Note on Value and Digital Commodities
Keep your local academic paper dealer at the ready if you want to check my sources.
Digital reproduction poses a problem: you can find everything for free now because digital copying is so trivial. So what is the value of a digital “object?”
I should also say I am not breaking any new ground here, just getting some thoughts in order.
Are Digital Commodities Commodities?
In Marx, a commodity is a thing which binds a use-value and exchange-value; linen has a practical use in making textiles, but it also has a value in exchange, it can be bought and sold. I am not going to retread the entire labour theory of value, but the possibility of exchange implies that there is some common value that can be compared between the most disparate use-values. On this basis money emerges as the universal equivalent commodity, its use-value is exchange.
In production, some value is reincorporated in the commodity from, e.g., the raw materials and machinery used, but some value is newly produced by labour. Labour is not the source of value, but it creates some surplus value.
The above definition of a commodity applies to physical things, like linen, but also importantly to labour-power, the sole property of a worker[1]. In the capitalist mode of production, the worker sells his labour-power to a capitalist who employs it for some agreed upon period of time. This labour-power is not a physical thing. It is employed as physical labour (so-called knowledge work is still physical), but labour-power itself is the worker selling their potential. The work has not been done when the worker comes to the job market. Labour-power has its use, labour; and its value, expressed in wages.
Digital goods are certainly useful products of labour, they are certainly subject to exchange, and they certainly have a use-value. They may be nominally digital/ethereal, but what you are buying is a particular arrangement of electrical charges in a RAM, ROM, or EEPROM device. In other words, digital goods represent a physical memory-state. This is true in the case of a free trial too, you pay to flip the bit that says you can use the software.
This expression fits the definition of a commodity but in the real world there are differences between digital and analog commodities. Computers are effectively able to create something from nothing, by copying data at approximately no cost. In the physical world, a general[2] doubling of productivity halves the value of the articles produced, because it takes half the time to produce them. Applying this logic directly to the digital world we can only say that data, no matter its arrangement, has no value due to ease of copying. Productivity approaches infinity, value approaches zero. This is an apparent contradiction, but the fact that digital exchange happens at all implies a solution.
The Value of Software
The value and price of digital media commodities, Jang-Ryol Yun. A summary of the problem, and a solution. All emphasis is mine.
“All [software] goods have the characteristic that the labor time required for their production approaches zero from the second unit onwards.”
“Chae and Kang define copied software as valueless things and point out that the value of software once produced is never actually transferred to a second unit, and so on.” … “The R&D labor expended in producing the first unit of any commodity forms the value of that commodity. But and here is his point, labor adds no value to commodities produced from the second time onwards.”
Large upfront costs are recouped with cheap reproduction. Pay can be kept reasonably low because reproduction does not increase the means of subsistence (food/shelter/clothing) required by the worker [3].
“Why then, can a valueless object like software become such a valuable product in the market place? According to Chae (2004), it is only possible with (legal) interventions such as intellectual property rights. Since the amount of labor required for software reproduction is close to zero, normal duplication (reproduction) is possible at virtually no additional cost. However, if its reproduction (copying) is technically restricted or legally restricted, software can indeed become a commodity.”
So this author and his sources agree with me (as expressed here and in the Dream of the Internet); subjecting software (etc.) to exchange only makes sense if there is some limit on copying, and these limits are always going to be artificial since computers copy by nature.
Digital reproduction was born with fetters–for enthusiasts, programs were printed in magazines or distributed on tape. As computers became more popular, software was distributed on disks and discs. These things do have a cost of reproduction, so paying for access makes sense. The first war on sharing came with the proliferation of writable media. Publishers didn’t want the Stupid Public burning games or music for their friends. The internet eventually freed digital commodities from their physical form, if not literally, then effectively.
The argument I quoted above is stated another way by Avi Goldfarb and Catherine Tucker in the Journal of Economic Literature. Emphasis is mine.
“a key distinction between goods made of atoms and goods made of bits is that bits are non-rival, meaning that they can be consumed by one person without reducing the amount or quality available to others.”
As you might expect, they formulate this as a problem and not the groundwork for a free information utopia, tantamount to real magic.
“…In the absence of deliberate legal or technological effort to exclude, bits can be reproduced by anyone—not just the producing firm—at near zero cost without degrading the quality of the initial good. As Shapiro and Varian (1998, p. 83) put it, the Internet can be seen as a ‘giant, out of control copying machine.’”
The Varian cited above is none other than Hal Varian, Google’s chief economist since 2002. He is largely the reason that they pivoted to ads and invented some of the worst technology of all time. Note the negative framing of the internet as “out of control”.
