Jeremy Rifkin on the Emergence of a New Economic Model

July 25, 2014 at 8:59 pm

Jeremy Rifkin, advisor to the EU and China and lecturer at the Wharton School, speaks about the emerging “zero margin economy.” In summary, companies have fixed costs and marginal costs to bring a product or service to market. The marginal cost of something is the additional cost of producing an additional unit. In the twenty-first century, the marginal costs in some industries is approaching zero.

In the old economy, the marginal cost of a second unit might be almost as much as the producing the first item. For example, creating a satellite channel might cost, say $5m. Creating the second channel might cost $4.5m. Buying the airtime, for example might cost almost as much as the airtime for the first channel. Some savings might come from shared administrative costs.

However, in the new economy, the cost of creating a web content delivery system might primarily consist creating and maintaining the software. Once it has been created, the cost of duplicating it, is virtually nothing.

The  implications for the PAK7 vision is that creating a new media channel might well be much less than that of creating a traditional cable or satellite channel. Moreover, duplicating the software would cost virtually nothing, thus creating a value proposition for satellite or cable ministries that want to both expand their footprint, and expand further into the realm of web TV.

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