<nettime> Jeremy Rifkin: The Age of Access

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Digital Restauration
or: The Age of Access 

We're entering an era in which lifelong customer relationships are the
ultimate commodities market.
  
By Jeremy Rifkin

Think of waking up one day only to find that every aspect of your
existence has become a purchased affair, that life itself has become the
ultimate shopping experience.

The capitalist journey, which began with the commodification of material
goods and places, is ending with the commodification of human time and
duration. E-commerce and networked ways of doing business are giving rise
to the "Age of Access," a new economic era as different from industrial
capitalism as the latter was from the merchantilist era that preceded it.

The transformation from the old economic era to the new has been long in
the making. The process started in the 20th century with a shift in
emphasis from manufacturing goods to providing basic services. Now the
commercial sphere is making an equally important shift from
service-related to experience-oriented.

In the Internet Economy, the commodification of goods and services becomes
secondary to the commodification of human relationships.  Holding clients'
and customers' attention in the new fast-paced, ever-changing networked
economy means controlling as much of their time as possible. By shifting
from discrete market transactions that are limited in time and space to
establishing relationships that extend in an open-ended way over time, the
new commercial sphere assures that more and more of daily life is held
hostage to the bottom line.

The Customer Is the Market In the industrial economy, with its emphasis on
mass production and the sale of goods, securing a share of the market was
utmost in the minds of every entrepreneur. In the Age of Access, with its
emphasis on selling specialized services and providing access to expertise
of all kinds, the role played by suppliers changes markedly. "We are
shifting from being box sellers to becoming trusted advisers," said
Hewlett-Packard 's Wim Roelandts in Don Tapscott 's The Digital Economy.

The new idea in marketing is to concentrate on share of customer rather
than share of market. What these ideas boil down to is the commodification
of a person's entire lifetime of experiences.  Marketing specialists use
the phrase "lifetime value," or LTV, to emphasize the advantages of
shifting from a product-oriented to an access-oriented environment in
which negotiating discrete market transactions is less important than
securing and commodifying lifetime relationships with clients.

Automobile dealers estimate, for example, that each new customer that
comes through the door of a Cadillac dealership represents a potential LTV
of more than $322,000. The figure is a projection of the number of
automobiles the customer is likely to purchase over his or her lifetime,
as well as the services those automobiles will require over their
lifetime. The key is to find the appropriate mechanism to hold on to the
customer for life.

To calculate the LTV of a customer, a firm projects the present value of
all future purchases against the marketing and customer-service costs of
securing and maintaining a long-term relationship. Credit card companies
and magazines, which rely on subscriptions and memberships, have long used
LTV cost-accounting projections. Now the rest of the economy is beginning
to follow suit. The commercial potential of capturing a share of customer
is directly proportional to the projected duration of his or her consumer
lifetime. For that reason, many companies try to capture customers at an
early age to optimize their potential LTV. Hyatt Hotels features Camp
Hyatt and a newsletter aimed at its youngest LTV customers. A&P provides
children's shopping carts to accustom youngsters to making their own
selections in the store. Determining a person's LTV is possible with the
new information and telecommunications technologies of the networked
economy. The Web's continuous flow of consumer behavior information,
combined with retailers' ability to track their every bar-coded purchase,
give companies detailed profiles of customers' lifestyles – their
dietary

choices, wardrobes, states of health, recreational pursuits and travel
patterns.

With appropriate computer modeling techniques, it is possible to use this
mass of raw data on each individual to anticipate future desires and map
out targeted marketing campaigns to lure customers into long-term
commercial relationships. Many in the information sciences suggest that
these new technologies be thought of as relationship technologies, or
R-technologies, rather than information technologies. "We need to turn
away from the notion of technology managing information and toward the
idea of technology as a medium of relationships," said Michael Schrage,
codirector of the MIT Media Lab's eMarkets Initiative, in Kevin Kelly's
New Rules for the New Economy .

French economist Albert Bressand in 1996 was quoted in Wired saying that
R-technology is an appropriate way to describe the new technologies
because "relations rather than material products are what is processed in
these machines."

What is becoming clear to management and marketing experts, and a growing
number of economists, is that the new computer software and
telecommunications technologies allow for the establishment of rich webs
of interconnections and relationships between suppliers and users,
creating the opportunity to quantify and commodify every aspect of a
person's experience in the form of a long-term commercial relationship.
Says Bressand, "The time has come to shift from the engineering approach
of information technology, which was totally warranted at the beginning,
to the human and relationship approach."

