Positive externalities thrive online

My latest Guardian column is about positive externalities, the value that bystanders get from the stuff you're already doing:

That's the crux of this irrational fear of positive externalities: "If something I do has value, I deserve a cut." It's one thing to say that someone who hires you to do a job, or purchases your product, should pay you money. But positive externalities are the waste-product of something we were already going to do. They're things that you have thrown away, that you have thrown off, that you have generated in the process of enjoying yourself and living your life.

The mania to internalise your positive externalities is the essence of cutting off your nose to spite your face. I walk down the street whistling a jaunty tune because I'm in a good mood — but stop as soon as I see someone smiling and enjoying the music. I keep my porchlight on to read by on a warm night, but if I catch you using the light to read your map, I switch it off, because those are my photons — I paid for 'em!

Worse still: the infectious idea of internalising externalities turns its victims into grasping, would-be rentiers. You translate a document because you need it in two languages. I come along and use those translations to teach a computer something about context. You tell me I owe you a slice of all the revenue my software generates. That's just crazy. It's like saying that someone who figures out how to recycle the rubbish you set out at the kerb should give you a piece of their earnings. Harvesting positive externalities involves collecting billions of minute shreds of residual value – snippets of discarded string –and balling them up into something big and useful.

If every shred needs to be accounted for and paid for, then the harvest won't happen. Paying for every link you make, or every link you count, or every document you analyse is a losing game. Forget payment: the process of figuring out who to pay and how much is owed would totally swamp the expected return from whatever it is you're planning on making out of all those unloved scraps.

Why trying to charge for everything will kill online creativity


  1. I’ve thought this for a long time. It always felt like just another sneaky manifestation of greed.  Thank you so much for crystallizing it for me Cory.

    In recent years, my own credo has been just the opposite.  If I have something good going on, (music, light, whatever), I almost go out of my way to share it.  I guess its the pay it forward thing.  I’ve learned to smile at people, ESPECIALLY when I don’t feel like it.  There are rewards.

  2. I hereby award you the Nobel Prize for Economics.  But nobody listens to Paul Krugman, and they aren’t going to listen to you either.

    1. Nobody listens to what’s right.  Just to who has the best marketing, most expensive lawyers and most cutthroat business plan. 

      I, for one am not happy with this world. 

      Christ. What a bunch of assholes.

  3. I agree 100% with your thesis.  That said, nobody enjoys your whistling, no matter how jaunty it is.  They’re smiling at you in the belief that you are either mentally deficient or insane.

    1. There’s only one thing that I know how to do well 
      And I’ve often been told that you only can do 
      What you know how to do well 
      And that’s be you 
      Be what you’re like Be like yourself And so I’m having a wonderful time But I’d rather be whistling in the dark

  4. You sir, are on the wrong side of history.  No-one is talking about whistling, they are talking torrents, megaupload, and filesharing.

    At no point do you explain what the “positive externality” for that stuff is.  

    Instead you blame DRM and create this fictional concept of creativity.  If someone makes some music on their days off and wants to give it away for free, fine.  No-one cares about that, no-one is trying to stop that.

    The question is for the professionals who spend all their time and money creating content.  What if they don’t want to give it away for free?  How is that a “positive externality”?

    You seem to be really worried that art and creativity will stop somehow.  Of course it will never stop, people will create if they are getting paid or not.

    But what you are really advocating is for poor artists to become even more poor, and get less money from people who genuinely enjoy their work.

    1. And you seem to be promulgating the story about CD sales going to support poor starving artists, rather than the corporations that devour 95% of the retail price. 

      Poor, poor Universal Music.  They might grow even poorer if they don’t enjoy a monopolistic hammerlock on the distribution of music, and break the internet in the process.

      1. No, I’m ‘promulgating’ the story of independent CD sales going to artists.  Its a story I witnessed for about 10 years in the late 90’s/early 2000’s in the independent record business.   

        I’m talking about artists, now, and their finances, now. 

