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Notes and Reflections on Books and Media

by Hannah Leitheiser

4 S's of Intangibles

Capitalism without Capital: The Rise of the Intangible Economy

Jonathan Haskel, Stian Westlake

2017

Link

2018-09-02

- Jonathan Haskel, Stian Westlake, Capitalism without Capital: The Rise of the Intangible Economy (2017)

Four S's of Intangibles

SCALABILITY - if you can make one DVD,
you can make a million with little added
cost.

SUNK COSTS - you can seldom sell an intangible
for close to the cost to create it. When you buy
a new car, you can sell the old one. When you
redesign a website, nobody will buy the old design.
It's not that you can never sell an intangible -- Microsoft sells software packages, companies exchange patents, data services are available for fees, companies might be acquired for their brands, just that it's more likely the costs are not going to be recoverable through direct sale. This then makes it hard to produce intangibles by borrowing money.

SYNERGIES - connections between intangibles create value. Not new -- all the pieces of a car are worth a lot more as a car than separated parts, but perhaps more apparent.

SPILL-OVERS - If something's produced in a factory, the owner has exclusive rights to the production. Humans have spent at least 5000 years figuring out how property rights should work for tangibles. It's not so clear for intangibles, meaning it's harder for a firm to capture all the value created. Ideas spill over and add value elsewhere.