Prosumer

Definitions and origins

This blurring of the roles of consumers and producers has its origins in the cooperative self-help movements that sprang up during various economic crises e.g. the Great Depression in the 1930s.

General meanings of "prosumer" (no relationship to the business term "prosumption")

Producer and consumer

Marshall McLuhan and Barrington Nevitt suggested in their 1972 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. However, in many cases architectural clients are not the only or even primary end-consumers, a distinction touched upon in the H+ Magazine essay 'Prosumption Architecture: The Decentralization of Architectural Agency as an Economic Imperative'.

Toffler has extended these and many other ideas well into the 21st-century. Along with more 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 Zedong.

Don Tapscott reintroduced the concept in his 1995 book The Digital Economy.

Despite several decades of usage, the term only recently began to receive full theoretical elaboration. George Ritzer and Nathan Jurgenson, in a widely cited article, claim that prosumption has become a salient characteristic of Web 2.0. Prosumers create value for companies without receiving wages.

Mass customization has not taken place in most areas of the economy. Mass customization has ruled the food & beverage industry for years. Look at how many choices we are faced with in the grocery stores and supermarkets. Brand extension and dilution are ways companies have sold more under various names, giving us thousands of choices. 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.

In the digital and online world, Prosumer is used to describe today's online buyers because not only are they consumers of products, but they are able to produce their own products such as, customised handbags, jewellery with initials, jumpers with team logos etc.

In the field of renewable energy, prosumers are households or organisations which at times produce surplus fuel or energy and feed it into a national (or local) distribution network; whilst at other times (when their fuel or energy requirements outstrip their own production of it) they consume that same fuel or energy from that grid. This is widely done by households by means of PV panels on their roofs generating electricity. It is also done by businesses which produce biogas and feed it into a gas network while using gas from the same network at other times or in other places. The European Union’s Nobel Grid project, which is part of their Horizon 2020 research and innovation programme, uses the term in this way for example. http://nobelgrid.eu/

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 (an amateur, someone who dabbles in a field out of casual interest rather than as a profession or serious interest) to the point of commanding skills equal to that of professionals. Key examples of such hobbies are:

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:

Toffler’s Prosumption was well described and expanded in economic terms by Philip Kotler, he saw Prosumer/Prosumption as a new challenge for marketers. Philip Kotler anticipated that people will also want to play larger role in designing certain goods and services they consume, furthermore modern computers will permit them to do it. He also described several forces that would lead to more prosumption like activities, and to more sustainable lifestyles, that topic was further developed by Tomasz Szymusiak in 2013 and 2015 in two marketing books.

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.

Prosumer from company perspective

A fourth view of the Prosumer is from companies perspective, who open up their processes and integrate end-users as prosumer for shared benefits. Such motivated enthusiasts, can be for instance integrated into a company's R&D. Other benefits are strengthened relationship with the customer and faster feedback cycles. Companies and individuals are increasingly utilizing and involving the end-users to develop final products and services. In some instances, end-users are creating products on their own, without the interference or assistance of third parties (i.e. companies, organizations, etc.). For example, Lego Mindstorms allows users to download software from Lego's website so that the users can edit and update software as they wish.

Prosumption

In their 2006 book Wikinomics: How Mass Collaboration Changes Everything, Don Tapscott and Anthony D. Williams use the related term of prosumption (production/consumption; also coined by Toffler) to refer to the creation of products and services by the same people who will ultimately use them. The book states criteria that increase the value of prosumers' participation such as openness, sharing, peering, globalizing. But empirically some criteria have inverse relationships.

Adoption

Identifiable trends and movements outside of the mainstream economy that have adopted prosumer terminology and techniques include:

Influence on a company's R & D budget

A fourth view of the Prosumer is as one who is aware of

can influence the R & D spending of a company in ways which directly benefit them. For example, say you’re a manufacturer of widgets. One of your customers changes their requirements and asks that all their widgets sing. This customer is important enough 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. While the customer didn’t directly make the changes they did influence your company with their design requirements. This arrangement has positive effects for both parties:

For the customer:

For the company: