We continue our presentation of Kevin Carson’s important essay on decentralized production.

In our previous summary, Kevin argued that we are ready for a ‘distributed’ neotechnic era of organization of production, that this format has been derailed, but is about to become dominant. The first sign of this, he argues, is what we see happening in the culture industries.

I present the general argument, then a example that Kevin has chosen to illustrate the crisis, and that concerns the iPhone.

1. General argument

Kevin Carson:

“The unsustainability of the old corporate framework is most apparent in the culture industries. The copyright-centered business model of the old corporate dinosaurs simply cannot survive in an environment where the basic capital equipment for recording and sound editing, podcasting, software design, and desktop publishing are affordable on an individual basis, and in which bittorrent and strong encryption make copyright obsolete. The old gatekeeper corporations originally owed their power to the enormous capital outlays required to start a newspaper, a radio station or a record studio, with twentieth century technology–often amounting, at a minimum, to hundreds of thousands of dollars. The main function of the traditional corporate firm was to govern the tangible assets, hire labor to work them, and supervise the labor to make sure it was acting in the interests of the corporation. Today, in contrast, the basic item of capital equipment for desktop publishing, sound editing or podcasting is the personal computer, which is in more than half the homes in the country. The networked environment, combined with endless varieties of cheap software for creating and editing content, makes it possible for the amateur to produce output of a quality once associated with giant publishing houses and recording companies. In this environment, the only thing standing between the old information and media dinosaurs and their total collapse is their so-called “intellectual property” rights–which, once again, are becoming unenforceable.

In the information and culture industries, where the basic production equipment is affordable to all, and bottom-up networking renders management obsolete, it is likely that self-managed, cooperative production will replace the old managerial hierarchies. Music, publishing and software will be governed by peer production on the Linux model. But how is it possible to realize value from open-source production with zero cost of reproduction? The answer is suggested by the business models of Red Hat, Phish and Radiohead. Red Hat, a Linux distributor, can’t make money from ownership rights over the software itself. But it does quite well selling customer support and product customization. Phish gives the basic product, its music, away free; it makes money from concert tickets and concessions. Radiohead experimented with offering an album for free download from its website, coupled with the collection of voluntary contributions via what amounted to a glorified PayPal tip jar.

The interesting thing about Radiohead’s business model is that, because there is no physical reproduction process (the downloader burns his own CD), the overhead cost (mainly hosting and administering the website) is close to zero when spread over all the downloads. So even if the downloaders only average a buck or two per person, or even less, the revenue is essentially free and clear. Apologists for copyright like to say “you can’t compete with free.” Actually, though, there is still a significant rent entailed in the time and trouble of entering the market, even when there are no proprietary rights to the content. For the largest bestselling authors, like Stephen King, it may be worth it to offer his content at a unit price of fifty cents over production cost, even when King is selling his books for only a dollar over cost. But for the vast majority of writers and musical artists with small to medium-sized market profiles, so long as they sell their product for a modest markup over production cost, the profit to be gained by undercutting them by such a small amount simply isn’t worth the trouble. It’s only those who charge a large markup who would make it worth the competitor’s while to undercut them. As for manufacturing, the new economy that emerges from the Time of Troubles, if anything, will be more Emilia-Romagna than Emilia-Romagna itself.

Product design will be revolutionized around modular components, for durability and cheap reparability.

2. The iPhone: sabotaging repair

“Julian Sanchez’s discussion of the i-Phone is a good example of the effect of proprietary technology in reinforcing planned obsolescence.

Julian Sanchez:

(1) Some minor physical problem afflicts my portable device—the kind of thing that just happens sooner or later when you’re carting around something meant to be used on the go. In this case, the top button on my iPhone had gotten jammed in, rendering it nonfunctional and making the phone refuse to boot normally unless plugged in.

(2) I make a pro forma trip to the putative “Genius Bar” at an Apple Store out in Virginia. Naturally, they inform me that since this doesn’t appear to be the result of an internal defect, it’s not covered. But they’ll be only too happy to service/replace it for something like $250, at which price I might as well just buy a new one….

(3) I ask the guy if he has any tips if I’m going to do it myself—any advice on opening it, that sort of thing. He’s got no idea….

(4) Pulling out a couple of tiny screwdrivers, I start in on the satanic puzzlebox casing Apple locks around all its hardware. I futz with it for at least 15 minutes before cracking the top enough to get at the inner works.

(5) Once this is done, it takes approximately five seconds to execute the necessary repair by unwedging the jammed button.

I have two main problems with this. First, you’ve got what’s obviously a simple physical problem that can very probably be repaired in all of a minute flat with the right set of tools. But instead of letting their vaunted support guys give this a shot, they’re encouraging customers—many of whom presumably don’t know any better—to shell out a ludicrous amount of money to replace it and send the old one in….

Second, the iPhone itself is pointlessly designed to deter self service. Sure, the large majority of users are never going to want to crack their phone open. Then again, most users probably don’t want to crack their desktops or laptops open, but we don’t expect manufacturers to go out of their way to make it difficult to do. Again, in the instance, this was 15 minutes screwing with the case for a problem that took literally seconds to fix.”

Kevin concludes:

With due respect to Sanchez, the point of deterring self-service is the price of a new phone. It’s a fairly common business model: sell printers cheap, but sell product-specific toner at an enormous monopoly markup; sell blood glucometers cheap, but charge $100 a box for the testing strips. In the old days, it was cheap electric typewriters and expensive ribbons. And of course, thanks to “intellectual property” law, it’s illegal to manufacture generic accessories for someone else’s product.”