Social Production and Demographic Changes
One noteworthy trend we’re experiencing of late is the rising prominence of social production—the creation of valuable information goods on a non-commercial basis. Probably the clearest example is Wikipedia, a hugely useful service that doesn’t produce any economic “value” in GDP terms. Of course valuable activity that doesn’t register in GDP is nothing new—just ask moms spending time taking care of their kids. But the transition to the digital economy is changing things in important ways. In particular, it’s simultaneously making it cheaper than ever to produce and distribute information goods, but harder than ever to capture revenues from information goods.
In other words, if you and a friend have a band and want to work with another friend to produce an album that sounds decent and make it available to music fans all around the world, that’s become dramatically easier than it was 20 years ago. But if you want to make people pay money for your album, that’s much harder than it used to be. The marginal cost of distributing digital records is nothing, so the price trends toward zero. And much the same is true of making a movie, moving a news story, or anything else that can be sent around over the internet. This implies that production of these kind of goods ought to decreasingly be conducted on a commercial basis and increasingly done on a non-profit basis. For profit firms are finding it harder-than-ever to make revenues match costs in the news business, for example, but non-profits and hobbyists are finding it easier than ever to gain an audience for their products.
I think this trend has important linkages with the various demographic trends facing the world. At the moment, the costliest element of producing information goods is no longer the capital required to produce them (primarily a computer and an internet connection) but the time it would take out of your busy day to do it.
But many Americans—retired Americans—actually have plenty of time on their hands and famously spend a great deal of time pursuing their various hobbies. At the moment, relatively few retirees have the skills necessary to engage in digital social production. So you’ll find them playing golf or bridge or what have you, but generally not blogging. This skills issue is, however, a pretty transient phenomenon. In the future, it might be common for grandpa to spend a couple of hours a day tinkering with open source software. Or maybe he’ll make it his business to attend city council meetings and write on the web about them. People will write whole books and distribute them for free to people’s kindles. A lot of this material may have a “crank” quality to it. But much of it will be genuinely well-informed, and reflect a lifetime of knowledge. Already, I can see in DC’s local blogosphere that there’s a fine line between an annoying busybody and a vital source of information. As the cohort of people with the most time on their hands to just pursue their interests becomes more digitally literate, I think we’ll probably see an explosion of non-commercial activity in a variety of fields. And one important source of success for commercial enterprises will be finding ways to hybridize commercial and non-commercial elements of the production/distribution process. Someone might make a living organizing and marketing goods that are overwhelmingly made by hobbyist producers, doing a certain amount of “last mile” stuff that’s too dull to be fun for anyone but that no longer produces enough revenue to support an entire paid workforce.
One important implication of this is that we’re almost certainly shifting from a world in which a large and important set of activities aren’t captured in the national economic statistics to a world in which a large, important, and growing set of such activities isn’t captured in the conventional statistics.
28 Responses to “Social Production and Demographic Changes”
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April 7th, 2009 at 12:31 pm
“Hits”, “Click Throughs”, “PageViews”; these are the new money.
Go to my blog, click five times and I can exchange your hits for a beer.
April 7th, 2009 at 12:39 pm
the costliest element of producing information goods is no longer the capital required to produce them (primarily a computer and an internet connection)
Most of the labor is handled overseas, where it’s cheap. When progressives speak of any other industry, we care about those working the “hardware.” Their brains shut down when talking about the Internet — it’s just a magical place that exists solely with a ethernet jack and computer! This bias fits well into our politics (lots of progressive youngsters on the Interwebs), but we should at least consider the invisible labor that goes into creating “the Internet.”
April 7th, 2009 at 12:43 pm
Re “Already, I can see in DC’s local blogosphere that there’s a fine line between an annoying busybody and a vital source of information. ”
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You’re welcome, Matthew.
April 7th, 2009 at 12:43 pm
Part of this is related to the problem of using industrial-age metrics to track information-age value-creation processes. The social creation of knowledge is probably the most important activity in the global economy today, but its effects are visible as improved outcomes, not increased outputs. The inability to measure/anticipate these outcomes with precision makes it difficult to justify investments in either the technology or the workforce development practices (e.g., technology training appropriate to members of pre-digital generations). Policy-makers and business leaders are reluctant to invest, especially in a recession, when they can’t see ROI the way they are accustomed to seeing it.
April 7th, 2009 at 12:47 pm
Wikipedia does produce value, it’s just those who “create” the value don’t necessarily get to reap the benefits of it. In practice they usually do, because people who contribute to Wikipedia generally use it themselves, and this is mainly why the model is successful. But it’s not true that Wikipedia produces no value; if that were so then it wouldn’t exist.
