Even In The Age Of Abundance It's Quality, Not Quantity, That Counts

from the do-books-need-to-be-expensive-to-be-good? dept

Seth Godin is nothing if not prolific. As well as publishing a string of popular marketing books with catchy titles like "All marketers are liars", "The big moo" and "Small is the new big", he writes short but smart blog posts every day, some of which are rather obvious, but many of which contain real gems of insight.

This fluency with words means he is well placed to comment on the age of abundance we are entering thanks to the rise of digital technologies. One of his latest pieces is entitled "How the long tail cripples bonus content/multimedia", and appears as part of The Domino Project, "a new way to think about publishing. Founded by Seth Godin and powered by Amazon" -- a partnership that is itself symptomatic of the digital times.

The post is in response to a HuffPo interview with President and CEO of Ingram Content Group, David "Skip" Prichard. Prichard shows himself optimistic and surprisingly open to new ideas for someone leading a book distribution company -- not a sector known for its innovation.

But Godin concentrates on one particular aspect of Prichard's replies, which is typified by the following exchange:

Are there enhanced books available this holiday season that have already changed the definition of a book?

Yes, for example, a biography can to come to life in many ways. Jacqueline Kennedy: Historic Conversations on Life with John F. Kennedy has all of the interview audios, videos, photographs, text, and transcripts available. Even classics -- Penguin has updated Pride & Prejudice with clips from the movie and even instructions on dancing. For the 75th anniversary of The Hobbit, HarperCollins released an e-version with exclusives including J.R.R Tolkien's book illustrations and recently discovered Tolkien recordings. Publishers are still learning what added value readers will or won't pay for. I expect we'll continue to see lots of experimentation in this arena.

Godin describes these "breathtaking visions of the future" as "economically ridiculous", and comments:

The Long Tail creates acres of choice, so much as to make the number of options almost countless. But at the same time, it embraces (in every format) much lower production values. For what Michael Jackson and Sony paid to produce the Thriller album, today's artists can make and market more than 5,000 songs. You just can't justify spending millions of dollars to produce a record in the long tail world.

This is an important point that the copyright industries are extremely reluctant to acknowledge, because it's at odds with their business models based on just a few massive blockbusters that are highly profitable. There's a good reason for their preference: the elevated costs involved in creating these works act as a barrier to entry for newcomers, and help preserve the status quo. The new model, based around large numbers of low-cost products, is available for anyone to adopt -- including artists selling directly to their public.

As Godin puts it:

it's not a few publishers putting out a few books for the masses. No, the market for the foreseeable future is a million publishers publishing to 100 million readers.

He explains what that means for ebooks:

The typical ebook costs about $10 in out of pocket expenses to write (more if you count coffee and not just pencils). But if we add in $50,000 for app coding, $10,000 for a director and another $500,000 for the sort of bespoke work that was featured in Al Gore's recent 'book', you can see the problem. The publisher will never have a chance to make this money back.

Finally, Godin addresses the inevitable complaint that the imminent loss of those $500,000 multimedia ebooks -- like the imminent disappearance of $100 million movies - means the end of creativity as we know it:

The quality is going to remain in the writing and in the bravery of ideas, not in teams of people making expensive digital books.

Even in the age of abundance, it's not about quantity, but quality.

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Filed Under: abundance, business models, quality, quantity, seth godin

Getting It: In A World Of Digital Abundance, Sell The Scarcities

from the dickens-of-a-good-idea dept

A recurrent refrain from the copyright industries is that you can't make money from digital goods if they are freely available online. To which Techdirt has been pointing out for years that not only are there many ways of doing precisely that, but lots of people are already coining it as a result. One of the Guardian's columnists has noticed one of them - that in a world of digital abundance, you can make money by selling associated scarcities:

Earnings from recordings have been plummeting for a decade, while from live they are rising ever faster. Warner Brothers release albums free online to publicise forthcoming concerts. In Britain HMV is closing 40 shops while tickets for a Rihanna concert can cost £330 [$500], and for Coldplay £180 [$280]. A seat for Madonna is more expensive than her entire recorded output. A top American performer would reckon to earn between 80% and 90% of revenue from live performance. In the US alone, touring revenue that grossed $1bn in 1995 rose to $4.6bn last year.

