Observation #1: Information is automatically stored; electricity is not

Digital information creation commonly includes storage. When you write an email or take a picture, the information you create is automatically stored in the recording device, in the cloud, or in a combination thereof. Because creation is paired to storage, information can be consumed at another time than it was produced. You don’t need to read a book as the author writes it.

For electricity, the story is different. When a flow of electrons is created it must be transported and consumed instantaneously. Today’s gas power plants or wind turbines – electricity generation devices – do not offer the possibility to store electricity for later use. Neither do fridges or microwaves – electricity consumption devices.

N.B. The notable exception to integration of information creation and storage are spoken conversations. When we chat, our voices are not automatically stored. (This is changing, though.) Non-digital forms of information – a written letter, a painting, a Beatles’ vinyl – are stored, but are not easily replicable (see the next observation).

Observation #2: Information can be copied; electricity can not

When you send me a postcard, I can read it once, ten times or a hundred times, without the quality or quantity of the information changing. The information can be viewed an infinite number of times. When you send me a digital postcard, not only can I read it infinitely, but others can read it an infinite number of times too. Digital information is endlessly replicable – its quality and quantity doesn’t change.

A quantity of energy can only be used once, much like a kg of gold can only be used once. The physical properties change when you use the electricity. But, gold can be reused. I can not conceive of ways to derive the services from electricity without using the electrons. This is a big difference to distribution of information.

Scalability of electricity, versus scalability of information

You can visualize this difference by envisioning a ratio that equals the number of times something is used over the number of times something is created.

For electricity, the consuming versus creating ratio can be no larger than 1. Every kWh of electricity generated can only be used once (or less, if it’s wasted somewhere between generation and consumption).

For information, the consuming versus creating ratio can be much larger than 1. Every line of words typed by you can be viewed by a billion users, who read it hundreds of times.

Observation #3: Digital information can have an enormous variation in value; electricity can not

This may be the most important insight of this entire post. For a given quantity of digital information – say, 10MB of sound – the quality can range from terrible (the sound of a jetplane if your goal is to relax) to outstanding (a symphony orchestra recording for the same goal). The value for that piece of information can range from negative (I’d pay you to remove the sound) to very valuable (worth €10 per iTunes Album). Combined with digital information’s replicability (the previous observation), the large variation in value explains why software can be worth hundreds of dollars (Adobe Suite) or nothing.

In my view, electricity does not have a large distribution of value. For a given quantity of electricity, the quality is more or less equal. There can be a difference in value, depending on whether the electricity is generated close to the location of desired use or far away and whether electricity is generated according to the user’s preferences or not, but this value difference is marginal compared to the value difference of information – in the order of tens of percents.