Transcript from video at http://www.ofcom.org.uk/event/videos/445536/

Introduction by Tim Gardam:

Let me introduce our final session. My name is Tim Gardam, and I'm a director of Ofcom, and my job simply today is to introduce our final keynote speaker, because this final session of the conference is designed really to challenge all of us who've been here throughout, to stand back from the arguments, and to interrogate for ourselves, I think from first principles, some of the assumptions that have been made about digital culture, digital society and the future shape of digital markets, and the way we're responding to them. 

Now, our speaker Douglas Rushkoff is Professor of Communications at NYU, but way beyond that, he's recognized globally as one of the leading theorists on the impact of technology and media, both on corporations and on the social dynamics of consumers and citizens. And I think it's fair to say that throughout the life of internet, he's charted the struggle of orthodox media and communications corporations, to come to terms with the implications of the technology they've created. His work ranges across economics, business, popular culture and religion. He has also authored a graphic novel and a PBS documentary. His latest book, which is going to be published I think early next year, has a rather forthright title of "Life Incorporated: how we traded meaning for markets, society for self-interest and citizenship for consumer service". A title which I think is fair to say, takes head-on all the assumptions upon which Ofcom is based. 

So what are the implications for effective government and regulation in a world where as Douglas argues, consumers are now co-producers of the media that shape their culture, a world where value is created on the periphery rather than at the centre, and I think this will offer us a constructive counterpoint to some of the key thoughts with which Lord Carter opened this conference. Stephen spoke yesterday of the economic crisis as a fundamental point of dislocation globally, and of the potential for the communications sector within the right regulatory and public policy framework, to be a vital catalyst for economic recovery. He also pointed out, that most of the incentives are in the wrong place. And he talked of the lack of alignment, as far as rights, responsibilities, revenues and costs are concerned, between network infrastructure providers and the content creators. 

So it will be really interesting to hear Douglas Rushkoff's analysis of how far those of us who will be responsible for regulating media markets, and those who are at the heart of creating value, both public and private out of them, really understand the changing nature of what we're on about. So now let me without more ado, invite Douglas to give us his keynote address. 

Douglas Rushkoff:

So I don't know how many of you know that this was originally called the Ofcom-Lehman conference? Did you know that? But Lehman was forced to withdraw due to its non-existence. (polite audience laughter) And replaced of course by Bloomberg, which pretty much, I think, tells the story, of what's going on here. It's it's... Most of us at this conference had been framing the essential conflict or divide as being between corporations and government, and I think the actual divide is between corporations and themselves. Between corporations and their own basic structure. Your companies, if you are a publicly traded company, your companies are not media companies; your companies are names on debt. The media company-part is the story that's being used to acquire more debt. To get more shareholders, to get more investment. But the problem is, you are on the one hand traditional corporations, traditional names-on-debt, on the other hand you are promoting decentralizing technologies that undermine the foundation of that basic corporate capital structure.

In some ways, Bloomberg brought down Lehman. Right? Bloomberg, through interactive media, democratized the investment capital space. So that anybody could have a terminal and participate in something that was originally monopolized by companies like Lehman. If we want to understand the current crisis, and we'll call this the financial market crisis for lack of a better crisis to talk about today, most historians are tending to go back to the Depression. Oh, the last great big one. And we can't understand what's happening now, based on what happened there. I think what we actually have to do is go all the way back to the Renaissance to understand what's happening now, to understand what's unraveling now, because it was during the Renaissance that the capital structures that we're depending on were invented, and where the technologies sympathetic to those capital structures were also invented. And what we're looking at today, is the invention of technologies that now undermine those capital structures, but we're not willing to change the capital structures to adjust to these new technologies.

So, if you go way back, very brief history lesson: how did we get corporations, right? We think back to the Renaissance and we think "oh, because we needed a great new vehicle to promote this evolution, the natural evolution of our markets and companies." No. That's not what happened. The reason we got chartered corporations is because monarchs were losing control. Right? There was a rising merchant class, these great pirates and all sorts of merchants going out to sea making a lot of money and threatening the monarchy, threatening the aristocracy. So what the monarchy did is, it came up with an idea, and that was the corporate charter. What I'm gonna do, if I'm the monarch, is find the biggest companies out there, the ones that threaten me the most and say "You wanna lock in your gains? Do you want a monopoly over your industry that can't be challenged? I will give that to you, if you give me a piece of the action in the form of stock, and eternal loyalty." And the company, the joint-stock company that became the corporation, gave me loyalty, as monarch, why? Because the longer I'm the monarch, the more power I have, the more enforcible their monopoly is. So one company gets a monopoly over wine, another company gets a monopoly over the East-Indies, another company gets a monopoly over the West-Indies... And both luckily and as a result of this structure, of this invention, we got a bunch of new technologies and inventions that were very sympathetic to this monopoly, to this new centralization of power by the monarch, and these monopoly charters for corporations. 

