The End of the Info Age

Abstract: This article is based on DonParagon's Vision of the Future. The article wonders what assets back up the trade in money, investments, loans and derivatives. The article concludes that it is information that now makes up most wealth in the business world. But how solid is information as an ultimate back-up of asset values? As information becomes more easy to access, prices for information will come down. The so-called Information Age will come to an end, not because of a renaissance of physical assets, but because the Information Age reflects cultural values of the past, such as assets, ownership and theft. In future, 'theft' will simply become less attractive, because it will become ever cheaper to obtain information, while one's name and reputation will become more important. As falling prices for information will decrease its asset value, creativity will emerge not so much as the dominant source of wealth, but as the determining factor in prosperity. The article concludes that, in future, people will not be valued for their possessions, nor for what they have to sell, but for what they can create.


A. Wealth's changing Shape

In the old days, wealth was measured in things such as the cattle one possessed and in the size of the land one owned. But as trade and industry made the city wealthy, many moved to the city to become rich living on a small block of land.

Progressive income taxes have disguised the extent of these changes; tax revenues on trade profits that were made in the city, were not only re-invested in urban roads, electrical grids and sewage systems, hospitals, ports and railway networks. Eventually, utilities such as the electrical grid, postal and telecommunication networks, and infrastructure such as roads and commuter railways reached out far beyond the city centre.

At first, only the poor lived in the outer suburbs and factories and railway stations were planned specifically for poor neighbourhoods. Gradually, more shops andresidents moved out of the city centres creating a suburban culture of shopping malls and cul-de-sacs. Since 1976, all population growth in Sydney and Melbourne has been in the outer suburbs and the city centres have lost population, while two-third of businesses are now based in outer and middle suburbs. Australia's major capital cities have long lost their appeal; statistics show that the capitals had a net migration loss over the past decade, in Sydney's case a drop of 138,700 between 1986 and 1991.

Other changes in culture are linked to the changes over the past decades in the things people do, i.e. activities such as work, education, eating habits and leisure activities. Many more people now find work in services than in manufacturing; education is no longer training in manual skills, but transfer of knowledge. On-going gains in efficiency and globalisation of trade have driven down the cost of living as measured in the price of consumer goods and of services such as eating out in restaurants, building a house or renting a car. Watching TV has become the number one leisure activity for all age groups.

In a global trend, wealth is no longer determined by geographics. Global competition in production of and trade in commodities means that owning land for its resources gives a company little advantage in trade. Many have come to realize that wealth is represented not by real estate, but by information. Wealth is now expressed in letters and numbers on contracts, shares and investments such as superannuation funds; wealth is now expressed as data in the computors of banks and other organizations. This is what many call the Information Age or Information Society.

B. Wealth is Information

Many people have problems accepting the cultural values associated with the Information Age. They look back with nostalgia to the family values of the past, to the order and discipline, and the respect for authority that characterised the cultures of the past.

Today, currency swaps alone represent a total value that is worth many times the total value of goods traried on the global market. Net daily currency trading is now estimated to add up to a staggering $US 1.3 trillion. Together, the central banks of industrial nations barely hold half that amount in foreign reserves. Many wonder how so much money can be in circulation, when values of land, cattle and commodities and prices of consumer goods only seem to go down; they wonder what the assets are that back up the gigantic value represented by all this money, shares, debts, loans, insurance and superannuation policies and derivatives.

The answer of today's Information Society is: information. Many companies will say that their most valuable assets are stored in filing cabinets and computers; they are a company's contracts with clients, its marketing expertise, the knowledge built up by key staff members, its licences and its designs, patents, trademarks and other 'intellectual property'.

The dominance of information as the source of wealth seems unchallenged. Yet, control of information-based assets requires enforcement of out-of date cultural values. As long as the wealth constituted by information is based on exclusive ownership of such information, this exclusivity is in turn based on laws that can prohibit access to 'intellectual property'. And this in turn depends on the Government's ability and willingness to enforce such laws.

C. The End of the Info Age

Exclusive control by a single owner was the cornerstone of the law in many cultures. And in an effort to preserve the cultural values associated with ownership, the Government typically enforces the same type of ownership rights on information, as it has done on real estate and other physical items. But information has a different nature than such physical items. Information can be copied and taken elsewhere undetected, while the original remains untouched. Information can be encrypted and sent over computer networks to multiple destinations all over the world in a matter of seconds.

