Can Capitalism Continue? (Part 4) “Placing Calculated Bets on Human Creativity”

This is part four of a multi-part series that seeks to answer the question: what resources will remain scarce in the future? Since economic activity is based on scarcity, by answering this question, we may be able to locate future areas of employment, if they exist…

SCARCE RESOURCE #3: CREATIVE POTENTIAL

Times have changed for content creators. The small size of digital files makes them easy to pirate and often hard to monetize. Once you release a product digitally, the genie is out of the bottle. You can’t control the sea of inevitable copies. You can only provide people a convenient way to support you and hope they will do so.

And this problem is only going to get worse. With the adoption of household 3D printers, more and more physical objects are going to be vulnerable to both piracy and competition from free alternatives. This is yet another case of technological abundance undermining traditional business models.

So rather than trying to sell copies of a digital file, why not time shift the digital sale to before the product release? This is essentially what Kickstarter does. The creator has a promising idea in his head that the fans want. The creator then ransoms the idea, saying “If you want to see this idea come to fruition, you will need to pay up.”

When you fund a Kickstarter you are buying the existence of something that wouldn’t otherwise exist. You are buying a potential creation rather than a finished product.

This business model allows creators to bypass the economics of digital abundance. After all, people can’t pirate something that hasn’t been made yet, or design a knock-off of something that is still locked up in someone’s mind.

Of course creators must be able to convince people that their idea is good. So persuasion skills are a requirement to make this work.

The good news is the model is scalable. Big name creators have been able to raise millions of dollars, but small time amateurs with more modest goals have been able to reach their funding targets as well. I myself was involved in a campaign that successfully raised $9000.

But does this create jobs? Hard to quantify. Clearly it stimulates the economy. If someone raises money to make an independent movie, then they are going to take that money out into the world and spend it on costumes, props, gas, food, airline tickets, make up artists, hard drives, light rentals, camera men, etc.

More importantly, I think there is room for this model to expand in the future. Let’s forget about Kickstarter for a moment and boil this concept down to its core structure:

  • Person A claims to have a good idea in his head.
  • Person B pays Person A to execute.

Remember Person B does not have to be completely convinced. If Person A’s asking price is reasonable enough, person B may be willing to take a calculated risk.

Consider a theoretical film production model. These days it is possible to create a good (and profitable) film for as low as ten thousand dollars, and occasionally that does occur. But more often than not, a million dollars is the starting point for even a low budget art house film.

How else could you spend that million dollars? Suppose you were to hold a contest. People pitch you ideas for films, and you select the most promising ten. To each of those ten people you give a decent budget: a hundred thousand dollars. Enough to potentially cover their living expenses for the year as well as finance a micro-budget film. Granted, many of these films will turn out terrible. But out of ten? You’re bound to have a success in there somewhere. Take the best film, put a marketing push behind it, and I think you’d have a very strong chance of making your money back or at the very least making something critically acclaimed and garnering valuable attention. And don’t forget: because you are exercising a hands-off approach and utilizing amateurs you are also imbuing your film with a certain authenticity that may only make it more marketable.

What really has happened here? By not making a traditional bigger budget production we have lost a lot of film production jobs. But by taking a shotgun approach we have hired a lot more filmmakers. Yes there is waste in the system. You are paying some people that are never going to produce anything worthwhile. But ultimately the successes should justify those losses.

Remember this is just one thought experiment, and I have only chosen film production for my example because it is a topic I have thought about. You could just as easily apply this approach to designing chairs, writing jokes, or performing research.

But, you might ask at this point, won’t computer algorithms be performing all these creative tasks just as well? Perhaps eventually. But remember this model is based on persuasion. I don’t have to be better than a computer. I just have to convince you that I have some unique good idea in my head. One your computer algorithm doesn’t know about.

Interestingly this idea also bears some resemblance to Google’s “20% time.” As you may know, Google engineers are encouraged to take 20 percent of their time to work on something company-related that interests them personally. Most of the small Google projects that result from this time turn out to be inconsequential but you only need one Gmail or Gchat to make the whole system worth it.

The point is that most human beings are creative in some way. Allowing those human beings to sit around unemployed, without enough resources to even act on their ideas is incredibly wasteful. Quite possibly some new businesses are going to find a way to take this huge slack resource and turn it to their advantage. The key, I think, is accepting that most people’s ideas will fall short, but it only takes one success to justify a bunch of failures.

Next Up: Access

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