We got the printing press, which is a monopoly technology. I mean, it's great for reading, but it's not really great for writing, except to the few that have access to this press. We got centralized currency. Centralized currency is a very interesting invention. I mean now we think of the stuff in our pockets as money, but at the time, this kind of money was just *a* money, it was one of many moneys that were around. Before centralized currency, there was what was called 'local currency'. It had very different biases; it was created very differently. The way you created a local currency in pre-Renaissance, what we called late-Middle Ages Europe, which wasn't as bad as everybody seems to think. Late-Middle Ages was before the plague; women were taller in the late-Middle Ages than they were at any time in England until the 1980's. They had a three- or four-day work week, I mean they were actually wealthy, they ate five meals a day. They were happy people. Why? Partly, because they had local currency. The way local currency worked, was: you would bring your grain to the grain store, you had a hundred pounds of grain, he would take the hundred pounds of grain and give you a receipt, for a hundred pounds of grain. And then this receipt worked as money. You could even tear off little pieces; here's ten for you for this, ten for you for that. And it was a local currency, because someone over in Czechoslovakia isn't going to care about my hundred pounds of grain in my local grain store, we need the empire's coin for that long-distance transaction. But locally, this is actually worth something, this is worth a hundred pounds of grain. 

Now the interesting thing about local currency is, it lost value over time. Why? Because we had to pay the guy that runs the grain store, because rats are eating some of it, some of it is getting wet, you can only store it for so long. So each year, this might go down from being worth a hundred pounds to worth ninety pounds, to worth eighty pounds. So what is the bias of a local currency that loses value over time? The bias is towards spending it. The bias is towards re-investing it. You'll accept the money, but then you'll want to get rid of it as quickly as possible, so the money starts circulating. And you're looking for investments. People were so desperate for investments in late-Middle Ages Europe, that's why they built cathedrals. Right? The cathedrals weren't built because the Vatican cut a cheque, for Chards (?) to go build their cathedral, no these were people looking at, how can we reinvest this money in a way that will promote our prosperity in the future. So they built a cathedral, which takes a few generations to build, but once it's built you get pilgrims, you get tourism. That's what it was for, it was not because oh, we're such good Christians, or Catholics or whatever they called themselves. It was an investment in the future.

Now, centralized currency came around because the monarch was looking and saying "look how rich these people are, and they're constantly reinvesting in their own local communities". The corporate capital model is about extracting value *from* those communities. That's the way my system works, that's the way I'm going to get wealthy. How do I extract value from those communities? Make their coin illegal and force them to use my coin, or what we call 'coin of the realm'. That's what that means. Now you'll have to use this coin which I can issue, at interest to you. I mean, that's the way money works today, we know money is not earned into existence, money is lent into existence. And it's lent into existence for interest. So if I'm the central bank, I lend money to a bank, and that money lends money to a bank, until it gets down to a consumer bank, which then lends it to a business. If I want to start a business, I borrow $100.000 from the bank and in ten years I've got to pay back $300.000. Where does the other the other $200.000 come from? From someone else who's borrowed $100.000 from the bank. So for me, to pay back all $300.000, two of these other people either have to go out of business, or borrow that much more. Go that much more into debt. And that's why our money is biased towards growth: great while things are growing. But it's also biased towards debt, towards paying back these banks. 

So the new bias, from the Renaissance right through today, for the way business has to work, these are the ground rules, these are the rules we accept as given circumstances, but I'm arguing are not given circumstances; these are the rules of the game, of a *highly regulated*, so-called 'free market place'. Where we only have one kind of money that works this way, where we have one kind of chartered monopoly that works this way: to extract value from the periphery, to do disconnected management from a long distance away, to disconnect people from the value they create, and instead extract value from those people, and to promote individualism as the guiding sort-of ethic and moral of all this. You are individuals, don't worry about the community that you're in, the locality; *you* are what matters, you, you're the one, as we like to say today.

