Is value really created, or is it bestowed?
People have used phrases broadly equivalent to “Beauty is in the eye of the beholder” for millenia. Margaret Hungerford is considered to be the first person to have used the precise phrase in print (in 1878, in Molly Bawn). James Joyce, pictured above, referred to the phrase and its use by Hungerford in Ulysses, page 701). William Shakespeare sought to evoke something similar when he wrote “Beauty is bought by judgment of the eye” in Love’s Labours Lost.
In similar vein, in 1910, Charles Mann and George Twiss (in their book, Physics) raised the question “If a tree falls in a forest and no one is there to hear it, does it make a sound?”. More precisely, what they actually said was:
When a tree falls in a lonely forest, and no animal is near by to hear it, does it make a sound? Why?
Again, the concept evoked was not new even then. George Berkeley, a 17th century Irish philosopher, raised a similar question in his theories of immaterialism, summarised as “To be is to be perceived”.
[My thanks to stock.xchng for the photograph.]
Throughout my life, I’ve heard the phrase “Perception is reality”, particularly at work. [When I was younger, I used to feel its usage was egregious, and I had to restrain myself from saying “But the perception is wrong. Plain wrong. How can you say that it is real? It needs to be corrected, that’s all.”]
I can hear you saying “Well that’s all very interesting, JP, but just where is all this going? What point are you trying to make?”. I’d better get on with it then.
It’s like this. For some years now I’ve been wrestling with the implications of our moving from “scarcity economics” to “abundance economics”. Maybe I’m getting obsessed by it, I cannot tell. You tell me. But when I look at issues to do with DRM and IPR, I think to myself “scarcity versus abundance”. When I see institutional pushback on social software in enterprises, I think to myself, scarcity versus abundance. When I see government immune systems keep finding ways to circumvent “freedom of information” legislation, I think to myself, scarcity versus abundance.
My thoughts on this probably go all the way back to Cluetrain. [I find it hard to believe it was all of ten years ago. Incidentally, there is a special, updated, 10th Anniversary edition due out later this year. Couldn’t be more timely.] More recently, they’ve been influenced by all the discussions around Vendor Relationship Management.
And this is where I am at present. I think that there’s a shift taking place everywhere, a shift that strikes at the very root of industrial-age “value creation” concepts. I think that these concepts were meaningful when monopolies and oligopolies were common, a consequence of ownership of factors of production in the industrial age. Scarcity was often real, or at worst could be manufactured through hoarding or cartels. The creation of value was closely tied to the creation of scarcity.
The World Wide Web celebrated its 20th anniversary last Friday. We live in a digital age: it is no longer that simple to create scarcity, particularly when the asset in question is digital in nature. Anything that can be copied will be copied. As I’ve said before:
Every artificial scarcity will be met with an equal and opposite artificial abundance
[There’s a simple way to avoid all this. Make sure the asset is never available in digital form. But then you have to give up the idea of making money “selling” the asset in digital form.]
Physical things become scarce. Digital things become abundant. That is their nature. And when things become abundant, I think we shift from an era of value creation to one of value bestowal. Value is no longer created as a result of scarcity (real or artificial); value is bestowed upon something by the purchaser, the viewer, the listener.
Which is why we have phenomena like Kutiman. Amazing stuff. Here’s his wikipedia entry, and here’s where you can find the videos he’s made. But what’s really telling for me is this statement on the website:
Now that’s “abundance economics” in action. “Check out the credits for each video – you might find yourself…”
Scarcity economics is being attacked from many directions in the digital space. People are realising that, as something commoditises, “ownership” decreases in value. So suddenly access becomes enough. This spawns a series of useful business models such as LendAround and Spotify.
There will always be a premium paid for real scarcity. Creators of valuable things will always be able to receive reward for the value they create. But the marketing and distribution models associated with real physical scarcity cannot be imposed that easily on the digital world.
- Not because everyone’s born a criminal, wanting to “steal” “content”, whatever that might be.
- Not because everyone has stopped wanting to be part of an “audience”, whatever that might be.
- But because value is bestowed, not created, in an abundant world.
Does this mean that many things that used to be expensive will now become free? Not necessarily. The only things that will tend towards “free” are those things that were abundant in nature (i.e. digital and copyable) yet were artificially constrained to being scarce.
I’ve written about this before, but it’s worth repeating. Kevin Kelly, in his seminal article Better Than Free, does a great job of showing us how to make money in such environments. His thesis is fairly simple: if you want to make real money, find something that’s not easily copyable. Or, when things are abundant, make sure your business model is about the new scarcities that emerge.
It may not feel like it, but we’re moving to the Age of Abundance. Value is going to be bestowed, not created. And our business models will have to reflect that. And our laws. It’s just a matter of time.
8 thoughts on “From value creation to value bestowal”
Very perceptive. It reminds me of John Perry Barlow’s piece “Selling Wine Without Bottles on the Global Net.” Distribution of digital information is so easy, providing the distribution is of little value (unless the legal system is used to create artificial scarcity). In modern times, artists pay has been relatively low, suggesting that there is an excess in creativity over demand for creative works. Perhaps the real value is in what my dad calls “filtering” (an engineering term and perspective), or what journalists might call the “editorial function”. An editor filters through a large volume of content, and provides selected material of interest to his/her “subscribers.” The interesting question is whether the traditionally paid “editors” (music industry execs, magazine editors, web site publishers, etc.) provide enough “value” to continue to economically justify their existance, or will social and informal networks evolve to the point that they displace this function? I think the latter. Increasingly, I am finding a few blogs that I follow to be more focussed, relevant, and interesting than the traditional journals and magazines that are supposed to keep me current in my profession (IP attorney). And bookmarking your blog is much less of a committment that subscribing to a new magazine. Thanks for writing.
Thanks for stopping by, and for the comments. I particularly appreciated the pointer to the John Perry Barlow piece, which I hadn’t read.
Do you know when it was written? The best link I can find is this one, which places it around early 1994 as far as I can figure out.
Great post…Thinking about value as being bestowed upon something by the user/listener makes for a fascinating construct. Quite different from the idea of “user generated content” which has typically been my rote thinking mode when visualizing how someone/oganization can monteize/benefit from social media.
I also find Bill’s comment interesting. The Net was supposed to do away with the “editorial function”, but truly as content swamps us, the value of the editorial function can only increase, but becomes something that that has to be truly earned/bestowed.
Arun, what Bill says about the editorial function required some analysis. I think the traditional editorial function was placed bang in the middle of a content *and* distribution chain. You can’t do that any more, so new forms of editor will emerge, probably tied to the content rather than the distribution.
This divorce of content from distribution is painful. But it is happening.
Very interesting thoughts. The consumer/customer is also a creator of the product in many ways.
JP, a thought provoking post – and surely a fine example itself of how value can be added through provision of an ‘editorial’ window onto the web – I don’t think I would have stumbled onto many of the links on my own and they’re all gems.