A few days ago, I wrote a post about Yochai Benkler’s contention, in his book The Wealth of Networks, that we are today seeing the arrival of large-scale systems of “social production” that “are decentralized but do not rely on either the price system or a managerial structure for coordination.” I argued that the leading social production projects are already adopting management structures – some, indeed, have had them from the start – and that it’s likely they’ll also come to embrace the price system as well. I pointed to Jason Calacanis’s offer of payment to “social bookmarkers” as an early example of the emergence of a price-based talent market. My post ended with a question: “Which is mightier – Benkler’s dream or Calacanis’s wallet?”
Benkler posted a comment, focused on the price system side of the question, that is interesting and deserves to be elevated to full post-hood. So here it is (and please note that I have no intention of paying the professor for his contribution to Rough Type, which is run as an anarcho-syndicalist organization of one):
I’m happy to accept this wager as a measure of the quality of my predictions about the long term sustainability of commons-based peer production. The shape of the wager, however, should be clear. We could decide to appoint between one and three people who, on some date certain – let’s say two years from now, on August 1st 2008 – survey the web or blogosphere, and seek out the most influential sites in some major category: for example, relevance and filtration (like Digg); or visual images (like Flickr). And they will then decide whether they are peer production processes or whether they are price-incentivized systems. While it is possible that there will be a price-based player there, I predict that the major systems will be primarily peer-based. Look at what happened to Mojo Nation – which tried to reward participants in a swarm peer file distribution system with “mojo” convertible into goodies as compare to BitTorrent, which did not. Compare the level of use and success of pay-per-cycle distributed computing sites like Gomez Performance Networks or Capacity Calibration Networks, as compared to the socially engaged platforms like SETI@Home or Folding@Home. It is just too simplistic to think that if you add money, the really good participants will come and do the work as well as, or better than, the parallel social processes.
The reason is that the power of the major sites comes from combining large-scale contributions from heterogeneous participants, with heterogeneous motivations. Pointing to the 80/20 rule on contributions misses the dynamic that comes from being part of a large community and a recognized leader or major contributors in it, for those at the top, and misses the importance of framing this as a non-priced social process. Adding money alters the overall relationship. It makes some people “professionals,” and renders other participants, “suckers.” It is not impossible to mix paid and unpaid participants, as we see in free and open source software and even to a very limited extent in Wikipedia. It is just hard, and requires a cultural form that is definitely not “now at long last we can tell who’s worth something and pay them, while everyone else is just worthelss.” What Calacanis is doing now with his posts about the top contributors to Digg is trying to alter the cultural interpretation of what they are doing: from leaders in an engaged community, to suckers who are being taken for a ride by Ross.Maybe he will succeed in raining on Digg’s parade, though I doubt it, but that does not mean that he will succeed in building an alternative sustained social process of peer production, or in replacing peer production with a purely paid service. Once you frame the people who aren’t getting paid as poor sods being taken for a ride, for example, the best you can hope for is that some of the “leaders” elsewhere will come and become your low-paid employees (after all, what is $1,000 a month relative to the millions Calacanis would make if his plan in fact succeeds? At that point, the leaders are no longer leaders of a community, and they turn out to be suckers after all, working for pittance, comparatively speaking.)
There is an abiding skepticism, born of many years in the industrial age, about the sustainability and plausibility of nonmarket-based cooperation and productive collaboration. We have now, on the other hand, almost two decades of literature in experimental economics, game theory, anthropology, political science field studies, that shows that cooperation in fact does happen much more often than the standard economics textbooks predict, and that under certain structural conditions non-price-based production is extraordinarily robust. The same literature also suggests that there is crowding-out, or displacement, between monetary and non-monetary motivations as well as between different institutional sytems: social, as opposed to market, as opposed to state. It just is not so easy to assume that because people behave productively in one framework (the social process of peer production that is Wikipedia, free and open source software, or Digg), that you can take the same exact behavior, with the same exact set of people, and harness them to your goals by attaching a price to what previously they were doing in a social process. Anyone interested in the basic approach can look at my articles Coase’s Penguin, or Sharing Nicely, which include more of the underlying literature than does the book The Wealth of Networks, although some of the materials are there in chapter 4. The problem is not, in any event, a simple or solved one, and I, among many others, continue to work on it.
On another, less important note, of course it is “too soon to tell for sure.” “Knowing for sure” is the sure sign of religion, not analysis. I just want to point out that the particular example you use, the American Broadcast System, however, is very far from accurate. There is a very brief overview of the history of the displacement of amateurs by the networks over the course of the 1920s in an oldish piece of mine called “Overcoming Agoraphobia”. The short of the story is that the Department of the Navy more or less forced British Marconi to sell its American assets to an American company, thereby creating RCA in partial alliance with GE. GE, RCA, AT&T, and Westinghouse then created a patent pool which divided the market in radio receivers and transmitters in 1920-21, and spent the next five years jockeying within this market to try to prevent amateurs and competitive producers from competing. Throughout this period they manuvered with Herbert Hoover, then Secretary of Commerce, to regulate the airwaves so as to shunt the amateurs onto what were thought unusable short waves, and to crowd all the nonprofit and almost all the non-patent-pool stations into a single narrow channel, while reserving separate channel allocations for stations that could afford expensive broadcast stations and live performers.Amateurs were prohibited from broadcasting news, or recorded music, etc. To say that this process represents an instance in which “that nonprofessional network was soon displaced by a smaller set of commercial radio stations that were better able to fulfill the desires of the listening public” is, shall we say, not the only way to characterize that story.