Tag: economic_models


Value Dissonance, Digital Goods, The Long Tail & My Oven

August 5th, 2009 — 12:00am

This weekend I went looking online for the service manual for my oven, to effect some DIY style repair work, and was unpleasantly surprised to find every collection of digital service manuals within ready googling distance locked tightly away behind a solid e-commerce wall.

Ten, five, or even three years ago, some thoughtful mechanical engineer would have lovingly uploaded a blurry pdf conversion of a scan of a photocopy of the original KorEnglish instruction manual to a public file share hosted somewhere deep in the wilds of homebrew electronics land.  And there it would be, waiting for people who needed it.

Not anymore, apparently.  Thanks to all the MBAs who read The Long Tail during the revenue models section of their Digital Business courses, and then went prospecting for an under-monetized content domain with predictable transaction and renewal flow volumes (read, opportunity), I now have to pay $20 to find out how to take apart my ailing appliance.  To soften the monetary blow, I have an instantly findable, one-click-to-purchase, secure-payment-capable experience.  But it’s still $20, when it would have been free last time I looked.

Take note, this is a sea change in digital culture staring us in the face: DIY become $DIY, thanks to ‘rationalization’ of the home brew electronics information economy.

If it sounds like I’m bemoaning the simple fact that businesses like to colonize new markets, and I now have to pay for something I used to get for free, I want to say ‘Not true.’  (Okay, partially true.)  Something was wrong with this experience.  At first I thought it was price: That manual is fully digital, meaning it comes with absurdly low publication costs for printing, distribution, inventory and restocking, thanks to the-great-copying-machine-in-the-sky-called-the-Internet.  It’s also transparently findable via a simple two-word query, which I know because I went looking for it myself, so there’s few of the typical costs from AIDA (generating awareness and motivating my decision to buy).  Yet the instruction and service manual for a piece of hand-me-down kitchen equipment now carries the hefty price tag of $19.95.  And that’s without a preview; this is digital merchandise I’m expected to buy on blind faith.  So much for free.

Then I realized something deeper was involved.  This experience is interesting because it demonstrates the inevitable tension that comes from living in an era during which basic cultural layers, with very different ways of assigning value, come into friction with one another.  At heart, this is a modern experience of value dissonance driven by two ancient human patterns in collision.

The first pattern: I am ‘given’ the oven for ‘free’ by virtue of my ‘membership’ – earned by marriage – in the local operating unit of the folk-recycling economy instantiated by my extended family; specifically, my Dutch in-laws.  Apartments in Europe don’t come with appliances, so after moving to Holland from New York, I need a new oven thanks to the legacy incompatibility in electric distribution infrastructures (voltage differences) between Norte America and Europa.  This lovely unit was available from the family’s pool of collectively managed assets, thanks to a construction accident in my wife’s cousin’s neighbor’s adjoining property, which caused a flood of water into their home while they were on a 3-week  holiday, resulting in substantial water damage, compensated in proper Dutch fashion by a hefty insurance settlement, which allowed this particular pair of agents in the extended family network to go shopping for a new kitchen set-up, all appliances included, long before the projected lifecycle expiration of their current oven. [ill winds indeed…])

This pattern is as old as managing the aggregate livestock and pasturage.  Deciding which of the children to educate, send to the military / priesthood (or some other form of bachelorhood), or sequester in a convent b/c of lack of required marriage dowries is the same thing.  For me, all is fine and good: I have the oven I need, and all I have to do in return is allow the extended family to use my house to host the annual family New Year’s dinner.   A fair trade for all parties.

The second pattern: the constant evolution in the definition of first-tier tradable goods: Successive waves of technosocial change have made the instruction manual for my oven a digitally tradeable good on it’s own.  At brith, the manual was “part of” the consumer product package of the oven, only available – and meaningful – when sold with the appliance.  Fast forward to the pre-Long Tail Internet, and the manual was free to me, as a resident of the unfenced realm of the digital frontier, exchanged via the folk economy of DIY practitioners.  But now that the technical infrastructure required to effectively enclose this resource is  itself nearly free, and every MBA knows the Long Tail (sounds like one of those terrible fake American Indian names people used be given in TV sitcoms, when some form of hijinks led them to visit a ‘Native American Tribe,’ and the characters had to be identified within the tribe’s conceptual space [another example of truly awful sort of cultural friction…]), this particular piece of digital content has a price tag.  A hefty one.

So using the free appliance now requires content from the ambient information cloud in the form of a paid asset that is now, on it’s own, a tradable good.  This misalignment causes friction and dissonance for me; I have an appliance from the folk-resources layer, but all the useful information *about* the appliance resides in the newly monetized Long Tail digital content economy.  The newly digital manual that should come with my hand me down oven is very much trying its hardest to be a traditional product from the universe of tradable goods: a Thing, with a Price, sold by a Business, to Customers.

What drives the friction, and what makes this worth paying attention to and writing about, is that it is the opposing direction of the movements of these different kinds of goods, digital and material, that creates dissonance by bringing me a free physical oven and an expensive digital service manual.