        1. I wouldn’t say that copyright infringement through torrents is a positive externality.  It’s not the by-product of making music, but rather a consequence of popularity.

          And even so, piracy is linked to increased sales anyway.  Studies have shown that Pirates Buy more music than those who don’t pirate.  Isn’t that worth something?

          And before you mention that these artists have a right to their intellectual property, remember that the PUBLIC has a right to a public domain as well.  The public domain existed long before copyright was invented, and copyright is specifically for the benefit of the science and useful arts.  The fact that it can be used to benefit artists is simply a way to incentivize production, which benefits the public.  Go ahead and read the constitution.  It states that copyright is for a limited duration.  You know what aged into the public domain this year?  NOTHING.  That’s not benefiting the public good.  That’s a detriment to culture.

        2. No, you’re talking about a story written in another time. People don’t buy CD players anymore, and it’s not because of pirating. It’s because they don’t have to carry a CD player around to listen to music anymore. Too bad the industry hasn’t caught up due to an irrational attachment to “the story of…CD sales going to artists.” Have you contributed to Lester Chambers’ campaign?

          1. That’s where the significance of ‘mostly’ comes into play.

            Artists that actually speak about copyright tend to see the benefits of having people hear their music and become fans. And do I have to go through the tired history of Tape, Radio, Minidisk etc. to highlight how this is nothing new anyway?

            Puppets picked out of the crowd to autotune their way through the latest song Prince has written? Yea they’re probably not big fans of it, but seriously, who gives a fuck about them? They’re probably already making twice as much as the first group anyway.

    2.  Are you a starving artist?  A troll for the “music industry”? Or what?  Do you have a heart? 

    3. Piracy is a different byproduct that eventually turns into a legitimate buiseness. We only have to look at the past for that: player pianos, radio, cable television, hollywood itself, all started as piracy and/or patent dodging. There was a market need but not a reasonable legal way to do it, so piracy rooted around that.

      It goes on untill those in tradtional media and tradional ways of doing buisiness adapt to the new market demands.
      In the case of torrents: big media was not providing online acces to content, piracy stepped in and changed that. It’s still going on because the acces isn’t good enough yet, they are still fighting the internet and only reluctantly providing DRM locked content. The consumer wants something else and piracy will provide it.

      And more importantly: the article isn’t about piracy or advocating that you should not pay artists for their output. It’s about the recent trend of trying to monotize what is already free without being stolen, such as linking to a website.

    4. Content isn’t a byproduct, it’s the product. Unless I’m missing some subcontext this isn’t about piracy, it’s about everyone thinking they’re owed something.

    5.  It’s the kind of utopian language that Cory Doctorow likes to throw around that a grasping and rapacious tech industry uses to justify being even more abusive and exploitative than the old media empires. But you’ll find few allies here where people believe the myth that creators will somehow just get paid eventually out of all this “exposure.”

      1. It’s the kind of utopian language that Cory Doctorow likes to throw around that a grasping and rapacious tech industry uses to justify being even more abusive and exploitative than the old media empires.

        Can you back up this assertion?  How do we quantify the rapaciousness of various industries?

        I just don’t understand this presumption that we have to forbid certain kinds of technology for the sake of preserving the lifeways of particular artists. Changes in technology lead to changes in the economy lead to changes in how people make their living. I’m REALLY trying to understand what your argument is but I just don’t get it.

        1. How about Google’s massive attempt to infringe the copyrights of any author not backed by a major publisher with Google book search? Maybe that rings a bell? And they’re the ones with the unofficial “Don’t be evil” motto.

          My argument, which maybe you don’t care about because your primary interest is getting free stuff, is that the while the old media empires paid creators poorly, at least they were constrained by the moral principle that creators needed to be paid. The tech industry, however, is backed up by vague hand-waving arguments like yours about “changes in the economy” somehow making it okay not to pay people at all.

          Somehow finding a way to profit off of other people’s work without compensating them is supposed to be a “positive externality.”

          1. How about Google’s massive attempt to infringe the copyrights of any author not backed by a major publisher with Google book search?

