Guest post: Acting as a non-monetary economy

Adam Gurri wrote in with this excellent observation:

“When I think of something that is so abundant as to be available for free, I think of acting.

It's no secret that are are more actors in New York than there are productions to put them in.  Economics helps us understand the consequences of this to a certain extent; obviously a gigantic supply will result in lower wages per actor.  What interests me, however, is how this works in practice.  People think that a gigantic sector of a specific workforce could not possibly work for free, because they need to feed themselves and pay their bills, and so forth.

The thing about acting is that the labor force (actors) actually value the ability to do work in that field that they are willing to take on work for nothing and take on other jobs as a sort of cross-subsidy.  There is a sort of demand for employment in theater, which makes competition among actors so fierce as to actually drive down wages (at time of entry at least) to zero or near zero.

There is a parallel between this old story and what's going on in the content industries today, I think.  It used to be that professional economists, physicists, statisticians, historians, and software programmers were too busy doing their jobs to write about it for the general public.  As a result, newspaper and magazine writers--the majority of whom had no technical training or experience in these areas--none the less had a comparative advantage when it came to writing about these topics for broader audiences.

Today, the cost of writing on a blog that is out in the public to be seen by anyone interested in it is nearly nothing.  Russ Roberts can blog about economics, Google employees can blog about their projects, and so on.  The internet has made it possible for the content industries to look more like the acting industry: people giving away content for free because they enjoy it, while making money with a paying job.”

Comments

[Raghu]

Really enjoying your posts and the blog.

Keep up the good work, son.

[ross christopher]

maybe our current economic state is proof that no one can predict, foresee, or guide the economic future...

[ross christopher]

maybe our current economic state is proof that no one can predict, foresee, or guide the economic future...

[Nick Carr]

While there have always been writerly scholars, just as there have always been scholarly writers, the scholar labor pool and the writer labor pool are still distinct, representing two different skill sets. The scholars have a comparative advantage in scholarship, while the writers have a comparative advantage in writing.

This raises an important question: Is the phenomenon that Adam Gurri describes a benign one, or does it represent a distortion in the labor market that leads to an inefficient allocation of time? In other words, is the low cost of publishing, combined with the human need for ego gratification, leading scholars to reduce the time they spend on scholarly pursuits (where they have a long-term comparative advantage) in order to write blogs (where they don't, but where they get an immediate ego-gratification buzz)?

I wrote more about this, with regard to blogging economists, here:

http://www.roughtype.com/archives/2007/10/when_economists.php

Nick

[Chris Anderson]

Nick,

Great question and I'd encourage anybody reading this post to check out Nick's link on the long-term consequences of economists blogging.

My only observation is the acting-for-free phenomenon that Adam describes has been going on for centuries and top actors have never been paid more than they are today. So if that's any precedent, economists and the rest of us pros who blog for free should rest easy.

[Adam]

Thanks for the plug, and the kind words!

I wrote a follow-up post, with a response to Nick:
http://cloudculturecontent.blogspot.com/2009/01/free-content-in-cloud.html

A couple of quick things:

First, Chris' observation about actors' pay extends to blogging; :the top 1% of bloggers earns $200,000 a year.

Second, there is no reason to believe that the time used to publish online is coming out of time that would have been used for activities relating to one's profession. For one thing, the demands of one's profession have not relaxed any more than they used to be. For another, Clay Shirky has observed that time spent online is very likely coming out of the time that used to be spent watching television.

[Nick Carr]

Adam,

Something tells me that the time scholars spend blogging is not simply coming out of their couch-potato time (though maybe you can prove me wrong). If you read my original post, you'll see that it was inspired by Greg Mankiw's complaint about how "time-consuming" blogging had become for him (leading him to turn off comments). I expect that if he had just been repurposing TV time, he would not have been concerned about the time he was devoting to blogging. More generally, and despite Clay's (personal?) "observation," Nielsen tracking research shows that the time people spend watching TV continues to *increase* even as the time they spend online also goes up.

So I would argue with your contention that "there is no reason to believe that the time used to publish online is coming out of time that would have been used for activities relating to one's profession." I think that, at least for scholars, there's ever reason to believe that the time spent blogging is diminishing the time they spend (or could spend) on research. You write: "For one thing, the demands of one's profession have not relaxed any more than they used to be." That's true for a lot of professions, but scholars, particularly those with tenure, have a lot of leeway in how they spend their time. It is, to a large extent, up to them (rather than a boss, as in other professions), how much time they devote to research (or to blogging, or to drinking tea and staring off into space).

