3: PLENTITUDE, NOT SCARCITY
In the network economy, the more plentiful...
...things become, the more valuable they become.
This notion directly contradicts two of the most fundamental axioms we inherited from the industrial age.
First hoary axiom: Value comes from scarcity. Take the icons of wealth in the industrial age--diamonds, gold, oil, and college degrees. These were deemed precious because they were scarce.
Second hoary axiom: When things are made plentiful, they become devalued. For instance, carpets. They were once rare handmade items found only in houses of the rich. They ceased to be status symbols when they could be woven by the thousands on machines. The traditional law was fulfilled: commonness reduces value.
The logic of the network flips this industrial lesson upside down. In a network economy, value is derived from plentitude, just as a fax machine's value increases as fax machines become ubiquitous. Power comes from abundance. Copies are cheap. Let them proliferate.
Ever since Gutenberg made the first commodity--cheaply duplicated words--we have realized that intangible things can easily be copied. This lowers the value per copy. What becomes valuable is the relationships--sparked by the copies--that tangle up in the network itself. The relationships rocket upward in value as the parts increase in number even slightly.
Windows NT, fax machines, TCP/IP, GIF images, RealAudio--all born deep in the network economy--adhere to this logic. But so do metric wrenches, triple-A batteries, and other devices that rely on universal standards. The more common they are, the more it pays you to stick to that standard. We have an even older example in the English language. Wherever the expense of churning out another copy becomes trivial (and this is happening in more than software), the value of standards and the network booms.
In the future, cotton shirts, bottles of vitamins, chain saws, and the rest of the industrial objects in the world will also obey the law of plentitude as the cost of producing an additional copy of them falls steeply.
Well, I don't necessarily agree. Your assertion is around the value of one (in the traditional case) and the value of many (in the modern case). Your carpet example. They used weave carpets one at a time by hand - expensive. Vendors didn't sell many. As the cost of manufacture decreased (due to automation) the price could drop, increasing volume and presumably the business value of carpet making. While the value of the individual carpet may have actually decreased.
It has always been that as the volume of something goes up the PRICE of the object goes down. Individual value perceived value is something different. The rate of decline of price versus the rate of increase in perceived value is the interesting fact.
FREE is an interesting price point.
Only with things that cannot be caught in a butterfly net. There are riches in scarcity and increases exponentially; your car would cost many times the amount part by part. The law of what the market will bare instead of the value of the materials,labor and marketing network the part actually costs. True value can only be attached to those things that if the whole system broke down you would still need to survive the rest; extraneous perceived madison avenue value .