Rank and File
Highlighting the growing chasm between abundance in the digital world and scarcity in the physical world, Chris Anderson discusses the implications of these spaces for mass culture, collective experience and personal choice. He extends his discussion into reputation economies – non-monetary transactions – that have flourished and found their own particular online metrics in niche social networking sites and Google PageRanks.
Currently the editor-in-chief of Wired Magazine, Anderson described the management and market characteristics of expanding online economies in his provocative and celebrated 2006 book The Long Tail: Why the Future of Business is Selling Less of More.
JI: In your Wired Magazine essay Free! you point out that in the age of an economy of abundance not everything transfers over to the world of abundance. Rather, there is a development of expertise to design channels that deal with the transfer between the two worlds.
CA: Yes, there are two economies: the economy of scarcity, which is the physical world, and the economy of abundance, which is the digital world. Everything in the physical world gets more expensive and scarcer, while everything in the digital world gets more abundant and cheaper. So there’s a huge imperative, both in terms of economics and choice, to shift things to digital, and then once they become digital–once they’re in that deflationary world–they inevitably become free. Physical world things are going to get more expensive over time – I don’t just mean monetary cost, I mean also their externalities: carbon costs, ecological costs, everything else is going to become more expensive. Therefore, there is going to be a strong drive to shift from the inflationary to the deflationary economy, to make things digital if at all possible. I’d like to think that gas prices are finally going to be the straw that breaks the camel’s back in that they start to shift our behavior from the scarcity to the abundance economy. I was recently in Seattle and had the chance to walk through OMA’s Seattle Public Library again. That’s a pretty good example of getting the balance right between abundance and scarcity. I think it’s profound that on the first floor, in the largest communal space, there are no books. The library is simply a place with portals into the world of abundance.
JI: One main point of The Long Tail: Why the Future of Business is Selling Less of More is that today we have an extended range of selection, from large quantities of goods desired by many to rare ones desired by very few. What are the differences in having these choices in a city, where there is a degree of social coherence or a collective awareness of our own accumulated set of tastes and choices, and having them in the digital world?
CA: I want to give you specifics: the physical world had to do double duty. It had to satisfy the economics of physicality, which is basically the constraints of concentrated demand, and it also had to try to address the range of interests of the people who lived there. Cities manage to accomplish The Long Tail in physical space by having a critical mass. You can get any cuisine you want in New York or in any other city as long as there are enough people there with wide enough tastes. So cities are fulfilling The Long Tail in physical space as a result of diversity and cultural range. What digital space does is satisfy the same demands in a geographically agnostic way, which is to say that at least theoretically, you can get city-level density of choice anywhere, anytime.
JI: So in that sense individual choice plays a much greater role in the abundance economy. The ability to choose, to express what you want, and to take action to get what you want all carry economic weight because, like in cities, there is a market environment where you can actually attain them. And because people have access to things and they take action to get them, vendors in this economy have responded by creating access to many more items ranging from mass to niche goods. If broadcast media gave rise to mass-culture consciousness, then does the economy of abundance facilitate niche culture?
CA: I think mass culture is an immature stage of social development that was driven in the 20th century because of the incredible power of broadcast. The broadcast economic model demands aggregation of mass audiences. The only way to pay for your broadcasting license and power was to have 10 million viewers. The 20th century was exclusively mass: we all wanted to do the same thing and we wanted to be defined by our collective viewership of the same shows. The 21st century will be a mix of mass and niche which will have pros and cons. There are upsides and downsides; I think you lose something as a collective definition of a people, of a nation or city or age when you’re not all doing the same things at the same time. On the other hand, you gain something in terms of the depth of your experience when you identify your subtribe: people who really value your particular interests. People worry a lot about our fragmentation: what does it mean as a nation if we’re not all watching the network news at the same time? Well, it means we’re probably less defined as a nation, but we’re probably better defined as individuals.
JS: In the late 90’s, before social networking was such a buzzword, the entire concept of an internet community seemed more speculation than reality. Now that there are so many social networks, they are taken more seriously, including the proliferation of niche networks on open source platforms like Ning.
CA: I’m a big believer in Long Tail social networks. I think social networks are a feature that good sites should have rather than a destination to which you go. I run a Ning network on aerial robotics called diydrones.com and we get about 2,000 people a day, maybe 5,000 page views. That feels about right, because we’re incredibly narrow in our interest. There are 320,000 networks on Ning right now. I think the problem with the Facebook or MySpace models is that they’re mostly about Facebook and MySpace, and you literally get consumed under the platform. The Ning model should be integrated into every site. That is, sites should be about something, they should be primarily about what they’re about and the social networking aspect should just be best practice. You should not feel like you’re joining a social network, you should feel like you’re going to a place with a purpose and everyone else is there because they share that purpose.
JI: How do you see the economies of scarcity and abundance unfolding?
CA: The concept of ‘free’ means it’s free in a monetary economy. You know the phrase, ‘there’s no such thing as a free lunch’? Well, that phrase is only true if you include the non-monetary economy. You’re not paying me for my time right now and I’m not paying you for yours. Nevertheless, we have conducted a transaction: I’m giving you my attention and you’re giving me yours. I presume when you run this you’ll use a little of my reputational currency to help you and I presume I will use your reputational currency as well. This transaction would involve negotiations over dollars and cents in the monetary economy. For the type of transaction in which we’re engaged, people use the phrase reputation economy, but they use the term economy only as a metaphor. I’m uncomfortable with the use of metaphor and what I want to say is: if this is an economy, let’s treat it as an economy. Who controls the money supply of reputation? How much attention is there in the world? What is the conversion rate between attention, reputation and cash? Let’s see what you can formalize when extending reputation to real economies.
JI: In this non-monetary economy, value arises from various activities. What do you see as the significance of the value of commentary? Journalism or reporting are traditionally ways of providing information. But a commenter who is not necessarily a professional writer, journalist or editor can develop a reputation by expressing well-supported, well argued opinions. If readers choose to gravitate to one of the many available online commenters for whatever reason, it increases that commenter’s reputational value.
CA: I think this is increasingly important, because the problem with the old model of commentary was that it was largely through the press and because there were limited numbers of papers, most of the stuff people like me were interested in never got reviewed. Even Amazon’s reviews, commentary written by individual customers, have a huge influence on the sales of those products. Those individuals are filters that drive demand. I hate to be a Google fan-boy, but there’s only one thing I would put on my business card if I were to make a new one. And that’s my PageRank. I have a really high PageRank. I probably got a little bit of that PageRank from my professional side, but it has even more to do with what I’ve done. I earned that PageRank, point by point, over the years.
So it’s kind of interesting that in a reputation economy, your title matters less than your actual metric of reputational assets, which is what PageRank measures. I think we need better ways to measure and communicate reputation. We’re very fragmented in that sense, we’ve got Facebook friends, we’ve got eBay, we’ve got ratings, we’ve got PageRank, we’ve got Technorati scores, things like that. We need better repository of reputation, where your reputation can be stored. We’re in a very early phase of the portability of reputation. This is a huge opportunity whose potential we do not yet fathom, but I suspect that we will over the next decade or so.