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Echronomy 101

July 15, 2009

Echronomy (noun) : the production, distribution and consumption of time. [a neologism from economy and chronos – the Greek word for time)

I’ve watched the Free debate between Internet poster-boys Malcolm Gladwell versus Chris Anderson with interest, it’s a fascinating discussion in a period of such monumental change. The topic is worthy of the many books about it so this 1000 word summary simply relates the concepts back to Zenbu.

Anderson, who wrote the book and coined the term “The Long Tail” and is currently promoting his new book “Free: The Future of a Radical Price”, pushes the idea that information industries will tend towards providing a free product based on age old Adam Smith economics that the price will be the marginal cost of production, which is close enough to zero for anything which can be consumed as zeros and ones.

Gladwell, author of Tipping Point and Blink and a journalist at The New Yorker, seems to take umbrage that his newspaper industry is a key target in Anderson’s writing.

Gladwell writes

There are four strands of argument here: a technological claim (digital infrastructure is effectively Free), a psychological claim (consumers love Free), a procedural claim (Free means never having to make a judgment), and a commercial claim (the market created by the technological Free and the psychological Free can make you a lot of money)

Answering each point in turn:

1. digital infrastructure is effectively Free
The inherent nature of the internet is a distributed infrastructure which spreads the cost of use out between users – not free but close enough. BitTorrent is such a succesful distribution system because it utilises that very distributed nature.

2. consumers love Free
Beyond that, free is the black hole of rational consumer thought.

3. Free means never having to make a judgment
Free does NOT mean never having to make a judgement, it means we have to judge things without price based on our most precious, divisible and scarce resource – time (or attention). In fact if time was a transferrable asset, it would be the perfect monetary system; I call this the Echronomy but I digress into Sci Fi territory.

4. the market created by the technological Free and the psychological Free can make you a lot of money
The market created by these claims can and will make a lot of money! Freemium, not free, is the actual model promoted by Anderson (he screams for the thousandth time in his blog comments); Google brought in 5.7 billion in revenue in the last quarter of 2008 based on this freemium model, unarguably a lot of money. Best guesses are over 90% of this is from advertising so this isn’t ‘new money’ (yet), its simply a transfer of wealth from the old (and in terminal decline) media industries. The pie is shrinking because the internet enables extremes of efficiency impossible in old media, so businesses are spending less and getting more, but at some stage they will realise that if they spent the same (or more) than they did previously in old media they will get orders of magnitude more value; the pie will grow again.

The most galling part of Gladwell’s argument is that he picks out Anderson’s use of YouTube as an example and admission that YouTube “has so far failed to make any money for Google.” Who cares? It’s an investment! I’m sure there’s a very simple graph of YouTube revenues. Revenue trends upwards relentlessly from advertising (and other) income streams. (YouTubes media advertising techniques might be experimental but there is a century of proof that this market is sound. ) Meanwhile the costs, mainly bandwidth and storage, shrink exponentially each year. The two lines will, sooner or later, cross and never go back.

Perhaps these golden years of the internet are parallel to the land grab of the wild west, only now the land up for grabs is the far more transient concept of attention – and Google is staking out some serious ground. Every day information becomes more abundant and attention more scarce; we enter the Attention Economy.
Of course Gladwell is right that not everything will be free, we will always be willing to pay for convenience, quality and exclusiveness. Anderson is also right that information resources will inevitably tend towards free. It’s economics 101: cost of entry to the information market and the marginal cost of distribution are both close to zero.

(What does this all have to do with Zenbu?!) The Yellow Pages in New Zealand was a $300 million a year business in 2008 and I believe this is one pie in serious need of shrinking. Yellow has a strong aura of authority and authenticity. We can rely on Yellow to have a listing for every business – primarily due to the strong historical relationships from when Telecom had a monopoly on telephone lines. Yellow did a great job of compiling and distributing information about every business in NZ. In the days before the internet this was a mammoth task, deserving of the massive infrastructure that Yellow has built.

