One of the popular notions in the P2P community is to “capture value in the flow.”For example, rather than Whirlpool selling a dishwasher to consumers for $429, Whirlpool sells them access to a dishwasher for $21.99 a month. Whirlpool installs the dishwasher, fixes it if it breaks, and replaces it when a newer better model comes out. In short, its the idea of not charging people for ownership of property, but charging access to it.
Another, consumer side example is Neighborgoods. The is a market-maker business model that let’s neighbors share things with each other—stuff like a lawnmower, book, bed, sugar….anything. They can do it for free or for a small rent charge.
Some people feel hesitant promoting this “flow-based transactions” concept. They like discrete products that they purchase once and use for at least several years without updating. It’s the “I buy it, it’s mine to use on one or two computers, and that’s it” mindset. I even had one person share with me this fear:
“I would just want to make sure (somehow) that the ‘flow’ model doesn’t get corrupted into ‘rent-seeking’ — like the pharmaceutical industry opting for maintenance-type drugs instead of cures.”
Fair enough perspective.
But it’s important to know that flow based transactions aren’t a replacement for these types of transactions. As with all the new innovation in organization, currency, production methods, and such, it’s not about replacing old ways, it about diversify from them.
Flow-based transactions do not fit for all situations. Certainly, flow-based transactions don’t apply when buying a hamburger — or gas or a seat at a baseball game or a plumber to fix my broken pipes. These incompatible instances tend to be situations where I, as the purchaser, will consume/destroy a singular instance of the property.
Flow assumes an ongoing relationship between the purchaser/user. Therefore, it doesn’t make sense in single-use instances. But I do think it can apply to and benefit many things.
The first thing to know is that while “licensing” and “renting” are core economic models within the P2P economy, they technically aren’t what P2Pers thinking about when talking about flow-centric value creation. To get into that, I first need to break property into three types:
- private property
- collective property
- peer property
Private property says, “this ‘thing’ is mine — not yours. I own exclusive right to it.” It is, therefore, individual and exclusionary. Collective property, i.e. state property, says, “This ‘thing’ is ours and no individual has sovereignty over it. It is regulated by “us” — a bureaucracy / representative democracy. You are given the right to enjoy/use it, but you cannot do as you wish with it.” Hence, collective property is shared but exclusionary. Peer property, on the other hand, says, “I ‘own’ this property and retain sovereignty over it but, unlike the other two forms of property, other individuals and collectives are free exert their sovereignty over it as well.” Peer property shares ownership because it all goes back to a core goal of the P2P designers: They seek to spur the widest possible usages for property. The I.P. legal structures that allow for this are Creative Commons and General Public License.
In the case of licensing and renting, they treat property as collective property. They permit the exclusive use of property for pre-approved purposes. It tries to maximize the number of users, denies their sovereignty over the property, and minimizes the innovative uses of the property. For instance, you are not allowed to take Microsoft Windows, recode a portion of it and resell it under a different name. In many cases, Microsoft has discouraged hobbyist hacking of their products. (With peer property such as Linux, you can.) But again, I’m not painting private or collective property as a bad thing. Both are staples of economic and social wellbeing. They’re just not the only two forms that contribute to that wellbeing.
“Flow-centric value creation,” contributes to economic wellbeing because enabling the widest possible uses for property creates positive externalities. In the case of Apple and its App Store, Apple transformed a portion of its iOS platform from private property into peer property and allowed the imaginative community of coders to access it. Because of it, Apple has benefited immensely from the positive externalities. Access to a library of apps has transformed the inherent value of the iPhone from a device that makes calls to a device that connects the user to an endless world of awesome lightweight software. The company has gained in customer loyalty. The phone with the best app store wins. Google found that out and decided to create their own App Store. The apps have expanded the use-case scenarios of the phone. And those are just a few of the externalities that benefit Apple. That leaves off all the externalities that benefits coders, users, and the community.
The important thing to know in this example is that Apple does not charge for access to the iOS code (as a “renting” or “licensing” models would dictate). Instead, it gets a percentage of each download. In other words, Apple has created a model of participation geared towards inclusion and a posteriori revenue generation. Put even more simply, the Apple doesn’t make money until you (the mobile app developer) makes money. So “flow-transactions,” from the P2Pers mindset, does not refer to charging for access to property. It refers, instead, to partaking in the value created from freely accessible property—and sometimes the “partaking” means taking a % of sales.
While this seems a niche economic activity, that will change in the next 5-10 years. Factory manufacture is swiftly transforming into desktop manufacturing. It started with immaterial things (home laptop recording software like ProTools for musicians and publishing software like Adobe photoshop and illustrator for designers) now its moving into the physical. Yes, you can now print shoes and furniture at home now and in 5 years, you’ll be able to print food. The intent is not simply to allow people to produce these objects in their home. The expressed intent, is to allow everyday people to be creators by redesigning the initial printable models—or as they are now known, “physibles.” Again, this is the intent because P2P-led people strive to use property in a manner that leads to as many uses, and therefore positive externalities, as possible.