Therefore, I think my question about comparative advantage and the efficient distribution of time still stands. If a scholar's comparative advantage lies in scholarship, then scholarship is, from an economic and a social perspective, the most productive use of his or her time, no?

Nick

[Adam]

Nick,

All Good points, but I would like to respond to a couple.

First, you argued that if the time were simply coming out of Mankiw's TV time he wouldn't have been so concerned with how time-consuming his comments section had become. Nevertheless, this does not suggest that that time was coming out of what had been devoted to scholarly pursuits.

People in general do value their leisure time, regardless of whether it is used for TV, blogging, or taking a walk in the park. While it is true that blogging does take time (though particularly in Mankiw's case I find it hard to believe for the very short posts that he puts up throughout the day) monitoring a very active comment section takes far more time, and is not exactly rewarding. It only takes a handful of motivating trolls to completely level of a comment section, and moderators are often forced to either face a perpectual uphill battle or shut down the section entirely, as Mankiw ultimately did.

Second, the comment about tenured professors frankly has less to do with time spent online and more to do about the incentives that tenured professors face vs. the untenured ones. It may be that before they had access to the internet they were more productive in their own fields. Or it may be that they found other ways to spend their time doing nothing.

And it may well be that changing the tenure system will turn out to be a necessary adaptation to the new media landscape.

Finally, I cannot agree with your efficiency argument. Particularly in Mankiw's case, I can honestly say that much of what he does is simply link to or post graphs from things he was probably already looking at; the Wall Street Journal, the BEA, NBER, BLS, and so forth. The internet has made it so easy for him to simply point out something that might have been missed in the past--and when he singles something out he is making use of a judgment that has been tempered by experience in a particular specialization.

I think we are all better off that people like him can, with little cost in time borne by either him or his reader, lend his expertise to a wider audience than would have been possible in the past.

[Scott Beveridge]

We're all prostitutes, really

[Nick Carr]

Adam,

My interest was in examining the phenomenon through the lens of comparative-advantage theory.

I would agree that there are many other lenses to look through.

Nick

[Adam]

Nick,

Fair enough.

When I was first taught the principle of comparative advantage years ago, my professor used the example of a surgeon and his secretary. The surgeon may in fact be a better typist than his secretary in an absolute sense, but performing surgery is a more valuable use of his time and so the secretary has a comparative advantage in typing.

If the cost of typing went down--that is, if the time it took to do it and make sure the document was sent out was reduced by enough--then the secretary might lost that comparative advantage. The surgeon could still perform as much surgery as he did before, and have time to do his own typing.

My argument is that that is what is occurring right now. I think that you are arguing for a different scenario: one in which the cost of typing goes down enough to make it not worthwhile to have a secretary, but in the end the fact that the surgeon has to type now eats into the time he would have been doing surgery, even if only a little.

I think that's very possible, but I also think that the result will not be an inefficient allocation of labor, but rather a reallocation of tasks. Those things that the surgeon did back when he left typing to his secretary might now be handled by his secretary so that he can still spend the same amount of time (or more) performing surgery.

Does that make sense, or have I stretched this metaphor too thin?

[Jeremy]

tell me about it... just like my industry, radio broadcasting!

[Adam]

Also, while I'm not sure what to say in response to the Nielsen statistic, a Pew study (PDF) from back in October did conclude that time spent on the internet was eating into time spent watching television (see the bottom of page iv).

[Fitzroyalty]

Good post - most commercial content providers have not realised that their value was created by scarcity and now the commercial value of their content is much lower than its intrinsic value due to bloggers undermining their business models by providing content for free. Hyperlocal media in particular can act as a very effective bad competitor and destroy the commercial logic of local newspapers.

[Tom Nocera]

Consider the notion of doing things - whether it be acting in NYC, writing, or the new favorite of so many - microblogging on Twitter, not for any "hard currency" rewards like money, but for the deeper satisfiers such as the pure joy found in just doing it. Priceless!

[Schnell Abnehmen]

Having or not an impact on the quality of the content, blogging becoming so popular is a gigantic supply resulting in lower cost per click per blogger.

In other words, Google is the big winner: they are keeping the biggest part of the Internet advertising money for themselves because, as you suggest, people are ready to give away content for free.

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[nathan]

The salient proposition is that people are still getting paid! What I see as being lost sometimes is the enjoyment in doing so (being paid). If we all loved what was being done, by ourselves, or others that influenced us to do so, then we wouldn't at large be caring about "economy" as that's an easy escape and an easy thing to blame. Acting will outlive marketing on a long enough timeline.

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