Crafter Economics

This column was published in the first issue of CRAFT. I wrote it earlier this spring.

In the Long Tail, Wired’s Chris Anderson wrote “The future of entertainment is in the millions of niche markets at the shallow end of the bitstream.” I’ve been wondering how the economics change when exchange moves further down the tail from manufactured products to crafts.

When I post a picture of a self-made laptop sleeve on my weblog, does that mean that my laptop sleeve is now “on the market”? Many of us would probably say that the answer depends on whether I offer to sell my sleeve for a price. Well, let’s assume I do not, but then a stranger emails me offering to swap it for something she has made. And when my friends see my creation, it inspires them to make their own versions that inspire yet more crafters. Some sell theirs on Etsy.

In this story, the self-made laptop sleeve on my blog is clearly part of some system of exchange. Still, it seems that in this system of makers, users, buyers, and sellers, the idea of the market is broader than classical economics would have it. We are used to thinking that

• profit motivates exchange;
• exchange is based on money;
• price is determined by supply and demand; and
• demand can be purchased (stimulated through marketing).

But my goal wasn’t to profit; money did not always change hands; there was no need to negotiate a price except on Etsy; and nothing was spent on marketing.

If we still want to call this system a market, we need to update the definition of the term.

First, learning, recognition, and reciprocity motivate crafter exchange at least as much as economic profit. The American Craft & Hobby Association reports that only 15 % of crafters claim an interest in selling their creations*. The rest have other reasons for making things.

Second, barter and conversation are more important modes of exchange to crafters than monetary transactions. I impart bits of my know-how in exchange for your recognition and advice. I may also swap my laptop sleeve for something that you have made. To sell my laptop sleeve for money is just one option among others.

Third, links determine the crafter-value of an object. Crafters value objects that can teach them something new. A product rich with stories about its origin, maker, materials, and techniques of manufacture, is infinitely more interesting than a product without a history. For a crafter, a product without links is a dead product.

Lastly, crafter demand shows as recognition, not just purchases. Recognition depends more on recommendations than marketing dollars spent on media space. Companies who have dabbled in purchasing recommendations will keep burning their fingers.

So is there a different crafter economics? I think there is, and the crafter exchange logic is moving up the tail to manufactured goods. Witness the growing preference for customized fashion, cars, and electronics. In America, the size of the craft & hobby industry has risen by 50%, from USD 20 billion in 2000 to USD 29 billion in 2004*. Although money doesn’t move crafters, crafters are moving increasing amounts of money.

* Source: Craft and Hobby Association Attitude & Usage Study 2005 (not free - non-members need to pay). Get it here.

Comments

[henriette weber Andersen]

this is the 2nd time I read it , and I still think that you are absolutely right... Plus it's a great article!

[Ulla-Maaria]

Yes, I presented this at the Reboot conference, so it is not a new piece. Thanks for being such an active blogger your blog and good luck in organizing the BarCamp Copenhagen!