In marketing circles, using R-technologies to commodify long-term
commercial relationships is called "controlling the customer."  
Continuous feedback allows firms to anticipate and service customers'
needs on an ongoing, open-ended basis. By turning goods into services and
advising clients on upgrades, innovations and new applications, suppliers
become an all-pervasive and indispensable part of the experiential
routines of customers. To borrow a Hollywood term, companies serve as
"agents." The goal is to become so embedded in a customer's life as to
become a ubiquitous presence, a customer's appendage that operates on his
behalf in the commercial sphere.

Agents in the new schema are "systems integrators," a phrase coined by
Robert C. Blattberg, professor of retailing at the Kellogg Graduate School
of Management, and Rashi Glazer, professor of marketing at the Haas School
of Business. Systems integrators coordinate an increasing share of the
commercial life of their clients. In a sense, agents serve as go-betweens.
They manage the continuous flow of information between the global economy
and end-users. The function of the agent is a marketing one – to
find the most effective way of establishing, maintaining and enhancing
relationships with clients.

The kinds of relationships these technologies conjure up are, by their
very nature, one-sided. Despite the fact that the Internet provides a
modicum of counter-surveillance power back to the individual consumer and
allows for interactivity, the company knows far more about the customer
than he will ever glean about the company. The algebra of the new
electronic marketplace still favors the corporate players.

Critics of the indiscriminate use of R-technology argue that potential
customers should be compensated by any firm that uses their personal data
for commercial purposes. James Rule, a sociologist at the State University
of New York at Stony Brook, has proposed that everyone has a right to
"withhold, sell or give away rights to commercial sale or exchange of
information about himself or herself."

In the old industrial economy, each person's labor power was considered a
form of property that could be sold in the marketplace.  In the new
networked economy, selling access to one's day-to-day living patterns and
life experiences, as reflected in purchasing decisions, becomes a much
sought-after intangible asset. >From Production to Marketing The shift
from manufacturing and selling products to establishing and maintaining
long-term commercial relationships brings the marketing perspective to the
forefront of commercial life. The production imperative, which reigned
supreme in the industrial era, is increasingly viewed as a back-office
function of marketing.

Establishing relationships with consumers is critical when goods become
platforms for managing services and services become the primary engines
driving global commerce. Marketing in the new networked economy becomes
the central framework, and controlling the customer becomes the goal of
commercial activity. Controlling the customer is the next phase in a long
commercial journey marked by the increasing wresting away of both
ownership and control of economic life from the hands of the masses and
into the arms of corporate institutions. Recall that in the early stages
of a production-oriented capitalism, economic tasks in the home and craft
shops were spirited away and placed in factories by capitalist
entrepreneurs.

Frederic Taylor introduced his principles of scientific management to the
factory floor and front office, revolutionizing the organization of
production. Using a stopwatch, Taylor timed workers' movements with an eye
toward improving their efficiency. The goal was to gain near-total control
over the worker in the production process.

Today, as the marketing perspective gains ascendancy and commodifying
relationships with consumers becomes the essential business of business,
controlling the customer takes on the same kind of import and urgency as
controlling the worker did when the manufacturing perspective prevailed.
In the new century, organizing consumption becomes as important as
organizing production was in the last century.

In the industrial economy, discrete market transactions and the transfer
of property between seller and buyer afforded the customer a high degree
of control over each consumption decision. In the Age of Access, however,
customers risk slowly losing control over the process as short-term market
decisions give way to long-term commercial relationships with trusted
intermediaries; and the purchase of goods gives way to the contracting of
a range of services that extend to virtually every aspect of one's life
experience. The customer becomes embedded within a dense web of ongoing
commercial relationships and may become totally dependent on commercial
forces that he little understands and over which he has less and less
control.

Consider financial planning. Many investment companies have begun to make
the transition from trading stocks and bonds and managing customer
portfolios to becoming a full-service provider – a systems
integrator. Clients are looking to companies like Merrill Lynch to help
them create customized investment packages for their specific needs and
goals. Some financial institutions are acting like customer agents,
providing complete financial-planning services that include yearly
business plans, personal budgeting plans, retirement income plans, estate
planning, tax and accounting services, legal assistance and other
services.