Today it is a different story. We can build and share a comparable superior directory using the infrastructure of the net and the distributed labour force of the end users. We don’t need 200 staff or $10K full page ads in a printed paperweight pushed out to every household when we can create a better information resource with 2000 contributors and a few servers. I don’t begrudge those 200 people their jobs but New Zealand would be far more productive if they were doing something else of value. (Actually a lot of those jobs are outsourced to the Philippines now but that’s a completely different issue)

The Yellow pie will naturally shrink from old-media-attrition but let’s hurry it up, let’s build Zenbu up so you can Find Everything. The pie needs to be shrunk, it’s dinnertime.

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5 Comments
  1. Olivia permalink
    July 17, 2009 10:25 am

    My take on yellow is that they now own a large number of sites and are desperately trying to become a monopoly on the Internet when it comes to searching for local businesses. I think that all the other established sites like MenuMania, ViewAuckland etc should work together to get a good piece of the pie

  2. July 18, 2009 11:43 pm

    One of the sites Yellow now has a large stake in is Finda.co.nz. Google uses Finda for all it’s local Auckland searches. Cha ching.

    Yellow is decreasingly relevant because it relies on physical business model (its printed directories; directories I will continue to simply recycle rather than use since I just use the internet to find phone numbers these days).

    So, Yellow buys stakes in more relevant, and free to the user, search databases so it can also stay in customer’s minds. I’ve never used yellow.co.nz, but I sure have used Finda.co.nz.

    I wrote an article on my blog about how I believe the price of everything, to the consumer will go to zero, but I think where the cost will come in is that whomever owns the data being used will in a sense be in control of everything.

    http://thesalon.blogspot.com/2009/04/will-there-be-ownership-in-future.html

    A larger cost of this new free economy is that we will no longer own anything and currency will also cease to have value. A utopia and a hell at the same time.

    I have to say that while journalists are valuable, they are being replaced by bloggers and videographers on YouTube because they simply get the news out faster. Quality might be lower, but we all would rather have immediacy these days.

  3. July 19, 2009 6:36 pm

    There’s been a more local storm on the journalism front this week after Barry Colman attacked the “spawn” of “amateur, untrained, unqualified bloggers” on the internet. Bernard Hickey’s response is especially interesting. He is now a full time blogger that escaped from Fairfax in 2008 and produces a ton of great content, free to the consumer…

    http://www.interest.co.nz/ratesblog/index.php/2009/07/17/opinion-how-to-profitably-publish-financial-news-online-for-free/

  4. Maurice Winn permalink
    July 22, 2009 10:51 am

    Disclaimer – I’m not an economist or echronomist.

    /rant on
    Echronomics is about time and attention = cognitive functions and the value of them. Economics was largely about the processing of resources, materials, physical distribution and the laborious effort involved in transforming the 3D world and moving it around.

    The industrial revolution replaced muscles. The cyberspace revolution is replacing brains, not just assisting them though it does that in a big way. Brains are about cognition and time.

    Economics ran into ethereal will o’ the wisp issues such as brand value and problems such as pricing of “computers” as part of measuring changes in consumer price indexes. Economics tried to measure the service economy. It is currently in meltdown mode resulting from the failure to correctly describe fairly basic things such as mortgage value, counter-party risk and regular, garden-variety economic issues, Now it’s also trying to describe and measure the attention and time economy which is tricky.

    In my own life, the value of the material world; food, car, house, golf course, fuel, air liners, hotels, compared with the value of my cognition and time has declined from very dominant to also-ran. I still need food, but it’s now a trivial part of my economic life. My echronomic world is vastly more important.

    The NBR, print media, Google, Bing, journalists, Yellow Pages, Zenbu, Finda, TV, YouTube are all thrashing around trying to find a path into the cognitive future where the big value lies.

    Bernard Hickey’s article describes the issue well – in regard to the on-line versus 3D distribution of news and information. http://www.interest.co.nz/ratesblog/index.php/2009/07/17/opinion-how-to-profitably-publish-financial-news-online-for-free/ But it’s a much bigger issue than merely reporting on things.

    We don’t know where we are going, but we are on our way.

    /rant off

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