Wednesday, January 5, 2011

The Face of the New Information Economy

Originally I was going to write a big piece on the new Information Economy, and how it works and doesn't work with our current economic framework, but I decided to strip everything away but the most interesting stuff. This is the second part in a series on the impact of the Information Age on society.

As I talked about in my original post about the media "distribution paradigm shift," as a reader put it, the Information Economy is primarily user driven. Information (meaning music, books, software, other forms of media, etc) is more or less freely produced and distributed by the users, as the means of production continue to become democratized. All content, whether the source be a lone user or a giant corporation, competes in the same user-driven aggregating and filtering systems.

Surely this is only a good thing! People making content for other people, and often higher-quality content than if they were paid to do it.

Our problem arises when we reach the question of compensation. Most information producers aren't paid to do what they do, but instead do it out of passion. When was the last time you heard about a band making a living by touring? (Touring being pretty much the only possible way to make any sort of cash in the music business now). For the last decade or so, all our problems with copyright and piracy have bubbled down to "how can we make sure the people who dedicate their time and energy to their work are being paid for it?"

In our current economic framework, goods are priced based on scarcity - that is, the more scarce an item is, the more monetarily valuable it is. Other factors add in for sure, but it all comes down to questions of scarcity and abundance. The problem with the Information Economy is that it's based on the Internet, where information is pretty much infinitely abundant. Putting a price on data is like putting a price on water - you can do it, but there's plenty of it available for free. There are no limits to the amount of copies of any piece of content you can make and distribute. If you download something, you're making a copy of it to your computer instead of taking away from some imaginary limited number of that thing.

There have been many solutions so far to try and make sure people get paid for their work (or more cynically, that users are paying to use it). The most simple way to get paid for work is to charge for it! E-stores like iTunes, Steam, and the Kindle Store all allow users to purchase and download media without having to deal with packaging or waiting for deliveries (or walking out and going to a store!). On a more basically user-driven level, on a site like Bandcamp, artists can "sell [their] music & merch directly to [their] fans." Cutting out the middle man (record labels, publishers, etc) and paying the artist directly for their work is actually quite satisfying.

Needless to say, offering a priced option does not take away the appeal of "free." Copyright protection on media used to be more widespread halfway through the last decade, when all iTunes songs had strict DRM (Digital Rights Management software, meant to protect copyright by restricting use) on them and so did many video games. User-driven uproar and easy ways to break DRM caused this kind of protection to go (mostly) out of style though. DRM or not, people still pirate information. Right now, e-stores exist in a weird place where they're charging money for goods that aren't scarce right next to the blogs that are giving the same stuff away for free.

Another way people have tried to make money off information is by imposing scarcity. The bottled-water model is entirely relevant here, because it's another example of taking a resource that is abundant (water) and putting it in a form that's scarce (bottle). For music, vinyl has recently made a resurgence. I saw a shelf full of records at Best Buy not too long ago, which says everything about the music industry. Often, video game publishers will release their products in a limited physical form, which imposes both physical and time scarcity, which lets them jack up the price. Underground bands nowadays sell tour-exclusive releases, which provides incentive both to buy the product and go to the shows.

Unfortunately, this imposed scarcity doesn't really solve the compensation problem so much as it momentarily steps around it. People are still going to download music and games for free just as they're going to continue drinking water from fountains and streams. Not to mention the amount of waste produced by having to make physical products.

So "free" has an immense, easy-to-understand appeal (that is, for consumers). There are a few kinds of free though: one which I'm going to get to, which is free in the Anarcho-Communistic sense, and one I'm going to cover now, free in the corporate-sponsored sense. And of course, none of it is really free because you still have to pay for the infrastructure (which I'll get to another time).

Hulu was a pretty cool idea that is still decently cool. Provide TV shows, on demand (no time constraint like on TV!), for free. But this is the "corporate-sponsored" kind of free, so there are advertisements involved. So for the price of being exposed to advertising, you can watch your favorite TV shows. Not too different from TV, except advertisers aren't paying for time slots anymore. However, Hulu recently implemented the pay-for Hulu Plus, which still has ads but provides much more content. Why the new plan? Presumably because advertising wasn't paying all the bills.

In a similar vein, underground band Magrudergrind recently released an EP for free through Scion, a car company owned by Toyota (one of the largest corporations in the world). Scion has been courting the underground for a few years now, providing free festivals and putting on some killer shows. One can only assume that this is a marketing scheme to build brand loyalty, which begs the question "how long will this last?"

Obviously advertising and corporate sponsorship will continue to play a large role in the Information Economy, but advertising money is not steady and only flows as long as a sponsor gets use out of it. Sure, Google can build a company based on ad money, but how many others can say the same? Still, according to the Interactive Advertising Bureau, money spent on internet advertising has only gone up in the last decade. Of course, this then leads us into questions about the pervasiveness of advertising in everyday life.

So far I've covered the solutions currently being put forth as valid in our current economic framework. In a way, each of these offers an answer to the question of "how can we make sure the people who dedicate their time and energy to their work are being paid for it?" But maybe we need to ask a broader question, such as "how can we make sure the people who dedicate their time and energy to their work are being properly compensated for it?"

