Prosumer

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Prosumer is a portmanteau formed by contracting either the word producer or professional with the word consumer. The term has taken on multiple conflicting meanings: the business sector sees the prosumer (professional–consumer) as a market segment, whereas economists see the prosumer (producer–consumer) as having greater independence from the mainstream economy.

Contents 1 Prosumer as Producer and Consumer 2 Prosumer as Professional Consumer 3 Prosumer as Non-Corporate Producer and Consumer 4 Prosumers can influence a company's R & D budget 5 External links

[edit] Prosumer as Producer and Consumer

In 1972, Marshall McLuhan and Barrington Nevitt suggested in their book Take Today, (p. 4) that with electric technology, the consumer would become a producer. In the 1980 book, The Third Wave , futurologist Alvin Toffler coined the term prosumer when he predicted that the role of producers and consumers would begin to blur and merge (even though he described it in his book "Future Shock" from 1970). Toffler envisioned a highly saturated marketplace as mass production of standardized products began to satisfy basic consumer demands. To continue growing profit, businesses would initiate a process of mass customization, that is, the mass production of highly customized products.

However, to reach a high degree of customization, consumers would have to take part in the production process especially in specifying design requirements. In a sense, this is merely an extension or broadening of the kind of relationship that many affluent clients have had with professionals like architects for many decades.

Toffler has extended these and many other ideas well into the 21st-century. Along with recently published works such as Revolutionary Wealth (2006), we can recognize and assess both the concept and fact of the prosumer as it is seen and felt on a worldwide scale. That these concepts are having global impact and reach, however, can be measured in part by noting in particular, Toffler's popularity in China. Discussing some of these issues with Newt Gingrich on C-Span's After Words program in June 2006, Toffler mentioned that The Third Wave is the second ranked bestseller of all time in China, just behind a work by Mao Tse-Tung.

Don Tapscott more fully elaborated on the concept in his 1995 book The Digital Economy calling it "Prosumption."

More recently, The Cluetrain Manifesto noted that "markets are conversations" with the new economy moving from passive consumers ... to active prosumers.² For instance, Amazon.com emerged as an ecommerce leader -- partially due to its ability to construct customer relations as conversations rather than simple, one-time sales. Amazon supports exchange of information among customers; it provides spaces for customers to add to the site, in the form of reviews.²

However, mass customization has not taken place in most areas of the economy. Most consumption continues to be passive as critics of television, recorded music, and fast food would argue. Indeed, people are generally uninterested in going to the effort of customizing the myriad products that comprise modern consumer culture. In The Paradox of Choice: Why More is Less, Barry Schwartz argues that diminishing returns from a confusing abundance of consumer choice is producing stress and dissatisfaction.³ Still, one key area of high-customization is taking place: highly involved hobbyists.

[edit] Prosumer as Professional Consumer

With customization focused on leisure pursuits, Toffler's initial combination has been largely supplanted by a second pair of blurring roles: that of the professional and consumer. In particular, hobbyists have become ever-more demanding in the pursuits of their hobbies, often rising above the level of dilettante to the point of commanding skills equal to that of professionals. Key examples of such hobbies are:

• home improvement as illustrated by the rise of hardware stores such as Home Depot
• cooking as illustrated by creation of entirely new cable television channels entirely dedicated to the culinary arts
• photography as illustrated by cameras and camcorders that, often, are on a par with equipment used by professionals.

This professional slant of the prosumer term is most common in photography which is a field that highlights prosumer trends. Access to professional-level equipment and skills is made possible by combination of factors such as:

• high disposable incomes by some sectors of the population
• increased leisure time, again, for some sectors of the population
• continuously falling prices of ever more advanced products (especially electronics)
• media geared towards amateurs and hobbyists:
  • beginning in the 1980s with the advent of desktop publishing, a growing profusion of magazines to satisfy specialized interests
  • beginning in the mid-1990s with the advent of the Internet, an even wider range of websites with online forums to pool experience
• Pertaining to electronics; are considered to be "on the fence" as a product of lower quality than a professional product, and higher quality (sometimes in the form of bells and whistles) than a consumer product. Some examples include:
  • Digital camcorders
  • Cameras
  • HDTVs

[edit] Prosumer as Non-Corporate Producer and Consumer

Yet a third meaning or usage of prosumer is springing up, especially among some activist groups. That is, the producer and consumer roles are being combined so as to exclude (or at least diminish) the role of the corporate producer; thus, rather than generating higher corporate profits from value-added products, producers would, at best, be reduced to supplying lower-profit commodity inputs. Indeed, the more consumer-oriented prosumer spin is irrelevant to many people with diminished disposable income caused by various economic trends such as globalization, automation, and wealth concentration. Identifiable trends and movements outside of the mainstream economy that have adopted prosumer terminology and techniques include:

• a Do It Yourself (DIY) approach as a means of economic self-sufficiency or simply as a way to survive on diminished income
• the voluntary simplicity movement that seeks personal, social, and environmental goals through prosumer activities such as:
  • growing one's own food
  • repairing clothing and appliances rather than buying new items
  • playing musical instruments rather than listening to recorded music
• use of new media-creation and distribution technologies to foster independent media (see Indymedia); many involved in independent media reject mass culture generated by concentrated corporate media
• self-sufficient barter networks, notably in developing nations, such as Argentina's RGT have adopted the term prosumer⁴

These blurrings of the roles of consumer and producer have their predecessor in the cooperative self-help movements that sprang up during various economic crises e.g. the Great Depression in the 1930s.

[edit] Prosumers can influence a company's R & D budget

A fourth view of the Prosumer is as one who can influence the R & D spend of a company towards a solution that directly benefits them. For example, say you’re a manufacturer of widgets. One of your strategic customers changes their requirements and asks that all their widgets sing. This is an important enough customer that losing them would seriously hurt your bottom line. Based on their request you direct a portion of your R & D budget to solve their specific problem. By using internal resources, open source initiatives and outside help you’re able to meet the requirements of your customer. While the customer didn’t directly make the changes they did influence your company with their design requirement changes. This arrangement has positive effects for both parties:

For the customer:

• Immediate access to the new technology.
• Requirements specific to their needs.
• Leverage their relationship with the supplier.

For the company:

• Strengthen the relationship with the customer.
• Demonstrates a willingness to keep their customers satisfied.
• The company now has a new feature/product/service they can market to other customers.

As customers continue to demand more of their supplier relationships, this type of Prosumer influence will only increase. Suppliers up to the task will strengthen those existing relationships, build customer loyalty and become more profitable.

[edit] External links

• Turns of Phrase: Prosumer - business-oriented definitions of producer/professional and consumer
• February 2004 Datacloud on "Consumer" - relating Toffler/cluetrain and noting examples of corporate prosumer activity
• Review of The Paradox of Choice: Why More is Less - from January, 2004 Christian Science Monitor
• Argentina's RGT - The World's Largest "Usury-Free" Barter and Trading Network - activist-oriented usage of prosumer
• De (hernieuwde) ontdekking van de prosumer - overview article on Prosumerism (in Dutch)
• DIY happy - A website devoted to helping people reach economic self-sufficiency through daily coverage of numerous DIY projects.
• Wikihowto - A wiki website aiming to make know-how free, providing consumers another option - not just to buy, but create it themselves.
• Managing Prosumers - An interesting article from ComputerWorld magazine about prosumers and their influence on wireless devices.