The article then goes on to list other manifestations of this trend, such as Tony Blair's $160,000 fee for a speech "in the flesh"; a doubling of attendances at museums and galleries; 90% audience levels at the UK's National Theatre and Royal Shakespeare Company; and the fact that even "humble" authors find "appearances at literary festivals (those that pay) can compensate for dwindling book advances and, in the case of poets, eroding copyrights."

But one of the most telling examples is the following:

Performers such as Stephen Fry have taken to reading their books in public, Dickens-style

Dickens undertook his American reading tours in part because piracy of his works was rampant there, so he made little money directly from the many published copies. But amidst this unwelcome abundance, he was still able to sell the ultimate scarcity – his presence – to earn handsomely from the reputation his pirated works created.

The same is true for countless other writers, musicians and artists before Dickens, who lived when there was little or no copyright, and whose works could thus be copied freely. In other words, people have been using abundance to sell scarcity not just for years, but for centuries. Maybe it's time today's copyright industries got the message.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Filed Under: abundance, business models, economics, scarcity

Star Trek In The Age Of Intellectual Property

from the it-would-be-quite-a-bit-different dept

Over the years, plenty of people have used the Star Trek: TNG "Replicator" analogy to try to discuss intellectual property issues. I recall writing a piece using that as the central construct for a magazine article (that got spiked, unfortunately) nearly a decade ago. Over the years I've mentioned it here or there on the site, including in a discussion about how such a replicator would likely, contrary to the belief of many, create more new jobs. The argument there was that by reducing the input costs for lots of products, there would also be increased demand for absolutely everything surrounding those products that couldn't be replicated.

Of course, not everyone thinks so. Matthew Yglesias has been drawing some attention to a piece that Peter Frase wrote at the end of last year, in which he went through a thought exercise in which he discussed the world of the replicator... plus intellectual property:

This is the quality of intellectual property law that provides an economic foundation for anti-Star Trek: the ability to tell others how to use copies of an idea that you “own”. In order to get access to a replicator, you have to buy one from a company that licenses you the right to use a replicator. (Someone can’t give you a replicator or make one with their replicator, because that would violate their license). What’s more, every time you make something with the replicator, you also need to pay a licensing fee to whoever owns the rights to that particular thing. So if the Captain Jean-Luc Picard of anti-Star Trek wanted “tea, Earl Grey, hot”, he would have to pay the company that has copyrighted the replicator pattern for hot Earl Grey tea. (Presumably some other company owns the rights to cold tea.)

This solves the problem of how to maintain for-profit capitalist enterprise, at least on the surface. Anyone who tries to supply their needs from their replicator without paying the copyright cartels would become an outlaw, like today’s online file-sharers. But if everyone is constantly being forced to pay out money in licensing fees, then they need some way of earning money, and this brings up a new problem. With replicators around, there’s no need for human labor in any kind of physical production.

He goes on to discuss what kinds of jobs would be left in such a world, and it's pretty much lawyers and marketers and not much in between. There would be a few people needed to create the new things that could then be replicated, but he argues that wouldn't be a big moneymaker, since you could just crowdsource the best ideas for free.

Of course, I think he leaves out a few things. I would imagine there'd be a good business in being a replicator repairman, for example. However, as we've pointed out for years with digital content, every new abundance tends to create new scarcities, and there will always be new opportunities to build products and services around those scarcities. Of course, sometimes it's difficult to predict what those new offerings might be, but we've yet to discover a new abundance that didn't create massive new markets, so I have trouble believing that an abundance of physical goods would suddenly stop that general principle.

Obviously, if it's easy to get tangible goods, it's likely that most of the new jobs would be in services, rather than goods, but that's not necessarily a bad thing. Of course, to even have this happen, we'd have to get past the intellectual property hurdle, that the estate of Gene Roddenberry might claim rights over your replicator...

Filed Under: abundance, innovation, intellectual property, scarcity, star trek

Culture is Anti-Rivalrous

from the it-increases-in-value-the-more-it's-used dept

Economists talk about rivalrous and non-rivalrous goods, but Culture is neither rivalrous, nor non-rivalrous; it is anti-rivalrous.

I. Rivalrous

Rivalrous goods diminish in value the more they are used. For example, a bicycle: if I use it, it gets me from here to there; if you use it, it gets me nowhere. If I acquire your bicycle, you don't have it any more. Only one of us can have the bicycle at one time. We can share it to a limited extent, but the more it's used the less it's worth; it gets dinged up and wears out. The more people use the bicycle, the less utility it has.