I mean, and the great examples of resistance to this, people who understood this was the original American Revolution, was actually fought against this; it wasn't fought against the throne, it was fought against the East India trading company. Why? Because Americans were allowed, the colonists were allowed to extract cotton, but they weren't allowed to fabricate fabric, or clothes from the cotton. They had to extract the cotton, ship it back to England through their British East India trading company, and then buy their clothes from England. It was against the law to make something. Why? Because if you make something from a colony, you're creating value, rather than just having value extracted from your resources. 

So we had a lot of great things, admittedly, thanks to corporate capitalism, but we ended up with a loss of skill, a loss of expertise, a loss of competence. People who had real jobs, people who made shoes or did something with expertise, became managers, as they moved up. And as they became managers and then supra-managers and managers of multiple companies, who actually did the shoemaking or the cobbling? The least-skilled labour they could find, they had the equivalent of, what we in the States we have a Home Depot, you go to the parking lot and you find Mexican illegal immigrants to go do your construction work for you. They looked for the least qualified labour they could find, because the less qualified they were, the less they could be paid and the more easily they could be replaced. So you came up instead with processes, processes you could teach this person in ten minutes, how to make these shoes. And meanwhile the great shoemaker is now a manager, is now an economic or a business actor, instead of a shoemaker. 

So we end up in this tremendous loss of competence, which we're still in today; most American companies don't actually do anything, right? We outsource the thing we do to someone else. We even outsource the outsourcing, you know, when the Chinese dog food problem happened in the United States, people called their dog food companies to find out if they sourced from that company that made the poisoned dog food, the dog food companies could not answer the question because they had outsourced the outsourcing. They didn't even do their own outsourcing. 

Meanwhile, we'd started to treat these people also, they devolved, these great individuals from the Renaissance and the Enlightenment, devolved from subject to citizen to consumer, and maybe now to shareholder. And we wonder, when we treat people like this, why they don't want to pay for their media. When we separate them from community, when we treat them as individuals, when we use this underlying notion that people are selfish economic actors, we wonder then, why do they behave like selfish economic actors.

So in the Industrial Age then, and this will be the last of history, in the Industrial Age again technology supported a model of currency. Right? We built technology, we built industry to support an economic rule? That's what mass production was about. Why did we have mass production, because everybody needed more of these goods? No, we created mass production because of the needs of capital. We needed to accelerate growth in order to pay back banking, in order to work currency. This was the underlying rule of currency. And so we created technologies, both to stoke production, and to stoke consumption. Right? Mass production, in some sense disconnected the worker from the process of production and made the timing, it really made human beings now, having to work at the pace of machines rather than the other way around. So all these goods were happening. 

Mass production required mass marketing. Why? Because now, instead of buying my oats from Joe at the corner, who I know, I'm getting my oats in a plain, giant cardboard box. I have a relationship in my community with Joe, if I have bad oats I can yell at Joe, and I am also Joe's plumber, so if I get bad oats Joe's in trouble, because I'm not going to plumb his pipes as well. Now I've got this plain brown box; the mass producer needs to create a relationship between me and this box that substitutes for the relationship between me and Joe. So what do they do? Mass marketing. They create a brand image, they put a Quaker on the oats, right? So these oats that are coming from a corporation far away, now have a relationship, when I look at the Quaker I like him, it's not a real religion it's just, they're friendly people. (audience laughter) Now how do they create a real relationship between me and this mass-marketing brand? Mass media. And that's where all of your companies came in. Mass media came about not because Jack Benny was sitting in his cabana in Hollywood saying "how do I reach the people with my comedy?". No, mass media came about because the mass marketer needed a way for that Quaker to get to me, so when I saw the plain box with a Quaker on it, I would have a relationship with that Quaker. Mass production lead to mass marketing which then lead to mass media. And these were all technologies that were very consonant with mass produced currency, with centralized currency. This is a broadcast media. 

So the needs of the consumer, or what you're calling the consumer, I would just call them the needs of the person, and the quality of production, are all limited by the needs of capital. Right? SO we outsource production, either in-house outsourcing or out-of-country outsourcing, and we cover up for the fact that we're making crap with branding and media. Now interactive technology, this is the stuff that just happened since the late 80's till now, doesn't conform to this model. Why? Because interactive technology turns the consumer into a producer. So now the person who was the consumer is creating value. Now this is a problem in a model where value is extracted. Right? The corporate model is to extract value from the periphery, to extract value from real activity, to extract value from communities, from localities, from the land, from the water, from anywhere. As people become producers, they're creating value, and it's not just... I think we do a disservice to citizen's media when we equate this with some picture of a baby on Youtube, that everyone looks at. I mean that's an easy example, but people are also creating real value, real media, real uhm, I mean Wikipedia is just one example but there is genuine value emerging from people's media. It might not be as expensive to make as Lost, but everything I mean gosh, even South Park, Beavis and Butthead, these kinds of shows, The Simpsons, came up really out of, what we would call citizen's media. 

