Page 67 - AC/E Digital Culture Annual Report

The crisis of the economic scarcity model
In 2011, an article4 in the Wall Street Journal discussed for the first time what is called the “Disney vault.” The term refers to a seemingly contradictory practice of a company that does business with the sale of goods: deliberately taking major titles like Snow White or Fantasia off the market. In reality, it is a marketing strategy. The objective? To increase demand
for certain products with the psychological impact of scarcity and the perception that these goods are ephemeral. For decades, companies have used this and similar strategies to market products on a physical medium, controlling their availability, format and price. The generation
of the value chain of cultural goods has been,
to a large extent, conditioned by these same market forces, which have subjected the user to certain consumption guidelines. The crisis of this model has undoubtedly been one of the major levers of change. Furthermore, this digital screen consumption has forced a change in business models, which explains the intense resistance to it in the traditional sector.
The new model of subscription platforms depends on instant consumption with no waiting and it is based on the concept of access, not ownership.
Netflix and other players who use the same system are clashing head on with the model
of “artificial scarcity.” This scarcity model has traditionally been linked to the protection of intellectual property to keep the broad avail- ability of goods from facilitating copies. How? By imposing restrictions on the availability of a product that would otherwise be abundant. This explains why the end consumer pays more for products recently launched on the market than for those purchased after some time has passed. This formula is becoming obsolete with the natural advance of technology.
What are the advantages of artificial scarcity? Basically, it permits a phased operation with a yield that is proportional to how recently the product was marketed and to the “value” of
the medium. It foregoes accessibility (which is embraced by the new model) to increase the margins for the individual product (which the new model sacrifices). These practices are well known in the creative industries for marketing physical products. They are also common in some digital business models that focus on the transaction (digital rental or purchase). Con- trolling availability and cutting the quality (think of paperback books or DVD editions without extras) allow a profit to be squeezed out of the higher value goods (such as hard cover books
or Blu-ray discs). This assignment of value has been used for years to stop the devaluation
of products (at least in theory), imposing dual controls: one on the format and context of its exploitation, and the other on the price. Once the product is considered to have passed one phase, it enters the next, in which the price is adjusted downward to (once again, in theory) reach a second mass audience. These strategies of differentiating audiences by price have been called “managed dissatisfaction”5 by Netflix’s CEO
The new model represents a radical change
for two reasons. The first is that subscription platforms depend on instant consumption with no waiting. As mentioned earlier, customer retention is based on the active use of the service and not on the anticipation of a premiere or new release. The second is that it is based
on the concept of access, not ownership. It is not necessary to possess a physical product or download a digital file to enjoy it. Therefore, the elements of the scarcity model (property, format value and time) are no longer useful for raising the price. With the release of all episodes of a new season, or the availability of new albums or recently published books in subscription services, what many have feared has become a reality: the user has increasingly less tolerance for surcharges and waits.
AC/E DIGITAL CULTURE ANNUAL REPORT 2018
67
Digital Trends in Culture