about keep setting up straw man arguments to knock down?
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The Mad (Patent) Prosecutor, 19 Dec 2008 @ 10:41am

I agree whole heartedly - as least with respect to Mr. Masnick's intellectual property. Mr. Masnick, please make available, on the internet, all of the intellectual property for which you have every charged a client.

I am sure I misunderstand to some extent, but I believe you produce some sort of business plans for companies that pay for your consulting services. Please, let's not have that information remain scarce - let's put it out, so other businesses can see the same information. They can them transform your work, adapt it to their own use. Society wins when information doesn't remain scarce.

If you find you can no longer make as much money offering consulting services, because your intellectual property no longer (artificially) remains a scarce good, then you can revise your business plan. You can sell T-shirts, or autographed album covers. After all, isn't it ridiculous for anyone, these days, to think their business model should rely on information that should be given away for free?
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Mike (profile), 19 Dec 2008 @ 11:41am

Re:
I agree whole heartedly - as least with respect to Mr. Masnick's intellectual property. Mr. Masnick, please make available, on the internet, all of the intellectual property for which you have every charged a client.

Nice strawman. Misunderstanding both what we do and what we say in a SINGLE sentence.

We do not hoard any information. We do not sell any information. Everything we provide clients they are free to do whatever they want with.

We sell the ability to *create* new content -- which is a scarce good. We do not sell any infinite goods.

I am sure I misunderstand to some extent, but I believe you produce some sort of business plans for companies that pay for your consulting services.

No. You don't misunderstand to some extent, you misunderstand entirely. But why let that stop you.

We sell the ability to create insights from a variety of smart people, which companies are then free to do what they want with that insight. We do not resell any infinite good. We do not hoard any infinite good. We do not sell "consulting services."

Please, let's not have that information remain scarce

It's not scarce.

They can them transform your work, adapt it to their own use. Society wins when information doesn't remain scarce.

Yes, and that's exactly what's happening. Have you seen the content that we've produced showing up on sites from IBM, Dell, Intel, American Express, Dow Jones and many other sites? They're taking the content our community has created for them and made them open and available to everyone.

If you find you can no longer make as much money offering consulting services

We don't offer consulting services. Is reading comprehension THAT difficult?

because your intellectual property no longer (artificially) remains a scarce good

We don't sell intellectual property.

You can sell T-shirts, or autographed album covers. After all, isn't it ridiculous for anyone, these days, to think their business model should rely on information that should be given away for free?

Yes, it is ridiculous. That's why we don't do that.
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DanC, 19 Dec 2008 @ 12:09pm

Re:
I agree whole heartedly - as least with respect to Mr. Masnick's intellectual property.

Well, at least you're admitting to being a hypocrite from the outset. It makes dismissing the rest of your post much easier.

Needless to say, simply because TechDirt may disagree with the current system of copyrights and patents does not mean that they can disregard the legal system. Clients can (and do) provide confidential and proprietary information which cannot be disclosed.

But in case you're interested, there are plenty of TechDirt's cases available for viewing here.

You can sell T-shirts, or autographed album covers. After all, isn't it ridiculous for anyone, these days, to think their business model should rely on information that should be given away for free?

Since TechDirt's business already relies on scarce resources (consulting and the creation of insight cases), I can only assume you don't actually understand TechDirt's business model and are simply trying (and failing) to come up with "gotcha".
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gene_cavanaugh, 20 Dec 2008 @ 1:06pm

Scarcity and IP
While the point is very well made about such things as mere product development, such as the Playstation, and I can't imagine anyone arguing about that (except for politicians who make laws enabling such things in exchange for campaign funds!), an important point was overlooked:
The way the patent system is SUPPOSED to work (but in today's system seldom does) is that someone comes up with an idea. As an idea, it has no value (the Chinese are especially sensitive and in agreement with that argument), so it must be developed into a marketable concept. Often, this is time consuming and expensive (most of Edison's inventions fit that description), and therefore not worth doing if the result is theft by a wealthier entity.
So, what the IP laws are INTENDED to do is encourage this sort of development. Seldom works that way today, though it did with Bell and Edison (and Tesla and ....).
There are exceptions: Heddy Lamarr developed PCS technology because of a visceral hatred for the Nazis, and patenting was an afterthought, but many of our most important inventions would not have happened if it were not for the system as it formerly worked (and could work again, if we could get the politicians out of the corporate finance feed trough).
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Anonymous Coward, 22 Dec 2008 @ 2:16pm

Re: Re:
Ima

I see you're trolling for musicians again...

Please let's not compare musicians to beggers and bums.
It's not even logical.
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Anonymous Coward, 22 Dec 2008 @ 2:24pm

Haiku
Endless arguments
fewer and fewer topics
Your bills go unpaid
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Busby SEO Test, 10 Jan 2009 @ 10:15am

scarcity is oftentimes abused
Busby SEO Test scarcity is oftentimes abused
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Jack Mack, 15 May 2009 @ 2:49pm

Scarcity
Here's one reason why you might want to limit the availability. The best thinkers in the world are capable of getting paid for their thinking. If you want them to think about and come up with neat software, it is reasonable to expect that they would want to be paid for diverting their efforts to this task. It's called capitalism and, so far, its the best method ever devised for people to exchange goods and services with each other.
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Raideo, 17 May 2009 @ 8:08am

Scarcity
Your main point is that scarcity is bad, and I agree that a true Utopian society would have no scarcity, however all of the economic systems in the world are based on the management of scarcity. The only way to have a successful economy wherein scarcity is null would require there to be an abundance of all resources, otherwise those who try to survive distributing non scarce goods would ultimately fail due to their reliance on scarce goods first and foremost being food.
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free ps3, 15 Oct 2010 @ 9:41am

scarity
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free ps3, 15 Oct 2010 @ 9:41am

scarity
One phrase. Scarity is bad!
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