If the high-speed networked world is to succeed there needs to be a dramatic shift away from current economic thinking.
So says influential writer and president of the Foundation of Economic Trends Jeremy Rifkin. Rifkin, who has written over a dozen books on the impact of scientific and technological changes on the economy, was speaking atresearch firm IDCs European Telecoms Forum in Rome Monday and called on gathered delegates from the world of telecommunications to take a simple message home to their chief executives - capitalism is dead. Long live the network.
According to Rifkin a networked world has no chance of making an impact on peoples lives unless it is accompanied by a revolutionary shift away from a market based economy which trades on geography, time limitations and physical transactions to a network economy which operates at the speed of light, without the need for buyers and sellers.
Kids of the future will not view a toy as a physical gift with a limited shelf life but as a platform that can be constantly upgraded using downloads from a network says Rifkin. "Why would anyone want to own anything in the 21st century when it is immediately outdated and upgradeable?" he asks. More and more of our life will be commercial and contractual with, for example, music bought on a per month contract along the lines of the Napster Bertelessman model currently being experimented with he believes.
In the brave new networked world the true asset to companies will not be physical capital but intellectual capital.
"Every industry is facing lower transaction costs and smaller profit margins and all companies are wrestling with the question of how to move from the market to the network," says Rifkin. The real issue will be how to value that intellectual asset - something the music industry is already struggling with as it considers Napsters offer of a billion pound payoff for its copyrighted content.
While Rifkins ideas may seem far-fetched there are already concrete examples of the radical shift away from market economics to those of the network. According to Rifkin UK pharmaceutical giant SmithKline Beecham is already planning a move to networked health care, linking up with insurance firms and employers to offer a "Keep Well" service rather than selling merely selling drugs.
M-Ware, a firm based in Utah in the US is offering people smart water sprinkler services. Instead of selling the devices the company is giving people the chance to link up their sprinklers with a network that will tell the product when to water the garden.
An example of a company turning its back on physical goods is Encyclopaedia Britannica which has already abandoned its valuable collection in favour of a free Internet-based service. This brings its own rewards in terms of advertising deals although Rifkin warns that there will be pressure on such content owners to remove the more obscure reference pages which attract few clicks, thereby risking knowledge becoming just another commercial transaction.
A networked world is not necessarily a good thing acknowledges Rifkin. "At least with a market economy we got time off," he says. "With the network we are embedded for our whole lives." The challenge for network and content providers will be to make sure the brave new always-on world is used to enhance our lives rather than add more stress. "We need to re-empower civil society and find a balance between content and commerce," concludes Rifkin.
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