The Networked Information Economy

The Wealth of Networks[ pages 1–90 ]

Presentation by Mindy McAdams

Information Production

►“Non-market” production – e.g., “Not for sale”; not Big Business

►Peer production and sharing Open source software – one example

►“Less dependence on commercial mass media” (p. 9)

►Why is this possible now? Why was it not possible earlier?

Information “Products”

►Writing: Stories, novels, journalism, blogs

►Music: Songs, recordings, MP3 files►Movies: On DVD, on film, as downloads►TV programs, news, entertainment►Radio programs►Photographs: All formats►Software: As downloads or on CDs►Graphics, illustrations, maps

Networked Information Economy

►A system of production, distribution, and consumption of information goods

►Characterized by: Decentralized individual action Wildly distributed, non-market means Not dependent on market strategies

►“The market” = capitalism, up to now

►Division of labor leads to increased productivity

►Governments help progress best when they permit laissez-faire markets

►The “invisible hand” of the market moves toward the good of everyone

►What benefits those who reap large profits will benefit society as a whole

The Wealth of Nations,Adam Smith (1776)

Non-market productionignores

traditional market motivations(i.e., profit)

Does a market economyrequire democracy?

Does democracy requirea market economy?

Democratic Countries

Out of a total of 192 countries in the world …

►122 countries are electoral democracies

►89 countries are “free” (46 percent of the world’s population)

Source: Annual “Freedom in the World” survey by Freedom House, 2005 http://www.freedomhouse.org/template.cfm?page=70&release=317

Source: Annual “Freedom in the World” survey by Freedom House, 2005 http://www.freedomhouse.org/uploads/pdf/Charts2006.pdf

What is this differencebetween “free”

and “democratic”?

Liberal Democracy

►“If a country holds competitive, multiparty elections, we call it democratic” (Zakaria, 1997)

►“Constitutional liberalism … is not about the procedures for selecting government …” Liberal: An emphasis on individual liberty Constitutional: The rule of law

►Nothing to do with Liberal vs. Conservative

If people dependon information products

for their individual well-being,does a market economy

for information products interfere with

their rights as citizensin a democratic society?

Decentralizationvs. the old mass media

model►Production and distribution of --

Information Culture Knowledge

►These have been concentrated in fewer and fewer hands, over time

►Giant multinational corporations own the majority of media companies

Economics (1)

►Information is “non-rival” You give it away to other people, and you

still have it►Industrial goods (such as cars) are “rival”

►To make profit from non-rival goods, a commercial entity puts constraints on them E.g., copyrights and trademarks

►Benefits not only the seller -- also the creator (such as a writer or musician)

A Balancing Act

►Controlling information goods (such as books and videos) makes possible the production of more

►Too much control, however, would lead to less production

►Why? Because … existing information goods are used in the production of new ones -- “standing on the shoulders of giants” (Benkler, pp. 37-39)

When to Let Go

►Innovation might be more profitable than repeated revenues from the same old stuff (e.g., Disney animated films)

►Charging for custom work or consulting might be more profitable if you give some things away for free (e.g., lawyers)

►Putting clips on YouTube might bring more people into the movie theater

Why would a movie studio order the removal of a movie trailer?

Economics (2)

►Music business as an example: Huge expenses to produce and promote a new album

►Costs associated with physical production (e.g., CDs) and physical distribution

►In contrast, a band can produce an album cheaply, without a contract

►Distribution online – very low costs

You might care moreabout low start-up costs

and lessabout large outputs

Inputs to Information Production

1. Existing information, culture, and knowledge (all are “non-rival” goods)

2. Mechanical and physical means for capturing, processing, producing the new items

3. Human communicative capacity: creativity, skill, experience, and cultural savvy (Benkler, p. 52)

Motivations

►People create and share new information for many different reasons

►Not all of these are material►Not all creative efforts are made for

the sake of money … or even fame►“You have to play to win”? Maybe …

you have to give to get

If the Internet is governedas a commons, will everything turn out okay?

Enclosure of the Commons

►Middle Ages, Europe: “Commons” were shared lands

►Villagers used them to hunt, plant crops, gather firewood

►“Enclosure” in one sense is building fences

►Enclosure is also private ownership►What once was free and open to all

becomes property of one

“... Each man is locked into a system

that compels him to increase his herd

without limit -- in a worldthat is limited. Ruin is the

destinationtoward which all men rush,

each pursuing his own best interestin a society that believes

in the freedom of the commons.Freedom in a commons

brings ruin to all.” (Hardin, 1968)

Open Source (1)

►The creator retains copyright►But … the creator licenses the product

for (re-)use by anyone►You can copy, distribute, and modify it►But … the copies you distribute MUST

allow everyone else to do the same►You retain copyright on your own

contributions

Open Source (2)

►You can sell it, if you want to (e.g. Red Hat Linux)

►No bosses, deadlines, or schedules

►Unmanaged collaboration

►As of July 2002, the Linux OS listed 418 contributors from 35 countries

3 Functions in the Process►Utter (or create) content

Mark or classify craters on a map of Mars Write a new Wikipedia article

►Assess relevance and credibility Rate or criticize the content Allow it to pass through a filter or “gate”

►Distribute the content; add value Pass it on, e.g. by linking to it Possibly enhance or improve the content

Peer-generated Relevance

Peer-generated Credibility

Who Can Play?

►Benkler doesn’t ask this question in pp. 1-90

►All this peer-produced information comes from whom? People who … Have free time Have computer access Are literate and technology-literate

►Who can benefit? Anyone … who has access

The End

The Wealth of Networks[ pages 1-90 ]

All sources used are on the handout.

The Networked Information Economy

Mindy McAdamsUniversity of Florida

2006