Monday, April 4, 2011

Post #11: Commercial and Sharing Economies

The difference between commercial and sharing economies is that, in a commercial economy, "money or 'price' is a central term of the ordinary, or normal, exchange" (118). In contrast, a sharing economy's exchange can involve anything except money. This means that requests for attendance, a need for cleaning help, etc. all encompass the types of exchange sharing economies work with. We live in a society that forces us to constantly interact with both types of economies, especially on the internet. While a request for a blog post from a professor would constitute a transaction in a sharing economy, the purchase of a $10 DVD on Amazon would describe the transactions in a commercial economy.

This distinction matters because Lessig wants the reader to understand how our culture has become so accustomed to certain interactions and how slight alterations may throw us for a loop, such as in his example where the waiter refused to put cheese on his pasta to preserve its taste. One would think that if the waiter was concerned about rationing the cheese, some money would make its use alright. However, this is an example of a sharing economy because eating the pasta as is was the request, or demand, and no monetary funds could change it.

Lessig's discussion about how long tails, little brother and Lego-ized innovation help commercial economy businesses such as Google succeed also aid in understanding how we interact with the digitized medium. I especially think the point about how "long tails", or the ability to have an increased inventory thanks to decreased need for space allows businesses to reach customers on a much wider range. These days, we take for granted the fact that Netflix has over 75,000 titles and just a decade ago Blockbuster was happy with its collection of about 7,000. This is the reason why Pullman's Blockbuster couldn't keep up and the online business is taking over. It's important to understand how the success of these businesses has forever changed the ways in which we acquire our daily wants and needs.