Selling information has high initial development and investment costs (sunk cost rule). It is also highly uncertain if audiences and users will have interest in a specific book, film, record, software, television series, advertisement, mobile phone because human tastes and cultural preferences are complex and cannot be calculated in advance (hit rule, nobody knows anything rule, see also Caves 2002). Initial labour costs and requirements are high, whereas the costs and hours for reproducing information goods (except live performances and unique pieces of art) are fairly low. The data presented in this section are empirical indications for the tendency that information companies try to set off the risks involved in their form of production by selling their commodities at prices above their output values (on average around 13% higher), at prices that are significantly higher than investment costs (on average around 20% higher) than in the total economy, which – given successful commodity sales – results in higher profit rates. The price rate of profit in the German information industries was in the observed data therefore on average around 30%, whereas it was on average only around 7% in the manufacturing industry and 12.5% in the total economy.
12.3 Labour Productivity in the Information Sector
The question arises whether it is possible or rather difficult to increase productivity in the information sector. From a theoretical perspective, the assumption of limited productivity increases seems to be only partly true for information, art, and culture: journalists can be made to work faster, that is to write more articles, cut and paste them online or from press releases, etc. Art and culture can be digitally reproduced and thereby become commodities that can be reproduced faster. Advertising is content that can be made more efficient by targeted advertising that allows presenting different advertisements at once to many people. Designers and architects can be made to work on more projects simultaneously. Freeman (2008, 3) argues in this context that “reproduction, transmission and recording” have “eroded handicrafts limits beyond the point at which the handicraft concept remain viable”. The Internet is a medium enabling the creation, production, transmission, and consumption of information in one space as well as the convergence of these processes (prosumption). Freeman argues that in the Internet age service productivity “is free to expand without natural impediment” (Freeman 2008, 3).
The labour productivity index is an OECD statistical indicator that uses the following definition of labour productivity:
Chapter Twelve | The Information Economy
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Labour Productivity in the Information Sector