Corporate reaction to the creation of value through technology, through media, through interaction, is to keep the consumer out of the picture. I mean, Microsoft was great at this for a while. Right? How do you install a program in Microsoft Windows? You conjure the wizard. Why did they pick 'the wizard' instead of 'the plumber'? Or 'the handyman' or 'the assistent' or 'the secretary'? The wizard, what does that mean? This is a mysterious technology, no user serviceable parts inside, hazard of electric shock. Don't watch while 'the wizard' moves the application into this folder over here. Woo. Stay away. 

I mean think, the natural progression, the natural evolution of a person using technology, is from consumer to producer. Think about how a kid engages with a video game. They start out, they play the game the way it's supposed to be played. They fight and kill and shoot dragons and whatever they do until they get stuck. And what do they do? They go online, they find the cheat codes for the game and they come back and play the game now with infinite ammunition or lots of armour. So they start as players, and then they become, kind of cheater-modifiers, they're playing the game now from their own perspective, from what an historian would call a post-renaissance, an individual approach to the game. And then after they play the game all the way through now with infinite ammunition and all that, what do they do it this is a great game and they are genuinely interested? They go back, they find out how the game was programmed, and they make their own versions of this game. And then they take those versions of this game, they upload it to a web site and hope that other people will download their version of the game. Not because they want money, because they want to show that they've got 300.000 downloads of the version of the game that they made. So they now created value. Now, smart companies understand that they've also created value for the brand, for the game; but the kid has also created for himself. If he's really good, ideally now he's going to get hired by a game company, right? Activision, someone's gonna see: oh look, this kid is really good at this stuff. 

So he's become, not just a producer, but he is using the technology now to re-socialize, right? Mass media intentionally de-socializes. Television which started as an appliance really in the living room, in the house, that everyone sat around and watched, ended up isolating us all into our own bedrooms, to watch our own individual narrowcasted cable channel. Right? That's because an isolated consumer is a better target market. Think about any commercial, a commercial for blue jeans, say. What's the communication of the blue jeans commercial? Wear these blue jeans and you will get to have sex. Right? Now if you are a person sitting on a couch with your girlfriend, with whom you already have sex, is that a good commercial? No. (audience laughter) The commercial is targeted to someone who is alone and not having sex. Right? The more friends you have around you, the better time you're having with life, the less susceptible you are to mass media's advertising pitch. 

So the kid now who makes videogames, or who's making levels of videogames and who's uploading them, why is he doing that? He's doing that for social recognition, for social currency. He's talking to other people, he's actually re-socializing through this medium. Now, marketers on the one hand love that: "Oh Social, we do Social." I hear that all the time. But in the end they resist the truly social, they're happy for us to be social online, as long as we're talking about the exact brand of car that we share, right? They'd rather me be talking to a fellow, you know, Dodge Caravan 1997 owner from across the country or across the world, than a neighbour who's just a car owner. Because then we have things in common other than their brand. 

Now, you can sell ads online, as we've watched Google do, but what has that really done? Selling ads online with recordable, verifiable metrics really just reveals how advertising doesn't actually work. Three million dollars for an episode of Lost, that's what I heard yesterday, 3 to 4 million dollars. Just because an episode of Lost costs 3 to 4 million dollars, doesn't mean an episode of Lost is worth 3 or 4 million dollars. Right? The cost and the value aren't the same thing. It might be, there was a reason why television was lower budget than motion pictures. Right? Until we were able to convince advertisers through falsified metrics that oh, this medium is great, actors couldn't ask for a million dollars per episode. They're not worth the million dollars per episode, there's twenty thousand unemployed actors for every one that's on there, and ten thousand of them are just as good as the person that's on that show. No but they, god this is sort of the other side of piracy. (audience laughter)

