The new global currency: InformationOctober 7, 2009: 10:00 AM ET
Forget the dollar and the yen. People value their cold, hard content.
By Pete Steege, product marketing manager, Seagate Technology
Earlier this year there was a bit of buzz that the US dollar was at risk of being dethroned as the world's default currency. I'm not a financial expert, so I can't weigh in with any authority on the US dollar's continued hegemony vs. other monetary currencies. But I do think the there is a new global currency looming on the financial horizon that will change how we transact business. The new legal tender: information.
Driven by the content Gang of Five (Google (GOOG), Facebook, Microsoft (MSFT), Apple (AAPL), and TiVo (TIVO) ) and their peers, our day-to-day lives have turned irreversibly digital. We collect television shows and movies instead of just watching them. We download songs instead of just listening to them. We don't talk on the phone so much as we manage our messages.
Along the way, information has become a consumable. More than that, information is a commodity that we increasingly equate with a specific dollar value. How much does a movie DVD cost? It depends on who's selling it and whether or not it is on sale. Not so with online content. A digital song is $1, (well, more like $1.29) a movie is $10, an ebook is $10, more or less.
This convergence of the value of digital content affects consumers' other possessions and purchases as well. For example, how much a personal computer is worth to its owner depends more on what is stored on it than what was paid for it. Two thousand songs stored on the hard drive? It's worth at least $2,000.
In fact, in a Harris Interactive poll commissioned by Seagate U.S. consumers were asked, "If you had to put a price tag on your digital content (photos, documents, movies, music, etc.), stored on your computer(s), how much would that be?" Forty-one percent said their content was worth $5,000 or more. That's more than the average cost of a high-end computer. Will computers become just a means to an end?
Data can be stolen. Can it be turned into currency?
This trend has spawned new industries for the care and feeding of this pseudocurrency - much like banks and other financial institutions surround more conventional forms of money. There is software to help you manage your content assets, backup services to safely vault them, and data recovery services - the "insurance" of the data world. Data theft is becoming common, as is government regulation on how it is handled. People are even suing each other over their data.
Thinking of information as legal tender raises questions. Does it depreciate? How is it affected by inflation? Is there a practical use place for information-based debt? Will we see an Information Futures market form?
I'll leave these questions to the more financially savvy. What I do know for certain: information will continue to look and act more and more like cold hard cash.