April 7th, 2009 at 12:48 pm
More to the point, Wikipedia can add to GDP if it makes people more productive–which it almost certainly does.
April 7th, 2009 at 12:48 pm
They never got much beyond forwarding copies of THE CLINTON BODY-COUNT LIST WITH COMMENTS IN ALL CAPS CAN YOU BELIEVE THIS I CAN’T BELIEVE THE LIBERAL MEDIA WON’T COMMENT ON THIS WHAT’S HAPPENING TO THIS GREAT NATION OF OURS …
So, it’s probably a good thing, Matt.
April 7th, 2009 at 12:48 pm
“The marginal cost of distributing digital records is nothing, so the price trends toward zero.”
And this is why Microsoft Windows is free!
April 7th, 2009 at 12:51 pm
a certain amount of “last mile” stuff that’s too dull to be fun for anyone but that no longer produces enough revenue to support an entire paid workforce.
It seems to me that the “last mile” stuff is inextricably bound up with the “fun” stuff. In my experience, the process of professional content creation, of whatever kind, involves tackling tasks that require more discipline, focus, and long-term training than amateurs have or are willing to deploy for free and in their spare time. Whether such content will be produced at all under the new regime seems an open question.
April 7th, 2009 at 12:53 pm
Everything Matt says is true, but to me this is a something that causes worry. Is a Bruce Springsteen possible in this day and age? If he has to put out his music for free or for near-free and work as an auto-mechanic or whatever to make ends meet, won’t the quality of the music suffer? Insert whatever artistic/journalistic favorite of yours and you get my picture.
April 7th, 2009 at 12:56 pm
See “Here Comes Everybody” by Clay Shirky if you want more along this post’s line of thought. He has it all sorted out. (I had nothing to do with the book; just read it and liked it.)
April 7th, 2009 at 1:02 pm
Is a Bruce Springsteen possible in this day and age?
Even if he had to give his music away for free, Bruce’d still be workin’ away, wipin’ the sweat from his brow, and thinkin’ ’bout Janie as he drove home down the Jersey Turnpike at 3 AM, feelin’ that information wants to be free wind blowin’ through his hair.
April 7th, 2009 at 1:15 pm
Is a Bruce Springsteen possible in this day and age?
He hasn’t been possible for many years already. Record companies stopped sticking with artists even when their sales weren’t stellar a very long time ago.
It’s a false dichotomy to say that artists (of any kind) either get paid millions or nothing. What artists need is not millions, but a *living,* so they can keep doing their art. If we don’t find a way to affect this (like micropayments), it’s a real problem, because nobody but retired people (or kids with an allowance) will be able to make anything. Is that a good way to select for quality? I don’t think so. Of course neither is a record company contract, nor (in the olden days) a ‘patron’, but those ways at least afforded some artists the time to do his/her work. The best way is a market way, other than online ads. I know The Utopians are horrified at the idea of anyone paying anything for anything intangible on the internet, but think of the cultural benefits! Neither the 60s, the curly wig daze, nor the present, are/were the best of all possible worlds, but the future could be.
April 7th, 2009 at 1:18 pm
But Wikipedia does not get counted towards the nations GDP in the same way that a really good encyclopedia would be.
April 7th, 2009 at 1:20 pm
But if you want to make people pay money for your album, that’s much harder than it used to be.
I played in bands 20+ years ago, and I play in bands now, and the above isn’t really true. It was about as hard then as now.
April 7th, 2009 at 1:21 pm
But Wikipedia does not get counted towards the nations GDP in the same way that a really good encyclopedia would be.
Only if you don’t understand what GDP is measuring.
April 7th, 2009 at 1:39 pm
As the cohort of people with the most time on their hands to just pursue their interests becomes more digitally literate, I think we’ll probably see an explosion of non-commercial activity in a variety of fields.
Alas, as the downturn continues and social security dries up, that “cohort of [retired] people” with “time on their hands” might become a thing of the past.
April 7th, 2009 at 1:41 pm
About the viability of “superstar” artists in today’s world – one effect of free digital content etc. has been an explosion in a “middle class” of bands or artists. I used to play in a band that could probably fit in this description, so I can only speak well-informed about the music industry but I’m sure this is similar for other creative industries as well.
Up until recently there were a few major record companies with lots of money that would sign relatively few artists. Then they’d invest a ton of money in their signed artists, as production, distribution, and marketing costs were all very expensive. The record companies would only make money on 1 or 2 artists per every 10 signed, but it was good enough for the company to make a profit overall.