26:00

And the other problem with ads online, and this is why I think Google's ad model at least, is ultimately doomed to failure; ads online don't work because they are redundant. If you are online, you are already consuming, you're already in the mall. The advertisement actually distracts you from the consumption you're doing. The advertisement is actually a drag on GDP, and I promise you GDP is more powerful than any corporation. (GDP = Gross Domestic Product) Do you understand what I'm saying? The person is already consuming. What the advertisement is saying is "please stop consuming, to watch this ad." They're already consuming. People are paying. People are paying for the computer, they're paying for access, they're paying for server space, paying for iPods, they're paying for digicams, they're paying for microphones, paying for game controllers, paying for Bluetooth headphones, they're playing for, paying for blank CD's and blank DVD's and double-layer burners. The problem is not that there is no revenue, that's not the problem. It might not be the same revenue, there's revenue. It costs me more, I promise you, to download my music for free, than it used to cost me to buy it. (audience laughter) The problem is not that. The problem is that people are creating value, and that's the threat. People creating value is considered a leak in traditional corporate capitalism. They're spending more, but the monopoly is broken and that puts future earnings in question, it puts business models in question. 

27:35

So now banking fails, right? Banking fails, the failure of banking is still the, this is the dotcom bust, finally happening. The dotcom bust sort of hiccupped, back in March of 2000, and then we delayed it with a real estate frenzy, but this is finally it. It's because banking has been threatened by the creation of value from the periphery, the way it used to be done before central banking. And the other problem, that's combined with the fact that the real economy can no longer support the speculative economy. The speculative economy got too big, there's too much of it; I mean look at New York, we make like a couple of corned beef sandwiches, and we've got another eight million people who are in investment capital. (audience laughter) There's nothing else happening. And in the crash now, deregulation has become just as dirty a word as regulation. But the fact is, there was never deregulation. There was never deregulation. The deregulated playing field was simply a playing field where we had forgotten the underlying rules, the implicit rules and the explicit rules. You know media, was subject to the rules of currency. Media was subject to the bias of scarcity. Right? And Clearchannel was sort of the last version of so-called deregulated, eh, deregulated media corporate havoc. Right? They came in and bought up the whole radio dial because we deregulated. They basically destroyed it, by using a corporate model, instead of having DJ's in actual places playing records, they had a computer in one place, giving orders to radio stations of what music gets played when. Right? So they destroyed radio. People stopped listening! They hated it, it was awful. And then they'll say "Well,", and then the free marketer will say, the person who believes he's a free marketer will say "Well don't worry, the market will correct it, see people didn't like it and now the market corrects it". No but when the, what is the market trying to correct, is the decimation of a radio ecology. They were people with expertise and jobs and relationships and infrastructure, human infrastructure that's gone, you can't just say "oh come back now". "Oh come back and be the expert radio.." no, they're gone. Regulation slows down that process, it says wait a minute: before we completely wipe out an ecology, let's look at where's the expertise in there and what's going to happen.

You know, (laughs) the regulation we do have, in the deregulated marketplace, is regulation biased towards companies and corporations and people who've actually died a long time ago. (audience laughter) They've left the building. And we're following the programs that they laid down, not understanding what they are. Right? We're regulation-friendly when it's about policing, we talk about that, or protecting copyright. Right? Because those actually, those are costs that we like to externalise. So that's good for regulators. Right? But the *biases* of the accepted economic truths, what we're accepting as givens, are towards the individual and away from community, towards the consumer and away from the producer, or citizen participant, towards protection of brand myths, and away from the facts on the ground, the facts of the real world. But we are living in a world, that most of us don't like. Most of us don't like the underlying ground rules of this world, and we think it just is this way. But it's not. And when a media comes that finally has the ability to connect people, the business plan rejects this medium in its natural form as a revenue leak. And I would say no, I would say reject the banking model, just as this conference shed the skin of Lehman Brothers. Regulation actually rescues us, regulation is actually an opportunity for human intervention in a business plan that's gotten out of control. That is all but automated. And it removes the short-term risk, because what regulation does is promise that we're all going to do this together at the same time. It's why they made Sabbath rules. Right? Everybody wanted to take a day off, everybody wanted a Sabbath. But the problem was if you took your Sabbath, the other guy might still be working on Sabbath and then you're screwed. Right? Because now he's making more stuff, you've lost your competitive advantage. By making a Sabbath regulation, and making it a rule, it's like you're going to check and make sure is everybody, is Louie in church, is Joe in church, is Sammy in church? Oh good, they're all here. Alright, I can relax. Right? (audience laughter) 'Cause Sammy is not milling any oats in his spare time there. 

