Economic Interests

If you owe the bank £100, that's your problem. If you owe the bank £100 million, that's the banks problem.

Is this the Online Golden Age, or are we facing a Modern-Day Tragedy of the Commons?

The tragedy of the commons is a concept that believes individuals will act on their own self-interests and eventually exhaust shared resources. The individual without regulation will consume more than society deems efficient, even if it is not in their own long-term interests. A classic example would be a lake where anyone is allowed to fish; individuals would deplete the lake and gain all the benefits (lots of fish) and none of the costs (no more fish in the lake). Ways around this problem are to either assign ownership of the lake to the individuals (maybe as a club) so that they now have long term benefits from restraining their fishing or the government could place taxes or quotas on the fish, thereby increasing the costs of catching more fish or simply forcing the individuals to stop fishing at a certain amount.

But a modern-day version of this problem could be the internet.  Everyday billions of people are using the internet to learn vast amounts of knowledge that in any other walk of life would have a price, but with the internet is only a click of a button away. The saying “Knowledge is power” is not really applicable with the internet, as information is available to anyone, but does this reduce the value of the knowledge?

The internet (as a universal resource) is killing off many traditional suppliers of knowledge; Newspapers, Magazines, Books. They have either been forced out of business or into the online world itself, where fierce competition means trying to place a price is out of the question. It has been argued this has reduced the value of information, as there is no incentive to produce quality reports/articles/statistics when you can’t make any money from it. This is how it has come to be seen as a tragedy of commons; Users have no incentive to pay for knowledge and overuse free knowledge that can be found online, this has the effect of decreasing the standard of quality of information and users lose out in the long-term. This could easily be applicable to Music, as users download free music, artists make decreasing returns on their music and so fewer artists make music.

The methods to fixing a tragedy of the commons (as mentioned above) are much harder to apply to the internet. Giving ownership to users over knowledge on the internet is nigh on impossible, as they could just find the information somewhere else. The other method of government intervention is already being started, but mass protests from sites and users could de-rail this, as well as the fact that control over the internet has many logistic problems as information travels between countries and is incredibly hard to tract.

But does this paint the full picture? I think not. The internet has become such a revolutionary tool by being available to everyone.  It is in its very essence to be accessible by the billions and has improved innovation immeasurably. Sites like Wikipedia, YouTube, Google, Facebook and Twitter have all helped share information at faster speeds to more areas of the world than any other device. Products and businesses are now being started online to gain access to the world population, and have become some of the most successful of their kind in the world (Google, Facebook). The internet has even renewed everyday services with more efficient methods like for example online Banking and online shopping.

The idea of the internet being a tragedy of the commons also has some holes in it. Knowledge may not have a price anymore online, but that doesn’t mean companies can’t make money. Sites as mentioned above (excluding Wikipedia) make billions from advertising nowadays, as users are bombarded with new products they can buy or new service they could try out. It also dismisses the idea that knowledge doesn’t have to be about power or making money, some individuals may just want to teach the world something new. There is also dispute over the internet being a renewable resource, as that would count it out of the tragedy of the commons problem.

The internet may have some problems over knowledge, as the jungle of information can make finding relevant data difficult and it does decrease the value of information. But the idea of the internet being controlled seems both impossible and unwanted. It has connected society now and severing those bonds would be harder than people think.

Though I have to say, I miss the days when a friend could ask a dumb question and not have everyone get out their iphone.


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2 thoughts on “Is this the Online Golden Age, or are we facing a Modern-Day Tragedy of the Commons?

  1. Pavlos on said:

    Another way to fix Tragedy of the Commons problems, as you are hinting, is simply to find an indirect way to fund the activity. The fact that people are sharing knowledge, songs, whatever is a gain to society. Failing to fund the creation of knowledge is the loss.

    One way to fund indirectly is advertising – it’s a loss to both the advertiser who wastes money and to the consumer who gets influenced into less than optimal purchases; but we like it because free-to-consume content is such a gain.

    Other ways might be to pledge and sponsor projects a-la Kickstarter, to tax and grant, or to levy in some way the medium and then crowdsource the apportioning of funds to specific projects. I’m sure there are other funding models that would work. It’s just the specific “sell it for money” model that’s failing.

    • You make a good point, maybe with the internet bringing such difference tools to the market, you need new methods to try and make money. That is also true about advertising, too much money is probably wasted funding it (very difficult to judge the benefits) and people end up buying stuff they do not need. I like your blog btw, very well written and informative.

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