I understand that artificial scarcity of "information products" is a rapidly drying moat, but we need to come up with a new way to pay people to make these sort of things. I don't care if some people get shit for free, what I care about is incentivising (sp?) creation. There are a lot of products that would create real value for users/consumers that nevertheless require bucketloads of effort to create. Not only do we want the would-be creators of these things to not be stuck flipping burgers to pay the rent, but market price for competing products can still be a great way to surface which are better than others.
But Information Wants to be Free! If can duplicate it cheaply, it shouldn't have a price and no one should get paid for it. They can make money from selling t-shirts instead. You shouldn't expect to make a living just for creating things. /s
It makes no sense to pay for something that is not scarce, like software and content. The scarcity is in the service, and that is what we pay for.
I think that people are starting to realize that artificial scarcity is a net loss for society, and that we should strive to make what's abundant as widely available as possible. Once the information exists, the only work that's necessary is distribution. That's why distribution channels will likely be the ones investing in content creation.
This whole criticism of artificial scarcity probably explains why many don't like patents. It just makes no sense to prevent others from doing things in certain ways simply because someone claims to have discovered it first.
Now, how do we encourage people to create content if they can't use force to ensure that they get paid for its consumption? There are many ways:
- Pay up front (Kickstarter)
- Donations
- Recognition (content is proof of your ability to make things)
- Custom/personalized content creation
- Use of new media that are not yet easy to distribute (distribution channels pay content creators to produce this new media in order to have something to distribute on their channel)
- Getting "paid" in non-scarce appreciation/reputation/trust currency (likely to replace money in the future)
This is a tremendous problem with information goods in general. They're poorly suited toward market behaviors and incentives, and the wrong things get incentivized for -- at least in terms of quality and actual behavior.
Well, this is the thing, it is pretty much a physical law. Information is nonrival: it is infinitely copyable and anyone can use it without reducing access to anyone else. The effort and work to produce information is a scarcity, but once the information is expressed and public it is an abundance.
The problem is that this "scarcity" (to produce information) wants to be compensated too. And it's not only "scarcity", it's also costly to produce information. The fact that you can make 1 billion copies of Adobe Photoshop for free, for example, does not mean Adobe Photoshop itself costs nothing. It costs something like several tens of millions to make in programmer's salaries. Those paying those millions should get to dictate how you pay for it, like the guy that makes a chair gets to dictate how you pay for his chair.
You seem to think that the scarcity of infomation production means nothing at all, when you say e.g.:
Paying people for work done to create makes sense. It makes an 'economic' structure that mirrors the basic physical constraints. And it is justified according to its 'economic' effects. You give something up, you get something in return.
When you buy Photoshop, it's not just bytes downloaded to your PC you get, which cost nearly nothing (= your ISP bill), you ALSO get a slice of the paid, hard, work of hundreds of people in return.
Why are we confusing technological feasibility (free copies are feasible) what what ought to be done (compensate the creator or not)?
A crazy idea to directly make the software sale more akin to a specific item sale (a chair):
The software maker sets an arbitrary total aggregate expected sale price P and a selling goal (say, X units). Anyone buying before X units are sold pays P/X. For anyone buying after it, the price falls P/X+ (and the first buyers are also given their difference back, either directly or in "store credit"). In the end, if they sell a billion copies, people get the program for say a dollar, but it's OK, because the company is compensated. Actually, this makes popular items essentially free or dirt cheap in the end. For this to work, we need a marketplace like the Mac App Store, so those transactions and record-keeping can be automated.
This restricts the artificially huge profits made by controlling the price, and puts a set price to a free copyable item, like a tangible item has, that reflects the work that went into it. It also keeps the risk of the original sale, i.e if the sell < X, they have a loss.
None of that much holds for paying for copies. The transaction is not fair and square, it is an unwarranted and unjust restriction of personal freedom of those using the information. And as for the global gain, it seems rather lacking grounds of actual evidence.
