Friday, January 8, 2010

The Future of “Open” Depends on Open Currency

I am going to make a bold claim. If we want the new modes of economic production we’ve seen thus far in the information age to become deeply ingrained in our cultural fabric, we must apply these modes of production to currency itself.

I take as my starting point for this contention a recent post by a musician who’s music I have long enjoyed: DJ Shadow. For those who don’t read his entire critique of music in the age of file sharing, it basically says musicians need to be reimbursed for their work if they are going to keep making good music. And he is right in this assertion. If we want to have a culture where people can specialize in being musicians, we must develop viable ways for musicians (and other artists) to be valued and supported.


One contention of what I will loosely call the “open movement” (even though that is mostly a misnomer), has been that anything information-based tends towards being free because there is virtually no cost to producing it at a large scale, and because information is a “non-rival” good (meaning that if I have it, I don’t prevent others from having it). I believe this logic is correct when it comes to valuing information-based resources in scarcity-based currencies such as the dollar. However, just because a resource such as music is no longer inherently scarce, doesn’t mean these resources shouldn’t be valued.


I fear that we may be accidentally walking into a trap in the crowd-sourcing / wikipedia age of "open." We are correctly realizing that scarce money cannot measure the value of that which is not scarce, but we haven’t yet collectively adopted currencies that can. If we want anything more interesting than the most mediocre culture to survive this transition, we must develop currencies that can enable our collective support of musicians / artists without the need for scarcity as the measuring stick.


Our money forces us into valuing only that which is scarce. I believe the fact that music has stopped being scarce is a VERY good thing, but if we can’t find ways of valuing musicians (and other content producers) in the post-scarcity era, I fear the cost of “open” will far outweigh the benefits.


Already we are seeing a global backlash to this new “open” culture because producers of content of all kinds aren’t being valued. Douglas Rushkoff at a recent web 2.0 convention contended that this culture of “open” (or "free") was largely a way for Google to profit off of the hard work of content producers. In the context of a scarce money system, I am afraid I must concur.


For me, the principles embedded in the “open movement” represent nothing less than the future of human civilization. If we want to see any of the real benefits of this future, we MUST MUST MUST apply the logic of “open” to currency itself. Only then will society have the tools it needs to appropriately value musicians and other content producers.


Societies are complex adaptive networks, and like all complex adaptive networks, that which provides value to the network MUST be reinforced. This reinforcement does NOT have to be done with a scarce currency that forces us into pathological competition with each other. Nor does this reinforcement even have to be done with a quid-pro-quo kind of monetary currency. But the reinforcement MUST occur if we want to encourage the production of value. The time is now for OPEN CURRENCY.

15 comments:

Tero Heiskanen said...

I fully agree. Scarcity-based currency is main barrier which prohibits openness expanding. Many many fields of openness (open governance, open knowledge, open science etc.) are suppressed only because of great domination of scarce currency.

Hendy Irawan said...
This comment has been removed by the author.
Hendy Irawan said...

I truly agree with all your points. For example, there's a new "currency" on the block, it's called 'Facebook Like"'. and it's very popular among teenagers. ;-)

JussiR said...

Current financial system need to be replaced with new, innovative digital currencies, i agree. But i'm not sure i fully understand the concept of "open currency". I mean all currencies need to be somewhat scarce, because without scarcity there is no value in them?

(This is different from content, which has inherent value - currencies, on the other hand are only mesurements of value.)

Katin Imes said...

JussiR, you've revealed the answer in your own statement: currencies are *measurements* of value, not the value itself.

Let's switch to another measurement to explore this. A scarcity of "inches" doesn't make sense: "Sorry, I can't sell you that pipe laying there today, it's sold by the inch and we ran out of inches."

In the same way, a scarcity of currency doesn't make sense. If we have all these goods and services available to trade, then it really makes no sense that we can't trade them with each other simply because we ran out of little green paper tokens.

