We live in an age of abundance. If you disagree, go to any supermarket and look at all the different brands of toothpaste, cereal, coffee, soap or any other product. We have surpluses of food, automobiles and every other product imaginable. Relative to western standards of living, goods are essentially free. Even the poorest employed person can afford a quality of life beyond that of royalty just a couple of centuries ago.
Online abundance is incomprehensible. How many millions of blogs and websites are publishing free content and services? We are living in world when the old rules of economic scarcity have essentially vanished.
In traditional hierarchical corporations it made sense for managers to hoard information. That is how they kept control and increased their own value to the firm. It was in their self-interest to keep their knowledge scarce.
The economics have flipped. Time and attention are the only two resources that are not in infinite abundance. Everything else is basically in endless supply. We have to share and give valuable content and ideas just to catch the attention of a world awash in information, advertising and goods. Success is more a function of how much you give rather than what you keep for yourself.
Clay Shirky articulated this new reality in the quote;
“Abundance breaks more things than scarcity.” (Quote via Edward Boches)
That is a very powerful idea. Markets are being destroyed because of too much, NOT too little. Here are some examples.
- Craiglist (Free classified ads) versus the newspaper industry.
- Blogs and websites versus magazines.
- MP3 songs versus the music industry.
- Amazon versus book stores.
- Skype versus long-distance phone charges.
- Wikipedia versus Encyclopedia Britannica.
- Chinese manufacturing versus US manufacturing.
The oil industry is not going to implode because of a shortage of fossil fuels. It will be made irrelevant when alternate and abundant alternative energy sources are developed. Storage and bandwidth are rapidly approaching zero marginal costs, just wait to see what clean and abundant energy will do to the world.
What happens when supply is infinite and prices are zero?
In an abundance economy, supply and demand are irrelevant. Supply is infinite and demand is almost non-existence because finicky consumers can not be interrupted to even consider your firm’s offering. It is a winner take all world.
A better exemplar of the new economic reality is the cult of celebrity. Riches go to only the top performer. Winner takes all. A famous actor, musician, athlete or blogger can command huge incomes while all the wannabes struggle in obscurity. Economic success is no longer a product of the scarce resources you control. The only real differentiation arises from the quality of ideas and your ability to command an audience.
How will your company survive when you product or service is given away for free?
How can you become a celebrity in your niche?