Well, the global IP industry, sales of software, music, books, magazines, etc, is on the level of trillions of dollars. It would be almost zero with totally free copying. So, at the economic level, there is some support for "global gain". And it's not like the culture would be poorer if less Metallica and Lady Gaga albums where freely torrented (yes, I'm a snob like that ;-).
The same thing is happening to the digital world that happened to classical media.
People want cheap and/or free. It's also incredibly difficult to compete with cheap/free products. Mix this with the fact that information is "free" -- it costs almost nothing to copy -- and all information economies tend to become deflationary races to the bottom dominated by free and freemium stuff that is indirectly funded by other parties (like advertisers).
What's wrong with this? I mean, doesn't this mean the information economy is some kind of wonderful post-scarcity utopia?
The problem is that information isn't actually free.
Let's say you have two files. One is 100k and contains a copy of a novel. The other is 100k and contains the results if dd if=/dev/urandom. Both files take up the same amount of space and both are virtually free to copy and distribute. But the novel took years and years of someone's hard work to create, while the random numbers took no effort at all outside of a tiny bit of electricity.
All information is not created equal. Information that requires effort to produce is not the same as information that doesn't.
This creates a market paradox. The market wants free (or at least cheap), and free is incredibly tempting to marketers because free undercuts the competition and goes viral. With free (or freemium) you can get a kind of exponential growth curve that is incredibly hard to achieve with a paid product. Yet at the same time you are a liar. The information you're releasing for free is not free. It cost you something to produce. Like all lies, at some point you have to answer for this one. How will you keep the ball rolling?
In a networked world, the obvious and convenient answer is to sell your users to someone else.
In cases where your product has a service component with a non-trivial cost (e.g. Facebook), free is a particularly pernicious lie. Not only does it cost money to keep producing the product, but it also costs hard capital to operate the infrastructure. If there's no subscription based revenue model, you must sell out your users. Either that or you shut down.
This happened in traditional media of course, and it gave us ad-or-propaganda-fueled television and radio. Outside of a few pay channels, virtually all broadcast media is financed by advertisers or is operated at a loss by governments to serve as a propaganda outlet (the same thing really).
This means that -- big surprise -- those financiers have tremendous pull over what is broadcast. There's a reason you never see genuine challenges to the conventional corporatist/state-capitalist political system on TV. It's because the beneficiaries of that system pay for all your TV.
There are exceptions in the software world, like Linux, that have managed to discover a niche where they can be the permanent beneficiaries of philanthropy. These exist in the broadcast world too. But they're unicorns. These niches are rare, hard to construct, and possibly unstable. Ultimately every business and most other efforts that require constant financing must serve some master. If free rules the day, they must serve advertisers and other interests that want to buy you.
It's no coincidence that Apple is trying to take the high road. They're doing it because they can. Apple is insanely profitable off their own physical products and their own vertically integrated services, and they have a measure of lock-in that ensures long term customer loyalty (meaning high lifetime customer value). They can afford to forego advertising revenue in favor of customer goodwill, especially since this further cements their lock-in over those customers in the long term via platform integration.
When I saw that Windows 10 was going to be free, I knew it would be spyware. Microsoft also has the option of taking the high road, but they've chosen not to. Instead they've decided to try to become Google or Facebook and "invert their model," making their products free and therefore making their users into products.
The free ad-supported model was tolerable for TV and radio because these are unidirectional. The TV does not watch you. But free ad-supported models in the Internet age lead to horrific dystopias. If we don't want something worse than Orwell's worst nightmares, I really think the only solution is to reject free.
Rejecting free alone is not enough -- obviously there are paid products that are user-hostile. But I think it's at least a necessary if not sufficient condition. We also have to embrace and reward players that make an effort to protect their customers' privacy and security -- in other words to treat their paying customer like customers.
I'm looking forward to the day when customers see "free" and actively reject the product, assuming that its business model will be user-hostile. I already see a little bit of this in the web. When free services with absolutely no revenue model get introduced, I often see skeptical questions about where the money's going to come from. If the company has no obvious answer, the default is 'by selling you out.'
The idea of selling copies of information is very basically broken. Half the time stuff is made but undersells copies because the producer did not find out no-one wanted it, and the other half, people are prevented from realising value that could actually be freely available.