We have businesses that are short-staffed and that need people. We have people that need jobs. Unfortunately, we ran out of trading tokens, so sorry, no trading for us today!

It's kinda of a mind-bender to switch to this kind of thinking because we have been thinking for so many decades that it is the token that is the actual value. It becomes easier to grasp when you think of currency simply as *information* about value. How much you have, how much we trade in a transaction, how much is tax, it is all just information about the value going around. Currencies are really nothing but information. And our new information management power tools of computers and Internet, we can now manage information at a far higher level than ever before - to the benefit of all.

Open standards for currency data and transaction processing means we can all trade and exchange our currency information together easily and directly, enabling huge new levels of trade.

Katin Imes said...

As for getting musicians paid for the value they produce, as an example, this requires a massive re-education of consumers. Consumers fresh out of the 20th century just don't appreciate the true cost and value behind the music, information and services.

It isn't really the fault of the consumer... they have been hypnotized to grab up all that is free (they are still in the scarcity mode) and to believe that things like TV shows are already free. They have been confused because the 30 cents of each dollar they pay for consumer goods has been *invisibly* going to purchase those TV shows, etc. through advertising. (What, you think Cokes would still cost the same amount on the shelf if Coke didn't spend over two BILLION dollars per year in advertising?)

We did it to ourselves by hiding the true money flow for TV, art, etc. from consumers. For generations of time. WIthout education about it.

I'm guessing that it will take a time of deprivation and loss of those arts and services before consumers really come to appreciate the connect-the-dots line of value, payment and production. We'll probably see a bunch of good art and music producers be forced to stop producing, and once people get tired enough of the same old stuff that they are willing to actually pay for the creation of some new stuff, we'll get our artists back.

It sucks hugely to have to go through that low cycle, to be sure, but this is simply the cost of doing things the way we did in the 20th century.

The bright spots in the darkness here are things like the Thousand True Fans model and others like it: many different ways of thinking about getting the art and music you want are being explored and discovered, mostly through the Internet. When it becomes personal - *my* artist that I know and love - then it becomes a great river of access to the new way of getting artists paid for fair trade.

Hendy Irawan said...

I disagree with Katin.

Prices change? yes. But people not appreciating music/artists? No!

There is a reason why Apple is happy about their iTunes music sales and movie rentals.

Traditional selling for artistic works may not work, but that's the model changing... not necessarily mean that users want them for free.

Is it unacceptable that consumers value the convenience of iTunes and their iPod highly, more so than walking to a music store (+ traffic jam + parking fee + gas) then paying much more for (strangely) less convenience?

With regard to this article, "paying" doesn't have to be in US Dollars or any currently accepted currency... With open currencies, we should be able to pay using any form of currency we want... as long as it holds. It can be merit-based, hour-based, or else..

With proper information technology, the "seller" can determine the value of the currency and so is able to sell the goods for some other currency... not just current "real money" which is scarce and somewhat artificial.

JussiR said...

Good explanation. I guess was splitting hairs a bit myself too, trying to find some kind of definition for open currency.

I think the only way of "paying" for digital content that would solve all problems would be some sort of donation based currency. Because with content that is abundant, the transaction can't be one on one (i give you something, you give me something), but one to all (i give this for "free"), hoping that some of the people who really like the content, will give something back.

Now, the big question is why would they give something back. One answer could be reputation (people who donate get their names shown next to the content). Another would be to take this from taxes (every person gets x dollars per month to give to content providers, who give their content for free). Or we could just make giving donations extremely easy while keeping the ammounts of donations small, and trusting in peoples good will: every time you read/see/hear something you like, just click a link next to it wich will donatate few cents to its creator.

Katin Imes said...

Hendy -

I'm a huge iTunes supporter myself. I think what I forgot to say is that collectively, as a society, we aren't doing so well at appreciating our artists.

