Papas Fritas writes:
"Jeremy Rifkin writes in the NYT that the inherent dynamism of competitive markets is bringing down costs so far that many goods and services are becoming nearly free, abundant, and no longer subject to market forces and while economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring those costs to near zero. The first inkling of this paradox at the heart of capitalism came in 1999 when Napster enabled millions of people to share music without paying the producers and artists, wreaking havoc on the music industry. Similar phenomena went on to severely disrupt the newspaper and book publishing industries. The huge reduction in marginal cost is now beginning to reshape energy, manufacturing and education. "Although the fixed costs of solar and wind technology are somewhat pricey, the cost of capturing each unit of [renewable] energy beyond that is low (PDF)," says Rifkin. As for manufacturing "thousands of hobbyists are already making their own products using 3-D printers, open-source software and recycled plastic as feedstock, at near zero marginal cost" and more than six million students are enrolled in "free massive open online courses, the content of which is distributed at near zero marginal cost."
But nowhere is the zero marginal cost phenomenon having more impact than the labor market, where workerless factories and offices, virtual retailing and automated logistics and transport networks are becoming more prevalent. What this means according to Rifkin is that new employment opportunities will lie in the collaborative commons in fields that tend to be nonprofit and strengthen social infrastructure like health care, aiding the poor, environmental restoration, child care, care for the elderly, and the promotion of the arts and recreation. "As for the capitalist system, it is likely to remain with us far into the future, albeit in a more streamlined role, primarily as an aggregator of network services and solutions, allowing it to thrive as a powerful niche player in the coming era. We are, however, entering a world partly beyond markets, where we are learning how to live together in an increasingly interdependent, collaborative, global commons.""
(Score: 1) by Drew617 on Monday March 24 2014, @01:46AM
But I wonder about a couple points that have been made.
First, it seems like a mistake to apply the usual supply/demand logic to the Napster problem, because the economic demand curve assumes that goods will not simply be stolen. Don't mean to make an IP/copyright argument here, I just think that what happened was, objectively, more than just the usual market forces at work. An established paradigm failed entirely when a certain percentage of the market stopped participating. People weren't driven to a competing good, they simply TOOK the original good without paying anything. Again, not a moral/legal argument, just how my mind frames it in economic terms.
Secondly, can consumer goods reasonably compared to commodities like water? If automation allows us to produce highly demanded widgets at low MC, the widget market probably won't be competitive - expect high sunk costs with the widget automation and some degree of natural monopoly. What incentive exists to produce to meet or exceed all demand (where m. revenue eventually = 0) when some resources could be allocated to something more profitable?
(Score: 2, Insightful) by Tork on Monday March 24 2014, @02:41AM
"Theft" is not part of this equation, it still lands firmly within the realm of S&D. Demand was being expressed for digital music, people wanted it and went to great lengths to acquire it. When the labels wouldn't provide, Napster came along... as competition. When they 'let the cat out of the bag', so to speak, the labels finally gave in and now we have iTunes, Amazon, Rhapsody, etc. If iTunes had failed instead of growing leaps and bounds, I think your assessment would have been correct.
If taken to the extreme the scenario becomes: "What if the vast majority if the things we want cost practically nothing to make?" That 'something more profitable' idea could become scarce. (Although I agree that it's difficult to picture that one.)
🏳️🌈 Proud Ally 🏳️🌈
(Score: 1) by Drew617 on Monday March 24 2014, @03:27AM
Appreciate the insight.
Re: Music publishers and iTunes, I was looking at the short-term result rather than long-term, where what you say makes a lot of sense.
It's easy to forget that my experience as a young geek is probably not typical of the entire market.
Really digging here, but I remember becoming aware and having access to mp3s in High School, probably around 1998. For me and my friends at the time, the point wasn't to have digital music so much as it was to share it easily at little cost. Anything I really cared about was burnt to CD anyway.
I can picture iTunes for OS9 on my indigo iMac in my sophomore year college apartment, so 2000/2001? But it was little more than an MP3 player then, no store. Would guess that didn't gain traction for another year or two.
There were a few years where the existing market really was subverted entirely by some of us, but the extent is probably hard to quantify. It hasn't stopped entirely, either - iTunes was an appropriate response but isn't there a subset of the original market that just isn't participating anymore?
Hell, I've got disposable income now and choose, semi-arbitrarily, to "take" music now and then.