Such a structure consumes a scarce resource -- creative effort -- wastefully, and restricts an abundant resource -- communicability of information -- unnecessarily. That seems very much the opposite of economically efficient.
Information goods should be more like better kinds of software production. But the current copyright-based system makes it all more like a 'waterfall economy'
That’s a good point. Relatedly, Jaron Lanier says something quite insightful on the topic that gets to the root (pun) of the problem.
If you think all information should be free, like all software, then the creators of information are not being financially rewarded for creating it. That’s how you end up with cloud data centres making huge profits whilst most OSS projects struggle for cash. It’s also where the business models of Instagram, Facebook, Twitter, and TikTok arise.
Lanier makes a rather odd statement about how web links should be two way to solve this problem. I get his drift, but a better idea is that the web should be built on a more rigorous foundation (see Joe Armstrong’s talk - “the mess we’ve made” - for how it could work). But the general idea is correct - in an information economy either everyone is fairly rewarded for the valuable information they provide, or else you end up with giant companies capturing all the value instead, which leads to gross inequality.
Tbf to Stallman, he is more focused on constraining the worst commercial uses of software, but his fundamental idea that (as per this post) “knitting patterns should be free”, originally something that sounded like an exciting and inspiring idea, has turned out to be absolutely disastrous. He was maybe philosophically correct but in practice, the idea does not serve the best interests of most people.
Information shouldn’t be free (!!! I said that on HN) but rather information should be provided at a cost that is based on both (a) the cost of its provision and (b) the economic value that recipients of that information derive from it. So, for example, OSS authors writing code that underpinned Google’s empire or someone’s SaaS, should get a (small) slice of that pie.
I think once you recognise this, you end up in a really exciting place: like, how could this work in practice? What new concepts do we need to apply to information to do it? Some of the ideas of crypto should come in here: we need to be able to identify information uniquely, for example, so we can track its value. We need to know how many SaaS products are using Bootstrap or whatever. A new type of economy based on fair reward for information is possible. And for once, we do actually need a technical solution to a social problem.
The production costs of digital goods are naturally scarce. We "just" haven't (yet) figured out a good way to compensate people for those, so we turn to artificial scarcity.
I'd argue that it's to fundamentally re-think how we reward and finance creative and information works. It's becoming hugely apparent that the "free market" approach isn't working well. The reasons for this are very well understood.
We need to leave behind the concept of "value". Value was created by scarcity. But scarcity is decreasing and, in some cases, disappearing entirely.
If it costs me nothing to make a copy of something, then I have no incentive at all to pay money for it. It has no "value" to me. I can copy it instantly for free. And frankly, why should I pay money for it? Sure, someone had to do work to create it in the first place, but once it's created it takes on a life of its own.
And, often, the people doing the creating will do it whether I pay them or not. They do the creating because they want to. Musicians make music because they want to make music. As a programmer, many of the programs I write are ones I want to see exist. Were it not for the necessity of having money to survive, I would happily keep creating and giving away.
The necessity to make money to buy the goods and services I need to survive may be built into the current system. But as we automate more and more and produce a greater and greater surplus it's entirely possible that it could be removed from the system. It will take a change of culture, but there may come a point when we are efficient enough to produce everything we need simply by allowing people to pursue the creative endeavors that interest them and then sharing the results.
We don't have starfleet replication technology. But with digital media, 3d printers, and modern construction means we're pretty damned efficient.
It is easy - digital content has no cost of distribution, replication, or reproduction so charging for individual units is a failing model. So charge elsewhere, such as at the point of creation, or as an inclusion on something with per unit cost.
Basically, fund the creation of infinitely reproducible goods and release them for free, either through ads, through investments or crowd-funding, or through contracts.
We should be embracing how easy and cheap it is to replicate media of all forms, not trying to prevent the physical realities of electric charge and transistors.