The oven used to be part of the first-tier tradable goods layer.  It was a packaged consumer appliance product, created by a manufacturer, sold via optimized distribution networks that moved it through the chain from manufacturer to wholesaler to retailer at a fixed price, communicated via marketing channels embedded within discovery and communications media.  Since then, it’s ‘fallen out of’ the tradable goods economy, and is treated as a family asset, to be handed around as best suits the collective needs, without any official transactions taking place.  We could put it back into the tradable goods economy as used, if we choose to sell it, or even enter it into the recycling economy, where it would be broken down into constituent elements – e.g. motors, wiring, display, or at a lower level of integration physical materials like glass and steel – to whatever extent possible.  But almost all of the changes in value for material goods when they shift from one cultural / economic layer to another are one-way, and downwards.  The possible paths for re-uptake of material goods that have fallen into the folk economy layer used to be transformation into antiques, art, or collectibles – all one form or another of the museum economy.

That’s not the case with digital goods in general, like the newly Long Tailed service manual for my oven.  The manual was originally part of the consumer / product economy for tradable goods when bundled with the oven.   Since then, it has undergone several transformations.  First, it was un-bundled and digitized for the DIY layer (making it part of the folk economy),  Now it is once again part of the product economy, though now in it’s un-bundled  and digitized form.  In terms of which economy it’s part of, *the manual is moving all around the page on it’s own*.  That’s highly unnatural!

This is a key property of digital goods that the material world is just beginning to understand.  Digital goods are designed for just this sort of mobility: We can move digital goods all around the map in terms of the cultural / economic layers they inhabit, and their consequent value, with a few changes in addressing and format.  No transformation of a digital good is necessarily one-way.  And when these transformations aren’t synchronized with the elements that inhabit the physical world, we feel the conflict and tension that results.

In my case, the oven is moving one way, while the information about it is moving the other way.  This failure to dance together economically and culturally is a consequence of the way that the oven was designed, made, marketed, distributed, etc.  It’s a temporally isolated form of dissonance that emerges from friction with the new digital layer that’s permeating the world so rapidly.  If you’re familiar with spimes, and related concepts like service avatars and information shadows, you know this is a (ostensibly) temporary state of affairs.  Once our cultural frames of reference catch up with our technical capabilities, and everything is part of the great database in the sky, these experiences of friction should be much less common.

But in the meantime, I have to fix my oven on my own.  Or cough up the $20 for the manual…

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Cultural Clouds: A New Kind of Commons?

September 21st, 2008 — 12:00am

There’s a lot of buzz about cloud computing in the technology world these days, but I think something much more interesting is the emergence of cultural clouds as the newest kind of public commons. By cultural clouds, I’m talking about the new layer of the human cultural stack we’re busy laying down as a by product of all our social and creative activities in the inofverse.
To be clear, I’m not referring to the IT infrastructure layer wherein cloud computing is defined as the “style of computing where massively scalable IT-related capabilities are provided ‘as a service’ across the Internet to multiple external customers.” [Thanks Gartner, via BusinessWeek]

These new cultural clouds appear in the ever growing collections of crowdsourced collectively or socially accumulated judgements, cultural products, knowledge, history, relationships, etc., encoded in the form of managed digital information. This quick illustration shows some of the pools of activity and judgement that that make up these cloud commons; including wikis, public media, reputation statements, reading recommendations, social networks, wish lists, music listening histories, shared photos, films and videos, citation networks, geotagging and memory maps, comments and public discourse, hashtags and tags for photos, URLs, and songs, link streams, subscription and feed lists, blogrolls, etc. These are social, cultural, and conversational resources, not mineral deposits or physical topographies.

New Cultural Clouds / Commons
cloud_commons.jpg
The commons is an old construct that embraces natural resources – think land, air, water, the electromagnetic spectrum – and the more recent public domain of cultural materials not governed by copyright law.
Venerable institutions of custom and law, such as seasonal access to pasturage, the right of passage across borders for nomadic peoples, and common law, define and regulate the recognized forms of commons.

But socially collected, digital, reified human cultural products and judgements are a new *type* of commons. I think they’re a new type of resource, brought forth largely by the cognitive surplus we enjoy. And as profound technological permeation and ubiquitous computing bring on the age of everyware, the cloud commons will grow (and fragment / specialize / multiply?).
Who and what will govern the new cloud commons? How will we define and manage these resources?

By form and makeup, the cloud commons is ephemeral and distributed. But as digital information, it is eminently tangible and actionable. Our basic social structures and mechanisms – science, the law, economics, art, agriculture, religion, technology – will recognize the emergence of cloud commons, and respond accordingly. APML (Attention Profiling Markup Language), from the APML Working Group, is an example. The DataPortability project – “a group created to promote the idea that individuals have control over their data by determining how they can use it and who can use it. This includes access to data that is under the control of another entity.” – is another. [Advocating for the right to free movement of data is a digital analog of the ancient idea of right of way.] OpenID, OpenSocial, OAuth, OPML, and the rapidly evolving Creative Commons licensing system are other examples of responses to the appearance of cloud commons.

What does the future hold? As recognition of cloud-based commons grows, expect to see all the patterns of activity typical of new frontiers and zones of instability: wildcatting, pioneering, piracy, squatting, privateering, enclosure, slums and shanty towns (informal settlements in the parlance of architecuter and urban planning) extractive industries, sovereign claims, colonization, speculation, etc.

With history as a guide, I’m especially wary of enclosure movements, and extractive industries. Both practices can rapidly diminish the present value of a commons or commons-based resource. Worse, enclosure and extractive practices act as negative feedback mechanisms, decreasing current estimations of a commons or commons-based resource’s future value, making the tragedy of the commons a likely outcome scenario.

The U.S. radio spectrum, as enclosed by the FCC
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Is this framing of recently formed clouds of information and activity data as a new kind of commons accurate? Useful?

More on the idea of cultural clouds as the new commons forthcoming.

 

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