Saturday, October 9, 2010

ePublic Goods. Is the internet making new public goods



Key words: Public Goods, Internet, Copyright, Market Failure, File Sharing, ePublic Goods
An Explanation of the Mass Failure in the Market: the Internet – the Creator of ePublic Goods 
First published:October 9, 2010

Update: May 2017.
Blair D. Macdonald.
2017 October: I see Bitcoin and any crypto current as an ePublic Good - it will fail.



Abstract
Media and entertainment industries are in decline; profitability down due to ‘freer access on computers. Is the internet producing ‘Public goods’ from what were Private goods? With respect to these goods and the Internet, the assumption used to classify ‘Private goods' and Public goods in an economy (the degree of excludability and rivalry) was analysed, and the respective industries tested for being Public Goods. It was concluded these goods within the entertainment/media industries are slowly being repositioned from what are termed 'private' or 'club'/'congestion' goods, to their extreme opposite, Public goods. The ‘free rider problem’ of Public Goods has become the ‘free copy problem’ with respect to these goods. It was hypothesised the Internet was the cause. It was discussed Public Goods – by tradition – failure in the market, and are therefore provided by Government: is this to be the destiny of Internet goods, or any item on the internet subject to file sharing or digital copying in any form including – at the extreme – the human genome, solid object 3D printing, and even money in the form of bit-coins?


1 Introduction
While there has been much (probably unfounded) concern over the effect new computer technology will have on labour markets, the real problem with computers may lie with the internet, and its effect on markets. Can the current demise the entertainment and media industries be explained by the internet creating ‘Public Goods? Newspapers, TV, movie and music production and the like are – since the advent of the Internet – slowly diminishing and have been scrambling for new models that pay. All of these firms are ‘hit’ by the proliferation of their copyrighted material on the Internet. Not withstanding attempts to extend their respective industries; to a great extend there is market failure. This paper claims this failure is due to the Internet producing an environment of ‘Public Goods. For this to be so, there will have to be evidence of a ‘free rider’ problem, non-excludability and non-rivalry – in the respective industries – all due to the Internet. If true, it may seem trivial on the outside, however on the inside, a problem rises; traditionally, public goods tend to almost always be supported by Government. What does this mean for investigative journalism? Will it lead to support by Government under a merit good rationale.
1.1 Public Goods
While teaching market failure in my economics class recently, and analysing examples of ‘public’ and ‘private’ goods: I noticed newspapers and the like – at least in their digital form – are akin to radio, where radio can be consumed in either pay per listen or free to air. Newspapers have similar problems to that of Public goods. So, what is a public good? The following is taking from a regular economics textbook.
Public goods are goods that are both non excludable and non-rival. Consumers cannot be prevented from consuming them once they are provided and additional consumers do not reduce the amount left for other people, e.g. national defence. Once a country is defended all of its inhabitants benefit automatically. Many public goods such as lighthouses could in theory be provided by the market mechanism but are not; these are called 'quasi public goods', rather than 'pure public goods'. Public goods suffer from the free rider problem. If asked whether they would pay for them, households would lie and say no because, once provided, they could benefit for free anyway. Because no one is willing to pay for these goods (because they hope someone else will) they will not be provided in a free
market. Therefore, the Government must provide them. (Note: for a 'private good' if one unit is consumed by one person it cannot be consumed by another. (This is not the case for public goods.)” [1]
1.2 Public Goods and the Internet - ePublic Goods
For the Internet to create an environment for public goods it will have to show evidence of non-excludability and non-rivalry. Non-excludability may be evident in the way the said goods and services are now sold: consumers can view – most, if not all – the product (news articles) online without paying. This is unlike the classic examples of a lighthouse or streetlight, but the effect similar; the firm has lost control of access: if the consumer cannot get from one provider of news, they will (easily) find a substitute, and if an access fee is applied online, this will also lead consumers to likely search for a free substitute. Firms are forced into competitive ‘game play’ to offer material for free. For the music and movie industry, much is available on Youtube; and if not Youtube, a close substitute to it – copies can easily be made by consumers. Entertainment goods are proliferated throughout the Internet, and this is extremely difficult to police; if a copy is found by a firm to be ‘pirated’, this copy may be ‘taken down’ – only to see copies soon available somewhere else, sometime in the future.
Non-rivalry maybe broken down to whether the consumers experience of the good or service is diminished by the use of an other consumer; are the consumers ‘bothered’ by the practice of someone – or themselves – getting something for (next to) no cost? The answer, without any research, is – no. Unlike the use of other traditional ‘Private’ or ‘Common goods’ (figure 1 below) – print newspapers, recorded music – there is no rivalry or bother by others the 'stealing' or copying of the good. The community do not show the concern or fight for the media as they would for the exploitation of ‘Common goods’ – the whales in the oceans or pollution in the atmosphere. As a consequence of this non-excludability and non-rivalry, the entertainment, media industries or anything subject to file sharing or digital copying in any form, have slowly been re-positioned from being private or club/congestion goods, to an opposite domain, public goods – as shown in the table below.
Figure 1. Public Goods and the Internet. All forms of media, once the domain of ‘Private goods’ are now in the domain of ‘Public Goods’.
1.2.1 The Free Rider (free copy) Problem and the Internet
The ‘smoking gun’ evidence of this ‘internet creating public goods’ claim is the presence of the free rider problem. Consumers are not getting a free ride, but rather a – in this case – a free copy: quite literally – when asked to pay by a market provider – consumers simply find a substitute or find a free copy elsewhere (on the internet). And for music and films, copies are made 'free' by file sharing and the like.
2 Discussions and Conclusions
Firms in the arts and entertainment industry demand revenue if they are to survive. While there has been an adaptive response to this problem of market decline: Spotify and the like for music provision, Netflix and the like for movie, and bands concert touring more, it does not seem to totally satisfy the concern of those in the industries – where there is clearly a major decline.
The problem is: public goods tend to fail as a business operation, and are almost always supported by Government, this is of great concern with respect to the future of news media and investigative journalism. Democracy demands
or depends upon a 'free from Government' media – can blogging and other social media meet this problem. It is likely we will see a ‘mass extinction in print and arts; this is not to say (at all) this is the end of the market, but it is a massive change.