It sounds like you've said not that scarcity exists in the supply, but rather than a limited amount of demand exists. That much certainly seems true (consider YouTube's statistics on how many days of video get uploaded per minute). However, I don't see how that leads to the conclusions you suggest; it certainly doesn't have the same effect as scarcity of supply.
> The question is, should I as the creator of the information be able to capture all that value? Some of that value? None of that value?
You have the right to try; you don't have any fundamental right to succeed, but you can certainly try.
I agree with the concept that you create value when you create new information, rather than at some later time. That seems like the perfect time to attempt to extract value, since you can choose not to create the information if you can't get value for it, and you can choose to focus on creating information for which you can derive value.
That model fits nicely with systems like Kickstarter: raise money to create something, then create it. If those become the primary model for funding creative work, they'll almost certainly attract more interest and more funding, which would otherwise go to copyright-subsidized creativity. Seems to me like a pretty reasonable model. Other sensible post-copyright models almost certainly exist; people just haven't thought of them yet, or haven't demonstrated that they can succeed.
You're making a huge logical leap assuming that artificial scarcity is the only reason that we produce non-physical goods, and that's easily contradicted by the existence of FOSS. There are plenty of creators who create things for all sorts of reasons besides profit. And in many cases, there are people who want to create free things and can't because of things like patents and IP trolls preventing them from doing it.
I agree that the devil is in the details. But I don't think creating artificial scarcity is necessarily the only way to create a market. There is still a major social component to trade that is too often ignored by economists, and people will sometimes pay even when they don't have to.
I think the case of podcasts is illustrative here. Despite a lack of DRM, a convention of free-as-in-beer, and a zero lawsuits (that I know of), the field has been thriving for 10 years using incentive structures which do not require IP:
- Pure Promotion, such as comedians who put out a free podcast to attract fans for live performances.
- Up-sells, whether for additional premium content, apps, t-shirts, etc.
- Donations, which at minimum can defray overhead costs. (It's worth noting that Kickstarter is fairly indistinguishable from a donation/gift economy, assuming the reward isn't a simple pre-order.)
- Advertising, while a dirty business model for producer and consumer alike, still can pay the bills, especially if ad content is tasteful and targeted.
Now, these methods are by no means the only ones possible, and that's my point. Rather than to try to create scarcity out of abundance, I think we're better off embracing it, and finding new, indirect ways to profit. To re-use PG's analogy, rather than suing the smell-stealer, the restauranteur could invite people to enjoy some free smells, knowing that some would be enticed to pay for a meal. Or he could buy the land next door and rent the space for gatherings, touting free smells. And on and on.
Thanks for the link. I've been building a hobby looking into this space.
Personally I think we can use Vickrey Auctions for this problem. Vickrey Auctions are able to give not only price discovery, but also value discovery. Everything digital has infinite supplies, that we artificially constrain so as to pump prices. If instead of using price discovery, we use value discovery, the price can stay at 0, so long as a certain (limited) amount of people are faced with a choice that would have them go without.
So for example perhaps we sample 50,000 people and say 75% of people keep access, say when they vote. If you bid in the top 75%, you keep access for the period, and you pay the value that the bottom person that kept access bid. That money is then not used to pay for the IP, some other tax will fund the IP or Open Source Software or Meme, that 25% will then go to all the voters for providing their values. So the average bidder will pay nothing, the below average bidder will lose something they value low, but gain, and the highest bidders will fund that. We then take some other collection and sample another 50,000 people, until we find out the value of all of these digital items to people.
If you do the subsidization process correctly, I think the idea of IP owners holding their supply back would go away, as releasing it to all would always provide more value than holding it back. I think at the very least this would be an obvious answer to Open Source Software, and this would easily fund things like Linux and Firefox. I think this would stretch further to research, and colleges would now be funded through this mechanism, and the professors who currently waste enormous amounts of time doing grant writing would be able to be productive. Thus the whole issue of journals goes away. Even things like ads, people would bid on their service less because of them, so there would be no fundamental reason to include them as it would reduce the subsidy.
The problem is even deeper: information is non-scarce. The marginal cost of production for any unit of information is zero, and thus the natural market price for a piece of information is zero.
