I promised to Yihong-Ding to reply to this contribution of low vs. high mind assets

So here it is.

Yihong-Ding writes that “mind asset may not necessarily be “zero marginal reproduction costs in an open environment” and that there are “higher quality mind assets”.

Yihong Ding:

“For example, a Web widget is a portable Web service that describes certain dynamic aspect of human mind. Although any user may freely embed the widget in his own site, the service provider still has the control over this piece of embodied mind asset. Moreover, based on the “mutual consent of producers and users”, the producers of this high quality mind asset may select to charge the users and the users may select to take the charge or switch to other free or low-cost services. Then you start to see that somehow the “free-market” phenomenon is also effective on measuring the value of mind asset.”

I think there are different things at play here. There is clearly a difference between a simple piece of information and analysis, and dynamic software-based ‘information assets’ that can help generate a lot more information production. However, the complexity of a software piece does not preclude its copy-ability. A good example is a movie, very expensive to produce, but just as cheap to copy. Apart from the objective copy-ability, there is also the competitive pressure: if you want to have a popular widget, do you have any choice but to give it out for free, how else would you achieve network effects and market share.

The only ‘escape’ from this copy-ability is to achieve platform effects, which mean that because users are investing their knowledge, reputations, and relations in the platform, even when that platform is open, it creates a collective learning which is very hard to replicate outside of the platform. I would say Google Search, or delicious or flickr are good examples of this. You can create another search engine, as good as Google, but it would still have years of advantage in the collective learning process.

But from these examples, it is clear, at least so it seems to me, that the value is created through usage and community, not just derivate from the widget itself.

Granted, if such a platform is successful, this indeed creates a high ‘demand’ for the platform, and the community switching costs preclude an easy forking of the community from the platform. But the demand for that mind asset does not create a simple “price” for it, as it is the very openness and freeness of that platform, and the user-generated content, which creates the value in the first place. Hence, in terms of the monetary economy, the income streams are only derivative, as in selling the attention. What we see is that few companies are making money from selling the primary commodity, say search results, but rather from secondary, derivative, commodities, say the attention of the aggregated searchers.

Moreover, even as use value follows an exponential expansion curve, only a very limited part of that is translatable into monetary value. There is no one to one relationship betweeh the 100 million downloqded YouTube videos, and the income it can generate. The ratios are very low. This is what the crisis of value is about. Google may make a lot of money, but only a marginal number of websites makes money!! Most use value that is generated, even by high quality mind assets, does not generate a lot of monetary income.

Yihong-Ding then moves his argument to even higher quality mind assets.

“the Web evolution is to produce mind asset with new quality that can serve people better and better. But at the same time, these high quality mind asset will become harder and harder to reproduce because it requires so much mind input that is beyond the capability of any single person.”

This goes in the same territory of the argument about community that I just mentioned. It is through increasing participation and user generation that value is created.

This leads to the conclusion that the value of mind assets can be objectively measured: “measuring the value of a mind asset is about how much this mind asset has the ability to produce more mind asset. Such an ability is also the mentioned “quality” of mind asset. The reason you get confused is that you still used to think of a mind to be a capital asset but not a mind asset.”

So, what I understand is this: the value of a mind asset can only be measured by how many other mind assets it produces. In other words: use value is measured by use value. Yhong-Ding even stresses that such value should not be confused with capital.

But this is the problem isn’t it! We have use value, and we have monetary exchange value, but the one cannot be simply be valued by the other, and, as I would agrue, less and less so.

So the problem remains: what kind of value is that mind asset in terms of ‘use value’. How can one type of use value, say informational value, be translated either into monetary value, or into another form of use value that is material in its essence. So the issue remains: how can live from mind assets.