Which economic model for the Internet of Things ?
By Philippe GAUTIER on Wednesday 28 April 2010, 10:50 - Web 3.0 / Internet of Things - Permalink
If things come to bear their “raison d'être" (see former post: http://www.i-o-t.org/post/3questionstoPhilippeGAUTIERbyDavidFayon), it may be necessary to give or teach them new ethical values, otherwise they will catalyze some (already existing) chaos in our economic systems ...
From inert objects to syndication of services
The current economic model is essentially based on individual ownership of
goods and use of services. Accordingly, the added economic value is mostly
gained through their consumption via selling, whether it is a primary
acquisition or replacement of obsolete or unusable property or
services.
By giving objects the capacity of being “communicating actors” (1) and to
monitor their own uses and sharing, the Internet of Things will probably
emphasize their role as “economic agents”, which role will counterbalance that
of existing simple consumer goods.
Therefore, they will likely mostly be considered as vectors of economic
value creation in services and will challenge the current principles of
individual ownership: sharing an object will become easier and sometimes more
interesting than to possess it, conditions of sharing directly supervised by
the object itself.
In addition, as aggregators of new uses – mostly created through the
conjunctions of already existing ones - objects will increase that part of
economic value creation in services: sharing an object will potentially give
benefits throughout interoperability of different services that will be
associated with, which is not allowed when possessed.
Issues about “sharing”
Our economic models will then naturally have to be restructured on both
“sharing models” and the associated rules.
Rules are usually based on “compulsory values”: laws, regulations ... let’s
call it the “constitutive values” that operates top-down
through the organization or can be “interiorized” by autonomous actors:
behavior, culture, know-how, businesses... we will call it “behavior
values”, operating in the organization itself. Those last ones are
often partly organized consequently to the first… in theory.
The purposes of all those rules are to regulate conditions of interactions
between autonomous actors, sharing of economic values, etc. and – most
important for constitutive ones - to guarantee convergences of aims VS
chaos.
It is therefore critical that “constitutive” organizations (states, NGOs,
governance bodies) should be ready to tackle the issues of current changes and
to understand how to possibly reply, if they want to be the “sharing rules”
original initiators.
Otherwise, facing the lack of anticipation from “constitutive” ones,
“transversal” and “behavioral“ organizations such as social networks, users or
citizens communities, companies, lobbyists... will lead up their own rules by
auto-organizing themselves.
Whoever will be the initiators, they will lead the issues and responses
related to “sharing”: costs of realizations, maintenance … and then
governance.
What to do?
Considering the difficulties to predict what will be the reactions of the
above concerned organizations, and, if the point is to make objects “full
actors” in these new economic models, why not to preventatively include in
their “raison d’être” - that would be to say in their “associated software
intelligence” – ethical purposes and values ?
What kind of values, who will define it?
The challenging issue would be to settle it, which is a major project… but
also very exciting. First answers will take some time to emerge but there are
some interesting approaches and methods that can be used to that achievement by
helping us to foresee potential problems and anticipate accordingly…
Actually, an adapted approach will help us to better apprehend the upcoming
evolutions, instead of groping and betting on good evolution of a probable
chaotic situation. On the other hand, such an approach could also lead us to
consider… that existing “constitutive organizations” are not the adapted ones
to tackle the issues…
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Philippe Gautier, march 2010
Comments
Philippe, I think you lost me on this one. Why would IoT bring specifically new values ? I have to disagree with your first statement already :
>The current economic model is essentially based on individual ownership of goods and use of services. .
Probably more than 50% of goods are owned by some kind of "moral person", such as a company or a state.
> Accordingly, the added economic value is mostly gained through their consumption via selling, whether it is a primary acquisition or replacement of obsolete or unusable property or services.
On the contrary, most high-value goods create value by being rented. And while all objects have a life cycle, their own value gets first up from a "BoM price" towards a "retail price" and then down to a "written off" value. Objects themselves do not create value, its their "usage" by other entities that can create it.
So, if you want to apply the above to IoT, I thing that you should consider the philosophy of "IoT usages" in terms of what is ethical or not, and this has little or nothing to do directly with value. For example, when a Google car makes a video of streets and collects information over WLANs, the way this data is used is important. And the "owner" of the object (a company) is responsible. This is for me a clear IoT example, since the car driver does not in any way have to interfere with the data of the cameras, that is handled by other computers, so in theory this could be considered as an "Interneted thing".
Christophe,
In my text, “individual” is related to single, either human beings or any kind of entities such as companies, etc.
You are right: “most high-value goods create value by being rented”, but – today – things are mainly bought since conditions for renting are not that easy to be implemented. One of the issues is to facilitate renting… How?
…When things would be able, as actors, to properly monitor their behavior, preferences and “raison d’être” (with associated software intelligence), they will have the opportunity:
- To monitor their own sharing amongst many users (conditions, schedule, etc.); e.g.: a flat, a car, a bicycle, a cooking machine, etc.
- To syndicate services or uses that cannot be merged today since provided by external entities: manufacturers, resellers, etc.; e.g.: see the example of the electric meter in my previous post @ http://www.atelier.fr/infrastructur...
Saying it a different way: the conditions of use, the opening to external uses and new uses (by association of existing ones) could be treated at a subsidiary level, the one of the object. Once again, you are right: any value comes from the use of an object, not the object itself…
The ability to monitor their own sharing and to syndicate uses will transform the objects into “economic actors”; hence, the necessity to feed them with ethical purposes and values.
On the other hand, what could be the relation between ethic and value?
If something (an object in the IOT for instance) is rare and useful, it will have a big value. Many people will then want to buy, share or have it. Without any regulation, either “constitutive” or “behavioral” it is likely that they could kill each others to obtain it.
The role of “constitutive” values is to define the conditions of the sharing, acquisition, ownership, etc. which conditions will also be interiorized by “behavioral” ones (customs, beliefs, etc.). Ethic is underlying with value: one day someone says “it is not ethical to kill someone to obtain ownership on something”. In my post, I am just questioning: “If traditional regulators cannot address this issue, which will be raised by new conditions of sharing in the IOT, maybe we should give the new economic actors – the objects – the knowledge of what is ethical and what is not?”.
However there are some remaining problems to solve: who will define it? How to make sure objects will not be perverted, etc…
I’m not trying to give answers but to raise questions, considering the possible future…
Philippe GAUTIER