The idea is to bring the client into an all-encompassing relationship with
an agent. The financial institution handles every aspect of the client's
financial dealings for a lifetime. The client gains access to specialized
expertise and trusted advisers who act on his behalf, often as his agent,
surrogate or advocate. In the Age of Access, while the clients make the
ultimate choice to enter into or leave these long-term, multifaceted
relationships, the complexity of rendered services and the expertise
needed to perform those services can become difficult to understand and
even baffling after a while, especially if the customer cedes those tasks
over to a third party early on.

Not ever needing to be personally engaged in the details of these
services, the client often remains untutored and ignorant of the forces at
work and may become increasingly dependent on the "expert"  agents over
time to manage his affairs. The agents, in turn, become the gatekeepers,
controlling the channels of supply and distribution that connect each
consumer to the global marketplace and the outside world.

One of the first to see the significance of the shift from a production to
a marketing prospective was Peter Drucker, the father of modern
business-management practices. In The Practice of Management in 1954, he
wrote: "The customer is the foundation of a business and keeps it in
existence. Because it is its purpose to create a customer, any business
enterprise has two – and only these two – basic functions:
marketing and innovation."

Business consultants began to urge their corporate clients to spend less
time focused on production and more on marketing if they wanted to capture
market share. In a landmark 1960 article in Harvard Business Review titled
"Marketing Myopia," Theodore Levitt, professor emeritus at the Harvard
Business School, argued that companies are too concerned with the products
they produce and not concerned enough about their customers.

Levitt argued that businesses should develop their business plans backward
from the customer rather than forward to production. The goal of business,
he suggested, is to capture customers, not simply produce goods and
services.

New Kinds of Communities R-technologies reach out to encompass the whole
of a person's life experiences. The power of these marketing tools lies in
the ability to create a comprehensive environment for organizing personal
life and restructuring social discourse. Because they increasingly become
a primary means by which people communicate with each other,
R-technologies can be used to reconfigure the most fundamental categories
of social existence.

Already, in marketing circles the talk runs to ways of using
R-technologies to create new kinds of communities made up of like-minded
people who come together because of a shared interest in a particular
commercial endeavor, activity or pursuit. There's a growing awareness
among management and marketing experts alike that establishing so-called
communities of interest is the most effective way to capture and hold
customer attention and create lifetime relationships. The companies become
the gatekeepers to these newly defined communities and – for a price
– grant customers access to these coveted new social arenas.

Marketing consultants Richard Cross and Janet Smith in Customer Bonding
list several critical stages in the creation of communities of interest.
Stage one is awareness bonding. The idea is to make the customer aware of
your firm's product or service with the expectation of negotiating a first
sale. Stage two is identity bonding. The customer begins to identify with
your firm's product or service and incorporates it into his sense of self.
It becomes one of the many ways he differentiates himself in the world.
Stage three is relationship bonding, which we've previously explored. The
firm and the customer move from an arm's-length relationship to an
interactive one. This is where R-technologies begin to play an important
role. They help create what marketers call customer intimacy.

Stage four is community bonding. The company brings its customers into
relationships with one another based on their shared interest in the
firm's products and services. The company's task is to create communities
for the purpose of establishing long-term commercial relationships and
optimizing the lifetime value of each customer.  "This bond is extremely
durable," say Cross and Smith. "To break it, competitors must actually
disregard social ties among friends, colleagues or family."

The key to creating communities of interest is to plan events, gatherings
and other activities that bring customers together to share their common
interest in your company's brand. Backroads is an upscale tourist company
that organizes bicycle and walking tours to some of the most scenic areas
of the world. The company provides tents, prepares food and shuttles
guests to the various sites by van. The value of the Backroads service,
say authors Larry Downes and Chunka Mui in their book Unleashing the
Killer App , lies in "the quality of its network of customers, who pay, in
part, for the opportunity to interact with and be entertained by each
other."  Backroads, say Downes and Mui, is about "creating communities of
value by valuing community."

Companies like Backroads will increasingly rely on R-technologies in the
future to search out prospective customers based on consumer profiles,
lifestyles and spending patterns. As software profiling becomes even more
sophisticated, it will be possible to match specific lifestyle interests
of prospective customers with particular trips, ensuring a more meaningful
experience and the likelihood of creating effective community bonding
among the guests. The transformation in the nature of commerce from
selling items to commodifying relationships and creating communities marks
a turning point in the way commerce is conducted.