If I steal your bicycle, you have to take the bus

All material things - things made of atoms - are rivalrous, because an object cannot be in two places at the same time. Everything in the physical world is rivalrous, even if it's abundant.

A commons is a rivalrous good. Hence the "tragedy of the commons": the more people use a square of land, the less valuable it is to each of them. The grass gets eaten too fast to grow back, the soil can't handle the incoming rate of sheep shit, and degradation ensues.

Fig. 1: a lovely day for grazing on the commons


Fig 2: Tragedy strikes

Rivalrous and non-rivalrous are often confused with scarce and abundant, but they're not the same thing. Air is abundant, but it is still rivalrous - some "users" could make it toxic for the rest of us, because air is not infinite. Land and water are so abundant in North America that Native Americans couldn't imagine owning or depleting them, and look what happened. We treat the oceans as infinite, but they are not; human pollution and exploitation is killing ocean life. We also pollute the vast ocean of air - hence acid rain. Air and oceans are commons.

Commons are commonly-held rivalrous goods. Because they are rivalrous, some uses (or over-use) can poison them or otherwise diminish their value. For that reason, Commons(es) actually merit rules and regulations.

But Culture is not a commons, because Culture is not rivalrous and can't be owned.

II. Non-Rivalrous

Non-rivalrous goods, as their name implies, don't diminish in value the more they are used. A favorite example of a non-rivalrous good is the light from a lighthouse. It shines for everyone. No matter how much you look at it, I can see it too.

Everyone can see the light from the lighthouse...

This is a pretty good example, but it's not quite right. Theoretically, if enough tall boats are in the harbor, they actually can crowd out your lighthouse light.

...except when they can't. Once again, too many sheep ruin everything.

Consider sunlight in Manhattan; yes, the sun shines for everyone, but if they build a high-rise next to your apartment you won't see it any more. There's only so much sunlight that hits a certain area, and that light is rivalrous. You can always move, of course - except land, while abundant, is definitely rivalrous and not infinite, so you'll have to engage in some rivalry to do so.

The light metaphor has another problem: is light a particle, or a wave? If it's a particle, then light is rivalrous. If it's a wave, then it's not.

Thomas Jefferson used the example of candle fire, writing "He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me." Of course candles burn out but it's not the light that's diminished, it's the candle. That's a great metaphor for attention, which is scarce: once our attention is used up, the light goes out.
But Culture is not non-rivalrous either.

III. Anti-Rivalrous

Anti-rivalrous goods increase in value the more they are used. For example: language. A language isn't much use to me if I can't speak it with someone else. You need at least two people to communicate with language. The more people who use the language, the more value it has.

Which language do you think more people would pay to learn?

• English
• Esperanto
• Latvian

More people spend money and time learning English, simply because so many people already speak English.

Social networking platforms increase in value when more people use them. I use Facebook not because I love Facebook (I certainly don't), but because everyone else uses Facebook. I just joined Google+, and will use that instead of Facebook if enough other people use it. If enough people flock to yet another platform, I'll use that instead. Meanwhile I love Diaspora in principle (I was an early Kickstarter backer, before they surpassed their initial $ goal), but I don't use it, because not enough other people do. When it comes to social networks, I am a sheep.

A classic "Nina's Adventures" comic, which I only realized was anti-rivalrous a few years ago. ♡ Copying is an act of love. Please copy and share. Culture is anti-rivalrous. The more people know and sing a song, the more cultural value it has. The more people watch my film Sita Sings the Blues, or read my comic strip Mimi & Eunice, the happier I'll be, so please go do that now and then come back and read the rest of this paragraph. The more people know a movie or TV show, the more cultural value it has. Monty Python references attest to the cultural value of Monty Python - we even use the word "spam" because of it. Shakespeare's works are culturally valuable, and phrases from them live on in the language even apart from the plays ("I think she doth protest to much," etc.). The more people refer to Monty Python and Shakespeare, the more you just gotta see em, amiright? Or not, it doesn't matter whether you see them, you're already speaking them. That all culture is a kind of language, I'll leave for another discussion.

Cultural works increase in value the more people use them. That's not rivalrous, or non-rivalrous; that's anti-rivalrous.

