Internet Paradox

Has the internet made 'pubic goods' of the entertainment and media industries and if so what are the consequences? 

While teaching ‘public’ and ‘private’ ‘goods’ in Economics recently, I began fractalising - trying to see examples (or repetition’s) at different scales of public goods - and in doing so noticed something pretty interesting, if not astounding. Newspaper's are now Public goods?? I did a quick search of the net to see if anyone else had similar thoughts, but found noone.

One of the great questions of our time is what’s to be the fate of the entertainment and media industries:- the newspaper, movie, music production, TV and the like; all of which have since the advent of the internet have been scrambling to find new models - that pay. The question is, will they survive, in this age of internet and file sharing?

It was while looking at the differences in position between Cable TV, which is known as a ‘club good’ and free to air TV, which is known as a ‘public good’ and public goods ‘free rider’ problem that I began thinking about the media.
I refer you to Wikipedia: to see the classic diagram illustrating economics classification of goods.
Here is a typical text book definition of a Public Good: 

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 defense. 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.) Andrew Gillespie, Economics through diagrams, Oxford University Press 2001.

Classification of Goods (and Services)

I believe that, the entertainment, media or anything subject to file sharing / copyright,  have slowly  been re-positioned from being (basically) private or club/congestion goods to their extreme opposite, public goods.

The proof - or smoking gun – of my public good observation is the presence of  the dreaded free rider problem: quite literally when asked to pay by a market provider we know we can find a free copy somewhere on the net - we quite literally get a free ride, (or in this case copy).

The thing is, public goods tend to fail as a market or business operations and are almost always supported by whether by hand or money, by the Government.

What’s more, unlike the use of the traditional newspaper or unlike a 'commons good' - noone is really bothered by my or other’s use (or stealing)  - no one will show concern or fight for the media  as they would say with the ocean or atmosphere.

So this leaves us with a great paradox: we love the internet and do well for it, but on the other hand it maybe our own slow undoing as democracy demands a 'free from Government' media, as do the arts and entertainment.
It is as if the internet has formed some kind of an economic black hole. Is there any escaping?

Tell me I'm wrong.  (Please)

Popular posts from this blog

Natural fractal lake, Arethusa Pool, the worlds only?

Fractal Dimension, (Economic's) Elasticity and Complexity

ePublic Goods. Is the internet making new public goods?