I think we need just such a respite, we need just such a moment of relaxation. And if we get such a thing, such a respite, such a shared relief from the treadmill, we can then elevate our media companies to more than just the name on someone else's debt. Or the story that's used for someone else to accumulate more debt. Right? What we are working with, what we are celebrating is a new Renaissance technology. As big as the old Renaissance technologies. And I think we have to stop fighting against that Renaissance, and start fighting for it. OK that's enough of my uhm, my diatribe. Thanks. (audience applause)

Tim Gardam (TG): Well I thought we'd stand back a bit, and uhm Phil doesn't wake you up (???) And uhm, I relatively don't know where to begin in asking any questions so uhm, (audience laughter) so I hope that you'll think of uhm, think if you've got some (barely intelligible) 

Douglas Rushkoff (DR): (trying to unscrew the top of a bottle of water) is death... (???)

TG: I suppose it might be worth, thinking about the things we've learned, uhm that Jay the Wizard has joined Joe the Plumber, which is good, uhm, that most American companies don't actually do anything, and eh, but fundamentally Douglas, I'd just like to pick up on this point that what you're saying here, is that the digital shift is a shift of a five hundred, eh a five hundred year shift of a model, right back to the Renaissance. And you then, and, and this shift is moving inexorabily from corporate, the uh, accretional power by corporations back towards communities. And the role of regulator is to give space to those communities, to find uhm, uh, their natural vitality.

DR: Yeah or to give space to the corporations to let that happen without, freaking out. 

TG: So what is the relaxed at regulator? (??) What are some to the things there are to do exactly, that's what I'm trying to work out, in this new model. Uhm, you say we need them, or do we?

DR: Well we, what we can, what regulators can do, is look at what are the obstacles to value creation by small parties, by local parties, so it's it's uhm, as simple as net neutrality, is one thing, uhm, promoting genuine digital literacy in school. Right? We are very good at teaching our kids how to be digital consumers, but we're not very good at teaching them how to be programmers. Like when I went to school, learning programming was what you got in a computer, you took a computer class and they taught you basic, or Fortran, they taught you how a computer worked. When you take a computer class now, you learn, if you're in a Western country, not one of the little you know dark-skin outsource countries, if you're in a Western high-quality country, you learn how to use Microsoft Excel and Microsoft Word, and if you're lucky maybe you learn how to make a pdf. And that's like you're a "creative" (uses air fingers) student who's learning deep programming or HTML, you know a markup language, or Dreamweaver, say. Right? You learn how to use software but you don't learn how to use computers. And if you don't learn how to use computers then you are being trained towards being a software consumer, rather than a software maker. And that's what industry is teaching us to do, both because that's what the job today, if I need to fill this job at that desk in my corporation today, I need someone who knows Excel, and Adobe Photoshop, and this, so please teach them that. And then in twelve years, when that person comes out, "Adobe Photoshop? Why did you teach them this crap?" Right? Meanwhile, I'm outsourcing all of my real core programming, anything that matters, to India, because over there they're teaching C++ to the kids. They're learning in eighth grade, they're learning C. Right? Which we in America and England look at as bricklaying, for the, the nobodies to do. But it's not, it's... Remember bricklaying used to be the masons, right? These were the powerful people, not the stupid ones. These were the actual technologies that, that's building our world. So yeah I think that regulation sort of moves, is is more towards encouragement than, than uh uh stopping things from happening. 

TG: I could go on forever, but I, we've got not much time, and I wondered if there were any questions out there. So question over here. There's a question in the middle first. 

Questioner: Ah yes uhm Malcolm Harbour, member of the European Parliament, or perhaps easier if I sit down, probably, because uhm, uh, so I'm a regulator I suppose, so I try not to produce too much regulation, I wanted to come back to, actually to the core of what you're talking about, uhm, I had a fascinating session last week, with people working, the digital economy in 2025, and actually the issue for the people in the sector is exactly what you're saying: they don't want young people, who come out with basic keyboard skills, they want people who can exercise creativity, and that's really the word that seems to be at the heart of what you're talking about, and and to understand I think more broadly about how to use the tools that they have been given. Now that doesn't seem to be a regulator's problem, except in the sense that we're running the education system, and we should be training more people in creativity. But what's interesting is, that in China I understand, and I haven't seen the data, maybe somebody here will confirm that, actually what they're trying to do, because they understand that in the future world that we're working in, the knowledge economy next stage, Knowledge Economy 2 or wherever we are, that you need more people with those (various?) creative skills. And not just to produce the interactive products, but also to be able to design and make things. Because I mean, whatever you say, we're still going to design and make things. I mean that's crucial. I'm big in manufacturing, that's my background. And I'll just conclude with an interesting thing about your Renaissance, eh, I've just spent a week in Venice, partly because I was invited by Etna to go and speak there, it was an interesting place to go. But I mean this was exactly where the merchants got together, and the whole, the elite was run by the merchant society, and they were trading all over the world (Douglas nodding in agreement). But also, they invented the first mass production. What was the first mass production? It was making war ships. And they could make them in a day. 

