The Zero Marginal Cost Society, by Jeremy Rifkin

This is a book I really wanted to like. Both because I like Rifkin, his ethics and what much of what he has done, but also as I think the theme of the book is both very interesting and important.

The idea with a “near zero marginal cost society” is an interesting one, but I do not understand why Rifkin writes a book that is confusing the issue rather than helping make sense of the complex situation we face.

If we look at the different phenomenon that Rifkin discusses as “near zero” they are all interesting, but they are very different and only one category, with very few example, could be called close to zero marginal cost (if we ignore the cost of building and maintaining the ICT infrastructure). By confusing very different categories Rifkin is not helping provide a better understanding of the challenges we face. Perhaps he was hoping to contribute to a broader shift in how we approach cost in the digital age, but with such

I have seen others do similar mistakes as Rifkin, and below are four main categories that I use as a starting point during lectures to help provide a basic understanding regarding some of the key aspects of the digital economy.

1. (Close to) Zero marginal cost This is when a service can be provided for 1 person or 9 billion without any change in cost (for the provider): Software/information, books, movies. images and music belongs to this category (e.g. Operating systems, e-books, mkv-files, jpg-files, etc basically everything provided by Piratebay . It is important to understand that some of the goods in this category (like software) require significant investments. Too many people confuse zero marginal cost with zero cost. The question of how such goods should be priced is interesting and many might be goods that should be provided through taxes and then turned into digital public goods in key areas (education, health, science, etc. classical music).

These goods are interesting as many of them do not can be shared without loosing their value, the value actually increase as more people use them (from Skype to music)

This is basically data that can be copied.

2. Optimal use This is when limited additional use can be seen as zero marginal cost (if the existing use is profitable). This is when people share cars, tools, rooms (e.g. Air bnb, sharedearth, Zipcar). The “low” cost in these cases are not really low or zero, they are just a result of suboptimal use of our resources today. The fact that individual car ownership result in a situation when the car is often used less than 4% of the time does not really make the use of the additional 96% free. The fact that connectivity allows us to use products more optimal is very good, but it is only when we approach the challenges from a service perspective (in the case of the car “mobility”) that we can identify really smart solutions.

Optimal use is therefore in many cases just better use of fundamentally unsustainable solitudes, from extremely inefficient fossil SUVs that are part of car sharing schemes, to enormous inefficient apartments that are part of airbnb or similar schemes.

3. Low/zero running cost This is when the fuel/material used is zero or close to zero. Solar power, wind power, hydro power (almost nuclear power) belong to this category. These kinds of solutions have been part of society since the dawn of civilization, from windmills to water pumps.

These are fundamentally different from category 1, as these goods are not possible to share in the same way, if I use solar power it is less power left for you to use. When I read an e-book it does not affect your possibility to read it (if anything it increase the value of your reading it as we can discuss the book).

If the bulk of the cost belongs to the upfront investment for the construction of the goods, or to the running cost has noting to do with a zero marginal cost in the long run. It is the total cost of ownership that is interesting. There are challenges, from physiological/personal financial that tend to make people buy cheaper goods with higher running costs, to institutional when some companies roll over running costs to end-users. Still these challenges are not really related to the other zero cost aspects above.

E.g. the challenges with solar today is that most depend on materials that are limited in a way that do not allow them to be scaled up so that 9 billion can use them. They also require a lot of investments, not only to build them, but to connect them and maintain them in the current system. A simplistic “zero marginal cost” approach run the risk of hiding these important challenges.

This group of solutions must always be assessed through a LCA for natural resource use and actual costs of ownership.

4. Low production cost There are also a number of products where the value is due to research (or branding/marketing) not the actual production cost. Many medicines belong in this category, but also much of the luxury market where people pay for advertisement (like designer shoes, clothing, make-up).

For the “unnecessary” goods there are some positive environmental aspects as people pay a lot of money for very little material. Still the overall focus on citizens as consumers probably results in an overall negative impact (as these goods tend to promote short-tem thinking and limited empathy)

For necessary goods, like medicine, there are a number of interesting initiatives trying to explore how those in need can get access to medicines they need. E.g. http://healthimpactfund.org/ that is interesting as it also help focus on actual gains from the medicines.

In summary: Although I tend to disagree with much of the content in the book I still think this is a book that could be read as it covers many of the new trends and ideas that are often ignored. Also Jeremy has the heart in the right place so the discussions are interesting. I would recommend readers to approach the book like a bookmark collection from an interesting person who has found a lot of good pages on the web rather than a book with a coherent idea (or with any references to actual first hand research). I hope that the fact that almost all of the references are articles on the web is not an indication of a shallow thinking behind the book, but rather an attempt to provide easy read articles (although I think such books should have references to actual research).

I guess my conclusion is that this book could have been distributed as a 5000 words article and the weblinks downloadable as a package.