Today's author Google guest is Jeremy Rifkin.

The book is titled "Zero Marginal Cost Society:

The Internet of Things, the Collaborative Commons,

and the Eclipse of Capitalism."

Jeremy is the best-selling author

of 19 books on the impact of scientific and technological

changes.

His books have been translated into more than 35 languages,

and are used in hundreds of universities, corporations,

and government agencies around the world.

In 2001, Jeremy Rifkin published the New York Times bestseller,

"The Third Industrial Revolution."

Presented in this book, his vision

of a sustainable post-carbon economic era

has been endorsed by the European Union and the United

Nations, and embraced by world leaders-- including

chancellor Angela Merkel of Germany,

president Francois Hollande of France,

and premiere Li Keqiang of China.

Rifkin's other recent titles include

"The Empathic of Civilization: the Age of Excess,"

"The End of Work," "The European Dream," "The Biotech Century,"

and "The Hydrogen Economy."

Jeremy Rifkin has been an advisor to the European Union

for the past decade.

He also served as an advisor to President Nicolas Sarkozy

of France, chancellor Angela Merkel of Germany,

prime minister Jose Socrates of Portugal,

prime minister Jose Luis Rodriguez Zapatero of Spain,

and prime minister Janez Jansa of Slovania,

during their respective European Council presidencies.

Mr. Rifkin is the principal architect

of the European Union's Third Industrial Revolution Long-Term

Economic Sustainability plan to address the triple challenge

of the global economic crisis, energy security, and climate

change.

The Third Industrial Revolution was formally endorsed

by the European Parliament in 2007,

and is now being implemented by various agencies

within the European Commission, as well as in the 27 member

states.

Jeremy Rifkin is the president of the TIR Consulting Group,

comprised of many of the leading renewable energy

companies, electricity transmission

companies, construction companies, architectural firms,

IT and electronics companies, and transport and logistics

companies.

Mr. Rifkin is a senior lecturer all the Wharton School

executive education program at the University of Pennsylvania.

His monthly column on global issues

has appeared over many years in many

of the world's leading newspapers and magazines,

including the Los Angeles Times, The Guardian, Die Deutsch

Zeitung, and the Handelsblatts, Le Soir Arnaque, L'Espresso,

El Mundo, and El Pais in Spain, and many others.

Mr. Rifkin holds a degree in economics from the Wharton

School of the University of Pennsylvania,

and a degree in international affairs from the Fletcher

School of Law and Diplomacy at Tufts University.

After this somewhat long introduction,

but worth reading it, please welcome to Google, Mr. Jeremy

Rifkin.

[APPLAUSE]

JEREMY RIFKIN: Good afternoon, everyone.

It's a pleasure to be with you here at Google this afternoon.

We're just beginning to glimpse the bare outlines

of a new economic system entering onto the world stage.

This is the first new economic system

to emerge since the advent of capitalism--

and its antagonist, socialism-- in the early 19th century.

It's a remarkable historical event.

It has long-term implications for every one

of us, our children, and our grandchildren.

This new economic system is the collaborative commons.

And what's triggering this shift to a new economic paradigm,

a collaborative commons economic system, is something called

zero marginal cost.

Now, zero marginal cost is something

you're very familiar with here at Google,

and certainly we are the business community--

not very well known in the public.

Marginal cost-- the cost of producing an additional unit

of a good and service after your fixed costs are covered.

Business people have always wanted to reduce marginal cost,

and they're always in search of doing that.

And here's why.

And I want to introduce to you a paradox.

There's really a paradox deeply embedded

in the heart of the capitalist system-- previously

undisclosed, really.

This paradox has been responsible

for the great success of capitalism

and the invisible hand of the marketplace.

The paradox is this invisible hand success

is now leading to its potential demise,

and the advent of a new successor

paradigm to replace it.

Let me explain.

Sellers in a capitalist market are always

attempting to find new technologies that

can increase their productivity, reduce their marginal cost

so they can put out cheaper products,

win over consumers in market share,

bring home profits for their investors.

Clear?

So business people have always welcomed the reduction

of marginal cost in the production and distribution

of goods and services.

It's just that the business community never

anticipated in their wildest imagination

the prospect of a technology revolution so extreme

in its productivity that it could reduce

those marginal costs to near zero across the value chain,

making goods and services essentially priceless, nearly

free, abundant, and beyond the market exchange economy.

That's beginning getting to happen.

The first inkling of this paradox, of course,

was Napster, back in 1999.

