Content is a public good: the abundance economics of digital media

Paul Raven @ 15-04-2010

In the absence of Charlie Stross (who is out in Japan, the fortunate devil), guest posts are appearing on his blog… and today’s is a little something different, namely a 101 guide to the economics of digital media from one Milena Popova:

So, to recap, for pure private goods, the market is both a practical and efficient way of allocating resources, and that’s what we do most of the time. As soon as we move away from the pure private good paradigm, either because our good is non-rival or non-excludable or both, the market ceases to look like a good idea. In practice, what happens is that we try to use technical and/or legislative means to help us approximate private goods when dealing with any type of not purely private good. We can, for instance, make it a crime to overfish the seas, or put fences around our golf course to stop people from overrunning it without paying; we can make it a crime not to pay the tax that contributes to running the armed forces. (Oh and, incidentally, using a public-type good without paying your dues is called “free-riding”. It’s something economists are obsessed with stopping.)

Okay, enough with the theory. Let’s look at content in practice. Remember that little clip at the start of your legally purchased DVD that delays your enjoyment of the film you’ve paid to see to tell you about how you wouldn’t steal a handbag and thus should not steal a movie either? If you’ve been paying attention you should by now have spotted that these two things (the handbag and the movie) are not alike. If I steal a handbag it stops you from having it; if I download a movie from Piratebay, there is nothing that stops you from enjoying that same movie (either by getting it from Piratebay yourself or by forking out 20 quid at HMV or a fiver at Tesco’s). In other words, while handbags are rival, movies aren’t.

Go read the whole thing; valuable straight-talking information.

And while we’re talking economics and new paradigms of consumption and ownership, here’s a post that suggests (rather plausibly) that a whole new generation of lawyers will be needed in a world where sharing and cooperation among communities becomes a stronger economic force [via Chairman Bruce]:

The evolving nature of our transactions has created the need for a new area of law practice. We are entering an age of innovative transactions, collaborative transactions, crowd transactions, micro-transactions, sharing transactions – transactions that the legal field hasn’t caught up with, like: Bartering. Sharing. Cooperatives. Buying clubs. Community currencies. Time banks. Microlending. Crowdsourcing. Crowdfunding. Open source. Community supported agriculture. Fair trade. Consensus decision-making. Cohousing. Intentional Communities. Community Gardens. Copyleft.

At present, there is not much literature explaining the legal implications of these kinds of transactions. To those of us who have made this our area of practice, many of the legal questions in this new field sit unanswered on our giant to-do lists. One-by-one, client-by-client, we are making headway. As the ground swells with people adopting more sharing and cooperative work and lifestyles, we can look forward to a growing body of law and literature on the subject.

At the same time, the answers will never be clear cut, and lines we have grown accustomed to will be increasingly blurred.

Until we evolve a new set of legal definitions, we’ll dance uncertainly around the lines between “income” and “gifts,” between “own” and “rent,” between “employees” and “volunteers,” between “work” and “hobby,” between “nonprofit” and “for-profit,” between “invest” and “donate,” and so on. Our clients may have outside-the-box livelihoods and organizations, but it’ll still be the job of lawyers to help them fit into boxes that are traditional enough to comply with the law.

Well, there goes my naive hope for a future where there are no lawyers at all. Guess we really do take the lord of the flies with us everywhere we go, after all… 😉