The paper’s tepid answer to the pricing of digital goods is that bundling a lot of stuff together might make people pay for it. The authors point to Netflix as an example of this without accounting for why Netflix emerged so late in the internet’s history. The paper is from 2019 but ignores the fact that the streaming market has fractured to an extreme degree, a piece of evidence which demonstrates that the bundling tendency must be tempered by something else which rips these bundles apart. Bundling is a more refined form of content delivery than buying songs on iTunes, but it’s not fundamental.
You must always add something to prevent copying, whether it be DRM or a legal instrument (or both!). If these access controls exist, some people will pay for access if it’s easier than pirating (“piracy is an issue of service, not price” as Gabe Newell said). Commodified software is a concrete example of Baudrillard’s annoyingly French formulation (The Dramatization of Economics in Utopia Deferred):
“At the stage of reproduction, which is the aesthetic stage of political economy, that of a finality without end of production, the ethical, ascetic myth of scarcity collapses, and with it the principle of mercantile exchange. Scarcity must be regenerated if the principle is to be reactivated.”
I am not going to pretend that I understand Baudrillard, but scarcity needs to be reinstantiated because it is the only excuse for the current social order. In the digital realm, if we acknowledge that art is a social good, and its reproduction is frictionless, then neither the publishing model nor the wage labour model make sense for artists[4]. To cover the obligatory citation of Capitalist Realism, regenerating scarcity is a way to affirm that there is no alternative.
The concept of copyright was readily available at the birth of the internet, but it required adaptation. Before the law could prosecute copying, all manner of DRM schemes were dreamed up to prevent it, or to prevent people from using copied software. Software companies wanted to maintain a monopoly on distribution, and the concept of intellectual property was their legal tool to do this. The DMCA made it illegal to circumvent access control schemes “whether or not there is actual infringement of copyright itself”. So, by its own declaration, the Digital Millennium Copyright Act is about controlling access to digital files, and copyright status is secondary.
The DMCA provides the legal framework for digital access control in general whereas before it many disparate DRM schemes prevailed and these could be freely bypassed if you knew how to do so. Because the DMCA made software crackers into criminals, a new market for more standardized DRM was born. Hence the codebooks, codewheels, etc. of the past gave way to software like SecuROM or the bane of the 2020s, Denuvo. In practice, little has changed. There is, in fact, less heat on pirates today, because streaming services are a form of friendly DRM that people have widely accepted. Streaming is the ultimate form of access control–the consumer never gets an opportunity to copy the data because their device downloads the file piecemeal and discards each part as soon as it serves its purpose. High-speed internet is the technological basis for streaming.
With all of this in mind, the software-commodity is a contradiction, unless there is some access control in place. The bundling idea proposes that people will imagine value in digital commodities if they are abundant, but the reality is the opposite–you need artificial scarcity and intellectual property. At first, Netflix was king because it was an unproven model, too risky for publishers. Once Netflix demonstrated the viability of streaming, intellectual property reasserted itself and the publishers tried to monetize their properties themselves, splintering into 1000 streaming services.
notes
I think this is a more functional definition of a worker than the whole productive vs. unproductive labour thing. In the west every non-owner has common cause and experiences similar pressures. I would also agree that Starbucks workers, for example, produce value but this has been the source of much online bellyaching. ↩︎
General in the sense that these improvements are implemented in most or all factories producing a given commodity. When something new is first discovered, the capitalist can exploit their technical advantage to undercut other factory-owners’ prices. ↩︎
A bit of a weird sentence, but for a worker at an old-school print shop, each copy costs some amount of physical exertion, some amount of wear on their clothes, some amount of wear on the machinery… all of which needs to be replaced. The things which the worker must purchase to renew themselves for the next work day are rolled into the phrase ‘means of subsistence.’ As I just alluded to, digital distribution not only substantially decreases the necessary means of subsistence to reproduce a given quantity of commodities (versus their physical equivalents), but also the depreciation of the machinery–a day’s work in Blender or Excel uses up a tiny fraction of a computer’s entire lifetime. ↩︎
You might have the obvious, warranted reaction to such a statement that it’s just leftist idealism or whatever. But we truly have conquered scarcity, at least the kind of scarcity that mandates a full-time job for the entire population. The creation of needs (i.e. scarcity) is necessary to keep the social order in place. Maybe Baudrillard calls this the stage of reproduction (idk I can’t read that kind of stuff), it’s more like the stage of obligation. ↩︎