This makes it hard for the Government to track the movement of assets, say, in a merger between two media conglomerates. When such intangible assets move across borders between branches of multinational organisations, they are often undetected by taxation bureaucrats. This also makes it hard for the Government to enforce exclusive control and usage by a single party. In the case of real estate it is quite simple to determine who lives in it. But who uses specific information? Many companies zealously guard their filing cabinets that contain details on their staff, clients, suppliers, etc., not so much out of respect for the privacy of these people, but more in the belief that their exclusive access to these details is the key to their future success in their competition with other companies. As companies steadily upgrade the value of such assets, they pour huge amounts of money into Management Information Systems and other computerised systems to speed up access to all this information.

But as companies all over the world computerise such systems, some of them will try and earn money by offering commercial access to information they have collected. Such companies will find it more attractive to give others access to such information (at a charge), than to use it exclusively.

In the case of information, it only takes a few organisations to make such information commercially available anywhere in the world at attractive prices, to wipe out the asset value of all other companies holding the same information exclusively. As commercially available information grows in quantity and quality and as access becomes easier and cheaper, the value of information as an asset for the average company will decline.

Similarly, companies pour huge amounts of money into staff training, in the education of their scientists and in research that increases the knowledge of their staff of the market and of their products. But why have expensive in-house research to obtain information, if that information is immediately available on databases at commercially attractive rates; why put information into the heads of staff through education, if all such information is readily accessible? According to Forbes magazine, the richest man in the world is now Bill Gates. Many use this fact as evidence that the Information Age has arrived. But it is also interesting to note that Bill Gates' $US 13 billion fortune is largely based on his legally backed grip over the computer software market, rather than on his education record: good old Bill has got no formal degree at all!

With the growth of computer networks and cheap media such as CD-ROMs, information will be more readily available from all kinds of commercial sources. Meanwhile, building-up databases in-house will become increasingly expensive, not because of the cost of hardware, but due operational costs such as keeping details up to date with an eye on accuracy, privacy, defamation, etc.

As access to information becomes available at attractive prices and in attractive formats from competitive sources. The Government's arbitration on who owns certain information becomes more and more irrelevant. Holding such information as an asset will in many cases become a liability.

At the moment, the dinosaurs of the cultures of the past all cheerfully enter the Information Age. The dinosaurs are the Government and all the organizations that derive their status from the Government's grip over society. They are all frantically buying mainframes to store the precious information they cherish as assets, in the belief that this can camouflage the huge debts they all have incurred. But the Information Age will eat them alive and spit them out like trash.

D. Is this the end of Theft?

Many people fear that, without the law to protect the concept of ownership, cases of theft, in the sense of using original ideas without the consent of the creators, will rise. But as prices of information come down, its value will also come down and such theft becomes less attractive, while a good name and reputation will proportionally become more and more important.

As an example, the costs of making a film can be astronomical. Earlier this year, MCA wrote off $US175 million just for production cost of the film Waterworld as a tax loss. Promotion costs are proportionally even higher, meaning that a film such as Last Actian Hero needed to gross $US305 million just to break even. Apart from revenues through cinemas, there now are the additional markets of TV, cable, satellite, video, CD-ROM, etc. Merchandising as a spin-off from films was estimated to be worth $US65 billion in 1989 in the US. Would a film-producer risk all this by using a potentially stolen script?

To give an example that deals with physical items, a portion of french fries may cost over $1 in a restaurant, but the farmer got perhaps less than one cent for the potatoe from which the fries were made. Such resources are 'small fries' in a competitive market; it is irrelevant who supplied them. But any accusation that the potatoes were stolen will tarnish the restaurant's name; when so much money is spent on building up a good reputation, why risk one's name by 'saving money' on potatoes, if their cost is 'peanuts'? Any accusation of theft will bite, as the public will wonder whether the restaurant manager is a liar who may serve bad dishes.

Crime is in fact part of the anonymous society set up by the Government; as people hide behind the facades of organizations, they believe their own name is not at stake when they act improperly; they are faceless; and an opinion that is in conflict with the Government's rule is silenced as if it is a crime.

In future, it will be important to build up a good reputation and, as the cost of products and services comes down, one's name is worth more than perceived short-term gains of theft.