IV. Some Exceptions That Prove The rule

I know what you're gonna say now: "what about my credit card number? That doesn't increase in value if it's shared!!" That's right, Einstein, because your credit card number is not culture. Here are two things that aren't made of atoms and are nonetheless rivalrous:

1. Identity
2. Secrets

Identity is some mysterious mindfuck that my very smart friend Joe Futrelle says no one has satisfactorily defined yet. But whatever identity is, it's rivalrous. If more people were named Nina Paley and had my home address and social security number, I'd be screwed. But that should highlight that my name, home address, and social security number aren't culture. They may be information, but they're not culture. They don't increase in value the more they are used.

Secrets have power as long as they're secrets. They lose their power when they are shared. When I become conscious of some secret that's weighing on me, I share it with at least one other person (even if they are a confidante also sworn to secrecy): I can feel the secret's power diffused just by the act of sharing. Notice I use "power" here instead of "value." Secrets may be of little or no cultural value - most people don't really care who that guy slept with 6 years ago - but they can certainly have power, especially when used for blackmail. Which is why it's important they remain secrets, so they're not used for blackmail, or harassment, or any reason at all. Privacy is important. Because secrets aren't culture. Culture is public. Secrets are, well, secret. Until they're public, whereupon we get scandalous stories that are culture - humans love to gossip - but aren't secrets any more. The story might gain value, but the secret loses it.

Money vs. Currency
And how about money? Money is scarce, right? It has to be, or it doesn't work (thanks Wall Street & Federal Reserve for screwing that up). But currency has more value the more it is used! Would you rather have your scarce 100 Euros in Euros, or in giant immoveable donut-like stones on a remote island?

A large rai stone in the village of Gachpar

I remember when the US dollar was a valuable currency; markets all over the world wanted dollars, because they were so widely used and exchangeable. So you want your money to be scarce, but you want your currency as widely used as possible.

V. Conclusion

It's important to treat scarce goods as scarce, abundant goods as abundant, rivalrous goods as rivalrous, and so on. Wall Street treated money, a scarce and rivalrous good, as though it were infinite/non-rivalrous, and look what happened.  Power companies, and the politicians they own, treat the environment, which is a rivalrous commons, as though it were non-rivalrous, and we have dying oceans and mass extinctions and other events you don't want to think about so much that you'll just get mad at me if I point them out here so I'll stop. The RIAA and MPAA, and the politicians they own, treat Culture, which is anti-rivalrous, as though it's rivalrous. They are doing for Culture what Wall Street did for the economy. If you want to help make this better, treat Culture like what it is: an anti-rivalrous good that increases in value the more it is used.

 

Addendum: Why do I say Culture is not a Commons?

Filed Under: abundance, culture, economics, non-rivalrous, rivalrous, scarcity

Discussions About Scarcity vs. Abundance In Copyright From A Century Ago Sound Just Like Those Today

from the history-repeats-itself dept

A reader by the name of Shadow-Slider points us to a fascinating report from a 1897 Copyright Commission in Great Britain in which the report points out how content is different than real property because of the difference between scarcity and abundance. It sounds very much like what we discuss here -- just well over a century ago.

Some of the witnesses whose evidence has been received by Your Majesty's Commission have urged the claim of authors to perpetual copyright, on the ground that the right of an author to property in his published works is as complete and extends as far as the right of any person to any property whatever.

If this analogy were admitted, it appears to me that it would be difficult to dispute the claim of an author to perpetual copyright; but I venture to submit that the claim of an author to a right of property in his published works rests upon a radical economic fallacy, viz., a misconception of the nature of the law of value.

The necessity which is recognize in all civilised societies of conferring rights of private or personal property arises from the limited supply of that for which there is an unlimited demand. It is only from a limitation of supply that there can be any value in exchange.

But supply may be limited either by natural or artificial causes.

Wherever supply is limited by natural causes it is necessary in the public interest to limit the demand, by investing the possessor of the subject of it with proprietary rights, for without them the progressive increase of an unlimited demand operation on a limited supply would lead to the dissolution of society. To whatever extent these rights partake, as they often must, of the character of a monopoly, they do so in virtue of attributes derived from the nature of things, which may be regretted, but must be accepted as inevitable, and which the law is therefore compelled to recognise.