It’s well-known that this model doesn’t work anymore, but people have seemed to miss the emergence of this new middle class of artists that is replacing the old heirarchy. It works like this: A band produces their own music and distributes it online. Eventually, through word of mouth / good D.I.Y. promotion, lots of people start downloading their music (We’re talking thousands, not millions). This allows the band/artist to start touring and selling merchandise, which is where the real money is made anyways. They probably sign with an indie label along the way to coordinate their marketing/PR (and to distribute CDs for those who still buy them). And off they go for a few years, playing clubs around the country, and making enough money that they could make music full-time without having other jobs.
The number of these bands – not famous, but not obscure either – has exploded in the past 10-15 years. Any promoter who books mid-size clubs will be the first to tell you this. I’m interested to see if the trend continues to grow and translates to other creative industries as well.
April 7th, 2009 at 1:41 pm
This idea of tapping into the potential of the retirees of the future seems based on the idea that the skills younger people use now to communicate online are the same skills we’ll use 30 years from now when the we retire. If that holds up, then the point is valid. But it’s at least possible that in 30 years our kids/grandkids will be using some successor to our current Internet that is as alien to us as Facebook is to our own grandparents. If the pace of technological change (generally) is accelerating, then the skill-set deficit of older people is just going to get larger and larger. The assertion of the rising prominence of social production seems irrefutable to me, and I hope Matthew is right about opportunities for retired people, but it doesn’t seem inevitable that it will work out that way.
April 7th, 2009 at 1:54 pm
Someone with much to say on the subject is Yochai Benkler, specifically his opus, Wealth of Networks: How Social Production Transforms Markets and Freedom
Also, and more tangentially, Eben Moglen and his rather provocative speeches: They give an interesting perspective on the subject by way of Intellectual Property, Free/Open Source Software, Copyright Law, Legal History, etc.
April 7th, 2009 at 6:09 pm
Instead of looking at old people, what about people that are currently unemployed? That while they aren’t contributing to GDP that might be contributing to the Commons Wealth.
And besides adding to digital wealth, I think retirees could add a lot of benefit to society that isn’t measured by volunteering. What if every person that got a social security check has to volunteer 5 hours a week at a local school? Imagine how much that could reduce government costs for education and improve the grades of all kids.
April 7th, 2009 at 10:12 pm
But if you want to make people pay money for your album, that’s much harder than it used to be.
Yeah, you’re going to want to support a claim like that, unless the word “make” is doing much more work in the sentence than I suspect it’s meant to. Selling records has always been hard, and the positive effect of the Internet for promotion of a small-time band almost certainly outweighs the tendency of small-time records to be pirated. I’ve seen a handful of local bands show up on torrent sites and filesharing blogs, but there are probably ten times as many record-releasing bands in town. Those bands can use the Internet to book tours, network with other bands, preview songs for potential audience members, promote shows, etc.
April 7th, 2009 at 11:36 pm
Matt,
Yes, I realize that old people don’t have the digital skill set to do vital things that aren’t counted in the GDP statistics, like updating the Wikipedia page for “The Hills” so we can keep up to date on Heidi Montag. When these useless old farts finally kick the bucket, we’ll be closer than ever to Digital Utopia, no matter what the GDP statistics say.
On the other hand, oldsters are more likely than younger people to have the skills to do minor things that aren’t counted in the GDP like fixing their own cars, fixing their own plumbing, repairing tears in their own clothes, etcetera.
April 8th, 2009 at 3:45 am
Matt contends:
“… a large, important, and growing set of such activities isn’t captured in the conventional statistics.”
Of course, when married mothers started working in large numbers and hiring other women to mind their children and clean their houses, that boosted the GNP by bringing more work into the measurable sphere.
April 8th, 2009 at 11:12 am
hmm, I’m an old person with time on my hands, but I suppose the real question is , do I have anything worthwhile to say?
April 8th, 2009 at 11:49 am
So how will I make money in my career as a poet? (Btw, I do -not- want to teach.)
April 8th, 2009 at 5:17 pm
I think – I hope and pray – we’re moving toward a post commodity economy. At least a post commodity fetishism economy.
Anent geezers,(like me) I see so much potential for left geezer activism. Locally a bunch of us dodderers took over the local Democratic committee in a planned putch. The first thing we did was pass a resolution in favor of impeaching Bush. Toujours gai!
April 16th, 2009 at 10:14 pm
Good Site. Nice work.
I am from Sri and learning to write in English, give please true I wrote the following sentence: “Travel, cheap flights, cheap flight, airline tickets, discount flights.”