Consumption could break free of product ownership

As regular readers of this column will attest, I have often argued in favour of shifting our thinking, in the digital context, from ownership to use. But as much as I believe this is the direction we should be taking, the journey will not be easy.

Ever since Adam Smith, the notion of consumption has been central to our conception of economic growth. As a result, notions of ownership have shaped the way we think about regulating all property—be it tangible or intangible. Now that it is possible to efficiently distribute digital goods using online platforms, I believe that it is time to question the need to continue to base our regulations on the same paradigm.

We no longer accumulate collections of CDs, vinyl records and tapes, since everything we want to listen to or watch is available online. For a flat monthly fee, we can access all we want to consume. Even though we own none of this content, it is available on demand whenever a fancy strikes us. Having so fundamentally changed the way we consume content, does it not make sense for us to rethink the way we regulate it?

I’ve argued in the past for the need to think outside the context of current intellectual property law in order to build frameworks more suitable to our digital context. One of the immediate benefits of this will, I believe, be the gradual elimination of planned obsolescence in consumer-facing technologies. As society begins to favour renting over owning, obsolescence will become less relevant as increased utilization will demand better, more long-lasting technologies.

It is for this reason that I believe that the time has come for us to more broadly extend these notions of use into other aspects of the physical world. I am particularly convinced of the need to do this in the context of urban mobility, where on-demand urban transportation services are forcing us to rethink our existing notions of vehicle ownership now that mobility is reliably available as a service. Some time ago I wrote that India is particularly well positioned to take advantage of this:

“We don’t own as many cars per capita,” I argued, “which means that, unlike the US, India has no tradition of car ownership that will come in the way of the transformation of mobility. To the contrary, younger generations of Indians will probably leapfrog vehicle ownership entirely, choosing to depend on ride-hailing rather buying a car. All of which will serve us well as we transition to our inevitable autonomous future.”

Despite my enthusiasm to see all this come to fruition, I am conscious that the transition from an ownership to a use-based economy will not be without its challenges. Early signs of how this might play out are starting to show themselves in the consumer goods space—an industry that already has a reputation for exacting extortionate prices for their consumables (just think of how much you spend on replacement razor blades or ink cartridges). For businesses such as these that already make considerable revenues from the sale of their consumables, I can see that the ability to legitimately deploy a subscription model may be exactly what they have been waiting for—an excuse to implement technology measures that would enforce adherence to subscription contracts.

Take the example of Juicero, a tech-enabled cold-press product that fully committed itself to the subscription model. Three years ago, it was all the rage in Silicon Valley when cold-press juicing was the latest fad. The Juicero Press that it launched was a wifi-powered machine that extracted juice from single-use sachets filled with pre-cut fruits and vegetables that customers could procure through an exclusive “farm to glass” subscription service. The company used QR codes to ensure that expired packets were not used, as well as to remotely disable packets if ever the need arose for a recall. But Juicero turned out to be more hype than substance, its QR-code-based subscription model little more than a novel way to lock customers in.

This story has played itself out time and again in different fields of business. We’ve seen Expresso machines that are designed to only accept coffee pods distributed by their manufacturer, with these obligations enforced by embedding proprietary technology into the design of the pod. Smart lighting systems have been given firmware upgrades to ensure that no bulbs other than those supplied by approved vendors will work. We have seen printers that stop printing after you exceed your estimated page count, unless you pay an additional amount for every subsequent page you print.

As we transition from owning things to subscribing to services, we will most likely see many more such situations in which technological fetters will be applied to physical products so that the terms of subscription contracts are better enforced.

No doubt, these restrictions will chafe some of us—particularly considering the price at which these early services will be offered and the lack of choice. But in time, as digital distribution becomes more widely adopted, I expect that market forces would come into play, ensuring not only that these services become more affordable, they also become widely interoperable.

At which point, our unfortunate preoccupation with ownership for consumption can finally be laid to rest.

Rahul Matthan is a partner at Trilegal and also has a podcast by the name Ex Machina. His Twitter handle is @matthan