There is no such necessity in the case of those objects which are useful or necessary for mankind of which supply is unlimited. In that which is absolutely unlimited, in the air, in sunlight, in the forces of nature, such as heat, electricity, magnetism, &c., there is no natural exchangeable value, and therefore no property; that which, although absolutely unlimited in itself, nevertheless exceeds all probable or possible demands in exchange, there can be little or no value, and little or no property, e.g., in the sea, in the water of large or unfrequented streams, in the game of a wild country, or in the fish of the sea. It is in fact scarcity which creates value, and renders property necessary. Property exists in order to provide against the evils of natural scarcity. A limitation of supply by artificial causes, creates scarcity in order to create property. To limit that which is in its nature unlimited, and thereby to confer an exchangeable value on that which, without such interference, would be the gratuitous possession of mankind, is to create an artificial monopoly which has no warrant in the nature of things, which serves to produce scarcity where there ought to be abundance, and to confine to the few gifts which were intended for all.

Apparently my own thoughts on this stuff is accidentally derivative of what came way before...

Filed Under: 1897, abundance, copyright, economics, history, scarcity

Dear Hollywood: It's Time To Realize Artificial Scarcity Is Gone... And That's A Good Thing

from the it'll-make-this-all-much-easier dept

If you haven't yet, you really should read Greg Sandoval's excellent report from Hollywood on how the major studios are feeling about Netflix these days. The whole thing is quite enlightening, but can basically be summed up thusly:

The prevailing feeling among the studio managers I spoke with is that Netflix's streaming service will be a good outlet for the least-valuable material. If they have their way, Netflix will be the Internet equivalent of a swap meet, where only the most dated and least popular titles are available. The studios are betting that eventually people will get bored with the service.

Yeah. Good luck with that. But the statement I wanted to focus on was one that preceded that, and which explains why the movie studio execs think the above is even possible:

Netflix takes the scarcity out of the equation, one film industry insider said. People can watch any of the service's commercial-free films and shows anytime they want.

Notice that this is said as if this is a bad thing. And that, right there, is a one sentence summary of all of the industry's problems. It still looks upon scarcity as a good thing, and is seeking ways to bring back scarcity where there is none. This shows a rather confused understanding of economics -- one that doesn't recognize that abundance increases market size and opportunity, while scarcity decreases consumer value and market potential. Abundance is what leads to economic growth. It may require different strategies to capture pieces of that economic growth, but it inevitably leads to greater economic opportunity.

And part of the way that you capture that economic opportunity is to focus on adding value to consumers not taking it away. Yet what these studio execs appear to be doing is exactly the opposite. Consumers like Netflix's setup because it takes away scarcity. They see that as a good thing. They're actually paying for that. And the studios' reaction is that this has to go away? It's incredible. What kind of execs actually look at what consumers like and are willing to pay for... and decide "that has to be shoved aside"? If the studios are flopping it's because of thinking like this.

Filed Under: abundance, business models, movies, scarcity
Companies: netflix

When A Humor Site Understands The Implications Of Abundance Better Than The 'Experts'...

from the nicely-done dept

A whole bunch of you* sent over the article from humor site Cracked, all about scarcity and abundance in economics. Wait, what? A humor site? Yeah, a humor site. Of course, they don't officially claim it's an article about scarcity and abundance in economics (though, they come close). Instead, in true linkbait-fashion it's called "5 Reasons The Future Will Be Ruled By B.S." Nicely done. Then, it focuses on the idea that the future can be described as FARTS: Forced ARTificial Scarcity.

That, of course, is the kind of thing we talk about all the time, and damn these Cracked guys, they actually make it funny:

Remember the debut of Sony's futuristic Matrix-style virtual world, PlayStation Home? There was a striking moment when the guys at Penny Arcade logged in and found themselves in a virtual bowling alley... standing in line. Waiting for a lane to open up. In a virtual world where the bowling alley didn't actually exist. It's all just ones and zeros on a server--the bowling lanes should be effectively infinite, but where there should have been thousands of lanes for anybody who wanted one, there was only FARTS.

