Some Big Thinking in admirable rough draft form is goin’ on over at Norlin’s place. He’s working through an argument that’s important if right.

Point #6 is crucial: The Internet is economically destructive because it’s hard to make money when so much stuff is entering the commons.

Eric gets there via a pivot point (#3) that he notes he needs to clarify: the lack of scarcity on the Net drives things towards the public domain. That seems intuitively right. But the question is: what on the Net is in such abundance that it drives goods thusly? It’s not the abundance of goods but the abundance of access to goods: you don’t need a lot of capital to create and/or distribute digital stuff. (BTW, in such an environment, what is the remaining virtue of capitalism?)

Then Eric raises a fascinating idea (#7): “Digital identity is a (somewhat subconscious attempt) to solve the lack of scarcity.” How? “[Y]ou’re able to rebuild some of the channels and points of distribution.” That is, if you can be put in jail for getting a copy of Eminem’s latest via Kazaa, then the recording industry can re-establish its chokehold. (My loaded language isn’t Eric’s.)

Why does Eric see “the lack of scarcity” as a problem to be “solved” (#7)? Because it drives down prices and thus drives businesses into the dirt. But there are at least two types of business here. There are those whose value has been nullified by the ease with which digits can be manufactured and distributed; there’s no good economic reason to prop them up (sez I). Then, there are companies that provide real value in a digital world that may not be able to make enough money to survive if their products become free. In the first category is the recording industry. In the second are recording artists and newspapers. I don’t know how the second category will survive, but I’d rather let the market innovate than impose artificial scarcity. We’re still at the beginning of this journey. I hope and believe that the solution will not be to re-centralize control and introduce artificial chokepoints. That’s not what drives an economy of abundance.

So, I don’t yet agree with Eric when he says “the internet is *truly* economically destructive…” (#6). Destructive of what? Businesses that no longer provide value, sure. But even if bsinesses that do provide value make less money (assuming they make enough to survive, which I admit is still at issue) then we also have to factor in the enrichment those creative goods provide to you, me and everyone else in the market. Overall, the Internet could turn out to be tremendously economically constructive.

(Eric, thank you for having the guts to post your ideas in rough form so that we can all chew on them.)

Categories: Uncategorized dw