I don't think this blog is the right place to go deeply into this discussion, so I would simply request you research the kinds of percentages that artists receive from iTunes sales (be sure to include the record label's cut and contract terms for digital media). Also, look into the common structure of contracts with large record labels and artists over the last 20 years, and judge for yourself if it provides any kind of living wage for artists selling less than a million albums.

Also, look into why the Copyright Royalty Board, charged with collecting royalties for *all* music played on the Internet (whether the artists is registered or not, strangely enough) has yet to pay artists their royalties, after collecting millions and millions of dollars. (Class action suits pending).

As individuals, we love our music. As consumers, we have no idea how the money is actually flowing. As a society, we are lucky artists are a passionate group willing to work for peanuts, because they generally do.

Don't rely on my words and opinions, please check out these stats and find out what the artists are saying for yourself.

Please look for ways that you can show your personal appreciation to the artists and musicians that you love and enjoy.

Hendy Irawan said...

You sum it up excellently, Katin.

Artists (especially independent/indie labels) need more support than just from royalties/sales, and the label... yet even those are already plummeting (esp. in conventional stores).

Open currencies allow society to appreciate and value artists not just with monetary currency.

I believe proliferation of open currencies will be good for artists, but not just artists but for all jobs.

Cascadia Commons said...

What about discussing an evolution towards "open." While I love the discussion about needing openness, I get a very strong sense that while we have appropriately defined the problem and the solution, we have not found the steps leading us from point A to point B.

Instead of demanding that we all use open currencies now, how about we evolve into the use of open currencies. There is so much amazing work being done in the private currency world. I'm thinking about all the hard work that went into establishing the Universal Currency offered by the International Reciprocal Trade Association (www.irta.com) and all of the other currencies available from any "commercial barter" trade exchange. Already, our economy hosts hundreds if not thousands of currencies, but the problem is they don't communicate. It's like they all live in a neighborhood, but don't know each other.

How do we get all of these currencies to communicate? I'm thinking that would be a very positive first step towards point B, i.e. "openness." Once all the world's currencies can communicate, then we can get a whole host of users to adopt open standards.

I realize that I am still talking from a high level, but what are some possible "baby steps" towards the solution?

Eric B said...

Hi, I need help! I understand that how we do money is at the root of many of our issues, but I am struggling to get it. Several "activist" movies say the FED prints money out of thin air, and loans it to the government. Other info sources say that banks create the money through fractional reserve lending, slowly turning a deposit into a much larger set of loans. This movie says that the banks create ledger entries for outgoing loans. Then this movie says that if that instant money was all paid back, it would just disappear. Why? If they've rigged this system to be able to create this fake debt money, why would it be gone when they got it all back in their hands? Or do they get to keep the interest? Why not the principal? If you're going to rig a sysyem, why rig it this way?

Hendy Irawan said...

Eric B:

Calm down.

Money and economy is such a complex flow system that even though we can spot a problem, crafting a solution is not straightforward.

Short answer: Diversify.

To you this means diversify your investment portfolio (don't invest all in cash), and your currency portfolio... participate in some local currencies, that's how you contribute and be contributed back.

National currencies will still be here for some time. That's why we call the CCs complementary currencies because they don't replace the conventional currencies, but they're still good for the economy.

You can learn more on http://openmoney.ning.com

Join a CES at http://www.ces.org.za/

Check this out for CC in action at Banco Palmas, Brazil : http://www.youtube.com/watch?v=h8YLFKr7lZs

That video will make you believe that CC can make and ALREADY MADE lives change for the better.

Peter Burgess said...

I have followed these issues since my education at the end of the 1950s ... and am appalled at how the money profit economy has become the driver of our global economy.

Because what we measure gets done ... the way we score the game changes the way the game is played ... I am interested in merely changing the way the metrics is done. Money money metrics is not enough ... we need to do metrics about value. This is what we are doing with Community Analytics (CA). (http://communityanalyticsca.blogspot.com)
Peter Burgess

Lily said...
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