Photo: Marc Ryckaert. Source: Wikimedia.
In North Africa they call them “medinas.” In Latin America they’re called “mercados.” In the middle east they’re “souks.” Whatever name they go by, it’s a colorful experience. There are lines of people filing through the popular areas. Dozens of small shops line the streets, which often have been covered. Different vendors cluster along different streets: shoes, kitchen wares, garments, goldsmiths and silversmiths tapping away on various projects.
These markets have been around for thousands of years. There are references to them in the Bible. The question is, why. Why do all the pottery sellers and spice merchants and rug purveyors and smiths hammering away all gather in the same area. It’s not like there are noise ordinances or zoning restrictions in most of the world.
The answer is transaction costs. It’s much more efficient for buyers to go to one location if they want to try on shoes or pick up groceries or find some furnishings for their home. If the buyers are headed to a particular spot, the merchants will want to locate there. It’s easier for merchants to get their wares, too, if the suppliers only have one place to go. It may be cheaper and easier for someone to place themselves in the middle of a field to sell their load of wheat, and there’s no local competition, but it’s easier to find buyers at a central exchange.
The souk is a platform, a place where buyers and sellers can congregate and transact. The same was true for the old Sears Roebuck catalog. Sears didn’t make things, they gathered them together and published prices, sizes, and simple line drawings in a precursor to the web. The same is true for Amazon, now. People go there to buy and sell all kinds of things. I have a son who had an Amazon Marketplace business where he sold our old books. He named it “Sellin’ Mom’s Stuff.”
Google, Facebook, and Uber are platforms, too. But they’re designed around the efficient exchange of information, rather than household goods. They don’t sell our information, they buy it. Our information is the most valuable resource they have, and they use it to craft profiles and create ads that should make our lives easier and more productive. They buy our data by enticing us with all kinds of goodies. Amazon offers video streaming and unlimited photo storage and free shipping with a Prime membership. Facebook offers social connections and photo stories and messaging. Uber offers rides and meals and freight shipping and perhaps soon, air transport. The goodies are there to get us to share our data.
Source: Uber Elevate
Data will drive the global economy during this phase of economic expansion. From World War II until the late 1960s the economy grew because we made stuff, we had a manufacturing-led economy. From the early 1980s until around 2000 we had an economy built around doing stuff, a service-sector led economy. Now, roughly from 2010-on, we have a data-driven economy, oriented around knowing stuff. And all the platforms and exchanges and regulations and political fights will be over defining, controlling, using, and protecting data. Because unlike material goods and services, data can be created, destroyed, and copied with the click of a mouse.
The song from the 1980’s is obsolete. We don’t live in a material world anymore. We live in a data world.
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