Products as Services

In a mature natural economy, all resources are considered human heritage, not being owned by any one person or group. However, in the current economy the opposite is true. This gap in culture and economic reality can be bridged using a concept known as "products as services".

Definition
A product or "good" in typical economic terms is a resource that satisfies the need for some human utility. A good can be durable, fulfilling the utility more than once, or consumable, fulfilling the utility through its destruction or dissipation. Services, then, could be considered goods that are produced and consumed simultaneously. This mode of thinking works well for an economy based on immediate, one-way efficiency.

For long-run, system efficiency, however, it is much better to flip this conception on its head: A service satisfies needs, and goods are merely material providers of a service. This is the products as services (PaS) model. The previous model is useful for generating maximal profits, while the PaS model is better for generating minimal costs.

In Practice
There are many examples of the PaS model being put into real practice, including cloud computing, car sharing, and rapid prototyping. There are a variety of pricing and ownership models, including hourly pricing, property-based pricing, centralized private, decentralized private, and free. Cloud computing, for example, has both paid services, such as Amazon's, ad-subsidized, such as Google's, and free, such as Ubuntu's. However, most cloud operations follow a centralized private ownership model, with a few exceptions. Car sharing, on the other hand, generally has use-based pricing but many different ownership models. Some car sharing programs are owned by a company or municipality, such as ZipCar, and some are distributed, such as SideCar.

As a Strategy
Replacing all possible uses of non-durable goods with service-providing durable goods is the key to turning private property culture/economics into common heritage culture/economics, as well as achieving sustainability. Both systems are compatible with the PaS model, which is what makes it useful in bridging the divide, and non-durable goods put an extreme amount of stress on the biogeosphere. A starting VIAAC will want to use a PaS model to create flow cycles and achieve closeability.

A community service network (CSN) should serve to standardize access to services in the VIAAC, reducing duplication of effort in both creating services and searching for them. The same API that would be required to create a CSN can also be used to analyze it graphically. Costs that are not covered by the CSN should be entered into the model to measure progress and aid in deciding which new services to create. The CSN will eventually be able to offer services that require high-value capital, which means new product creation. It is at this point that work should begin on implementing or installing the system to manage allocation processes.

Loanership
Loanership is a transitional concept that can be considered a hybrid of property and commons, or a specific type of renting. In the transitional community (such as a VIAAC), a community or organizational trust (such as a Knab) holds all property. Members then "rent" property, for which they pay a deposit, but the title-holding trust keeps only the portion that pays for any costs incurred during the rental period. Incurred costs include stored energy use (such as battery power or gasoline), dissipating material use (such as use of powders or sprays), wear (such as write cycles on memory, discharge cycles on batteries) and damage (such as vandalism). Incurred costs can also be negative, if the use pays for previously-incurred costs (such as repair) or reduces future incurred costs (such as modification). On return, incurred costs are appraised, and taken from the deposit, with the rest returned to the user.

There are many advantages to this scheme, most importantly its design as an in-place modification to the incumbent system (IS). This means that utilities and protections available for the IS may also be useful for the transitional system. Indeed, the legal structure of a trust, and the framework of contract law, are both essential to the success of loanership. The trust keeps the property in a sort of commons, relatively; Contract law allows the property to be "rented" with voluntary participation but compulsory consequences for exploitative, negligent, or destructive behavior. The use of deposits provides additional security against exploitative, negligent, or destructive behavior, and the return of all but the incurred costs provides users an incentive to improve the design and infrastructure of the products in order to reduce those costs. The creation of cyclic flows and adoption of renewable energy is implicit in this. The combination of all factors enables groups with low-trust to interact reliably and peacefully.

There are some disadvantages, of course: The use of property and prices means that there are still externalities that cannot be included, particularly ecological and social costs. These will only be internalized indirectly, through the closing of flows into cycles. There is a need for a notary to create the trust that will hold the organization's property, and to confer the property to the trust, which may incur taxes or fees. There is also a need for prosocial lawyers to create an open legal structure that can be used with minimal modification to ensure secure, reliable, and simple renting from the trust. As an early transitional structure, logistics managers will have to be appointed to perform the functions that are not automatic. This is an additional skill requirement that must be fulfilled, and leaves the communal property vulnerable to mismanagement or possibly even corruption.

Economics
Running a product as a service requires the owner to generate a surplus of rent over the operational cost. This encourages a high degree of product longevity and a low degree of exclusion. Prospective creators of PaS businesses or non-profits may want to set a maximum profit in the charter, so that more users means lower prices. Care should be taken not to view PaS businesses as a permanent solution; PaS businesses are just as beneficial to the perpetuation of capitalism as any other kind of business. However, it does provide an avenue to achieve communal savings in the short-term, or to provide them to VIAAC non-members.

Transferics
The number of products needed to fulfill a given demand for a service can be determined using queuing theory models. This gives us the number needed, but there are also considerations of where to place the service. Combining demand data with R-trees will allow graph-based methods to be employed to choose optimal locations for products. Repeated hypothesis testing techniques allow the previous two methods to be applied iteratively to respond to changing economic conditions.