Oct 13 2010
Week 7 Response Questions
1. In response to my first question, in class we discussed several various companies that are able to thrive and maintain their multi-billion dollar statuses in a bit-economy, including Microsoft, Second Life, and Google. These companies were able to find alternative ways to receive revenue and maintain their high standard in the commercial economic world. Google does this by selling ad space to other companies. Considering that Google is the number one online website, many companies are willing to purchase ad spots on their pages. Therefore, for Google this is an incredible market opportunity that they use to receive millions of dollars each year. Another online company, Second Life, engineers its software so that people can still monetarily purchase good that are “digital” through digital channels. People are able to both produce digital goods in the virtual world to sell, as well as purchase goods for their virtual characters and businesses. Microsoft is another multi-billion dollar business that has accepted this bit economic system. They are able to tempt users with temporary free trials of their software enough that people believe they must have it. Therefore, Microsoft has been able to maintain their commercial hierarchy with the use of this bit economic system as well. I’m not sure if a barter system would work online to gain monetary gain, but it would be a great way in which to gather specific items that you wish to obtain. For exmaple, Noise Trade is another online site that uses this barter trade model and is fairly successful. Obviously, it is not as popular or well known as the other multimedia giants.
2. In response to my second question, I believe the simple answer would be abundance. As there is an over abundance of the material used to make semiconductor chips, the prices of each chip, despite the holding capacity, will go down. Therefore, despite its unbelievable individual power or bandwidth, the prices of each chip will decrease. This does not take away, however, from the total overall cost of the gadget. As better storage, processing, and bandwidth qualities increase in each chip, and therefore in each gadget, the price of the overall gadget will increase as well. The overabundance of unlimited goods online in the digital world is an example of this economic model. The more you have of something, the less the individual something’s worth, especially when it can easily be copied, rendered, or manipulated. As we said in class, we need to move away form the scarcity model of thinking about economics, and look ahead to the abundance economic model that the digital world supplies us.
3.For my last question, I once again asked about this notion of the gift economy in relation to the negative consequences that may occur due to this type of model. Overall, I’m not sure that an economic model defined only by a gift-like economy would be helpful overall. I believe that given too much freedom, people will both cause and endure chaos. This is a natural response of humans and a reason why many governments are put into place. An example that was discussed in class is YouTube. Although YouTube isn’t necessarily the worst outlet that gets taken advantage of by hackers, it is still prone to what the book calls “waste”. Whether this is good waste or bad waste is debated in the book. However, it is still waste that is caused by the freedom that YouTube allows people to post videos. Therefore, countless numbers of worthless videos are uploaded onto the site making it more difficult and overwhelming for users to pick out the good ones from the bad ones. Overall, I would have to say that the gift economy is ideal, but far from practical.