The problem of mass-market failure may be extended if we include other flows of knowledge and information with respect to modern tech: the genome, knowledge in general, and anything that can be digitally printed, including solid object 3D printing, and even money in the form of bit-coins.
There is a great paradox: one of the great accomplishments of humanity, the internet, maybe our own, slow undoing. It is as if the Internet has formed some kind of an economic black hole. Is there any escaping? Our own privacy on the Internet may well fall under this public goods paradox also: including – in the future – ones genome.
References
1. Gillespie A. Advanced Economics Through Diagrams. Oxford University Press; 2001. 

40 comments:

  1. Using our present economic paradigm, it would appear, on the face of it at least, that you are correct: digital media will become public goods.

    Is this necessarily a bad thing?
    A different paradigm from which to assess this may prove useful, and it does seem a (large, very) paradigm change is imminent, does it not?

    The prospect of having one's product become a public good alters the producer's motivations, and once again, this may prove a very good thing from a different paradigm.

    I look forward to reading your other, and future posts soon. This is the most interesting new blog I have found in a very long while. I too have been thinking much about fractals and economics, but have not yet posted upon this directly. I will soon. I can see you have many ideas that I would like to contemplate.
    My thoughts involving fractals are mainly intuitive, which presents challenges when verbalizing.

    I'd be interested to know what you would make of Freegold in relation to public goods, and fractals.

    ReplyDelete
    Replies
    1. The effectiveness of IEEE Project Domains depends very much on the situation in which they are applied. In order to further improve IEEE Final Year Project Domains practices we need to explicitly describe and utilise our knowledge about software domains of software engineering Final Year Project Domains for CSE technologies. This paper suggests a modelling formalism for supporting systematic reuse of software engineering technologies during planning of software projects and improvement programmes in Final Year Projects for CSE.

      Software management seeks for decision support to identify technologies like JavaScript that meet best the goals and characteristics of a software project or improvement programme. JavaScript Training in Chennai Accessible experiences and repositories that effectively guide that technology selection are still lacking.

      Aim of technology domain analysis is to describe the class of context situations (e.g., kinds of JavaScript software projects) in which a software engineering technology JavaScript Training in Chennai can be applied successfully

      The Angular Training covers a wide range of topics including Components, Angular Directives, Angular Services, Pipes, security fundamentals, Routing, and Angular programmability. The new Angular TRaining will lay the foundation you need to specialise in Single Page Application developer. Angular Training

      Delete
  2. This comment has been removed by the author.

    ReplyDelete
  3. "The problem is that public goods tend to fail as a business operation, and are almost always supported - whether by hand or money - by the Government." - This has been a problem of most businesses. You just can't rely too much on public goods.

    business consultant

    ReplyDelete
  4. Great post! Really insightful. I have not monetized by blog in any way, I didn’t even know where to begin. but you’ve given some helpful tips.

    Virtual Edge

    ReplyDelete
  5. Particular interviews furnish firsthand message on mart size, industry trends, ontogeny trends, capitalist landscape and outlook, etc. klik voor meer

    ReplyDelete
  6. The creator has made a fine showing with regards to changing the sentiments into words.
    80 Niche Related links on Fiverr

    ReplyDelete
  7. The true benefits of LCPA are that there are millions of businesses across the world desperate to get leads for their business click here

    ReplyDelete
  8. Positive site, where did u come up with the information on this posting?I have read a few of the articles on your website now, and I really like your style. Thanks a million and please keep up the effective work. https://internetprivatsphare.de

    ReplyDelete
  9. The data you have posted is extremely valuable. The locales you have alluded was great. A debt of gratitude is in order for sharing... thebestvpn.uk

    ReplyDelete
  10. The first phase the preparation should, theoretically, be uninfluenced by the intended intensity and duration of the sound which is subsequently produced. In fact, however, so quickly are the three phases accomplished that the pianist rarely has capacity to think, in performance, of each phase separately. beste vpn