            Have you ever done a google book search?  Books returned by the search that aren’t in the public domain don’t give the user the full text, but the search does provide shopping results so that you can legally purchase the full text.  Can you explain how advertising a written work for free constitutes an infringement of copyright?

            Bear in mind that I can get the full text for free from a public lending library in almost every case that google doesn’t provide the full text. But google’s infringing on copyright and libraries are hunky dory?

            My argument, which maybe you don’t care about because your primary interest is getting free stuff, is that the while the old media empires
            paid creators poorly, at least they were constrained by the moral principle that creators needed to be aid.

            You’re making unwarranted assumptions:
            1. I DO care about your argument.  That’s why I asked.
            2. I don’t torrent.  I pay for any media I consume that’s not in the public domain, presumably the same as you do.
            I won’t call you out on getting unnecessarily nasty since my initial response to your comment (since modded) was also nasty.  Can we drop the histrionic ad hom attacks on both sides?

            The tech industry, however, is backed up by vague hand-waving arguments like yours about “changes in the economy” somehow making it okay not to pay people at all.

            You’re giving “old media empires” a lot of credit for paying their quite small stable of artists while ignoring the fact that they completely destroyed an entire industry of live music and destroyed thousands of jobs in the process.  Recording technology changed the economics of music, destroying the livelihoods of many and creating new ways to make livelihoods for a relative few.  How is the current situation in the music industry any different?

            Somehow finding a way to profit off of other people’s work without compensating them is supposed to be a “positive externality.”

            That’s pretty much the definition.  Road construction companies don’t get paid by the snow plow companies that profit from keeping the roads clear.  Google takes money for helping people find content.  It’s on the content creators to figure out how to make money from the attention that google gets for them — just as road construction companies need to make a profit from building the road and not count on those sweet snow plowing royalties that are bound to come rolling in any day now.

            I can’t help but notice google hasn’t been doing the “don’t be evil” thing.  Pretty much the only ones using the phrase are google detractors.  Seems a little disingenuous.

          2. “It’s on the content creators to figure out how to make money…”

            Shouldn’t they be trying to create better content?  

            Wouldn’t content be better, if content creators didn’t spend most of their time trying to game the system?

    6. Can you provide any evidence whatsoever that “torrents, megaupload, and filesharing” actually robs artists of money?  Real evidence, not RIAA propaganda.

      1. Clearly you will just dismiss any evidence that I provide.  

        But that sword cuts both ways.  The RIAA chooses their numbers selectively, just like TorrentFreak does.  The truth is we don’t have much good data about musicians on either side.  So, I ask you to provide any evidence whatsoever that torrents do not rob artists of money.  

        I looked around for a specific page, but I couldn’t find the one I was looking for.
        This one is pretty good, it provides a lot of data, some good, a lot bad for your argument. 

        And to your quote that you mentioned in another comment, that file sharers spend more money on music than non-file sharers, I say, “OF COURSE”.  They’re music fans.

        My grandmother is not buying music and she is not pirating music, because she doesn’t care about music. 

        That quote has nothing to do with how much money they might spend if they had to buy music.  It only proves that music fans pirate music, something everyone knows.

        1. The point of that quote is that nobody is losing money.

          If the people that spend money on music are the one’s pirating, then the only way that an artist is ‘losing money’ is via that purchaser not having more wealth to spend on media.

          A budget is a budget, if I download $10m worth of Disney movies it doesn’t mean that Disney has lost $10m – because I don’t have $10m to spend on Disney movies. But that’d show up as a loss in an RIAA document regardless.

          If pirating suddenly became physically impossible, I’d be willing to bet the profits of the record industry wouldn’t budge an inch.

  5. Nicely stated.  You should have a look at Agnes Varda’s spectacular documentary: The Gleaners and I.

  6. Festival films are a good example of this problem.  Somebody makes a film because they feel called to do so, so good they think it should be shown at a festival.  But the film festivals want to be the exclusive first release, so they make you agree not to let anyone see the film until it’s shown at the festival, and then they retain some of the rights.  By showing the film at the festival, the filmaker loses out the ability to show it to all their friends (and their friends and so on) on youtube or other social online media.  If they are lucky 100 strangers in some other state will see the film at the festival, and a few of them might mention the film to someone else, but mostly the films just die a quiet little death as the filmaker sold the rights trying to regain their soul.