TG: Okay let's uhm, very interesting, I would uhm uhm, I'll take one more question before I'll give Douglas a chance to give us a final piece of inspiration. Uhm, question around? Can't see. Yes, the gentleman over here. 

Questioner 2: The conflict between building societies around markets, building markets around societies, is that the paradox of a regulator? 

DR: Hmm-mmm (nodding). It is to a large extent. And it's to understand also that there are different kinds of market places. Right? That the thing that we look at as 'the market' is not 'the market'. It's *a* market. It's *a* market based on certain assumptions about how people and money and companies function. You know. And and, it is a a, artefact of a way of doing business in 1500 for a very particular situation, like when I hear, the the, the gentleman speak of the digital economy, to me 'digital economy' is itself an oxymoron. Digital economy is not, things digital are best understood as an ecology not as an economy. Economies are based, at least economies that we understand, are based in rational actors, maximising their value, through the the, acquisition or distribution of scarce resources. Whereas on the internet, what we have are irrational people having  fun, engaging and sharing what feel at least to them like limitless resources. And it may be, that treating it as an economy, uhm, is doomed from the outset. And that we have to learn where economic rules really do function and where they don't. In everything from uhm the uhm, oh what's it called the notion of uhm, the way international trade is supposed to work where you, you know the law of competitive advantage, say. Where, you know, the people in this country make this stuff better so we'll make them do that and these ones do that better, look at how it all works. I was taught competitive advantage by Alan Blinder at Princeton, and the underlying assumption under the Law of Competitive Advantage is that you have, by the way, full employment in both countries. Oh oops, right. Without that is doesn't actually work, if you don't have full employment, and you actually have companies that are in both countries, rather than two different companies straddling both countries, pretending that the law of competitive advantage is going to work eventhough the nation state boundaries aren't even being respected anymore in the trade equation. So I think what the opportunity is, the opportunity that the digital culture unleashes, is to re-think the so-called Laws of the Economy, and to realize that they are as subject to open-source, as the codes of our browsers. And once we approach them that way, we end up with rather than diminishing returns, we end up with tremendous flexibility on how we approach these so-called problems, and we can start looking at our work less from the banker's perspective and more from the media professional's perspective. And a media professional is someone who is creating media, through which people can connect with one another. And that becomes way way more fun than creating stories through which, you know some investment banker can extract more value from people. 

TG: Well I think that is a very big thought which will leave us (??), that the whole concept of digital economy may be in itself a misnomer. Uhm in a moment I'm going to ask the Chief Executive of Ofcom Ed Richards to come and close the conference, but first I think we should thank Douglas Rushkoff for this session. (applause)

DR: Thank you. 

TG: And stay in our seats, Ed Richards from Ofcom.

Ed Richards (ER): Thank you very much Tim, thank you Douglas, just a few closing thoughts from me. I think it was fantastic to end with such a brilliant provocation from Douglas and thank you, thank you very much. And two ideas stuck out to me amongst the many one could have picked out. One is, I do love the idea that regulators across the world are trying to regulate companies that already left the metaphorical building. I'm going to be wrestling with that one all weekend, I can tell you. But I also, on a more serious note, I think this question of what is an economy and what is an ecology, what are the differences between them, and what are the insights that flow from each of them, is an absolutely fascinating one, and probably one that we haven't paid enough attention to collectively. I think there some interesting differences, and the zeitgeist in a sense has always been around, the last decade or two decades, around the economy side of that, and actually the ecology side of it needs a lot of careful attention.  

With that thought, let me take you back to more mundane matters, if not, though very serious, where we began, we began with many observations about the economic circumstances that we face, there is no doubt that those economic circumstances are very challenging and are likely to be more challenging over the course of the next year. It's going to place extraordinary pressure on a number of the companies in this room, many of the companies with whom we work, both in the UK and internationally. I don't think we can underestimate the significance of that. And it presents challenges not only for people like myself but clearly for governments, and we started the conference I think in the best way possible, which was by having two of the leaders of the governmental response to this, both through Eric Besson, France Numerique 2012, and Stephen Carter and his expression of Digital Britain. 

