The Economics of Zero

Originally published in the Informanté newspaper on Thursday, May 7, 2015.



Traditional economics has always been defined in terms of the basic economic equilibrium equation: Production of a good will settle at a quantity (Q) produced at a price (P) where demand and supply are equal. However, in the past 20 years we’ve seen massive growth in a market where these basic equations no longer make sense – digital goods. Because digital goods can be reproduced perfectly, and at zero cost, suddenly the supply side of traditional economics makes no sense – because suddenly, the price drops to free.

 
With digital products, most of the scarceness of a product is wiped out – consumers can get as much as they desire at the low, low cost of zero. And in the developing world, such as Namibia, where everything else is scarce, an abundance of digital goods is a life-saver – eliminating inequalities of education and recreation in one fell swoop. 

This sounds great to the average consumer – but a nightmare for producers of content. After all, how are you going to get paid for what you produce? And how can you get paid if your product is free?

Readers of the Informanté should have the savvy to notice a glaring inconsistency in the previous argument: The newspaper you’re holding right now is free! In fact, it has been free since inception, and many more stories are posted via Facebook and on its website that are also available for free. 

Many content producers grasping at straws have clutched onto ‘intellectual property’ protection. While this has provided some basis for producers to protect themselves, the basic premise of ‘intellectual property’ is flawed. Ideas and stories are non-rivalrous in consumption (i.e. one person’s consumption does not prevent another from consuming it), and thus cannot be treated economically as property. In fact, African oral tradition has never had the idea of a ‘story’ as property. 

They often say that this is because creators of content have a right to make money from their work. Hogwash! Economics is not a moral issue – no one has a ‘right’ to make money off their work, they can merely try to make money off it. Businesses fail every day if they have products no one wants to buy – no entrepreneur has a ‘right’ to succeed. 

And this attempt to make something abundant suddenly scarce should be repugnant to a society that will be poorer for it. Putting a price on something economics dictates should be free only worsens the gap between ‘haves’ and ‘have nots’, and should not be tolerated in a country that strives towards more equality between its citizens.

But what about Namibian content producers? How will they live? Create? I suggest they also look at the other side of the coin – an enlarged audience. Without costs limiting the size of the audience you can reach, you have a much larger pool of potential customers. One example of this would be the Informanté’s reach across the Namibian population. 

And while certain digital goods are now abundant, content creators still have lots of non-abundant goods to sell – now to a much wider audience. Think gigs and concerts for musicians and the like. After all, for centuries beforehand, artists still created without selling to the general public. In previous eras, this was done via patronage – a countries leaders and wealthy often commissioned works.

Even now, our friend the digital world is making even that easier. While the Informanté’s patrons are its advertisers, with the concept of crowdfunding comes a new way for artists to go forward. With websites such as Patreon allowing fans to either contribute per work of per month to content producers, making a living from your art has become even easier. And for Namibians with a wider audience, services such as these will be a godsend. 

If you can gain 1 000 fans willing to sponsor you N$ 10 per song produced, would you not be much more motivated to produce? Now imagine 10 000 fans. Namibia is a small country. We should not be shunning the coming digital economy, but rather embrace it. We now have the world as our audience – let us put on a show! 

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