In the 21st century, the economy is the arena in which we live out much of
our day-to-day experiences. In this new world, ownership of things, while
important, is less important than securing commercial access to networks
of mutual interests, webs of relationships and shared communities. To
belong is to be connected to the many networks that make up the new global
economy.

Being a subscriber, member or client becomes as important as being
propertied. It is, in other words, access rather than ownership that
increasingly determines one's status in the coming age. The
commodification of human relationships is a heady venture.  Assigning
lifetime values to people with the expectation of transforming the
totality of their lived experience into commercial fare represents the
final stage of capitalist market relations. What happens to the essential
nature of human existence when it is sucked into an all-encompassing web
of commercial relationships? The growing shift from the commodification of
space and goods to the commodification of human time and lived experience
is everywhere around us. Every spare moment is filled with some form of
commercial connection, making time itself the most scarce of all
resources. The fax machines, e-mail, voicemail and cellular phones;
24-hour trading markets; instant around-the-clock ATM and online banking
services; all-night e-commerce and research services; 24-hour television
news and entertainment; 24-hour food services;  pharmaceutical and
maintenance services – they all cry for our attention. They worm
their way into our consciousness, take up much of our waking time, and
occupy much of our thoughts, leaving little respite.

When every endeavor is transformed into a commercial service, we run the
risk of falling into a kind of temporal Malthusian trap.  Although a day
is limited and fixed to 24 hours, new kinds of commercial services and
relationships are limited by the entrepreneur's ability to imagine new
ways of commodifying time. Already, even in the early stage of the
transition to the Age of Access, the commodification of time is becoming
saturated. Every human being and institution is courted and connected to
some form of commodified service or relationship. And while we have
created every kind of labor- and time-saving device and activity to
service one another's needs and desires in the commercial sphere, we are
beginning to feel that we have less time available to us than anyone else
in history. That is because the great proliferation of labor- and
time-saving services only increase the diversity, pace and flow of
commodified activity around us.

The networked economy increases the speed of connections, shortens
durations, improves efficiency and makes life more convenient by turning
everything imaginable into a service. But when most relationships become
commercial relationships and every individual's life is commodified 24
hours a day, what is left for relationships of a noncommercial nature
– relationships based on kinship, neighborliness, shared cultural
interests, religious affiliation, ethnic identification, and fraternal and
civic involvement? When time itself is bought and sold and our lives
become little more than an ongoing series of commercial transactions held
together by contracts and financial instruments, what happens to the kinds
of traditional reciprocal relationships that are born of affection, love
and devotion?

The fact that marketing professionals and corporations are seriously
engaged in developing what they call long-term "customer intimacy"  and
are actively experimenting with a host of vehicles and venues for
establishing deep "community bonding" is disturbing enough. What is more
worrisome is that these large-scale efforts to create a surrogate social
sphere tucked inside a commercial wrap are, for the most part, going
unnoticed and uncritiqued, despite the broad and far-reaching potential
consequences for society.

We're in the middle of a grand experiment in which virtually every aspect
of our lives is becoming a paid-for activity. We have yet to explore the
implications of living in an era in which human life itself becomes the
ultimate commercial product, and the commercial sphere becomes the final
arbiter of our personal and collective existence.

SPEND MONEY FAST: Highlights of the Age of Access

The exchange of goods and services through markets gives way to the
establishment of long-term commercial relationships inside networks.  The
commodification of human time and duration becomes more important than the
sale of material goods. E-commerce companies are turning information
technologies into relationship technologies to create "bonds of intimacy"
and "communities of shared interest" with customers. The goal: Make each
moment of a client's life a commercial experience. Life itself is becoming
a paid-for activity in the form of memberships, subscriptions, leases and
retainers, which in turn is transforming traditional social relationships.  
Jeremy Rifkin is an author and a fellow at the Wharton School Executive
Education Program. He is president of the Foundation on Economic Trends in
Washington. Excerpted from The Age of Access: The New Culture of
Hypercapitalism Where All of Life Is a Paid-For Experience, to be
published this month by Tarcher/Putnam.

Copyright 
© 2000 by Jeremy Rifkin. 



ripped from:
http://www.thestandard.com/article/display/0,1151,12726,00.html
March 13, 2000 


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