I come from an industry (publishing) where the cost to produce the product has dropped to zero. Today, anyone can go to WordPress.com, set up a Web site, and begin publishing news and information to the world – for free. (I know, tell you something you didn’t already know, right?)
It Won’t Stop with Virtual Goods
But here’s the new wrinkle. The publishing industry is imploding because its products can be produced entirely via bits and bytes and therefore, the marginal cost, as Jeremy Rifkin puts it so eloquently in this interview and video, has dropped to zero. It becomes extremely difficult for a publisher to sell a Web site subscription when so much is available for free.
But what happens, asks Rifkin, when you cross the line from the virtual to the physical? Seems pretty hard to bring the cost of producing a cell phone to zero right? And remember how economists have been saying that localized service jobs (plumbing, hair cutting, etc.) are immune to this kind of disintermediation?
Not so, says Rifkin.
Beyond the Hype of 3D Printers
What’s refreshing is that Rifkin doesn’t just list the in-vogue economic disruptors of the moment, the 3D printer and the Internet of Things, as the reasons why physical products and services will go the way of publishing. Rather, he combines them together into a compelling vision of overall economic transformation.
The missing piece of the puzzle that fell in place for me as I listened to him talk was that since the World Wide Web came along we have been continuously training generations of people to do things themselves and in collaboration with others. For example, we figure out how to get a free WordPress blog ourselves online or through word of mouth and then we learn how to collaborate with others through social media.
Pretend the Industrial Revolution Never Happened
In a sense, we are training people to pretend that the industrial revolution never happened and that we can go back to making things the way we used to before factories and steam engines came along: by ourselves or in small (or, thanks to the near ubiquity of the internet) large collaborative groups.
Given access to the same easy-to-use, free tools that I use for publishing, I could produce a cell phone that does exactly what I want it to (my iPhone 5S doesn’t). But it won’t look like something from a Lego box because of another important development: I will be able to gather data about what the cell phone can and should do and what it should look like from my friends and the general public. These things all have GPS devices in them that only do location today, but will do much more very soon. Already app writers are pushing the boundaries of GPS on cell phones.
Monitoring – the Good Kind
As we become more comfortable having monitors on ourselves all the time (which means we will also very soon need something equivalent to the Bill of Rights for data), we will demand them on our products and vehicles, too. And that will give us access to extraordinary amounts of valuable data that until recently were only available to governments and big companies, as well as apps that make analyzing and interpreting that data as easy for us as it is for them (okay, so it’s not so easy yet).
We will have the power and information to invent or at least easily assemble many things that we have relied on companies to do for us and it means that for companies, innovation, rather than plants and machines, will be the key to survival.
My question to you is, How do we market in a world of zero marginal cost?