Puzzles in the Economy of the Digitals

1          From the outset I want to emphasize that I don’t have any background in economics or legal affairs. So what’s the fuss, you may ask. Even without a proper training in both or a decent understanding of them, I think there are issues pertaining to the economy of net-based items that need to be addressed and might be addressed by someone without a formal training in both sciences. In the following my task will be more or less restricted to conceptual analysis of terms and issues that are painstakingly in the way of understanding how to deal with net-based items. Deal, that is, in both ways: how to come to grasp of it, and how to treat them in the context of economical exchanges.

A word on the term “digital”. Without a proper definition I would like to call every item that is susceptible to treatment or manipulation in a computer, a network, a database, or the net, a digital. So an address, a hyperlink, a media-file, a document, a tag, a piece of code, is a digital. Your monitor, your circuits, your books and pencils, on the other hand, are not. They are not susceptible to treatment or manipulation in a computer, a network, and the like. More specifially, I will call everything a digital that is prone to what I call the “mind-body-problem of information”. Stating this problem is one of the riddles I am going to talk about further below, so the reader will have to bear with me. In the meantime we may say that a digital is not opposed to an analogous — whatever that might be — but rather to material stuff in the ordinary sense of the word: items with a clear space-time-location, embodiments of generic terms that strech through space and time, etc.

I don’t mean to say that a digital is naturally or directly opposed to material stuff. That would place it in the neighborhood and resemblance of mental things or mental stuff like thoughts, dreams, emotions, etc. On the contrary: The digital’s appearance of being opposed to material stuff is part of the conceptual problems we have in the understanding of it. It looks like it is opposed to material stuff, and regardless whether it is so or not, this appearance makes it seem as otherworldly as mental stuff. But neither is it mental (in the usual sense of the word) nor is it an abstract entity like the meaning of a word or a natural law — things that Karl Popper placed in what he called the 3rd realm. So, for the moment there is reason to accept that we have to deal with metaphors, images, shorthands, some rough and crude ideas, and don’t have a definition at hand. Spelling out the details of the ideas involved will be a major task in the following.

2          One of the problems the digital economy faces is this: Why should anybody pay for a digital if he can get it for free?

Let us be honest about that: Nobody pays for something that he can get without charge. So why should anybody pay for content, for digitals, on the net, when there are enough possibilities at hand to avoid it?

There are enough voices around claiming that people would like to pay for content if only there were an easy way to do so. And because those who provide content don’t simultaneously provide for an easy of payment it is understandable that people don’t waste their time trying to get some money to the content provider.

It is not clear why it should be the provider that has to offer an easy way of payment. From a moral point of view it is the obligation of the customer — if we can call him such at all –, to pay for something he wants to have. But truth is, customers don’t need to think too much about this problem, because there are already enough ways in which intermediaries facilitate cash transfer, payment, or other forms of revenue bewteen customer and provider. Be it Amazon, iPhone, Paypal, be it donation-models like Kachingle with a user-controlled mechanism of spending certain amount of money under predetermined conditions …. I’d like to say: There are enough models for payments already around. I’d like to suggest further that the problems in the economy of digitals are not problems of payment-/reward-organization between customer and provider.

So one puzzle of the discussion becomes this: We already have enough sophisticated models of paying or transacting fees between customer and supplier on the net. The problem is not that we don’t know how to get the money from one hand to the other. That is not the problem because in wide areas of the internet economy these systems already work very well. Amazon wouldn’t be possible if the problem wasn’t already solved. Paypal — with all its problems of privacy and monopolistic action — wouldn’t be around if it wasn’t a widely used method of transfering money from one hand to the other. Ebay wouldn’t be possible too if we hadn’t already figured out a solution — or several solutions — of how to pay for items on the internet. So why then are there these grave problems? Why do some agents in the internet economy face a booming situation while others starve and face a revolution in their business models not seen since the beginnings of their industries? Why is it that commodity- or stuff-purchase works fine even on the internet, while content- or digitals-purchase does not?

