Shifting Economics of a Digital Age

The world today is vastly different from the world of even 50 years ago. We talk as economists about concepts that really only apply to things which hold a physical medium. The coming of the Digital Age forces us as a society to rethink how something is profitable. At the onset of the Digital Era people questioned what it means to “own” something, what does it mean for them to own a copy of a CD if it is not unique? The answer economists provided was that whoever makes a product is entitled to distribute it however they so desire. Now, if what is produced is a physical object, I agree with this for by selling that product the producer is denying themselves the use, but if what is being sold is intangible, than what is sold should not be owned by any one group or person. In the example of CD’s what is being sold is not the physical medium of the CD, but the knowledge contained on said CD.

The entertainment industry struggles with this as a whole as when they create new ways of saying things people copy the knowledge bypassing the need for a physical medium all together. The entertainment industry business model though is based in a material society instead of a digital one. Instead of forcing everyone to pay before watching, because it is almost impossible to prevent the spread of information, the Entertainment Industry should instead make money based on the amount of people at a given time watching a given piece of knowledge. As Netflix grew it was found that the amount of people “pirating” movies decreased, this is because people were no longer being barred from access, but instead being asked to pay for access to the information. Now that Netflix has gone global the Entertainment Industry is now trying to region lock information once more, and Netflix is going along with it. I expect to see an increase in “piracy” in the coming months because the walls around knowledge will not last.