Andromeda Yelton

Across Divided Networks

commoditizing our complements: a response

April 20th, 2012 · 2 Comments · Uncategorized

Jason Griffey introduced me to a new economics concept, commoditizing one’s complement — that is, if there are products people need in order to be able to use your product, make them as cheap as possible, to make use of your product more appealing.

Now my entire econ background is that I’ve read a few books and am a longtime fan of Tyler Cowen and the Marginal Revolution blog, but if we can’t have a bit of uninformed speculation then what’s a blogosphere for? So Griffey asks: what’s a library’s product? What can we commoditize to make that valuable? And here’s what I’m thinking this morning.

This is the wrong frame

There are many types of libraries; people use them in different ways; the inputs that would make that use easier or more valuable are too diverse to be readily encapsulated this way.

More to the point, libraries can’t commoditize anything. Commoditizing things requires the ability to move whole market segments; libraries don’t have the funding, collective action, or manufacturing capability to do so. Amazon can commoditize ereaders in order to explode open a new market which they can then dominate, but Amazon has enormous gobs of money, influence in a variety of market segments, and a supply chain.

I’m going to use it anyway

Conceptual frames don’t have to fit to be thought-provoking.

Why I don’t use my local public library

Except as an occasional book depot — and only because other libraries are farther out of my way — I don’t use my local public library. Why not?

It’s not open on weekends, or most evenings. This means it’s literally impossible to take my kid there, and I can get myself there only during my most constrained — that is, most valuable — time. Time is the product I most need in order to use my public library.

It’s in a beautiful historic building which is badly in need of repair. The paint is visibly tattered, peeling off in sheets in the stairwell. The tables and chairs are worn, ugly, and uncomfortable. The giant, lovely windows mean there’s glare on my laptop no matter where I sit. The upstairs is wonderfully quiet, mausoleum-like, with a stage that tantalizes with possibility that I have never once seen used — but there’s no climate control, it’s muggy up there, the carpet wrinkles and heaves with the threat of mildew. I value my comfort, the sensory pleasure of unobtrusive aesthetics, and the fact is there are other places in my community that give me that and free wifi and let me eat food and drink coffee; I’m in one right now. Yes, I have to spend a few bucks on coffee, but the money seems cheaper than the inconveniences of the library.

So how does that work? The library can’t commoditize my time — though it could shift its hours to be open when my time is less expensive. The physical comfort factor isn’t about some external input; it’s internal to the library. It could certainly be improved, but it doesn’t fall under a commoditize-the-complement frame.

Surfeit

Here’s the thing: commoditizing one’s complement is ultimately about scarcity. You need gasoline to drive your car, so you drive your car less when gasoline is scarcer (or more expensive — same thing). But the library isn’t competing with scarcity; it’s competing with abundance.

My time is overconstrained: there’s no shortage of things I can (and often should) be doing with it. The library competes with all of those.

Comfortable, attractive physical space, with wifi, is abundantly provided in my area. I can think of at least four such spaces no farther from my house than the library — more if I’m willing to pay for the wifi or if I were a student at one of the nearby universities — all of which have more convenient hours.

Unstated assumptions

The unstated assumption in all of this, of course, is — what is the value I get from the library? I mentioned there are many library types and many values people might get from them, and the argument runs differently for different use cases. Clearly, the value I’d be getting from the library is a good place for me to work. I’d also like to be getting the “good place to take my kid” value, but given its hours, my library does not offer that. And I get the “book depot” value — I order stuff online, I pick it up — that’s great, but you could raze the building and replace it with lockers I could open by swiping my library card and I would find that a significant service improvement so, really, let’s not be hanging my library’s value on the book-depot service as that leads nowhere good.

To bring it back to commoditizing the complement, I wonder what sorts of products (resources, services) we should be thinking of here. Are we talking about things that are necessary to use library services at all (in the manner that gasoline is for cars)? Or are we talking about things which make library services more valuable? My impression is that the commoditizing-the-complement frame is more about the former, but I think there are more interesting things to be said here about the latter.

Hence, questions

What resources (needs, skills, values, etc.) might people have which would make information literacy a more compelling good?

What drives desire to engage with civic institutions? to engage with the local community by means of civic institutions, rather than decentralized services like meetup.com, or serendipity? What makes libraries an appealing choice as this locus, amid the variety of possibilities? (Again: surfeit.)

To what extent are barriers to library engagement really driven by external factors (which could be made less costly) rather than internal ones (my library’s hours and physical plant)? To the extent that external factors are the limit does the library really have any power to change that? (I would love to see the library make my time get less constrained but I cannot imagine how they would do that. Do they circulate maids? No? Alas.)

The other way ’round

But honestly, it’s hard for me to think of these questions, because I think the biggest barrier to library use is surfeit. There are so many things which compete with the library for people’s time and attention — many sources of entertainment, of content, of workspaces, of children’s activities, et cetera. When your problem is the competition of abundance there’s nothing to commoditize. It’s the opposite, really: how do you make something that you uniquely have so valuable it outcompetes other options?

I invite your thoughts.

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2 Comments so far ↓

  • Grant Gould

    In general the easiest way to determine what goods {B1, B2, …} are complements to uses of some good A, you raise the price or lower the supply of A and see what other goods’ prices go down as a result. (standard textbook example: bacon is cheaper when tomatoes are out of season, because fewer people are making BLTs). So what gets cheaper when libraries close?

    Some folks would argue, “real estate values go down”, so houses and libraries are complements. I’m not sure that’s empirically true (though it might be worth testing) but in any case libraries can’t do much to the real estate market. Academic libraries probably have a somewhat more direct effect on tuition.

    In terms of ebooks, it’s hard for me to see — it’s hard enough to check out ebooks from the library that it’s hard to see how the value of my Nook would fall if it became even harder. So I don’t think there’s really an ebook complementarity in the current state of affairs. Besides, my understanding is that most library ebook lending schemes require me to be physically in the library, and most of the value of my Nook is in the fact that I don’t have to physically go to another place or have a book physically shipped to me to read. (Not that I would know, given how tiny the local libraries’ ebook collections are)

    In general I think this is a provocative frame, but possibly not very useful.

  • Grant Gould

    Also, complementarity in economics is typically symmetric (at least with respect to any particular end good), which means that your complements are probably busy trying to commoditize you. Who if anyone is trying to commoditize the various roles of libraries?

    Amazon and Nook lending are tiny and not marketed at all, as far as I can tell. Google arguably is commoditizing a lot of reference tasks, and a certain amount of cataloging. Starbucks is commoditizing “quiet place to sit and work”.

    This would imply that libraries should not worry about the already-fairly-commodity state of books (although if the publishers successfully replace the paperbook warehouse model with a pseudo-agency model for ebooks that will change). But broadening and making more transparent the markets for internet search and content and also the market for places-to-drink-coffee might help.