3          Not long ago we had a shift in vocubalary: Once we talked about information and data, now we talk about content. Once we talked about markets, now we talk about environments for goods and services. There will be a time when we describe our transactions via blogs, feeds, websites, downloads, sharing, etc., as ways of how we orientate in a habitat. We will not be someone unless we’ve downloaded this, shared that, postet in this location, and deleted a site over there. Until we do such things we are simply not inhabitants of this habitat.

The point is that living in this new habitat demands a kind of action that counts as an recognizable action in this habitat. And by doing so the habitat with its boundaries and places, neighborhoods and ghettos, comes into being at all.

The problem with this metaphor of a habitat is that it promises something and delivers something else. It promises a way or a style of life, in wich give and take are balanced, and the inhabitants of the habitat live a life of prosperity and learning, a culture of self-realization that takes into account the joyfull dependence on other participants, a self-realization that does not result from defeat and conquest, but from appreciation and solidarity.

On the delivery side we find something different. The habitat does not offer well-meant collaboration and self-realization, it offers a harsh two-class-society of nerds. It binds both in one project by a dream of participiation — called participatory culture — while in the meantime it favors one type of people over the other. And this can be seen when we turn to the question: Who gets paid for what in an economy of digitals?

Look around and you’ll find the astonishing fact that people who program — it is now called coding??–, can earn money with their work even when they “code” in open source projects, while those who provide “content” simply get nothing at all. Wikipedia lives from many people that never saw a dime for the content they provided while many if not most of those who provide code, maintenance, support do earn money. It is an old, perhaps too old, but in my eyes stil useful distinction to say that on the net those who provide form can get paid, while those who provide content fail to do so. You earn money or entice risk-capital by providing new gadgets, services, or programs — compare the fuss over diaspora –, but you definitely don’t earn money with content that is supposed to “fill” these gadgets and services or make them useful. So the question becomes: Why is it that we pay those who provide form (gadgets, services, programs), but not those who provide the content without which all these “forms” would be “empty”, i.e. useless?

4          In the discussions about copyright, FLOSS, Creative Commons, Free Culture, Open whatever, very fast one encounters the idea that in former times the payability of stuff — be it digitals or material stuf one can buy on Ebay or Amazon — was dependend on the concept of scarcity. Because material stuff is somehow scarce people are willing to pay for it while because due to the easy reproducability of the digital in the same quality people are not willing to pay. Furthermore, due to the abundance of the digitals “old” payment-models that target the scarcity-rate of an item simply can not cover this new-found opulence. The more there is of an item the more the price drops, it is said. Down to the point where the sheer overwhelming quantity of “copies” of one specific digital or the totality of all digitals plus their “copies” — innumerable infinite one might guess — makes pricing nearly impossible. In the end, it is said, we need a new economic model, a model for the economy of abundance, that is, an economic model that takes into account the need for a fair pricing procedure of objects (read: digitals) that does not rely on their degree of scarcity to determine their value and the corresponding price.

I already hinted in [2] that this cannot be true. The point is not that we don’t have purchase mechanisms for digitals, even for those that are so abundantly floating around that we might not be able to identify a fair value-price-relation. No, in fact we obviously don’t want such. Or, better said, the purchasing mechanisms we already have conflict with other goals and preferences we hold. And somehow this rules out the application of purchase mechanisms at hand.

So the conflict that emerges has somewhat the following shape. We live in a time, with a technology that once again suggests that we might be in reach of a society that is caring, benevolent, respectful, in which we can treat each others with dignity and immediacy that is characteristic of a perfectly balanced way of living. The insistence on sharing, on giving away for free, on openness of means and free access to everything we want, need, and care — this insistence on a humanistic goal makes pricing-procedures and ways of dealing with one another that seem to stem from the Dark Ages of relentless capitalism untenable. And it looks as if exactly this Dark Age of relentless capitalism tries to force its old ways of pricing on the participants of the “free-give-away”. In short: This is not about the problems of adequate purchase-mechanisms, it’s about values. It’s about the struggle to abolish capitalitic principles. Why then should either side give in in this fight?

