If you’ve been paying any attention to my recent Twitter updates, you can probably tell from my constant updates that I’m really digging reading You Are Not a Gadget, by Jaron Lanier. I’m a little over halfway through, but so far it’s an excellent look at how Web 2.0 and open/free culture are not only damaging our society, but destroying our importance as individual human beings.  It reminds me a bit of Andrew Keen’s Cult of the Amateur, and whether or not you agree with the premise, I strongly recommend reading it.

What I want to discuss here, however, is from one single paragraph of the book.  It’s found at the bottom of page 102 (of the hardcover) and is part of Chapter Two, “What Will Money Be?” in a section labeled, “Pick Your Poison.”  In it, Lanier says the following:

“It is a common assertion that if you copy a digital music file, you haven’t destroyed the original, so nothing was stolen.  The same thing could be said if you hacked into a bank and just added money to your online account. … The problem in each case is not that you stole from a specific person, but that you undermined the artificial scarcities that allow the economy to function.  In the same way, creative expression on the internet will benefit from a social contract that imposes a modest degree of artificial scarcity of information.”

The reason I’ve deemed this specific quote worthy of its own write-up is this: it’s one of the most eloquent and comprehensible explanations of why everything on the Internet should not be free.

When something is free ad infinitum, whether or not it is free by the decision of the owner or simply by those people who don’t care and take it for free by their own volition, it immediately reduces the item or idea’s value by no longer being scarce.  One of the basic tenets of economic theory, and why things have value, is that scarcity, combined with demand, can cause the value and price of an item to rise.  Therefore, by creating something that individuals want, but by enforcing scarcity (even artificially), one can create something that has value.

In Lanier’s example above, money that is simply added to a bank account through hacking the system does not actually take money from anyone.  Instead, it has added additional money to the pool of already existing money, thereby reducing the value of money in general. If people did this enough, it would cause inflation, causing society as a whole to suffer, and could even lead to economic collapse. Even when the money is transferred digitally between accounts and individuals, it is money that has appeared out of thin air, and no one actually loses this money. It never existed in the first place, and will continue to never exist so long as it continues to exist in an intangible, digital form. What happens instead is money, in general, loses value due to lower scarcity, causing everyone to lose some by making the money they already had worth less than it was worth before.

By trading music or other creative works online, even though a physical copy of the work is not actually taken, from anyone, the value of that work is reduced through every duplication.  Of course, one could choose to allow people to copy and share their works, should the creator have another goal in mind other than monetary gain – such as to spread knowledge or joy, to promote their work with the plans to later charge for it or a related product, or simply to build ego by knowing others are accessing their work (whether or not people actually read or listen to all the free stuff they download online, or if those downloads are just a padding of numbers through potential audience, is another topic altogether). But, in those instances, the creator is still in control of his or her own work and will hopefully be aware of how reduced scarcity will affect the perceived value of their work.

It’s in Lanier’s last sentence above that he speaks the most truth when he says, “creative expression on the internet will benefit from a social contract that imposes a modest degree of artificial scarcity on information.”  This, however, will only happen when people begin to agree once again that creative works and information have value in the first place. It will only happen when people grow to respect that value and the work creators and intellectuals put into making their works and thoughts worthwhile.

Jaron Lanier’s Right: The Web Needs Some Scarcity
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One thought on “Jaron Lanier’s Right: The Web Needs Some Scarcity

  • May 17, 2010 at 9:13 am

    Conversely, certain ideas (this one, for example), only have value if scarcity is not a problem. There’s a large amount of ideological inertia that must be overcome before people value ideas themselves (rather than the tangible good that they would never steal) enough to make this change. And that means that you have to educate people by propagating this idea and completely eradicating the idea’s scarcity.

    I’m not sure how that affects what you’re saying, if at all, but I find it interesting that some works and information only have value if they are scarce while others must be spread to gain currency.

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