So we know, we have the outline of how leading governments in Europe are going to respond to the circumstances that we now see. Not only the structural problems, structural challenges of the changing media, economy or ecology, but also these severe cyclical challenges. And I just wanted to pose a single thought in that area, which is that characterized both those responses , was a link to what David Curry began with, which is both of those responses actually had content and networks at their heart, if you like a converged response. And David posed the challenge on how long we could go on on an international basis without a more effective converged and joined-up response and approach to these questions. 

A second big theme which seems to have emerged and came out yesterday and today, is the question about whether the liberal orthodoxy which we've all lived with and worked with for many years now, will persist, or indeed how it will change. What is the role of the state, what is the role of intervention in these changed circumstances. Is there a seismic shift, a movement in the tectonic plates taking place. If you look at banking and financial services, we know what the answer is. We have nationalized banks in an unimaginable set of moves, and we have no doubt that financial regulation will be very different in the next decade to the last decade. A crucial question for us across the globe is whether those kinds of choices or the significance of those choices, what are the significance of those choices in the communications sector and beyond. Will those questions wash across, or not. 

Some of the issues which are provoked by that of course have been put on the table in the last couple of days. Universal service obligation for broadband, something the people have been toying with, but now seems centre stage, certainly both in France and in the UK. The question of the governmental role or devolved government's role in relation to the access network. The question of the governmental role in the release of spectrum, the acceleration of the release of spectrum. Again, placed firmly on the agenda by both governments and indeed at a European level. 

If we go back to our own communications world, specifically again I think we've seen the playing out of the debate with which many of us are familiar, the role of distribution and the role of content and the intersection between the two. Questions about piracy, about copyright, and of course about investment, and who will pay, and what commercial relationships will emerge, as we try and develop that next wave of superfast broadband. I think my sense was that there is an increasing sense of movement in this area. Certainly talking to people in and around the conference during the last day and a half, that there is a more constructive tone, a closer dialogue than there has been in the last year or two. There's no doubt that some of the parties in this area have been at polar opposite positions, and today I think we've seen people move closer together, and that is crucial to resolving this set of questions that are at the heart of those issues. 

The break-out groups and many of the discussions we've had here over the course of today and yesterday I think also remind us of how intrinsically international and global so many of these issues are; everyone of us in the room would defend the local, national, regional, unique nature of our particular challenges. But what this conference has demonstrated above all else, to me is that the same issues are being debated everywhere across the whole globe. And the opportunities to learn from that are I think very very clear. 

It also underlines the importance of international practice, of international lessons, of European law, of European policy making, and how that is of course central to any way forward. And we look of course in the next week or so to European ministers to take the next step in that area, we look of course to our partners and colleagues in the European Parliament, Malcolm Harbour who is here, and other colleagues to take the next step from a European perspective in that area. And of course European regulators, to play their role too. 

If we take it back to business, I thought we heard some very interesting things this morning, and yesterday, about the challenge of new business models, of making business work. Douglas has given us a particularly provocative view of the tensions and strains within that, but we heard some other interesting things as well. We all know, I think, that the new frontier for business in this area is extremely challenging: how do you make money, can you make money, what are the set of commercial relationships in this area. Jean-Bernard Levy's point about World of Warcraft was very powerful: there are means of establishing reach, significance, impact, and of course economic value in this new world, outside of the ones well-established. And the reach and significance there is withouth doubt as great and as significant as TV and radio. It illustrates that that new frontier can be navigated. 

And finally of course, that new frontier sets challenges for the public interest dimension. Of course, the well-discussed issues around public service broadcasting which I don't propose to rehearse anymore this morning, eh this afternoon, but, of course also the other questions about what content regulation looks like in that world, and I thought we had a fantastically stimulating session with Mark and Chris and Tanya about how content regulation may or may not need to evolve into this world. We had a warning about the scale of risk, but we also had a warning about the risk of moral panic. And I think a plea underlying it for collaboration and assistance and dialogue and working together to try and find the best way forward. 

It's been a very rich discussion, I've enjoyed it enormously, I hope you have as well, for me there have been all sorts of streams of new and familiar ideas that have come out in the last day and a half. I hope we will take them forward in the UK with many of you here today, and I'm sure we'll take them forward as we must, on an international basis as well. Thank you to all of our contributors, thank you to all of you for coming, I hope you've enjoyed it, and enjoy the rest of the day. Thank you. 

(applause)

THE END

 

 

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