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All of our existing controls around content, intellectual property, and information exchange were developed when moving information around was an ancillary function to what mattered at the time: moving goods efficiently to generate wealth. The most powerful nations and organizations throughout the centuries were the ones that mastered the levers that controlled the flow of things. That pattern may soon be facing its own Napster moment. Information is becoming a good in itself, and our controls have not yet adapted to this new reality. In fact, much of what we call governance consists of ensuring that information moves very slowly–if at all. The entities–countries, companies, individuals–that first realize that a shift has already taken place, and re-think their raison d’être accordingly, might be the ones who will dominate the market in this brave new world.

In my last Biznology post, I used a comparison between information and physical goods to support an argument that social technologies still have a long way to go to be considered mature. When information itself becomes the good, and social interactions become the transportation medium, some new and interesting economic patterns may emerge.

Scarcity is a natural attribute of the physical world: a house, a car, or a TV set cannot be owned by multiple people at the same time, nor can one person provide hairdressing or medical services to several customers simultaneously. Our whole economic model is built on top of it: theories around economies of scale, price elasticity, bargaining, patents and copyright all have a strong dependency on “things” or “services” being limited. We even created artificial scarcity to digital items such as software and audio files in the form of license keys and DRM, so that they could fit our “real world” economy.

That model worked OK when being digital was the exception. However, more and more “things” are becoming digital: photos, movies, newspapers, books, magazines, maps, money, annotations, card decks, board games, drawings, paintings, kaleidoscopes–you name it. Furthermore, services are increasingly less dependent on geographical or temporal proximity: online programming, consulting, doctor appointments, tutoring, and teaching are sometimes better than their face-to-face counterparts. While most online services are still provided on a one-off basis, the digitization of those human interactions is just the first step to make them reusable. TED talks and iTunes University lectures are early examples of that.

Of course, I’m not advocating a world without patents or copyrights. But I do think that it’s important to understand what that world would look like, and assess if the existing controls are playing in our favor or against us. Even if we do not dare to change something that served us so well in the past, others may not have the same incentives to keep the status quo.

Another factor to consider is the leapfrog pattern experienced by the mobile telephony industry: countries that were behind in the deployment of phone landlines ended up surpassing those in the developed world in the adoption of cellular phones. Similarly, countries that never developed a sophisticated intellectual property framework may be able to start fresh and put a system in place where broad dissemination and re-use trumps authorship and individual success.

Finally, the emergence of social technologies over the last 10 years showed the power of a resource that has been underutilized for centuries: people and their interactions with each other. The essence of what we used to call Web 2.0 was the transformational aspect of leveraging social interactions throughout the information value chain: creation, capture, distribution, filtering and consumption. The crowd now is often the source, the medium, and the destination of information in its multiple forms.

The conclusion is that the sheer number of people that can be mobilized by an entity–a nation, an organization or an individual–may become a source of a wealth in the near future. Of course, peoplenomics is mostly a diamond in the rough for now. A quick comparison between the top 20 countries by GDP per capita (based on Purchasing Power Parity) and the top 20 countries in the world by population shows that the size of a country’s population is still a poor indicator of its wealth–only the United States, Japan and Germany are part of both lists. Whether or not unleashing the economic value of large populations and efficient information flows will ever materialize is anybody’s guess, but keeping an eye for it and being able to adapt quickly may be key survival skills in a rapidly changing landscape.

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Aaron Kim

About Aaron Kim

Aaron Kim currently heads the Digital Social Collaboration Centre of Excellence at RBC. In the past, he tried his hand as solutions architect, Basel II consultant, performance engineer, Java programmer, Unix administrator, and environmental biologist. He’s married to Tania and they have a son, Lucas.

8 replies to this post
  1. But information has always been a “good” albeit a different kind of good. It could be created, has a quality attribute, can be bought and sold, often has a “best before date” and has value that is subject to the laws of supply and demand. It’s value is derivative, based on the value of the thing the information was about. The fact that some stuff we consume now is digital doesn’t change any fundamental – it just makes the distribution (and creation) of certain things easier.

    “was an ancillary function to what mattered at the time: moving goods efficiently to generate wealth” I’d argue that regardless of the value the Venetians provided in moving goods in the 16th century, the value that mattered most was the good itself, not information about the good, eg the location of the good. (Arguably transportation was just as much a good that could be consumed like any other) Obviously in 1550 the value of a pound of gold in Venice was different than the value of that same pound of gold in the Yucatan but it was valuable, first because of what is was, and second, because of where it was.