All of a sudden, millions of young people

that apparently had nothing else to do after school

but figure out new software in order to share music

and bypass providing royalties to the music industry.

Then this zero marginal cost phenomena

went on to invade the entire information goods industry.

Millions of consumers became prosumers.

And they began producing their own information goods-- videos

on YouTube, news blogs, e-books, and decimated

the newspaper and magazine publishing industry.

Newspapers went out of business.

Magazines went out of business.

And I'm in book publishing.

I can tell you that free e-books have decimated the book

publishing industry.

For a long time, industry watchers

said, well, this is fine.

We understand that more and more people are becoming prosumers.

And they're producing and sharing

their own audio, their own videos, their own text,

their news blogs.

They're working together and sharing information

on Wikipedia.

We understand that.

But we think that more and more free goods and services

provides the basis so that the premiums will allow people

to then go up to this-- the freemiums will allow people

to go up and have premiums.

In other words, if you're a musician,

you give away your music.

And then you hope that the long tail will set in,

and enough people will then decide to go from the freemium

to the premium, go to your concert,

and pay a lot of money.

Or the New Your Times will say, look,

we'll give out 20 articles a month free.

And we hope that the freemium will encourage a certain number

of people to subscribe to our new service, the premium.

It hasn't happened.

This was wishful thinking, or naive.

The more and more we are able, as prosumers,

to produce and share our own information goods,

the less likely we are to move from freemiums to premiums.

Because our attention span is limited,

and there are so much free goods that they really

don't push us into the premium category.

And the proof is in the pudding.

If you take a look at the newspaper industry, magazines,

book publishing, and the recording industry,

they've never come back from zero marginal cost.

Economists, however, have-- up until the moment

now-- our economists have thought,

well, we think there's a firewall here.

And that is, even though more and more information goods

are heading toward near zero marginal cost in virtual worlds

that they will not cross the firewall

into the physical world of brick and mortar goods and services.

No longer.

What's happening now is that the communication internet is now

expanding to an internet of things, a physical internet.

So what we're beginning to see is the communication internet

is just beginning in Europe, where I work,

to converge with an emerging energy internet

that we're laying across Europe, and a nascent automated

logistics and transport internet.

The internet of things is an expansive internet

that allows us to go from the world of bits

to the world of atoms.

And when we have these three internets embedded

in one system-- a communication internet that's

interacting continually with an energy internet

and a transport and logistics internet in one platform--

this internet of things allows us

to begin moving near zero marginal cost from information

goods to physical goods.

The internet of things, three interoperable internets,

then connect out with sensors across

the entire economic value chain.

Even though this internet of things

is just in its early stages, we have 14 billion sensors now

connecting resource flows.

We have sensors connecting warehouses, distribution

centers.

We have sensors along smart road systems.

We have sensors connecting the production lines on the factory

floor.

We have sensors connecting the new energy internet

so we know the price of electricity moment to moment.

We have sensors connecting offices and vehicles and homes

and appliances, continually feeding big data to these three

internets that operate as one platform--

the communication, internet, the fledgling energy

internet, the nascent automated transport and logistics

internet.

By 2020, IBM says we'll be at 30 billion sensors.

And a recent forecast study a few months ago

says that by 2030, we will have 100 trillion sensors connecting

everything with everyone in one global neural network.

When we move from the internet to the internet of things,

and we move from bits to atoms, we

began to see a completely new economic model

they can get us to near zero marginal cost in the production

and distribution of physical energy and physical products.

So a prosumer, and millions of prosumers-- and pretty soon,

billions of prosumers-- are going

to be able to go up on this expanded internet which

is already here.

And they'll be able to access the big data flowing back

from all the sensors to the three internets

operating in that general purpose technology platform.

And with the apps that companies like Google will provide

and others, they'll be able to use

that data with their own analytics

to create their own algorithms, because you can program it

right into the app.

You don't have to be a rocket scientist.

And then any one of millions of prosumers

will be able to increase their productivity,

dramatically reduce their marginal cost,

and produce, consume, and share their own physical energy

and manufactured goods with each other,

just like we now do with information goods.

While this is early on, the trajectory is already clear.

So if I had said to you in 1989, a year before the World Wide

Web went online, that 24 years later 40% of the human race,

equipped with a cheap cellphone, a raspberry computer,

could send their own audio, video, and text,

create their own entertainment, their own news,

their own knowledge-- any one of those 40% of the human race--

and then share it with each other at near zero

marginal cost on the World Wide Web,

what would you have said in 1989?