From Ownership to Access

There is a need for regulations aimed at balancing the economic objective of stimulating production with its environmental cost

In the garage of a fire department in Livermore, San Francisco, there’s a bulb that was switched on in 1901 and has been burning ever since. With over a million hours of continuous service, it is, officially, the longest lasting incandescent in history. In an age where even the best quality light bulbs don’t last more than a couple of months with continuous use, the Livermore light bulb is the stuff of urban legend. But as I dug deeper into the mythology, it became clear to me that this quaint anachronism hides a fantastic tale of cartelization and corporate intrigue that’s left a mark on the technology industry of today.

1924 was a terrible year for the light bulb industry. Technology had improved to the point where socket saturation was taking a toll on turnover. In the preceding year, the annual sales of Osram, the world’s largest manufacturer of incandescents, fell from 63 million to 28 million bulbs, prompting all the leading manufacturers of the time — Philips, Osram and General Electric — to meet in Geneva to try and find a solution.

That meeting gave birth to Phoebus, the world’s first transnational cartel, which, over the next few years, systematically reversed decades of innovation to ensure that the life of the incandescent light bulb would never again exceed 1,000 hours. This was the first recorded example of planned obsolescence — a concept that, today, sits at the heart of our economy.

Consumption is one of the cornerstones of capitalism. Economists argue that the more we produce, the more we purchase and the more we purchase, the greater is our prosperity. This philosophy drives innovation, forces industry to develop new products and creates new jobs — and eventually results in the advancement of society. But sometimes the technology is so good that consumers have no incentive to buy new products, as was the case with long-lasting electric bulbs. At times like this, there is a need to retard development to ensure continued consumption.

We see examples of planned obsolescence all around us, in the disposable razors we’ve been taught to favour over longer-lasting cut-throat blades, in appliances that miraculously give up the ghost just days after the warranty runs out and personal electronics that feel sluggish just when a new model is announced. And while the impulse to replace our existing stuff with newer, shinier stuff makes economic sense, the environmental impact of continuously disposing of old, useless products, does not.

Governments around the world have begun to take note of this. We’re seeing regulations aimed at balancing the economic objective of stimulating production with its environmental cost. India has imposed extended producer responsibilities on manufacturers, making them liable for the environmentally sound disposal of their end-of-life products. France tried a different approach and required manufacturers to declare upfront the planned lifespan of their product and for how long they intended to support it.

But these regulatory measures will do little more than re-allocate financial responsibility. If we are looking for a lasting solution to the malaise of constant consumption, we need to fundamentally change the economic basis of consumerist capitalism.

Not so long ago, the software industry was based entirely on planned obsolescence. Companies regularly released new versions of their software and we felt compelled to buy them or else face security risk and performance failure. This model is a thing of the past. It’s been replaced by subscription models that deliver software as a service allowing us to pay for what we use. The entire industry has moved from selling ownership to charging rent.

We’ve witnessed a similar transformation in the media industry. There was a time when the only way you could listen to music or watch movies was by buying CDs and DVDs. Today, digital media services like Apple Music, Spotify, Hulu and Netflix offer monthly subscriptions to an all-you-can eat buffet of digital content.

A decade ago, we would have been hard-pressed to conceptualize how we might effect the same sort of transformation in the world of physical goods. In the past few years, companies like Airbnb and Uber have shown us that we no longer need to own stuff if we can build business models that allow us to access them whenever we need to. And, while these companies have been reviled for operating on the fringes of the law, they have managed to change the way we think about physical assets.

Regulators would do well to reflect on the bigger picture. If we can encourage the Uberization of all things, we will effect a transition from an ownership economy to the access economy. Done right, this could incentivize technological advancement independent of replacement economics.

And then maybe, just maybe, we’ll be able to drag ourselves out of the death spiral of constant consumption.

This article was first published in The Mint under a column called Ex Machina on the interface between law and technology.