James L. McQuivey, Ph.D. is a Vice President and Principal Analyst at Forrester Research. His recent op-ed on Mashable about the end of scarcity is interesting, if somewhat unintelligible.
What happens if the economics of scarcity are exchanged for the economics of plenty? For those industries that provide information or experience as a primary good, scarcity is rapidly evaporating. The media business is undergoing a similar change with the rise of citizen journalists, bloggers, and YouTube performers — all of which circumvent the traditional systems that once dictated production norms and processes. Most of these companies have sought to restore order by reinstating scarcity rather than celebrating its passing. It’s not a good sign of things to come.
…The best ideas, no matter how small or underfunded, have the largest potential impact, and a company that gives its value away may stand to gain more value in return. As a result, companies like Facebook and Google are writing the book on how to manage the economics of plenty, even if they don’t know it.
I respect the idealism in this thinking, but practically speaking, I’d like to know much more about “the company that gives its value away” coming out on top. I do understand how a company can amass a large audience by offering a free service–it’s the model Google, Facebook and Twitter (to a lesser degree) have used to build their highly profitable ad-based businesses. But an ad-based online offering will need massive scale to succeed. Without that scale, the business needs another way to make money.
I’d like to know more about the concept of scarcity, as well. I know there are many who would say that what we do here is a commodity, that it can be had elsewhere, so we’ll never be able to charge for it. I might be totally delusional on this topic, but I don’t see it that way. The work that writers and editors do–if it’s any good–is never a commodity. A unique point of view and a distinct voice are, by definition, the opposite of commodities.
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Economics of Plenty is a house of cards. Some will survive, but not many. Google is in a good position unless someone attacks their algorithm and does it better. Facebook? They are a giant waiting to fall. The “cool kids” have animus towards them for starters. The second someone does personal social networking better and of course “free”, it’s over. What worries me about these models is that they’ve set a bad precedent. Everyone wants everything cheaply and there is no value, no commitment on either side. Facebook treats user data disrespectfully. Drop.io was a great free service and they rudely abruptly shut down in a sort of “get lost, peons” sort of way (surprise, surprise FB was behind that one). Users are just as bad, and place little value on what they are getting. Instead of quality, we want free. Imagine if you had to pay 5 cents per month, per friend? Your network would be more enriching and your name, address, phone, and first born’s name wouldn’t be peddled off. As for David’ journo comment – totally agree: bloggers in boxers isn’t going to last. We would notice and will notice as quality content continues to erode.