Writings on technology and society from Wellington, New Zealand

Wednesday, February 16, 2011

So long, Knowledge Economy – we hardly knew you

It wasn’t long ago that the Knowledge Society and its brother, the Knowledge Economy, were all of our futures. Remember the Knowledge Wave conference? That was almost a decade ago now. It posited that we all had a better future if only we would stop just growing nice things and sending them offshore and focussed more on creating intangibles that we could somehow sell for money than trees, views and milk. The future was going to be one where most New Zealanders were engaged in high-earning activities rather than farming or tourism. Except that it isn’t. Sure, we have a sharply growing technology sector – I work in it myself – which is great for the country. But it’s fanciful to think that will ever displace food and wood as our number one. We just have such a good competitive advantage in that area.

Missing technology trends is not unique to the academics and business leaders who promoted the Knowledge Wave. In the mid 90s I went to a presentation to Ministers by a government department (which I won’t name to save its embarrassment) explaining how it was going to build an entire business on helping New Zealanders and the world find things on the Internet. Oh dear.

“Content is king!” cried the first wave of entrepreneurs who saw the Internet. It didn’t turn out that way. There are staggeringly successful tech companies out there – Google, Microsoft and Apple come to mind as the front runners – but they don’t make a living by selling content. Whatever that is. Just try asking any newspaper proprietor. And remember what happened to the marriage of AOL and Time Warner?

There are two ways to generate money of intangible sales – content, if you like – which you might call “bespoke” and “pile ’em high, sell ’em cheap”. And, of course there is a range in between. Bespoke would be a high-end magazine like the Economist, or a book like Encyclopedia Britannica, which try to cater well for a small but wealthy market. One of those is still around, but I haven’t heard from Britannica for a while. Piling them high would be Microsoft, or even Apple, which produce endless copies of things that people will pay for. (Yes, I know Apple makes excellent hardware, but its that married to its software which sells the product.) Google is somewhere in the middle, but it has two clever innovations: to automate a very personal search experience and to find a third party to pay for it all in the form of advertisers.

One problem with selling knowledge is that you have *not* to deliver that knowledge to people who don’t pay. Not only does this irritate the non-payers, who will often ways to get the knowledge anyway, but it also reduces the overall size of the economy because people don’t get knowledge that might benefit their businesses.

But the key to the Internet is open sharing. Internet protocols are open in the sense that you can download the for free and implement them if you are able. Google makes almost all its services available online for free (to the users). Wikipedia – do I need to go on? These services have permitted the Internet to become a truly vast knowledge exchange – for free. And that’s what drives its expansion and usefulness.

How does that play out for New Zealand? It lets us have a tech sector which has to compete with the rest of the world. It would be nice if we had as large a natural competitive advantage in tech as we do for milk and tourism, but its hard to argue that we do have that. But, we still grow some great companies, partly due to our reasonable if patchy business Internet infrastructure. We can pat ourselves on the back a little and praise our tech entrepreneurs and developers who make this happen. What we mostly aren’t making money from is building barriers to prevent people from accessing knowledge unless they pay. And that’s a good thing.

posted by colin at 12:13 am  


  1. […] This post was mentioned on Twitter by Alastair Jamieson, Brian Calhoun and Colin Jackson, Colin Jackson. Colin Jackson said: Blog entry: So long, Knowledge Economy – we hardly knew you. […]

    Pingback by Tweets that mention » So long, Knowledge Economy – we hardly knew you -- — 16 February 2011 @ 7:51 am

  2. Knowledge Wave was an aspirational (but oft maligned) initiative that got many of us thinking a lot harder about ways of creating value for the nation that didn’t involve burning fossil fuels or pumping cow shit into our rivers and lakes. It also promoted other knowledge embedded industries, not just ICT. It kick-started the conversation, at least.

    Like the more recent “Jobs Summit” it failed to gain sufficient traction because the political will behind it collapsed. Incredibly, almost a decade on, we find ourselves still without an overriding national innovation strategy unlike similar sized nations such as Israel, Finland and Singapore

    The “weightless economy”, as it has now been renamed, won’t replace dairying or tourism in importance – not yet at least. But growing that sector of the economy does give us a hedge against other things we can’t control such as oil prices shocks and natural disasters.

    The world is hungry for food and information. We should do both.

    Comment by Paul Spence — 17 February 2011 @ 12:07 am

  3. I’ve got news for you: food and wood haven’t been number one in NZ for some time. That honour goes to tourism.

    So you see, it IS possible to displace the production of mere things as the “backbone” of our economy. :)

    Comment by Lawrence D'Oliveiro — 26 March 2011 @ 1:06 am

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