Water, Electricity, Content
How transmission/fungibility makes consumption possible and profitable
Your Life Runs on Fungibility
Why does power flow to your house so easily, and the same with drinkable water? For many years people toiled to build complex utility systems to make our water (mostly) potable and our electricity (mostly) constant.
Filtered H20 and excited free electrons have one important thing in common: fungibility, i.e. “the ability of a good or asset to be interchanged with other individual goods or assets of the same type.”
Your body can fly thousands of miles to another country, but electricity (with unfortunately different voltages) can power the same devices and water from Mt. Fuji can power your body just the same as water from Fiji. Heck, you can use water to make electricity with the help of gravity… water’s definitely showing off its fungibility there.
Money is often touted as the most fungible thing: a dollar for gasoline is the same as a dollar for soda pop. Fungibility’s main value in economics is to help with commerce and “getting rich.”
Consider if we lived in a society where nothing was fungible. You go to the market and instead of buying eggs, you buy “John’s eggs” or “Matt’s eggs,” which are all priced differently. John’s eggs cost… well it depends on what you have, because nothing is fungible, John can’t set a price for his eggs. John instead has to ask you “what do you have to trade?”
This system doesn’t necessarily fall apart, but it becomes really hard to accumulate much of what someone would consider “valuable.” So societies try to have some common denominator, like “some unit of gold” or “some unit of this paper with a dead person on it.”
From the latin fungi: meaning to perform
Not mushrooms?! Apparently fungus comes from the same root as sponge.
Your money and water and electricity perform a valuable function, but are not valuable as individuals.
The Target Market
Another important aspect of fungibility is that customers can be fungible. Consider selling a hamburger. You can sell it to adults and kids of any age, and if you sell veggie burger versions, then your total market is very large; an 80 year old vegetarian pays as much for one burger as a 10 year old carnivore (or more if you want to charge them for being vegetarian haha).
On the other side of things, consider a market with customers that aren’t fungible: elementary school kids. You can’t simply swap an elementary school kid with kids outside the county (magnet schools?!), and each kid brings a different set of strengths and weaknesses to their education.
Being a teacher of 20 kids is not the same as selling 20 hamburgers to 20 customers. Each kid requires special care and attention that won’t necessarily transfer.
Fungible goods -> Easily exchanged
Fungible customers -> Large market
So a dollar is a dollar is a dollar, and a burger eater is a burger eater is a burger eater… why should I care? How about —
The Rich
Ever wonder why other people are rich?
It probably has to do with the paychecks they get?
Yes! Good answer! Well, why do people get paid what they get paid?
There’s lots of complex economics, gender bias and probably other things that go over my head, but what I’ve observed is that people who are involved in fungible areas are rich.
So this is your Wall Street, banking, drug manufacturing, software, and content producing people.
Wait, content?
I’ll get to that in a second… but to make my point, fungibility scales. Take industries that are not necessarily attached to fungible outputs: primary education (again?).
Each kid is different, and money is not flowing freely to public schools. An elementary school can’t just start importing kids from out of their county to stuff classrooms and make more money… because they don’t function like for profit businesses.
So teachers don’t see any financial rewards as a result (also maybe because we don’t care about them?). You can make similar arguments about early age childcare, babysitting (also women do these things generally so I’m sure gender bias has its hand in it). But these are non-fungible fields. They deal with non-fungible assets (kids’ education) and non-fungible markets (people who have kids that live nearby).
Compare again to something like software, where code written by a team of a few developers (or even 10,000 developers in an extreme case) runs on millions or billions of devices. These fungible assets can easily flow to a large body of end users and nicely profit their creators. And most of the maintenance burden falls on the end users, not on the creators.
Content is Fungible?
Back to content… yes, content, like a music album, flows along the same lines these days as water or electricity. With Spotify or any other music provider, content is fungible, though maybe not exactly like water.
To Spotify, Taylor Swift or 30 Seconds to Mars are just bits of data they send at the cost of a monthly subscription or a required advertisement. This means any artist can be rich, as long as people are drinking their water and not someone else’s.
And the market for content is wider than it’s ever been. You used to watch music videos on MTV, now you can
The interesting thing about content is that we usually think of it as something unique and non fungible (NFTs, anyone?!). But music, books, movies, sports, podcasts, etc.are all entertainment at the end of the day.
But I read self help books so I’m better than you?
Haha OK… entertainment that makes you feel arrogant?* Just kidding…
Coming back — what is entertainment? It’s essentially a way to fuel your neurons. Give them the stimulation they so crave.
The dopamine hit when you hear the chorus you’ve heard 1,000,001 times, your brain reenacting the tackle from the play via mirror neurons... I could go on, but I’ll just do a quick summary:
- Electricty -> Fuels electronics cells
- Water -> Fuels living cells
- Entertainment -> Fuels brain matter
Content’s fungibility comes from the fact that, while the qualia might be different, entertainment all basically occupies the same parts of our brain, and in a practically mutually exclusive way.
Hey, I listen to a podcast while watching a movie and reading a book!
Uhhh… ok well, what’s my point about content being just like water and electricity? It’s that if you make good enough content, you can be rich, but, there’s one group that will be —
Richer
Back to utilities, who makes more money than the person who makes sure you have potable water? Or working electricity?
The person who owns the system.
Taylor Swift and some artists make concerted efforts to have their own brand and tightly control their music, but even they bow to those who own the “utilities.” A simple comparison:
- Daniel Ek (Spotify founder): $3.8 Billion
- Taylor Swift: $780 Million
The only way for an artist or any content producer to cross from rich to super rich is to go from making electricity to owning the power lines. If you look at a list of the top 10 richest musicians, you instead find a list of 10 people who own businesses and happen to also have made music.
And so we come back to the reason fungibility is so great, at least for the few super rich people. As you’re
- using electricity
- to downloading data from your ISP or cell tower
- on a device your purchased
- running Windows/Mac/iOS/Android
- and running the Spotify app
- to play Taylor Swift
All of these numbers represent one or more multi-millionaires/billionaires who aren’t Taylor Swift, taking money from you. (Woo techno-feudalism).
Is There a Solution to People Taking All My Money so I Can Be Entertained?
Go outside and look at the trees… oh wait someone probably planted them.
Go outside, find the few trees that no one planted and go “wow that’s a big old tree”.
Here are a handful of Douglas Fir on our street, each around 200 years old (I got out the tape measure). Are trees fungible? Well… if you ask a lumberjack yes. But looking at them isn’t.
Why are we looking at trees? Well —
They get their power from the sun (and don’t pay through the nose for solar).
They get their water from the ground.
They don’t consume entertainment. They just are.
And for me, these thoughts give me a lot of peace: staring at some of the greatest living marvels, unbeholden to man’s fungibility complex.
What Have We Learned?
- Matt has stretched the definition of fungibility to its limits
- Taylor Swift’s music is water
- People who bottle her water make more money (Daniel Ek!)
- Matt likes trees
Thanks for reading!
