Chasing Externalities in the Digital Network Economy: In Search of Nonmarket, Alternative, and Ancillary Value in Information and Media Products, Markets, and Policies.

Value has never been as simple a concept as it has been treated by markets, governments, and other actors. Value is contextual, variable, and uncertain – particularly for media and information products where there is less of a physical product to provide an underlying foundation for value. To simplify things, markets and analysts have tended to emphasize one particular kind of value that is more readily observed and measured – exchange value (price).

While this definition is viable, it has been long recognized as being incomplete, unable to capture the full range of value and value sources. Thus, there has been a recognition that when economic and other analyses focus on exchange value in their considerations, there will be externalities, other sources of value, left out of the analysis. The potential for externalities is well-recognized in economics, and there is considerable literature in the field as to the implications of externalities in market functions, for efficiency and social welfare considerations, and for policy considerations. However, in order to consider the implications of externalities and/or incorporate them into market and policy decision-making, those nonmarket sources of value need to be identified.

The need to identify and incorporate non-market sources of value are arguably more urgent in the digital network economy. The technologies of digital networks reduce entry barriers and transaction costs, and have arguably enabled alternatives to industrial production models. In other words, in the digital market economy, the less certain, and arguably lower, sources of value may be increasingly significant and viable.

This paper will identify and discuss a range of non-market sources of value, and the implications they hold for industries, cultures, and audiences.