Overlooked and troubling: information wants to be really expensive, not free
Here is the conventional story-line of digital information markets in very broad strokes:
The ability to copy and distribute digital information at basically no cost paired with new business models based on monetizing eyeballs or user data essentially mean that news and other information types resemble digital loss leaders, free-ish give-aways to pull in the crowds. Even the pricing of the very few top news brands that can still afford to charge for content are under enormous pressure. Competing with free forces them to maintain low prices and the economic logic of zero-cost digital copies also induces them to “pile it high and sell it low” — going cheap to reach as many paying users as possible, since every extra copy sold is pure profits. What’s more, various open data / open government initiatives, huge troves of user-generated content, philanthropic knowledge collaboratives such as Wikipedia all put lots of incredibly valuable information right at the fingertips of consumers and the powerful search functions at their disposal. In a nutshell, information in the digital age really wants to be (and increasingly is) free. And the unfortunate, yet inevitable collateral of this cheap, democratized information cornucopia: old broadsheet media perennially teeters on the brink of collapse, newsrooms shrink, budgets for in-depth investigations, deep expert dives and local reporting evaporate.
For sure there are lots of qualifications to this plot related to monopolistic elements, platform and gate-keeping dynamics etc. yet the main story still seems to stand. Information increasingly seems to edge towards free (yes, as in free beer) or at least towards really abundant and much cheaper.
A missing dynamic
But is this really the whole picture? The mantra of non-rival and ever cheaper information somehow always sounded a bit too good to be completely true. So I began to take a quick, rather unscientific look at some major information markets and summarize some initial observations in a recent working paper here. As it turns out, the conventional story is indeed rather incomplete and in many important contexts quite misleading. It overlooks — in line with much of the more popular academic and policy thinking on digital information — an essential attribute of many information products that directly contradicts the current plot: Information in the digital age does not necessarily drift towards cheap. Quite the opposite, in many important contexts it “wants” to be really expensive. Or more technically: many important information products are positional in nature, meaning they are more valuable (or only valuable) to someone if only few other people (or no one else) does have the same information at the same time. This is a common-sense feature of information that has long shaped professional information markets. Think as the most straightforward example, financial insider information. If I know about an imminent bankruptcy or high-stakes merger before the information becomes public I can trade on this advance notice and possibly make a lot of money. But this does not work if everyone else receives the information at the same time. The more people are in the know early on, the fewer opportunities for converting this information into monetary gains. And this positionality of information is far from dead in the digital era. On the contrary, with data and information as THE new strategic resource across the economy the positionality of information does matter more than ever. The consequence: vital information is not becoming cheaper and somewhat democratized. Instead, it is artificially kept scarce to realize an exclusivity premium. It is being made so expensive that only very few users can afford it and these deep-pocketed few are willing to stomach exorbitant prices for the very reason that this moat of average unaffordability guarantees that no one else can monetize the same information at the same time.
Information positionality -not a big deal? Think again!
Sounds abstract, dubious and niche? It isn’t. As it turns out, this deliberate pricing for exclusivity affects some of the most consequential information markets in our societies. It is prevalent for many types of economic and financial information and gives the best-resourced market players a tremendous edge over other market participants on many fronts. It applies to legal information and unfairly distorts access to justice. It thrives in markets for political information and undermines political equality by enabling wealthy actors to be much more effective in intervening in the policy process and asserting their interests. And it may also influence how scientific knowledge is being priced and disseminated, essentially giving an advantage in attracting talent and maintaining superior research excellence to a handful of the best resourced elite universities and their libraries.
A new perspective and then where next?
Positionality of information is neither new nor complicated, yet peculiarly overlooked when it comes to discussing shortcomings and challenges for information markets in the digital age.
Thinking about information from a positionality vantage point provides a fresh and more nuanced perspective on incentives, business models and interests of different stakeholders with regard to information production, pricing and access. It helps pinpoint the bifurcation of certain information markets into cheap/low utility and expensive/high utility segments and the related reinforcement of structural inequalities. And, last but not least, the positionality of information can help develop some plausible ideas about how important digital information markets and the strategies of major players that drive them might be evolving in the near to medium-term future.
I flag eight of these speculative dynamics in my paper all in the spirit of stoking an urgent debate on what policy responses could be fathomed to comprehensively address the tricky issue of formation positionality.
Zinnbauer, Dieter (2018), Information Wants to Be Expensive, Not Free! And this is Bad for Justice, Democracy, the Economy. Available at SSRN: https://ssrn.com/abstract=3125074