Happy Birthday Dear Internet . . . The Internet Devalues Everything It Touches

Technology always 'devalues' what it touches--but it always creates more value elsewhere.

One thing improves GDP per head: and that is technology.

The printing press devalued the monks role of copying out the bible by hand.

One is devalued if and only if one insists on looking for the same value exchange that existed before the technology. So if,a s a journalist, you stubbornly hold to being paid by a publisher who still insists on selling printed pages, you are much like a blacksmith who refuses to believe the demand for shoeing horses is dropping.

I for one believe that a world of friction, intermediation, selective-access to information and elites that controlled output and wealth, would be far better than the one we have today. Not.

I agree, technology always devalues everything it touches. Which is why it is strange to look to Silicon Valley for a way out of the recession. We will either all have to share in the value that technology provides or we will fall into unpleasant divisions.

The ONLY reason it devalues anything is if you let it. Look at what it it did for retail. Someday, all will realize the reason why failure happened and the web dismantled anything was by our choice and lack of proper adaption and adoption to it as a platform.

But that's what you get when you have many people talking and few people who actually know, like today.

Tom, in response to both this post and your previous one - the Internet can be reduced to a very basic efficiency: distribution. And in the examples you cite, the erosion of value comes from the elimination of institutions that capitalize on scarcity of a distribution method. I'd argue that if anything, the value of the actual consumable has risen in many cases, for example the rising costs of producing prime-time television shows and movies, or iphone applications. Ask Arianna Huffington, Henry Blodget or Michael Arrington if the value of talented journalism has dropped. For nearly a decade the harbingers have predicted the demise of state-side software developers, but demand in the valley is still strong. The challenge now is how organizations that once recouped the value of their creation by controlling the method of distribution, and the polar change to not only give up that control but also take advantage of cheap channels. Humans haven't even begun to demonstrate a limit on their ability to consume information, so current demand far outstrips supply.

I used to worry about the very scenario you describe but have since decided that it seems to be a short-sighted perspective on how the Internet is recapitalizing our society.

Tom,
You say about online journalism: "we don't have (yet?) a good way to recover the value of that work in dollars."
But you have found a way to turn your journalism work into dollars, have you not?
Cronan

I should note that I was being sarcastic--but the technology in this case did devalue the nuance!

Look: technology changes things. it changes business models. Why? Because it makes certain things that had to be done by hand, easier to do--through machine.

So where it took five men a week to plough a field by hand, a bullock and plough would do the same job in a day and a tractor in an hour.

That was bad news for those five men, in particular if they didn't have other skills.

For journalists, technology (not just the Internet, but mobile phones, and the growth in education and literacy levels of the rest of us, also driven by technology) is challenging the role as simple intermediaries of events.

For an individual journalist, you have to now work out how to deploy your skills. And of course the reality is that there is risk (in the uncertainty) sense of that. Do you do an SVW? Or do you go into PR? Do you become a very nice narrow expert in a single field?

Honestly, it's ludicrous to talk of the Internet or technology as devaluing everything it touches (which it might) without pointing to the enormous, profitable new fields of endeavour that it is creating at the same time.

It's rather like some complaining the the home birth of their child has ruined the five-year old Ikea rug, instead of enjoying the wonder of having a new addition tot he family and of creating a new life.

Cronan, yes, and no. Right now I'm not making hardly anything but in other years I was able to more than double what I was making working for a newspaper. Plus, my model is fairly specific to me, it's not something that can be easily adopted by other publications.

Azeem, I agree with you that the Internet creates huge amounts of value but - we don't all get to share in the value created. Disruption is good. But at some point, not very far from now, we will be able to produce the vast majority of the products and services we need, for a fraction of the cost, and they will be many factors better than what was before. What happens when only, say, 10 per cent of our population is needed to produce 100% of what we need as a society? How do we share in that tremendous productive capacity without falling apart? We don't have a model for that kind of future but we will have to have one eventually. We should be thinking about these things now...