The emerging picture looks like we face a proxy war. And in this war the battles are fought over as much control as possible. The industries, the content provider, they want their claims regained, and the FLOSS-community, the partisans of Open whatever want as much control abandoned as possible.

The battles over copyrights, revenues, content-theft, etc., have a dramatic character and feel like one of these age-old battles we like to watch in the movies. And we could leave the story right here, shrug our shoulders, choose side or refrain from doing so and wait until one side has won.

But the problem with that is that both sides are going to loose, inasmuch as individual content providers like musician, writers, artists, bloggers etc., will starve in one way or another, and without the ability of earning a living with what they creativley do will have less and less time to work creatively. And that will have consequences on the quality of their work, the “content”. The programers, on the other hand, who can earn money even in FLOSS projects will see a dry-up of revenue and be forced to work more and more for industries and emplyers they despise. The big content industries like music, film, news agencies, “newspapers”, etc., will see their revenues steadiliy falling in a struggle in which it will become somewhat “patriotic” to eat the rich and refrain from paying. So the question becomes: In what sense can and must both sides come to a truce without ceding too much ground, i.e., principles. And that means: How does an economy of digitals look like, in which not the amount of copies, but the (changing) value of the content is priced. How does an economy of digitals look like where creation and not distribution is rewarded?

5          There is this age-old problem called the mind-body-problem. There are several distinct versions of it, enough to rather call it a problem-family. In the version of Descartes it became the distinction between two unrelated substances, mind and body, repectively, into which a human being separates. The problem with substances is, they are not attributes, that means, they cannot take part in anything else besides them. Seen that way the question becomes: How can the human body and the human mind form one unity, which they obviously do?

Strangely enough we find something similar in the case of the digitals. Take as an example a work of art that may permit reproduction but is not in itself a reproduction. A painting for example. Even as we are able to conceive it in our mind, the painting is something real, an odd combination of material, colours, shapes, etc. Talking about a specific picture (or a specific statue) means talking about “content” and “material embodiment” at the same time. In fact, we cannot — even conceptually — separate form and material in a work of art without destroying it. And that means that in some artefacts we simply cannot help but are unable to separate form and content. In the case of the digitals — contents, information, code, etc., that is treatable in a computer, a network, a data base etc. — we can by parity of reasoning state: How with digitals can their form and content become separate?

An abbreviation of this might read like this: In the human mind-body-problem we cannot understand how mind and body come together; in the mind-body-problem of information we cannot understand how both can be separate.??

The reason why the mind-body-problem of information is relevant here is that it directly pertains to copyright, purchase, and royalities.

In pre-digital times the question how information or content is related to its bearer or embodiment (book, leaflet, etc.) was irrelevant for the answer of how to specify its value. All copyright laws and agreements on revenues and purchase could affix to the reproduceability of the material bearer. Scarcity was not scarcity of content or information in itself, but meant the availability of the material bearers of this content. Rules of access was a question of the localization of the material embodiment (the manuscript, the reliquiary).

In the digital times and field a digital like a file, a string of code, a software, a song or a blog-entry do not need a material embodiment to be accessible. They need some template for redupl
ication, but the existence of the template is not dependend from conditions in time and space. So a “copy” is not a reproduction, like a postcard of Chagall’s “Tree of Life” is a reproduction of the original painting. There is no orginal from which we reproduce and from which we no longer can reproduce in case the original is lost. Reproducing a digital is less a copying but more an iteration — we don’t create some new entity (like in a copy and its original), we re-iterate the procedures by which the first item came into being.

We cannot distinguish mind and body of an information, a content, a digital. We don’t copy something, at least not in the old sense of making an entity qualitative distinct from an original. But being in that situation we simply don’t understand how to apply given copyright-laws and regulations of purchase and revenue. When there is no embodiment at which we can somehow attach those regulations, at what then can we attach them at all?

