Saturday, May 14, 2016

There Is No Scarcity With Digital Artefacts

Money features scarcity!

Scarcity is at the core of the value of money. If money would not be scarce for nearly all of us, it would not work well as a utility to measure the value of goods and services. The Tool for matching supply and demand by some kind of market mechanism would break down.

Having to cope with scarcity everyone of us is trying to keep some kind of balance between getting or aggregation money and spending it to consume goods and services at a certain price point. How you try to establish this balance is a very personal choice and involves tradeoffs between immediate satisfaction and securing future options or even trying to build long term perspectives by taking investment risks. Living for the moment is a battles planning vs saving vs investing into the future. Most of what we do as participants on various markets is focused and based on scarcity. If something is not scarce, we tend not to recognize it's value. Consumption will then neither provide the boost to our self-esteem nor the desired social impact. Whatever is not scarce will become a commodity of minor importance.

Enter the stage: digital goods!

There is no natural scarcity in digital goods. Cost of duplication is marginal and closes in on zero. A first in human history this enables production and delivery of global products. This opportunity carries the cost of a major shift for successfully applicable business models.

With our current market paradigm classic business models based on scarcity can no longer compete with delivery models that scale to the global audience at no direct cost whatsoever for a single artefact. Neither selling nor consuming digital goods based on distribution and monetizition concepts from the physical world work too well. Trying to save old-style business suffers from a major problem due to the lack of control of how, by whom and to whom the digital product will be transfered or shared. The digital product is not not scarce. To keep in control or reestablish control established industries on the brink of digital disruption muster a lot of effort that goes into artificially recreating scarcity.

That's what they call DRM Digital Rights Management. Calling it Digital Scarcity Management might be more to the point. Does it work? No. Artificial scarcity cuts down on likes, shares and mentions. A major drawback when competing for the global audience. 

For a digital business model to be successful you need to rethink what is scarce. It's not the digital artefact. It's users, their time and attention that are scarce.

You need to accept that abundance of digital artefacts themselves is inevitable. Otherwise your business won't be up to it's coopetition. 


Thanks for reading, feel free to share your comments. I'll follow up with thoughts on:

 -> Sharing and Marketing
 -> Attention and Participation
 -> Users and Software Maintainance

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