Digital world view

Paul Krugman:

Do you remember what it was like back in the old days when we had a New Economy? In the 1990s, jobs were abundant, oil was cheap and information technology was about to change everything.

Then the technology bubble popped. Many highly touted New Economy companies, it turned out, were better at promoting their images than at making money — although some of them did pioneer new forms of accounting fraud. After that came the oil shock and the food shock, grim reminders that we’re still living in a material world.

So much, then, for the digital revolution? Not so fast. The predictions of ’90s technology gurus are coming true more slowly than enthusiasts expected — but the future they envisioned is still on the march.

In 1994, one of those gurus, Esther Dyson, made a striking prediction: that the ease with which digital content can be copied and disseminated would eventually force businesses to sell the results of creative activity cheaply, or even give it away. Whatever the product — software, books, music, movies — the cost of creation would have to be recouped indirectly: businesses would have to “distribute intellectual property free in order to sell services and relationships.”

For example, she described how some software companies gave their product away but earned fees for installation and servicing. But her most compelling illustration of how you can make money by giving stuff away was that of the Grateful Dead, who encouraged people to tape live performances because “enough of the people who copy and listen to Grateful Dead tapes end up paying for hats, T-shirts and performance tickets. In the new era, the ancillary market is the market.”

Indeed, it turns out that the Dead were business pioneers. Rolling Stone recently published an article titled “Rock’s New Economy: Making Money When CDs Don’t Sell.” Downloads are steadily undermining record sales — but today’s rock bands, the magazine reports, are finding other sources of income. Even if record sales are modest, bands can convert airplay and YouTube views into financial success indirectly, making money through “publishing, touring, merchandising and licensing.”

What other creative activities will become mainly ways to promote side businesses? How about writing books?

According to a report in The Times, the buzz at this year’s BookExpo America was all about electronic books. Now, e-books have been the coming, but somehow not yet arrived, thing for a very long time. (There’s an old Brazilian joke: “Brazil is the country of the future — and always will be.” E-books have been like that.) But we may finally have reached the point at which e-books are about to become a widely used alternative to paper and ink.

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He goes on to talk about the Kindle, Amazon's device for reading digital books. but one place the revolution has already happened that Krugman overlooks is software documentation. I have recently been cleaning out a storage closet and throwing things away. So far, I have filled three 55 gallon contractor bags with old software documentation going back to the my first DOS software. Some of these note books were huge. Now you get directions on a CD or download them from the internet. In fact downloads are also replacing the CD's in many cases. Usually one of the first things that happens when you do load a program from a CD is it wants to go to the internet to upgrade the latest changes.

In shoving all the books around that I have in storage that I will not be throwing away, I still would really like to be able to put them on a hard drive or CD and save the space.

I also used to get huge boxes filled with notebooks of documents and exhibits for cases that I arbitrate. There is still some of that, but I have at least stopped the 100 page last minute fax bombs. Now I have them email them as attachments. I think it want be long before we should be able to arbitrate the cases with digital documentation. That will be bad news for the copy business, but good news for our backs.

BTW, it is kind of scary how much sense Krugman makes when he is not on some anti Bush rant.