Yes, there is tremendous value in talented journalists but look at the New York Times and its struggles to monetize the value its journalists create. Also, many of the "new" media sites are just barely making it and their costs of doing business are so much less than the NYTimes. Clearly, there will have to be other ways to pay for the things our society needs, which in this case is a vibrant media sector with a professional journalist sector that can work on serious stories.

As a society we have some serious issues to deal with, some serious decisions need to be made about healthcare, education, government policies, the environment, energy, etc. If we don't have good information on which to base these decisions then we will have garbage in, garbage out, we will have special interest groups taking advantage of this growing lack of independent analysis and reporting. It's a very serious issue. I believe it to be the most serious issue we face -- how do we maintain a healthy and independent media sector. We don't have the answer, yet. I believe we will eventually work it out but it won't be an easy journey.

We are well into that golden age. The list of companies not devalued by the Internet is huge: Google, Microsoft, Yahoo, EMC, Cisco, NetApp, Dell, IBM, Oracle, HP, Apple, Salesforce, Facebook, Samsung, eBay and on and on. The list is almost endless. Yeah...the content world is being disrupted, but business models are not guaranteed. They evolve over time, are destoryed, or they thrive. But to say that the Internet devalues everthing it touches is so so wrong. It enables probably a 1000X more in value than it destroys.

Also, I don't understand the tangent about immigration. How do migrant laborers lower our living standards. Cheap fruit seems to be a good thing. What does limit our labor standards are quotas on highly trained talent. Not giving a visa to a recent PhD from India simply means s/he will return home and compete against the US. If you are good enough to be accepted to a US university, then you should be good enough to have a work visa here as well.

In the comments, you also make a bold forecast about 10% of the population being able to create all the products and services. Remember: a hunch isn't research.

Yes, the Internet enables huge amounts of value, I don't dispute that. But it also disrupts large numbers of businesses and jobs also. I'm interested in how our society will deal with that aspect of the Internet. And as for immigration laws, they exist because they protect jobs. What other reason is there? Since that's the case, won't there be some attempt to control the loss of jobs due to the Internet enabling digital work to be done trans-border? It would seem logical that this would happen. I'm not saying it is the right thing to do...

I would hope that instead of trying to stop jobs from being exported, which would be the wrong thing to focus on as that drives competition and efficiency, that we instead focus on retraining people to do more difficult/higher value jobs.: things that make society more productive. We also must be reminded that a job isn't a right...you have to earn it. Keep upgrading your skills, take classes, learn new things, do not be happy with the status quo: these are things that all people should be doing.

Love the post. I've long believed that the Internet devalues everything it can touch. The truth is that as you take the friction out of the economic system pricing goes down - and the Internet is the ultimate economic lubricant. Jeff Bezos becomes a billionaire selling books and Borders teeters on the verge of bankruptcy. Music retailers are toast and iTunes becomes the #1 retailer of music in the world. Few would argue that consumers are worse off as a result. The key - from an economic standpoint - is to adapt and become the guy who cuts out the middle man - or who uses the benefits of the Internet to apply to a business that cannot be disintermediated by it. So if you are an electrician who bought stuff from a wholesaler, and there were 3 more links in the chain up to the manufacturer - I guarantee you can now get your supplies cheaper going direct - and no one is going to harm or devalue your business; after all, without electricity the Internet is truly a dumb pipe.

Harry, yes, the Internet is a great if not the greatest competitive lubricant :) But it also means that few businesses are safe from its effects. Yes, you can continue to scramble up the value-add ladder but surely at some point, there are no more rungs. At some point we will reach a stage that not everyone has to be in a productive job for society to do what needs to be done. Do we create jobs for jobs' sakes? It will become a much different economy and society -- we should be thinking about how we will live in that type of future and plan for a peaceful transition.

Controlling immigration to save domestic jobs hasn't been working for a long while. You can just export the factories. And now the Internet does a great job in tunneling through any border barriers.

Yes, increasing our job skills is essential. Learning how to learn is the best skill to have. But you have to keep running ahead of technologies that seek to replace human skills and labor -- but we've been doing that since the beginning of the industrial revolution. So far so good...