The term weightless economy refers to the trade of intangible or abstract products and services such as consulting, software, and professional services. The weightless economy thrives on ideas, information, expertise, or services, defining a paradigm shift between physical goods and intangible value propositions.
Other terms, such as post-industrial economy or new economy, are also synonymous with these intangible products.
The weightless economy concept gained traction at the turn of the 21st century, coinciding with the rise of information technology and the array of products associated with it.
Key Insights
- The weightless economy comprises intangible products and services.
- The growth of information technology has granted the weightless economy a dominant role, eclipsing traditional economy components like manufacturing and distribution.
- For entrepreneurs, the weightless economy unveils opportunities for rapid transformation of nascent ideas into profitable ventures.
Understanding the Weightless Economy
Intangible products have existed throughout history: Music is an example. However, with the mass adoption of computing and the advent of the internet, weightless products have tipped the balance, dominating modern economies.
We can now deliver services and products to a broad audience over vast distances without the need for physical production, shipping, or storage. For instance, products like music or software only need to be created once and can then be distributed endlessly at minimal cost.
Making Music in the Weightless Economy
Consider an artist recording a song. In the past, record companies had to manufacture physical copies (vinyl records or CDs), package them, transport them to warehouses, and eventually deliver them to stores—all of which involved significant monetary and labor costs.
Now, the same artist can release music online via streaming platforms like Spotify or buy-through services like the iTunes Store. While production time remains fairly constant, delivery is almost instantaneous and effortless regardless of the audience size.
The Economics of the Weightless Economy
An economist evaluating this scenario would point out the artist’s marginal cost of production is nearly zero. Thus, the marginal profit of selling each additional song is practically 100%. Once the song is recorded and available online, additional sales generate minimal costs.
This underpins the ability of some tech companies to achieve significant profitability swiftly. With few barriers to expanding the customer base, demand-driven success can result in monumental growth and revenue in the weightless economy.
For instance, Microsoft’s Windows OS, Google’s search engine or Android OS, and Facebook’s social network and advertising platform exemplify market domination. These companies face ongoing costs for management, marketing, and product enhancements, but their production expenses are minimal.
In contrast, traditional firms like manufacturing plants and brick-and-mortar stores grapple with higher costs and logistical challenges, impeding their growth and profitability.
Real-World Examples of the Weightless Economy
The weightless economy flourishes on information technology, bolstered by intellectual property rights. Artists can only monetize their music online if their copyright is protected.
A hallmark of the weightless economy is its capacity to lower barriers to entry for newcomers. Aspiring entrepreneurs, especially those with coding skills, can create smartphone apps and sell them across platforms with far fewer costs than setting up a physical production facility.
For example, Garrett Gee created a barcode scanning app called Scan as a student of Brigham Young University. In 2014, Snapchat acquired his app for $54 million. Though Gee’s story is extraordinary, it underscores the success opportunities within the weightless economy.
Related Terms: post-industrial economy, new economy, intangible assets, information technology.
References
- The Bucket List Family. “About”.
- Insider. “A 28-Year-Old Who Sold His Company to Snapchat for $54 Million and Left to Travel the World Reveals Why He Hasn’t Spent a Dime of His Cut”.
