My brother Vince got me The Long Tail for Christmas, and it got me thinking about the rate at which products are being digitized. The spots on reputation and trust reminded me of the trade on "reputation markets" in Accelerando. But overall it got me thinking long term.
As products are digitized and their creation and distribution costs fall to near zero, consumers demand those products for near zero cost. iTunes and video on demand now, next up printable products powered by cheap fpgas that update themselves when in wifi range and broad spectrum communications provided by software radio. So to cover overhead todays useful digital products earn a profit selling advertising for the scarcity based markets which still drive the consumer economy. As the scarcity industries pour money into wildly successfully online marketing, innovators in the digital markets make enough money to begin reshaping research initiatives such as Google investing in Nanosolar or Intel funding physics research which will in turn enable more products to be offered digitally.
I guess technically that's what the transition from an industrial economy to an information based economy is all about. Go easy on me, this is my first economics book. It lays out the means by which the transition can remain profitable until such time as all industries can be called Infrastructure. Then I imagine in the same way that a non renewable fuel economy demands industrial reform so will the evolution of business demand economic reform.
I'm interested in reading more along these lines, please feel free to post links if ya got 'em.
4 comments:
Things could ultimately go many different ways, the problem with economic predictions is that they're primarily produced by analysts with a vested (read: financial) interest in hand-waving speculation and vague generalizations. It's easy to buy in to future ideals based on some romantic notion of the state of technology while largely ignoring the practical and social issues that go along with it, though it's something the market usually sorts out for itself while others scurry about attempting to amend their predictions presuming they didn't have a suitably vague one in the first place that scales along with change.
The problem with advertising, DRM, etc. is that there's a limit with how much the consumer is willing to tolerate, and that's a ceiling that's very quickly approaching. Some companies with little to nothing to lose can attempt reform in this area that defies the conventional norm in an attempt to usurp market share (google, anyone?), but once that happens, it's not sustainable, nor is it easily repeatable. Given cases like the Google example, pagerank worked well so long as they focused on search, but it's quickly demonstrated the ease of abuse with regards to pointed manipulation when Google suddenly expanded in to the services area, attempting to propel that forward based off of their effectively monopolized position.
Online advertising is far too much of an overused buzzword and crutch. Those that can't think of a sustainable business model (especially when switching to a primarily online market) often fall back on it as a hand-waving end-all rather than face the facts. Things like Google, Amazon, etc. are the exceptions, not the common trend. It's also debatable whether they're headed in to a recession or at least a fundamental barrier simply because of that inability to ask the "where now?" question. Those attempting to follow are simply setting themselves up for failure without even stopping to think why, a prelude to another bubble, as it were.
Likewise, vendors that are taking the research plunge know that they can tolerate a financial sink with little immediate payoff. This is not necessarily a problem as long as the research aim is not product-driven development. The intent and application for said research is also a key factor. These companies are not out to advance the state of the industry, they're out to make money. The only way real advance happens is when it's effectively an obvious discovery that multiple people eventually come to independently, and then it turns in to a litigation or cross-licensing issue before the industry can adapt and move on. One could say that technology evolves despite these things, rather than because of them.
A recurring example of this is intellectual property patents or patents in places like the medical industry, that focus far more on the short-term immediate gains than the longer-term evolution of the market or even social benefits that would result in an open environment. These sorts of things usually don't work themselves out or even become accessible en masse until someone blatantly disregards the patents and does their own thing. Who knows how far varying industries would have already progressed if they weren't constantly held in a litigious stranglehold by corporations intent on making a buck off of something that's effectively a crutch for their lack of an otherwise sustainable business model.
This always struck me as an interesting comparative of micro vs macroeconomics, with an offhand ethics tie-in.
Taking that a step further, large established groups (RIAA, MPAA, etc.) will do anything they can to stunt reform, simply because it cuts in to their bottom line in the short-term.
While those with money or short-term financial benefit stand in the way, the only reform will be finding new ways to reinvent the wheel. Educate those that are directly responsible for the bottom line, and you might get somewhere. Until then, society has only itself to blame.
I hope I don't sound too much like I'm buying into future ideals. I was trying to point out that the transition to new business models is being helped along by the trends examined in the book. I completely agree that companies will pursue profit over everything else, in many cases over self preservation as you point out. But in cases like research into cheap power, big players in the technology business can save money by advancing the state of the art in another industry.
I relate the advertizing notion to emphasize the fact that we still exist in a scarcity driven economy where practically any business model serves the scarcity world at some level. I just find it interesting that as the scarcity industries drive the development of increasingly advanced technologies they're accelerating their own evolution. Add of course the legal costs of doing business that you mentioned and it's just one more crucible to strip away out dated business models.
Of course like I said, this really is my first economics book and most days I try to ignore the business world as best I can. I'm sure my romantic notions of future
economies will linger for some time despite the slim chance that I may very well read one or more other books on the subject.
That's still operating under the assumption that evolution is gradual and deliberate, rather than accidental. In an ideal setting, I would tend to agree. However, as long as the new work being done by the few is kept in a stranglehold position by those only interested in short-term capitalization, any momentum will be purely coincidental or intrinsically linked to the blatantly obvious. Until things like IP and social reform occur, nothing will change.
Didn't anyone ever tell you that romance is dead? To paraphrase: "The only thing wrong with breast-feeding in public is that the baby's head obstructs my view".
No one does long-term thinking these days ;-)
It sounds to me like you may be better prepared than you're letting on to provide some further reading suggestions. You holding out on me? :)
Post a Comment