Changing perspectives on value
The Digital Economy is our saviour, according to the government. It's not just them: the Boston Consulting Group said, in 2010, that the UK internet economy is larger, per head, than in any other country, and is forecast to grow by 10% a year.
This partly explains why the government is keen to invest in this sector: research councils support academics in this space, and recently the Technology Strategy Board have launched 'Catapult' activities that aim to, er, catapult the UK to the forefront of this sector on a worldwide stage. The new Catapult centres are the UK's answer to institutions like Fraunhofer in Germany - and may well work, if they can be sufficiently well structured and funded.
There are some fascinating challenges, not least of which is understanding, and communicating, the fundamental differences between the digital economy and other ones. In most economies that we're used to, the scarcity of goods drives up their value. Ming vases are not everywhere; neither are Monet's paintings. Diamonds are, actually, not quite in this category - there are plenty of those - but (unless you reach significant sums) you tend to be paying for the cutting and jewellery surrounding them too. But in the digital economy, life is different. It's trivial to replicate goods, something that the music industry has found to its cost. You can't charge for goods creation and distribution, knowing that only you can turn out such a product - the opposite is true. And so only those organisations that evolve can generate revenue: many musicians now use the free distribution and copying on the internet to market themselves and their activities, and make money from concerts and supplemental goods like t-shirts.
There is more to it than understanding the nature of digital goods, however. More interesting are anti-valuable items. If previously, value was based on scarcity, these goods are those whose value is based on exactly the opposite: their expanding prescence, their near-ubiquity, is what gives them value. Telephones are an obvious example: Facebook accounts are a digital economy example. Recognising and exploiting these anti-valuables is essential to the success of the new economy, and yet there are signs that the TSB are not so focussed on exploiting these trends. The Digital Economy is not really about digitising the existing economy - of course, it can do that, but this won't lead to game-changing outcomes. It is about a new understanding of what adds real value, what you can charge for, what is freely available, and how to put your value-added (or anti-value added) proposition in front of the relevant people at the right time.