The key point, raised at the beginning of the article, which is the point we've been trying (and most likely, failing) to make for years, is that this isn't just about music and movies. Issues of abundance where there used to be scarcity is going to impact all sorts of industries, even beyond what many people expect. Or, as the folks at Cracked explain:

Which brings me to an amusing story. In the last few decades, thousands of babies in Third World countries have died from contaminated baby formula. Wait, did I say amusing? I typed the wrong word there. Anyway, what happens is the mothers mix the baby formula with contaminated water, because sanitation is poor. So why the hell do the mothers feed their infants poison formula when they can just produce milk, for free, from their own bodies? The answer is that they do it because the manufacturer of the formula, Nestle, ran lots of ads telling them to.

If you want to know what the future looks like, there it is. The future is going to hang on whether or not businesses will be able to convince you to pay money for things you can otherwise get for free.

Some of you think I'm about to talk about file sharing and DRM and the evil record labels. But that's just a teaser of what's coming. The world has changed. All the rules we were trained to believe about society from birth until now are about to go out the window.

In other words, get ready to learn how to "compete with free." Of course, it turns out that it's really not that difficult. They also do a bang up job walking through the basic thought process that goes into the steps down the road of abundance:

An ebook sold to a library will thus delete itself out of existence after a year, or after X number of times it had been lent out. This is a big source of controversy between publishers and public libraries, maybe because both of them know they've found the loose thread that can unravel all of society. After all:

A. Why can't the library just buy as many digital copies as are needed for the customers, and keep them forever, if they don't naturally degrade?

B. Wait a second. It's just a digital file. Why not just buy one copy, and just copy and paste it for every customer who wants to read it?

C. Wait a second. Why do you need the library at all? Why can't a customer just buy a copy from the publisher and "lend" copies to all of his friends?

D. Wait a second. If no printing and binding needs to be done, why do you need the publisher? Just buy it directly from the author.

E. Waaaaait a second. Why buy it? Once the author makes one copy available, why can't everyone just grab it for free?

So, the article's author, David Wong, concludes, the future of pretty much all commerce is going to be about marketers trying to convince you to buy stuff that you can get for free anyway, and when he notes that you probably think you're too smart to fall for that, he points out that you probably have already, and goes about listing just a couple of examples on his own desk, such as bottled water, Windows on his computer and Excedrin pain medication.

Now, I recognize that it's a humor piece, and not meant to be taken that seriously, but since it makes some good points in a humorous manner, I do want to push back (not in a humorous manner) on some of the points made in the article. First up, I'd argue that what he's talking about isn't really "forced artificial scarcity" at all. Forced artificial scarcity is when the laws are set up to artificially create the barriers that leave you little choice to buy. What he's talking about isn't forced, but voluntary -- and that's cool. And it's also not artificial. The reason people buy things, even when there are free alternatives is because of some very real scarcities, such as convenience, trust, reputation and patronage. So, for example, when he talks about buying Excedrin over the generic, he's paying for a real, not artificial scarcity (and certainly not forced). He's paying extra for the very real scarcity of brand comfort and trust.

Separately, he exaggerates (yes, yes, I know, it's a comedy piece, and exaggerating is how comedy works, but I'm the idiot trying to pretend there are real lessons in it, so hear me out) the jobs "lost" due to these changes. The jobs change, certainly, but they're not necessarily lost. And that's because with each abundance, all kinds of new scarcities are created as well. Historically, as industries defined by scarcity move to abundance, the new scarcities tend to create even more new jobs. Now, it's true that it's not always easy for those in the old jobs to make the switch to the new ones, but almost always other new jobs do open up (which were often more lucrative than the old jobs). Remember when automated phone switching was going to put all those operators out of work? Except, yeah, that didn't happen. Instead, automated switching created tons of new jobs, such as call centers, and led to new innovations (like the internet) that created even more new jobs.

But, yeah, those are finer points to nitpick in an otherwise quite enjoyable piece on the economics of scarcity and abundance. And, now, I'm left wondering why I don't go out and hire someone who's actually funny to write about the various important issues we like to cover on this site...

* And despite so many of you sending it in, we already knew about it by the time you did. That's because hidden in the middle of the article there, Cracked links to our story about libraries fighting with publishers over ebooks. And, despite the fact that this is the sort of link in the middle of a long story that people normally ignore, Cracked appears to get more traffic than Google and Facebook combined, and so even when an infinitesimally small number of those readers chose to click on that obscure, boring-sounding link in the middle of such an article, it shows up prominently in our log files, making me wonder who cracked Cracked to add a link to Techdirt and what could I ever do to get that sort of traffic to an article on the economics of abundance and scarcity?