      1. Why do you think that?  The comment seemed relevant to me.  Film festivals forbid positive externalities (views outside of the film festival) and doing so prevents the films from gaining any kind of foothold in the wider world. 

        1. It makes sense when you put it like that – but the message I got was more about greed and false expectation when it came to positive externalities – this seems like the opposite of that. Maybe that was the point.

  7. Google certainly see a huge profit to be made from pooling all the positive externalities they can find just lying around.

    Externality is in the eye of the beholder. Many pirates will just see your books as a positive externality – you were going to write them anyway, so they don’t need to pay for them. It’s just lucky that the written word doesn’t attract much piracy…

    1. Google is a very very good example, especially because they don’t claim to be sole owner of the links they provide.  They monetize those links in a subtler and less intrusive way.  And then they pass those links along to us, which is another positive externality.

      Imagine if the music industry worked the same way – if all music and concert videos were just thrown out there for free, and the bands made their money on Tshirts and beer cozies.  I believe that’s not only possible, but happening in little indie corners of the universe.

      1. Presumably Tshirt designers tired of seeing others monetize knockoffs of their work can just give it away for free and make money selling Tshirt-design-inspired music instead.

        1. Except that selling T-shirts is the main activity, not a secondary free byproduct.

          Piracy and knockoffs are not a positive externality, but the people trying to close down positive externalities, like linking to website, want to make it seem as if they are.

          1. I’m not sure I follow: are you saying that selling music recordings isn’t recording artists’ main activity?

          2. It has been in the past.  Does that mean it should be that way now and forever into the future?  Of course not.

            Let’s bear in mind there were musicians before there was recording.  In fact, there were a lot more of them and a lot of them were making decent livings.  People are quick to jump on how pirates destroy people’s livelihoods while ignoring the fact that this is exactly what recording technology did in the first place — destroyed the livelihoods of thousands of musicians.

            The weird part is, the evidence seems to say that pirates legally buy more music than non-pirates.  I don’t understand how everyone ignores the fact that the introduction of recorded music demonstrably destroyed livelihoods and that’s perfectly fine but piracy just sort of seems like it should destroy livelihoods (despite evidence to the contrary) and is therefore this really terrible thing that must be stopped at all costs.

          3. An painters ‘product’ is a painting, but I don’t see them being up-in-arms about you being able to view their art on Google Images.

            They make money from selling the original and from exhibits – pretty much the same as recording artists (bar the original work of course).

            CD’s are just promo material you pay for.

    2. “It’s just lucky that the written word doesn’t attract much piracy…”

      I hope that you’re not an author, because if you are I have some bad news for you…

  8. Kerbside rubbish collection is a great example. Some people genuinely hate anybody making use of something they’ve discarded. They’ve been known to write down license plate numbers and take photos of anybody picking something off the kerb.

    If their items had enough value, they’d have sold them. They didn’t. Now they want to punish anybody else for considering them useful.

    1. That was one thing that was great about living in San Francisco. We could put anything out on the sidewalk and it would be gone in fifteen minutes. We never had to pay to have anything hauled away or feel guilty about throwing anything out.

      1. It’s a popular sport around here too. I actually have a map of the verge collections happening for my entire city: http://goo.gl/maps/s1TRM

        It comes in handy when you suddenly realise you don’t own enough lawn chairs or 70’s-era TV sets.

  9. As per “wrong side of history” the trend is clearly towards increasing production of non-commodity goods.  That is, with the increasing importance of information and cultural works as a percentage of the total productive economy, those things which naturally have a scarcity which can render a price without some sort of guard labour (copyright, patent and all of the legal apparatus necessary to support it) are becoming less important.  The wrong side of history are those people who pretend that we can just fit the coming economy into the standard commodity form which rose to deal with the production of physical objects.