    My thought would be that what we’re seeing today isn’t any kind of fundamental or radical shift. It’s just that the rate of change in what are traditional, and largely unchanged processes or interactions is faster.

    • True, information used to be like any other goods. The digitization of it and the world becoming hyper-connected changed that: the cost of replicating and distributing dropped so much that in practice it’s now negligible. You may not consider that fundamental, but it changed a whole industry (music), hence my reference to a “Napster moment”. It’s happening in other industries too: see http://nicolasrapp.com/wp-content/uploads/2011/07/CHARTIST_NEW_INDUSTRY.gif (thanks to Bernie Michalik for the pointer). In this new world, demands determines supply, as the latter is almost unlimited now. Justin Bieber’s Ludacris video has as many views as people demanded of it. Of course, there are still a few natural limitations in supply (Twitter’s fail whale being one painful reminder of that), but in general lines, most constraints around digitized content are artificial ones, made so that we can apply the economic laws of the physical world to it.

      I’m unsure if the value that mattered the most in the 16th century was the good itself. It that was true, the American colonies from the North and the South could have declared independence much earlier, as they detained the goods. Being able to take the goods from where it was produced to where it was consumed was key, physical transportation being just one aspect of it — albeit an important one.

      Is this shift radical? Some people will think it is, others will disagree. Time will tell. I think this will follow the punctuated equilibrium pattern, where change is gradual, slow and smooth for long stretches and then drastically changes the landscape. Of course, I may be completely wrong here, but that’s what makes this discussion interesting.

  2. Recently had a discussion about the copyright implications of a “hyperlink”. It appears that the current opinion of the courts is that this is not a violation even when “inlined” and an image appears in the page. The rationale for this was that the actual data element was merely a textual pointer and that a browser implementation actually created a copy of the photo.

    It’s interesting because the conversation has obviously followed: what constitutes a “document”.

    Is an HTML page a document? After all each piece could be retrieved independently? How do you define the relationship between standardized syntax and what is rendered? Where do you draw the line?

    The digital and real world have a long way to go in being reconciled in a legal framework. Most copyrite / copyright law (US) is based on a definition created over 200 years ago!

    I only post this becuase when one argues that information is a “good” we have to bear in mind that much information isn’t actually realized until it reaches a presentation engine. Often that presentation engine is aggregrating information from many sources on demand. What is being transferred between parties is nothing more than pointers… and defining that as a good may be a stretch for any legal system based on the physical world.

    I should read your blogs more often. They are often very insightful.

    • I never thought about the rendering aspect of HTML in the context of copyright, thanks for bringing that to my attention. We cannot simply discard any controls or the legal framework developed based on the “conventional physical world”. We need to evolve it based on a thoughtful analysis on what still applies and what’s different. It also needs to be practical.

      I remember that in my Zoology classes a professor was trying to convince us that birds did not actually have colour in their feathers — something along the lines of feathers being colour-less at the microscopic level, but reflecting the light in a way that tricked our eyes to think they are red, or blue, or yellow. That could well be true, but we could also argue that at the atomic level colours do not actually exist. In practice, most people would just accept that feathers have colours, as the “presentation engine” (our eyes, light, the laws of physics, etc.) renders them that way. In the case of HTML, I do think that sourcing an image from somewhere without crediting it and abiding to acceptable etiquette, regardless of what the legal framework says, should be avoided.

      Naturally, the comparison between physical goods and information is an imperfect one. In fact, all comparisons are imperfect, they just help us to analyze a subject from different angles and to build on top of known or accepted references.

  3. The truth is…our world changes everyday,and information is more and more important.Information means power.

    and you can’t really make a good debate on physical goods and information,it’s like making a debate between cows and flowers…But you are right it helps us to analyze things better.

    Great article here…thank you!

    Have a nice day!

    • George, I agree that the world changes every day, but the digitization + easy distribution + efficient marketplace for information is much more prevalent in the last 10 years or so than before. I do think we are witnessing something similar to what was observed in the early days of the printing revolution triggered by the invention/popularization of the mechanical movable type, so the speed of change is different now, as it was back then. This post was in my back burner for quite some time, as I can’t possibly discuss something of this magnitude in a blog post, and only by myself. This subject is probably better addressed in a book, written by better writers than I can aspire to be. But while information and physical goods can often be as different as cows and flowers, sometimes they are more like cows and mechanical cows, as in the case of physical and digital versions of books or songs or architectural models.

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