Filed Under: abundance, economics, scarcity

Abundance And Scarcity In Privacy

from the something-worth-thinking-about dept

As you know, we talk an awful lot about understanding abundance and scarcity around here, and how that's really important if you want to understand what the future holds for a variety of different businesses. Failing to understand abundance and scarcity is a recipe for disaster these days. And the more you look, the more you realize that technology is creating new abundances and new scarcities in all sorts of places. Tons of industries are either already experiencing this (entertainment, content, publishing, news, software, etc.) or are about to (energy, health care, finance, etc.). But it's also showing up in other realms as well, and Jeff Jarvis has a smart post about how it's impacting privacy. He summarizes it in a very catchy manner:

Once-abundant privacy is now scarce. Once-scarce publicness is now abundant.

The concept of "publicness" is one that's been getting greater attention lately (Jarvis is writing a book on the subject, apparently), but it's this recognition of the flipside of privacy. As Jarvis notes, it used to be really "scarce." It was very difficult to have large parts of your life public. It only happened for a very small number of people, and involved a lot of gatekeepers. That's no longer the case.

The economics of abundant publicness mean that the old gatekeepers -- editors, agents, producers, publishers, broadcasters, the entire media industry -- overnight lost their power. That's why they're so upset. That's why they keep complaining about all these amateurs taking over their sacred turf -- because they are. What they thought was valuable -- their control -- now had no value. They can't sell their casting couches and presses on craigslist for nothin'. They are being beat by those who break up their control and hand it out for free (Google, craigslist, Facebook, YouTube, etc.).

Abundant publicness also creates new value. Google search is made up of that value. Twitter movie chatter predicting box-office success is that value. Annotations on maps, restaurant reviews, health trends, customer desires -- and on and on -- all find value in our publicness and so new companies are being built on that value. That is why it is in the interests of both companies and customers to be public and why privacy -- when it does compete, when it discourages publicness -- becomes a nuisance for them.

I don't totally agree with this. I think he takes the argument slightly too far in the name of simplicity. That is, I still think that many of the jobs carried out by those old gatekeepers -- editors, agents, producers, publishers, broadcasters, the entire media industry -- actually do still have tremendous value. But a lot of how it works has changed. The problem is when they focus solely on the gatekeeping function as the value (which is Jarvis' point -- many really hung their hat solely on the gatekeeping function), then it's difficult for them to adapt. Those who focused (and still do) on providing greater overall value beyond the gatekeeping still do have tremendous value. As proof that Jarvis believes that, just look at his post about that new book he's working on where he talks up his "brilliant editor" at publishing giant HarperCollins. There's value there, it's just not in gatekeeping.

The other point in all this, which Jarvis mentions more as an aside, is that this is really just looking at the economics of free from a different angle. That is, the reason that such "publicness" is so abundant is because it's so easy for people to spread their works (and share the works of others) for free. And that increases the value of other things that you might do.

Jarvis focuses on the "publicness" side of the equation, rather than the privacy part of it, but the idea that "once abundant privacy is now scarce," is also fascinating to think about as well, and certainly fits with various themes that have been communicated over and over again -- often as simply as Scott McNealy's famous: "You have zero privacy anyway. Get over it." I don't think we've quite reached the stage of the David Brin-style world where radical, extreme transparency replaces privacy, but if you want to extrapolate out some interesting scenarios, it's fun to at least pull the lever that far in thinking about what it would mean.

Instead, I actually think that it highlights the theme of the post we recently had about how everyone has something to hide. As privacy becomes more and more scarce, those things we have to hide actually become increasingly valuable as well. Being able to keep that privacy increases in value. And that is going to lead to some very interesting and controversial business models and situations over time.

It's all a very interesting subject that I'm sure we'll be talking about a lot around here over the next few years.

Filed Under: abundance, economics, privacy, publicness, scarcity

Society Doesn't Know How To Deal With Abundance

from the we're-hard-wired-for-scarcity dept

There's a great post about a recent Clay Shirky talk that highlights one of the key reasons why I think so many people have trouble understanding the economics of abundance. In the talk Shirky points out that, as a society, we're not really hard-wired to deal with abundance:

Abundance breaks more things than scarcity does. Society knows how to react to scarcity.

