Public Goods and the Economics of Cheap Content Replication

Public goods theory is one of the core concepts in micro-economics. It encompasses goods that are non-rivalrous and difficult for people to exclude others from using. A good example would be knowledge and written material. Once an idea has been created, it can be consumed by numerous people without diminishing the quantity of the idea to anyone else. The digital economy is accelerating this phenomenon as the cost to reproduce information is nearly $0. The invention of the paraphrasing tool has heightened this dynamic, and in turn will rapidly change the way that content is created, how it is shared, and how valuable it is.

Conventional written material is created with a large fixed cost. Authors, researchers, and businesses put in a considerable amount of time, expertise, and resources to create articles, reports, and analyses. The process of creating materials may take hours or even days to ensure that the material is accurate and original. However, once the written content has been created, the marginal cost to replicate that written content is valueless. The act of copying, sharing, or re-writing text requires very few additional resources. Consequently, this disparity (large fixed cost vs. marginally low reproduction cost) is also one of the determining factors that classify knowledge as an economic good.

At a faster rate than ever before, paraphrasing technologies now also reduce the cost of creating duplicate material. Users can create rewritten versions of existing pieces of content — quickly — retaining meaning while changing wording and structure. Thus they effectively reduce the cost to create duplicate content, and drive up the number of available copies in digital media. In economics, technological advances cause the derivative content supply curve to shift outward.

Demand and supply forces drive this trend — on the demand-side, businesses, marketers, and content providers need to produce larger amounts of content regularly in order to fill web pages, social networking sites, and be found via search; while on the supply-side, advances in natural-language processing and machine-learning technologies make automated rewriting tools much more widely available and affordable. Therefore, entry barriers to content production have dramatically decreased.

The data suggest a rise in the number of blogs being produced worldwide. With an estimated 7 million blog updates being created every day, the demand for content tools to assist in generating those updates has increased rapidly worldwide to an estimated value of billions of dollars annually by 2031. The significant increase in total number of blogs created and the large quantity of content available using tools that either copy existing written works or make it easier to produce new content generates widespread externalities.

From an economics standpoint, the increase in the supply of written content falling within the domain of public goods can have a positive externality (or benefit) to the economy overall. To the extent that there are spillover benefits to others when people have greater access to written content and the greater quantity of content that people can access at no cost (in many cases), there will be greater diffusion of knowledge and greater access to information than if the knowledge were available only through the traditional educational or career channels.

The use of public goods is demonstrated through the non-rivalry nature of content: one individual’s use of a written article does not prevent another individual from benefiting from the same material.

On the flip side of the ease of replication is a greater concern that adequate levels of original content will not be produced. If an individual artist cannot successfully monetize their creative output due to a great number of imitators taking advantage of their work for free, it will be much less appealing to invest the time and effort necessary to create a high-quality piece of original work. This represents a classic problem as demonstrated by the public goods theory — when a good cannot be excluded from use by others, it is likely that the marketplace will produce less than the socially optimal amount of innovation.

A real-world example can be seen in the areas of digital publishing and online journalism where organizations will spend a substantial amount of time and money doing in-depth investigative reporting and producing original analyses; however, because those original pieces of work are frequently summarized, repackaged, and/or completely rewritten by other organizations and individuals using multiple different media formats, it ultimately increases the reach of that original series of articles; but it also results in substantially reducing the original producers' revenue streams that would have otherwise been generated from the content of the original series. Additionally, as illustrated by both the academic and educational materials and vast numbers of rewritten works in circulation, this also raises significant issues regarding sustainability.

In this context, the concept of exclusion is of particular importance. The disruption of the traditional earning methods from the creation of content (i.e., paywalls and subscriptions for digital content), and intellectual property protection mechanisms, are examples of how these methods have limited creators' ability to earn money by restricting access. Paraphrasing has made it difficult for authors and publishers to enforce their copyright by allowing users to reproduce an idea in different ways that may not technically breach their copyright restrictions; thus blurring the line between the legitimate use of an idea and the appropriation of an idea.

Moreover, as digital technology continues to grow and progress, the economics of content creation will continue to reflect the tension between access and incentive, i.e., access to knowledge would be encouraged by these same conditions, but would hinder efforts to protect that knowledge. This creates a challenging and contentious environment between creators, platforms, and policymakers, where the value of an original idea is repeatedly tested.