This is the reason why software as the prime example of a digital is not sold or copied for an revenue, but licensed. When there is no embodiment at which to affix the rules of reproducing a material object (like copyright, purchase, selling, etc.), then we treat it somehow like a tool or service the use of which is regulated over a strech of time, under conditions that guarantee exclusivity of use (and revenue for the licence-giver). The digital (here: the software) is treated like a tool someone lends you for a certain time. The lending in itself and the regulations of the usage are fixed in a contract that allows the “buyer” to use the product and the “seller” to earn a revenue.

Even in the early times of Microsoft-licensing the equation of software with the use of tools or services tried to stay in the image of the primary usage of the material embodiment of a content. Even when you could not affix rules of reproduction and scarcity on the material carrier, you could treat the carrier not so much as the carrie of content but as carrier of usages. You could treat it as something that was good for doing something. In case of software this made sense, because with an Office suite you can do something: write a text. But in case of a film or a song the analogy got strained. What can you use a film or a song for? To enjoy your spare time, e.g., but something else? What can you use an online newspaper article for? You can use it to inform yourself, to entertain, etc. The problem with the licesning-approach to digitals is that it treats the digitals as a means to a further, distinct end, and not as an end in itself. Using a song primarily for entertainement makes sense if you own a bar and you need some soundscape to keep people undisturbed from others and themselfs and to further the consumption of beverages. But sitting at home, enjoying your favorite artist is something different: You don’t use his song, his album for something different than enjoying it. A tool, that is, achieves a goal somewhat independent from the design and the quality of the tool; the content, on the other side, is the object of desire — you cannot substitute it for a different song that somehow achieves its goals better.

That is one of the aspects of the mind-body-problem of information: Information (or: content) wants to be individual, it is jealous and doesn’t want to be substituded. Substituting content makes receiving or reaching out for content more or less pointless. Like the work of art it is about this content and no other. And that means that licensing content as specific as music files, blog-entries, etc., is the best method of making all content irrelevant.

No artist is able to work under such conditions. And in fact its only the big names in the music industry — artists already in the hearts of their fans — who can still sell records in numbers in that way. Other artists simply have no chance to reach through the noise and the chatter.

Even when we try to see every content in and for itself, like we do when we appreciate a piece of art, that gives us no way of understanding how we could reach a workable frame of appreciation and reward. But we should keep in mind that this problem is a problem mainly because we are in an hostile setting which cries out for a compromise between very anatgonistic interests. Remember: There are already ways of paying revenues. That is not the question. The point is that they are not working here, in the context of content without a carrier, because of the antagonistic setting talked about in [4]. The problem of revenue and copyright in the digital time is a problem mainly because there has to be found a solution aceptable for all parties involved. And that makes the search for an adequate model of revenue and copyright so difficult. Not the semi-ontological or epistemological quarrels that one may find here.

6          Why should anybody pay for a digital if he can get it for free? There are voices who insist that there is no good reason for doing so, because the appreciation of the interested person will likely urge her to spread the content under her friends. If the content is a song (a song or a music-file?), the argument goes, than what happens on the side of the listener is that by spreading the joy via sharing the file this amounts to a kind of voluntary “outsourced” marketing for the artist. This marketing is something the artist is not paying the fan, so one might argue that this amaounts to a fair trade: I get the song without charge (for “free”), and you get a portion of unexpected marketing campaign that makes you and your art more accessible to further audiences. In the end, the arguemt says, all musicians (and by parity of reasoning: all writers, artists, etc.) should give away without charge and with unrestricted access all their “material”. The future benefits resulting from this trade will outwage every momentary loss.

If this argument were correct one might ask why the fan, the recipient of the piece of art, is not paid by the artist for his marketing efforts. The argument might be used in extremis not only to ask the artist to give away his art “for free”, but actually to pay for being listened to and being appreciated.


[ …. in progress …. ]


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