Indeed, if you look at all of human history, probably 99.999999% of it has been about dealing with the issues of scarcity. In fact, our entire original economic philosophy (which is really just two and a half centuries old) was based on "resource allocation in the presence of scarcity." Historically, abundance just hasn't been an issue that we've had to deal with very much. And the problem is that people try to apply the mental rules of scarcity to abundance and they basically kick out an error message. It's a "divide by zero" sort of problem. You get infinity as a result, and you think it's wrong.

So the response is almost always the same. Rather than actually trying to deal with what abundance enables, people try to force abundance back into a feeling of scarcity -- which they're comfortable with. That is, they try to apply artificial rules and restrictions to make the abundance feel like it's scarce, so that they can understand it again.

But, that's not how disruption works. Disruption changes the old models -- and abundance can be disruptive in very significant ways. And disruption doesn't happen in an orderly transition, such that those who are stuck on the old models can gracefully and gradually learn about and switch over to the new models. As Shirky says:

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.

Indeed. This is a point that is brought up by our critics a lot. They claim that content creators and the like shouldn't even try to shift over to the new models while the old models still have some life in them or while the new models aren't really well proven. There's this belief that they can hang onto the old, and gradually add some elements of the new, and then eventually make the jump. But, what Shirky points out more eloquently than I ever could, is that much of the new stuff is really incompatible and very much in conflict with the old. If giving away your content increases new opportunities, how do you square that with an old business model that was built entirely around the scarcity of content?

No one doubts that this is difficult, and at times requires a big leap of faith. But there's no question that there are many things today that are abundant, where they used to be scarce. And that presents a huge challenge. Yet, time and time again, we've seen that when something becomes abundant it is not a bad thing -- but an opportunity to do something even larger. It's just that it's incredibly difficult to do that if you're still hanging on to the old ways.

Filed Under: abundance, clay shirky

Understanding What's Scarce And What's Not...

from the sell-the-experience dept

A bunch of folks sent over Jeff Jarvis' recent blog post entitled stop selling scarcity, which I actually think is slightly misleading. If you read the details, he's actually saying that you should very much sell scarcities -- but that you should avoid pretending that you're selling a scarcity when you're really selling something that it infinitely available:

If you are selling a scarcity -- an inventory -- of any nonphysical goods today, stop, turn around, and start selling value -- outcomes -- instead. Or you're screwed. Apply this rule to many enterprises: advertising, media, content, information, education, consultation, and to some extent, performance.

I have to admit, while I get what he's saying, I'm not sure it's particularly useful to most people, because they've always thought they were selling "outcomes" in the first place. I think that a similar post by filmmaker Ross Pruden may actually be a lot more useful, in that he talks about selling experiences, which is something that's scarce:

You think you sell a movie--you do not.
You think you sell a book--you do not.
You think you sell a song--you do not.

You sell an experience, something communicated, something elusive and ephemeral. Something mystical and transformative and inspiring. All these abstract things simply come in the shape of a movie, a book, or a song.

Never before has it been possible to strip away these experiences from the product... until now, the Digital Age.

The Digital Age lets us duplicate products infinitely. And, for the first time in human history, creators are not deprived of their original copy.

From that he points out the simple problem that many folks who were used to the old way are facing:

...now we can read a novel without buying a book.
...now we can watch a movie without buying a movie ticket.
...now we can listen to a song without buying a record.

From there, he lists out a bunch of different scarcities that come up with you separate the experience from the physical product, and notes that this is how things have always worked in reality, it's just that conceptually we merged the experience with the scarce physical product, which is why it's often so difficult to separate them conceptually now that they've become untied in reality.

The key to the Digital Age is to recognize that many existing products already embed intangibles, which is why those products are still being bought. However, once those tangibles stop being offered, or a competitor offers better intangibles, the customer will go elsewhere.

Creators can sustain. They will sustain. The market wants to sustain creators. Yet only the ones who realize that they don't sell products, but experiences. Only those creators are the ones worthy of survival in the Digital Age.

This is a great point, and more eloquent than my own post from a few years back on how every "product" was really a mix of scarce and infinite goods. To understand what the technology allows, and how to embrace it in a way that's sustainable, you need to be able to break out the components, and properly figure out what's really scarce, and what isn't.

Filed Under: abundance, business models, scarcity