The Economics Of Abundance Is Not A Moral Issue

from the continuing-the-series dept

As regular readers know, I've been working on a series of posts discussing the concept of economics when there's a lack of scarcity. My last post on the importance of understanding "zero" in economics (and the fact that many of the problems people have in grasping the subject being due to a misunderstanding of zero) kicked off a really interesting discussion, that has me diverging from my planned third post in the series. Instead, I'd like to focus on one of the key objections people keep coming up with: the idea that this whole concept of the economics of abundance makes no sense because it means the creators of content make no money and they have a right to make money for their creative output.

It makes for a compelling emotional argument, but it is wrong on two major points. First, is the idea that it means creators of content can't make any money. In fact, nothing can be further from the truth. What this series is leading up to is an explanation of how the opportunity for making money is even larger when you understand the economics, and don't rely on directly selling the non-scarce good. However, for now we'll leave that aside and focus on the second point: that there's a right to make money. That's completely false. Economics is not a moral issue. It doesn't care about anyone's "right" to make money from their creative output... and neither should you. The idea that anyone automatically has a right to make money from their creative output is wrong. Everyone has the right to try to make money out of their creative output, but if the market isn't there, then there's no money to be made.

For example, I could draw a picture on a scrap of paper and try to sell it as fine art -- but no one would buy it, because my artistic drawing ability is pretty weak. That is, the market would properly value my drawing at something close to zero because there would be no demand for it. It has nothing to do with my right to make money. Similarly, in a situation where there's a lack of scarcity, the market would properly value something at close to (or equal to) zero because there's infinite supply. It has nothing to do with the moral issue of the creators right to profit from the creative output, and everything to do with the market at hand.

Perhaps part of where this gets confusing is that we have the current situation to fall back on: where content creators have had a good run selling their content. People have trouble then understanding why we would suggest that they should learn how to take the same content they've been selling for money and give it away free. The issue here is that the comparison is wrong. It's not about a choice between being able to sell the content for money or giving it away for free, but a recognition of where the market is going. Historically, the content has been made scarce by connecting it to a specific media (music on CDs, video on tape/DVD, etc.). What the internet is doing is breaking down the barrier of that scarcity, and that's changing the market, pushing out the supply to infinite levels and putting clear pricing pressure on the content. People used to make a living selling buggy whips too, but the market changed, and they couldn't any more.

In other words, it's wrong to look at this as a "choice" between the old way and the new way, but to look at the market trends and recognize that the old way (pretending the content is scarce) won't be viable any more -- and when that happens, those who try to sell their abundant good based on scarcity will find that there is no market and no matter what "right" they have to try to make money, the market won't care. Once you realize that, you can make the argument that content creators should wait until that market shift is complete to make the change, but as we go forward, I'll hopefully make a convincing argument that it actually makes much more sense (and much more money) to begin shifting now, before being forced to shift. But, for that, we'll have to wait a little longer...

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  1. icon
    Gabriel Tane (profile), 17 Nov 2006 @ 6:53am

    Just a thought:

    "without protections, let the market decide."
    -Jaylen Smith, Post #45

    This got me thinking about the choices involved. Let me take you where my mind is going on this and see if you agree. Feel free to point out anything I missed on this...

    Everyone involved in this market has choice in their participation. Artists have the choice to make the art or not. Distributors have the choice to help distribute it or go do something else. Consumers have the choice to consume the art or not.

    The artists are (mostly) ok with the choice to make the art and find compensation through means other than the direct sale of that art.

    Consumers show a willingness to purchase the art (or at least the media containing that art) to support the artist. Most of the "proud pirates" I've talked to or seen posting in places like this state that they want to support their favorite artists, but not the record labels...

    Which brings us to the weak-link here. It's the distributors (the labels and their storm-trooper enforcement, MP/RIAA) that have chosen to participate, but are trying to force everyone else to play their game their way. It's become clear that no one else wants to play that anymore.

    I remember back on the grade-school playground, when I was playing a game in a way that other kids didn't like, they all walked away. I didn't go running to a teacher to get them to make the other kids play.

    Now this is where my mind was going: If the people who are unwilling to play this new game (those making money off the old system) choose to leave, won't that mean a rise in the number of people who want to do this for the sake of the art? What I mean is, no more boy-band/popstar flakes who are in it for the money. Artists who actually have something to say and want to make art because they have some kind of artistic vision they want to realize. Oh, we may not like their vision (not a big Van Gogh fan myself), but it won't be crap just churned out for money.

    Anyone else remember the time when we had truly great artists that you just knew were up there playing something that they truly felt? How much money did people like Hendrix make? Not much. I know I'm being a dreamer here, but I'll keep my hope.

    (Rant to Follow)
    On the topic of choice: These record exec's and the ##AAs keep saying how they will be ruined if digital copying is allowed to run rampant. But it's their choice to be there. They could choose to go flip burgers at a nice, stable McJob. I know a lot of people are thinking "that's not a choice". You're wrong. It is a job. You always have the choice to lower your standard of living and live comfortably within that pay-range. What you are choosing to do is take that higher-paying job, but you have to accept the risks involved in it as well.

    The risk in this case is the market moving away from your business model. Where is it written that your chosen business model has to be legally protected from ever changing? Why wasn't there this kind of outcry when we no longer needed milkmen? A new distribution model was introduced (us getting our own milk from the store) and that meant that a milkman was no longer a viable career. What about payphone manufacturers? Why didn't they sue cell phone developers for "making technology that is stealing from us"?

    The public didn't just wake up one day and say "you know, I don't like those record companies. I think I'm going to go destroy them". The public said "you know, I don't like this game anymore. Let's go play a different game our way." The market has spoken. Those who are at risk can either choose to change with it or choose a different job.

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