    ReplyDelete
  11. Great post yet I was thinking about whether you could compose a litte more on this subject? I"d be exceptionally grateful in the event that you could expound a tad bit further. Value it! mejoresvpn.com

    ReplyDelete
  12. A very awesome blog post. We are really grateful for your blog post. You will find a lot of approaches after visiting your post. I was exactly searching for. Thanks for such post and please keep it up lemigliorivpn.com

    ReplyDelete
  13. I might suggest solely beneficial in addition to trusted facts, and so find it:
    mason soiza

    ReplyDelete
  14. No matter how many times I read this, I will never get bored of it.
    Mason Soiza

    ReplyDelete
  15. Nice to be visiting your blog again, it has been months for me. Well this article that i’ve been waited for so long. I need this article to complete my assignment in the college, and it has same topic with your article. Thanks, great share. clickfunnels pricing

    ReplyDelete
  16. I think this is a really good article. You make this information interesting and engaging. You give readers a lot to think about and I appreciate that kind of writing. Dslr camera price in pakistan

    ReplyDelete
  17. I like your post. It is good to see you verbalize from the heart and clarity on this important subject can be easily observed... situs bokep terbaru

    ReplyDelete
  18. I have tried many different online casinos enough modern slot on line but stopped here

    ReplyDelete
  19. I discovered your site ideal for me. It consists of wonderful and useful posts. I've read many of them and also got so much from them. In my experience, you do the truly amazing.Truly i'm impressed out of this publish privacyenbescherming

    ReplyDelete
  20. bookmarking and checking back frequently!it people processing it really is another person's renowned company, you will never in the world of the 55 and other lavishness brands supra to uncover which.. https://diebestenvpn.at

    ReplyDelete
  21. The expanded interest for provincial Internet has begun to make it increasingly appealing for rustic broadband Internet suppliers to support these remote regions of the nation. internetprivatsphare

    ReplyDelete
  22. I like your post. It is good to see you verbalize from the heart and clarity on this important subject can be easily observed... תפקידו של יחצ

    ReplyDelete
  23. Web advertising is testing, and there will be, you need a specialist internet searcher promoting administrations to beat your opposition in the rush hour gridlock wars. If you don't mind consider our website improvement organization with the assistance of your task. Clickfunnel Review

    ReplyDelete
  24. I think this is an informative post and it is very useful and knowledgeable. therefore, I would like to thank you for the efforts you have made in writing this article.
    먹튀

    ReplyDelete
  25. This is my first time visit here. From the tons of comments on your articles.I guess I am not only one having all the enjoyment right here! rollex11 online

    ReplyDelete
  26. This is my first time visit to your blog and I am very interested in the articles that you serve. Provide enough knowledge for me. Thank you for sharing useful and don't forget, keep sharing useful info: Groovepages

    ReplyDelete
  27. Without exception, your main header for the post should contain your keyword phrase. If you write a longer post, or one using sub-headings, try getting your keyword phrase into each type of header tag at least once.
    All about SEO

    ReplyDelete
  28. Truly, this article is really one of the very best in the history of articles. I am a antique ’Article’ collector and I sometimes read some new articles if I find them interesting. And I found this one pretty fascinating and it should go into my collection. Very good work! יחסי ציבור תל אביב

    ReplyDelete
  29. I feel very grateful that I read this. It is very helpful and very informative and I really learned a lot from it. power lead system review

    ReplyDelete
  30. The rewards from fraudulent sales or deceptive marketing strategies are immediate and attractive, but you cannot build a marketing empire with foundations laid on lies and deceptions. Best Digital Marketing companies in Chennai

    ReplyDelete
  31. Selling membership products is definitely a game changer when it come to affiliate marketing because you make an income from each customer, rather than a single commission. But a good model to choose is one in which you have a passion for and can keep doing for the long term.How to make money on Instagram with Clickbank

    ReplyDelete
  32. Even with its bad reputation, telemarketing still plays an important part of any direct marketing campaign. Telemarketing is personal and interactive, digital marketing and capable of providing an immediate response.

    ReplyDelete
  33. Facebook video downloader is an assortment of Internet marketing technique for downloads

    ReplyDelete
  34. I would like to thank you for the efforts you have made in writing this article. I am hoping the same best work from you in the future as well. Thanks... buy instagram likes uk

    ReplyDelete
  35. I am incapable of reading articles online very often, but I’m happy I did today. It is very well written, and your points are well-expressed. I request you warmly, please, don’t ever stop writing. TechFandu

    ReplyDelete
  36. Cool stuff you have got and you keep update all of us. website marketing

    ReplyDelete
  37. Why not exploit the traffic a portion of the social media destinations get?cheapest smm panel

    ReplyDelete
  38. In this manner the technology can empower a better division of work among nations, which thusly influences the relative interest for different aptitudes in every country. best place to buy a cheap domain name

    ReplyDelete
  39. To truly succeed online email marketing is essential, so becoming an expert is a necessity. Never rely on list brokers or buy email lists from someone. Generate leads from people who have sought YOU out, and know your conversion rates. how to extract email from facebook id

    ReplyDelete