[ox] Economist on Sharing
- From: Willy Smith <willy linuxgazette.com>
- Date: Fri, 4 Feb 2005 06:42:14 -0500
http://www.economist.com/finance/displayStory.cfm?story_id=3623762
The economics of sharing
Feb 3rd 2005
From The Economist print edition
Technology increases the ability of people to share, but will they share more
than just technology?
BY NOW, most people who use computers have heard of the “open source”
movement, even if they are not sure what it is. It is a way of making
software (and increasingly, other things as well), which relies on the
individual contributions of thousands of programmers. The resulting programs
are owned by no one and are free for all to use. The software is copyrighted
only to ensure it remains free to use and enhance. In essence, therefore,
open source involves two things: putting spare capacity (geeks' surplus time
and skill) into economic production; and sharing.
Economists have not always found it easy to explain why self-interested people
would freely share scarce, privately owned resources. Their understanding,
though, is much clearer than it was 20 or 30 years ago: co-operation,
especially when repeated, can breed reciprocity and trust, to the benefit of
all. In the context of open source, much has been written about why people
would share technical talent, giving away something that they also sell by
holding a job in the information-technology industry. The reason often seems
to be that writing open-source software increases the authors' prestige among
their peers or gains them experience that might help them in the job market,
not to mention that they also find it fun.
The characteristics of information—be it software, text or even biotech
research—make it an economically obvious thing to share. It is a “non-rival”
good: ie, your use of it does not interfere with my use. Better still, there
are network effects: ie, the more people who use it, the more useful it is to
any individual user. Best of all, the existence of the internet means that
the costs of sharing are remarkably low. The cost of distribution is
negligible, and co-ordination is easy because people can easily find others
with similar goals and can contribute when convenient.
The question is, can sharing be used to supply more than just information? One
of the most articulate proponents of the open-source approach, Yochai Benkler
of Yale Law School, argues in a recent paper* that sharing is emerging for
certain physical, rivalrous goods and will probably increase due to advances
in technology. Where open source was about sharing information by way of the
internet, what is happening now, Mr Benkler notes, is the sharing of the
tangible tools of technology themselves, like computing power and bandwidth.
This is because they are widely distributed among individuals, and sold in
such a way that there is inherent (and abundant) unused capacity.
Consider computing power. By some measures, the world's most powerful
supercomputer is not owned by NEC or IBM, but is a volunteer project called
SETI home that aggregates the spare processing power of around 4m computers.
When an individual's PC is idle, a screen-saver application that users have
downloaded kicks in and harnesses the computer's processor to decode radio
signals in search of extra-terrestrial life. A basic PC chip is a rivalrous
good, but it provides far more power than most computer owners ever use. So
putting this spare capacity to use through sharing makes more sense, if this
is as easy to do as it is with SETI home, than letting it go to waste. Why do
people not sell the capacity instead? Probably, this would raise the
transaction costs to the point where it would not be worthwhile.
Moreover, via “peer-to-peer” systems, people exchange digital copies of music
over the internet, sharing not only songs but, more important, the physical
memory of their PCs. Tens of millions of people have used peer-to-peer
systems, which account for more than half of all internet traffic. One reason
why sharing is so commonplace is that there is enormous overcapacity in both
computer memory and internet bandwidth (and because the songs themselves are
“non-rivalrous”). Both memory and bandwidth are rivalrous, yet people have no
choice but to buy more than they can usually consume themselves. And as with
open source, sharing is made easy because the internet has made transaction
costs so low.
Tune in and share
The phenomenon of sharing physical goods has important implications for a
number of public policy debates today, most notably for regulation of the use
of radio spectrum. Around the world, regulators have granted licences, giving
mobile-phone companies the rights to use a specific band of the airwaves,
often in exchange for billions of dollars. Spectrum is parcelled out in this
way under the assumption that more than one signal on the same frequency
results in interference. This has been true until recently, but today radios
with cheap microprocessors can pick out competing signals intelligently, just
as the human ear can make sense of a conversation in a noisy bar.
The result is that new technology has made the sharing of spectrum possible—
radio waves could be a non-rivalrous good—if only this were legally permitted
and engineered into the software that runs the wireless devices. Regulators
have changed their approaches slightly by allowing secondary markets in
spectrum, but this anachronistically still presumes exclusive, not shared,
use.
Mr Benkler does not limit his analysis to computing and bandwidth, but tries
to make a broader point in favour of sharing goods far beyond information
technology. “Social sharing”, he asserts, represents “a third mode of
organising economic production, alongside markets and the state.” However,
with the exception of carpooling, he acknowledges he is hard-pressed to find
instances where sustained sharing of valuable things is prevalent in the
world outside information technology. For most goods and services, sharing
will remain the exception not the rule. But Mr Benkler has identified an
intriguing alternative.
-- ---
Willy Smith
Ciudad Panamá
Panamá
America Central
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