THIS NEW ECONOMY
The tricks of the intangible trade...
...will become the tricks of your trade.
The new economy deals in wispy entities such as information, relationships, copyright, entertainment, securities, and derivatives. The U.S. economy is already demassifying, drifting toward these intangibles. The creations most in demand from the United States (those exported) lost 50% of their physical weight per dollar of value in only six years. The disembodied world of computers, entertainment, and telecommunications is now an industry larger than any of the old giants of yore, such as construction, food products, or automobile manufacturing. This new information-based sector already occupies 15% of the total U.S. economy.
Yet digital bits, stock options, copyright, and brands have no measurable economic shape. What is the unit of software: Floppy disks? Lines of code? Number of programs? Number of features? Economists are baffled. Walter Wriston, former chairman of Citicorp, likes to grumble that federal economists can tell us exactly how many left-handed cowboys are employed each year, yet have no idea how many software programs are in use. The dials on our economic dashboard have started spinning wildly, blinking and twittering as we head into new territory. It's possible the gauges are all broken, but it is much more likely the world is turning upside down.
Remember GM? In the 1950s business reporters were infatuated with General Motors. GM was the paragon of industrial progress. It not only made cars, it made America. GM was the richest company on earth. To many intelligent observers, GM was the future of business in general. It was huge, and bigger was better. It was stable and paternal, providing lifetime employment. It controlled all parts of its vast empire, ensuring quality and high profits. GM was the best, and when the pundits looked ahead 40 years they imagined all successful companies would be like GM.
Since all the things that become important in our economy are of the type that can't be measured very well, and since it's commonly claimed that in order to manage something you need some metrics (another way of saying that: what can't be measured can't be managed), then maybe the conclusion is that the era of management, corporate style, is on the wane.
Of information, relationships, copyright, entertainment, securities, and derivatives that you mentioned above, most will agree that relationships can't be managed (in the traditional sense), anyone with eyes in their heads (that is, not recording companies or movie studios) understands that copyright can't really be managed nowadays, recent history shows how well securities and derivatives were managed, and information is just too vague to add to this list.
This view agrees of course with the end of GM as we know it (or almost any other big corporation for that matter) - where many people's sole function is to manage rather than actually do something useful, and explains the rise of small companies where the ratio of managers to contributors is more favorable.
Kevin, you wrote: "The new economy deals in wispy entities such as information, relationships, copyright, entertainment, securities, and derivatives." Towards the end of my career in electronics production, I began to realize that the cost of equipment was at least half software writing. Plenty of metal parts were still designed and built, but even the lowliest production tools, such as a drill, had lots of information age content.
I have worked on a lot on metrics over the years. At the very least there has to be some overweaning objective that eclipses the difficulty of valuing things like lines of code or values of patents. Clean water, food, clothing, shelter, transportation are relatively easy to measure and will likely dominate our thinking for longer than we would imagine.
However, love, peace, joy, seem to elude quantification. Yet we seem very aware of changes in how we fare in those areas.
Entertainment or Amusement baffle me the most. Our main criteria seems to be how does it make us "feel" in a very shallow sense. The quest for more and better entertainment is a stumbling block for us all.
I have the impression that a truly new economy will involve harnessing our energies more effectively toward increasing love, peace, and joy. Measuring pounds of steel or lines of code will be a part of the picture, but far less important than we now imagine.
As technology increases at light speed, copyrights will absolutely be able to be managed. If Google can revolutionize search and crawl the web, scanning, dissecting, and digesting millions of terabytes of information across the web, technology inevitably be able to find companies, peoples, etc, disregard copyright and break laws. Identifying these individuals, computer programs, websites, whatever, will be the easy part. The more impossible part of the equation is being able to penalize individuals who are bootlegging intellectual property.
@Kent: I agree that we don't have very good metrics for the intangibles that count the most: peace, love, joy. Perhaps there is a Nobel prize awaiting the person who can figure this out.
I doubt copyrights as we understand them will have much value soon, at least not in the constrained way that they currently function. I'd guess that the value of a copyright has declined hugely as media has become far more involving, and the benefits of holding on more loosely become clear. The carrying media has become essentially free--no paper and ink, no CD's or DVDs. the value comes from reach and all the benefits that can come from that.
Sure, you can get Youtube to pull a video that includes your song, but if it had (or might have) ten million viewers, would you be wise to?
Seems like smart media companies (is that an oxymoron?) would be dragging talented street musicians into cheap Garageband studios and hooking them up with homemade video makers trolling for inexpensive megahits.
Hmmm. Sounds like a business plan.