The problem being that while the creation and copying of new information is obviously massively valuable, we've not yet invented any effective and sensible way to trade information for physical goods like food and land and medicine.
The more information-based our economy gets, the more blatantly neo-feudal it gets, because our property laws for information are blatantly feudal and have been for decades. Popular examples of the problem include patent trolling and Mickey Mouse's regular copyright-extension bills.
Free Culture was a marginal movement in the past couple decades. It's going to quickly become the next big question of the world economy. When data is what makes the world go 'round, how do you compromise between compensating the original creator of the data, making use and extension of the data as widespread as possible, and not allowing "intellectual property" to expand into feudal-style veto or rent on everyone else?
I think we can use Vickrey Auctions for this problem. Vickrey Auctions are able to give not only price discovery, but also value discovery. Vickrey auctions incentivize bidders to bid their true value. If instead of using price discovery, we use value discovery, the price can stay at 0, so long as a certain (limited) amount of people are faced with a choice that would have them go without.
So for example perhaps we sample 50,000 people and say 75% of people keep access, say when they vote. If you bid in the top 75%, you keep access for the period, and you pay the value that the bottom person that kept access bid. That money is then not used to pay for the IP, some other tax will fund the IP or Open Source Software or Meme, that 25% will then go to all the voters for providing their values. So the average bidder will pay nothing, the below average bidder will lose something they value low, but gain, and the highest bidders will fund that. We then take some other collection and sample another 50,000 people, until we find out the value of all of these digital items to people.
If you do the subsidization process correctly, I think the idea of IP owners holding their supply back would go away, as releasing it to all would always provide more value than holding it back. I think at the very least this would be an obvious answer to Open Source Software, and this would easily fund things like Linux and Firefox. I think this would stretch further to research, and colleges would now be funded through this mechanism, and the professors who currently waste enormous amounts of time doing grant writing would be able to be productive. Thus the whole issue of journals goes away. Even things like ads, people would bid on their service less because of them, so there would be no fundamental reason to include them as it would reduce the subsidy.
Why should we turn information into a "product", introducing scarcity where none is required? It's just a misguided attempted to force every part of society into a capitalist system, regardless of whether it makes any sense. It will probably fail in the long run anyway, since who wants to pay for something that they can get for free, even it involves circumventing the rules. How many here would pay $30 to take a casual look at a journal article, when they could get it from Sci-Hub?
If we are sticking with a mostly capitalist system so that money is so important to get things created, then a government can provide some for this purpose (and they often do already). It's not like they don't borrow or print money in whatever quantity is needed.
I suspect that it's the same issue that has led certain neoliberals and libertarians to denying that various forms of pollution are a problem. There's just no way that it can be fixed within capitalism, so better just deny that there's any problem at all.
That only works for a subset of things, namely those things that can be effectively crowdsourced at small increments. I'd also argue that Wikipedia is heavily indirectly subsidized by academia and government.
Large coherent software products and great works of art are by definition the products of individuals or small teams focusing intensely for long periods of time. That is inherently expensive. Only the independently wealthy or the otherwise subsidized can afford to focus for thousands upon thousands of hours and then give the product away... not unless they have another idea for revenue like freemium, SaaS, etc. (... and those don't work for music, movies, books, etc.)
... and "otherwise subsidized" takes us back to some of the pathologies I mention... propaganda, advertising, etc. driving art and surveillance/manipulation based business models driving software.
Do we really want a future where only trust fund kids and propagandists create art? Do we really want a future where software is created exclusively to monetize its users?
The Wikipedia model can only work for everything in a true post-scarcity society where the marginal cost of everything is zero and everyone can live with no real "income." Until someone finds a way to draw unlimited energy from the quantum vacuum, we are stuck with some form of economy where everything I said applies.
Another way of thinking about the pirate economy is as a deflationary spiral in which monetary velocity collapses and all kinds of pathologies emerge from that. Deflationary spirals are actually really great for uber-capitalists that already own lots of rentier assets, but they're bad for workers, entrepreneurs, and other non-rentiers. Sound familiar?
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