E. Who will be wealthy?

Athletes who wim gold medals at the Olympic Games do not get more for their victory than the gold they wear. But the real earnings come in as they are offered contracts to appear in TV-commercials. They can earn millions from sponsorships by manufacturers of sport gear and from appearing as speakers at fund-raising parties. The big wealth is in such add-on earnings, not in the prize money of sport-contests.

Forbes Magazine lists four writers who each earned well over $US 10 million both in 1993 and 1994, as they each produced a string of popular novels. Most of their earnings came not from royalties for their books, but from movie rights! In future, added earnings from markets such as TV, video and merchandising products that use images based on one's creative work, are only likely to go up. James Cameron, the man behind Alien and Terminator 2, reportedly made a deal with Twentieth Century Fox in 1992, guaranteeing him $500 million for 12 movies based on his future work. Participation in such added markets more and more is the key to a writer's fortune.

The same can be said for composers of music. They can earn money in many markets, including live performances, record sales, use of their compositions in movies, TV-commercials, etc. The highest paid musicians are typically creators who perform their own work. Forbes' list of highest paid entertainers is full of musicians who have been around for a long time, showing the importance of name and fame. The Beatles and the Rolling Stones started their fame in the 1960s and still outrank all other musicians. Interestingly, Michael Jackson, who owns the rights to the old Beatles songs, is given a distant eighth place.

Michael Jackson may legally own the rights, but this arrangement does not enhance the value of the songs as assets. Anyone who wants to use such a song now faces the wrath of Paul McCartney, who is angry that he can be forbidden to perform the songs he himself has made.

Advertising is all about image and images are fragile. Advertisers do not like to risk the millions that are put into an advertising campaign, if there is the chance that the creator of the work that is central to the campaign, may start protesting against the use in the campaign. As added markets grow in importance, it will become even more important to gain the full support of such creators from the start and beyond the length of such a campaign.

Those who try to use information for a profit will find it increasingly difficult to buy such information and then use it as they see fit. They may be able to buy off some people who claim to own or to have created such information, but there may be others who have independently developed virtually identical information. Putting such information in the public domain is as inappropriate as enforcing exclusive rights of a single owner. It becomes important to allign oneself with ideas behind information, rather than to buy them. There will be a wealth of opportunities to participants each of which with such information readily available.

E. Who will be valued?

In the end, wealth in the traditional sense will lose its glance as what represents wealth keeps falling in price and value. There is no advantage of sitting on a huge pile of money, without any idea what to do with it. In the past, people used to sit at meetings because of their authority, their financial clout, their expert knowledge, etc. But people with dictatorial views will not be appreciated in a world in which the use of force is an unwelcome proposition and is a liability for all who get involved with it. People without face or spine will be left behind, ostracized as useless burdens. In future, people will not be valued for their possesions, nor for what they have to sell, but for what they can create. People will be invited to projects and groups for their ideas and their vision. What will be valued is their creativity; their artistic potential their ability to communicate, solve problems and give meaning to ideas. People will be valued for the way they can motivate others by expressing above qualities, from the realization that the future will be shaped by Optionality.


Appendix DonParagon's Vision of the Future

The following paragraphs are taken from earlier desciptions of DonParagon's Vision of the Future.

Many say that we are in the middle of the 'Information Society', but I rather avoid terms that depict this controlled, orderly, logical, rational and scientific society the Government has organised for us, says DonParagon.

The Government forces people to live in a society in which transaction-based values prevail. One is now valued for what one has to sell, either objects or one's time, i.e. labor augmented by gained skills or knowledge. But trading creative achievements like assets is like taking words out of context. If creative achievements are separated from their origin, they can lose much, if not all, of their value. In my vision of the future, participation-based values will prevail, i.e. one will be valued more for participating on the basis that one brings creative input along. This works both ways: someone who has something to say or to show will also love to participate and be appreciated. One does not have to give anything away for this, as in a transaction in which one loses something; it can be a win-win situation.

If I could name the era that we are now embarking on, I would call it Improvisation Time. In future, people will spend more and more time on following their own ideas. People will have more time to spend to be creative, to improvise and be successful because of that. The future is for people who are spontaneous, enthusiastic, etc, as well as for people who can listen, are interested, have an open mind and who notice talent.

In future, we will be able to participate in activities, events, initiatives and movements where and as we want to and that future will be there if and when we want it to be. It will be a future of Optionality.




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