    Secondly, you clearly do not understand what an externality of production is.  An externality of production is the effects of the production beyond what is intended.  If you intend to create one work and it can be copied infinitely at zero cost, it’s essentially an externality.

    Now, this poses a serious question for those who are in the realm of non-commodity production and there is no question about it.  There is a need to be remunerated for work in order for workers to reproduce themselves.  Further there is the need for resources for much production of non-commodity goods (It takes millions to make a video game or film).   This is all true and a serious problem but it can not be fixed by trying to make information act like lumps of steel.

    Instead, we have to go forward.  What does going forward look like.  Well, it’s going to mean that we have some way of diverting resources to production without requiring that the output be scarce.  We should devote resources to things based on their popularity or potential popularity without attempting to generate a ludicrous scarcity of the output which wastes human labour for no productive purpose.

    The National Science Foundation, DARPA, and many arts programmes find ways of funding various projects with various scales of funding and various likelihoods of success.  Projects such as crowd sourced funding also have methods to divert resources to non-commodity production. 

    Non-commodity production is the future.  Time to get on the right side of history and help us figure out how to go forward.

    1. I’m not sure if this is a response to something I wrote above, but I actually agree with almost all of this.

      What I object to are the arguments that piracy and the easy distribution of non-commodity goods are better for artists.  

      That is one of Cory’s primary points, and he’s been hammering that nail for years now.  

      The problem is, there is no clear way to move forward except for bringing more corporations and big donors on board to co-opt the art that is being produced.

      If average people aren’t going to pay for art, then someone has to, and it probably will not be the entity that average people want paying for art. 

      1. I think you’ve got it all wrong.

        Artists, more than ever, are doing just fine on their own. Self-funding, kick-starting, self-publishing etc. If anything they need these money hungry middlemen even less, not more.

        You seem convinced that piracy means the artist loses income – and it’s nowhere near that black and white.

  10. I’ve always had the feeling that the “non-commercial use only” CC licenses were a mistake, and this is one of the reasons why.  People need to make up their minds whether they want to give something away, and not hold back if they’re going to do it… You end up with people slapping NC restrictions on every blurry snapshot of the Golden Gate Bridge (and myself, I have trouble deciding what a commercial use is… if I hadn’t paid my ISP I wouldn’t be looking at your snapshot, do they owe you money now?).

    1. All this is fair, but that example also hints that cutting externalities off isn’t simply about looking for a cut. It’s about frustration with businesses that would make money by selling your own stuff back to you.

      And those do get annoying, even to people happy to give everything away. Cory writes sensibly about the pernicious effects of this, but he’s not being especially charitable in describing why it happens.

  11. Cory misses one important point about positive externalities. Since people do not realize that their activities benefit others at no extra cost, there is chronic under-supply of goods that have positive externalities. Therefore, we MUST internalize the externalities so that people can fully understand the value of the benefit others are getting. There are some people that will engage in the externality generating activity but it is not enough. We would want more.

  12. I’m interested in exploring the difference between what Cory is talking about positively here, and (for example) what Instagram tried to do in the recent kerfuffle.

    I mean, this could be taken as an argument that Instagram should be able to take your photos and sell them for use in advertising. After all, you were going to take that photo anyway, and you weren’t expecting to get paid for it anyway. Why shouldn’t Instagram be able to make use of it? (I’m not trying to be Internet-Debate Clever Dick — “haha! your argument is invalid!” I’m genuinely trying to explore the ethical principles at work here.)

    The brief discussion of Facebook in the article makes it sound like the difference is that companies like Facebook and Instagram (yes, I know Facebook owns Instagram now) are essentially farming their users for content they wouldn’t have otherwise produced. But I’m not completely sure about that understanding.


    1. Yes, this yes!

      This is exactly the point.  Villainizing the RIAA and Sony and Universal (who are villains at times) actually opens the door for much larger villains to profit off of hard working people’s content.  

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