This next part of this essay is going to hinge on the belief that Information Work is valuable and that Information Workers need a form of compensation that isn't "work at Torchy's Tacos between tours" or "soul-sucking IT job that uses little talent." If you don't agree with at least the first part of that statement, you can stop reading my blog, and get off the internet.

One of the things we can do (in the US) is to push for government incentives to do Information Work. Content producers, like bands or open-source software developers, need to be fed and housed. Maybe producers could have tax incentives based on how much work they do and how valuable it is. However, this is a messy proposition that involves the government making value judgments on specific works. I myself would be happy to pay a few more tax dollars (when/if I have a job...) if I knew that they were going to some programmer or graphic designer in his cheap-ass apartment somewhere.

Working through the government is always a tricky proposition though. I don't need to go into detail, but just look at the history of our social programs in America. Additionally, the idea of giving financial incentives to artists and programmers would not go over well in the decade that began with the rise of the Tea Party. So maybe table that.

And so we come to anarcho-communism. I only use the term because Richard Barbrook did back in 1998 when he wrote "The High-Tech Gift Economy." Back then, Barbrook was arguing against the technologically-determinist-minded folks at institutions like Wired magazine, saying that while free information on the internet is a wonderful thing and all, it's not going to change the entire economy, but merely add another dimension to it. (A decade later, Malcolm Gladwell would assume the role of the "voice of reason" against Wired's current editor on mostly the same issue).

Barbrook's ideas about the gift economy and functional anarcho-communism on the net are still worth reading today. The "High-Tech Gift Economy," in which internet users share and build upon each others' works, is still in place today and is thriving far more than it did in the late 90s. How is it "anarcho-communism?" According to him, "[internet users] collaborate with each other without the direct mediation of money or politics." This is still absolutely true. The user-driven part of the information economy isn't based in any particular government or economy, but it and its fruits of labor are available to anybody in the world with an internet connection. Barbrook says
"Net users will always obtain much more than will ever be contributed in return. By giving away something which is well-made, they will gain recognition from those who download their work. For most people, the gift economy is simply the best method of collaborating together in cyberspace. Within the mixed economy of the Net, anarcho-communism has become an everyday reality."
The important thing to note here is that Barbrook isn't proposing that anarcho-communism is going to replace our economic model, but instead is now simply part of it.

All that's well and good, but what about the starving artists? You can program as many open-source operating systems or release as much music for free as you like, but it won't make you any less hungry (while mindlessly rolling Burritos at Chipotle will).

Anarcho-communism may play a role in the real world too. As the gift economy has been vital to the development of the internet (and technology) for the last two decades or so, only recently are we seeing these attitudes beginning to permeate Real Life.

Take, for example, Reddit. In addition to this list of good deeds the community has done, just yesterday the site got a homeless man "with a golden voice" a job at a radio station. On the site, people often give gifts to each other with no personal incentive, including video games, needed money, and pretty much anything else you could think of. I would call them "random acts of kindness," but they aren't so random. Indeed, Reddit is a rare example of a community that embodies the idea of "from each according to his ability, to each according to his need."

Structurally, Reddit isn't a site based around gift-giving. The wave of altruism the site is experiencing is a happy coincidence arisen from the nature of the userbase and the "wisdom of crowds." But altruistic it is. Just recently a user decided he was going to travel across the country and stay at fellow Redditors' households. Reddit said "sure, you can stay at my place. Let me help you map out your journey and feed you when you get here." Just check out the subreddit made specifically for this one dude.

I'm not sure how much stake we can put in the kindness of strangers, but if Reddit is any indication, it's a resource to be tapped. Free of government programs and corporate sponsorship, participants in the high-tech gift economy are slowly building an effective form of anarcho-communism in the real world, in which resources are shared and given freely based on need.

In the future, we can probably expect more websites to pop up (perhaps Reddit spinoffs) that take advantage of the gift economy and the altruistic nature of many internet users. Maybe bands will be able to plot their tours based on who offers a place to stay and food to eat for the night. Maybe people will sponsor programmers they know are doing good work. Perhaps users will drift further away from corporations and the government and will rely more on each other.

I'm not trying to promote the sort of technological-determinism-influenced thinking that got people so excited in the late 90s, but I am noting that somehow the internet has made it cool to give to other human beings.

No matter what new (or old!) anarcho-communistic beliefs bubble up and influence user behavior, it would be folly to say that the Information Economy is headed in any one specific direction. Like Barbrook, I believe the new economy is a mixed economy, comprising aspects of traditional scarcity-based capitalism (somebody has to build and pay for the computers), corporate sponsorship (advertising and marketing), artificially imposed scarcity (paying money for intangible goods), and the high-tech gift economy (anarcho-communism). I'm sure there will be Governmental changes to copyright law as well, and perhaps other changes that benefit users. There is no one "right" way to be compensated for one's work, but instead a lot of different ways. I have absolute faith that as technology develops, we will find even smarter ways to distribute goods to people who need them and compensate Information Workers for their valuable contribution to the world wide web.