Benkler on Calacanis’s wallet

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 [email protected] or [email protected]. 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.

10 thoughts on “Benkler on Calacanis’s wallet

  1. Morgan Goeller


    Interesting points. I think I vote for the wallet, but mostly because money is a very tangible expression of the human will, especially at scale. This is not a moral statement, just a quantitative one.

    In my own field (IT and Systems Architecture), if have argued that if we took a more more market-oriented approach to information architecture things might be more efficient.

    Also, I think that the 80-20 rule mentioned above is being generous. It seems that the most recent data would point to the 1% rule for community content.

  2. Anthony Cowley

    It’s interesting that offering too small an amount of money actually seems to make it less likely that someone will contribute. The problem seems to be that it forces people to evaluate what it is they are doing. If I’m getting paid for it, then it’s not leisure activity, so I look at how much I’m getting paid. Would I accept this pay rate in a job? If not, then I don’t want to do.

    I don’t think it’s an issue of feeling like a sucker just because someone was paid for producing content I’m consuming. If I’m getting it for free (paid for by advertising), then I really don’t care where it came from. On the production side, however, I’m more likely to chase down some information for fun than I am to take it on as a sub-minimum wage task.

  3. lawrence

    My first sentence in the comment above is about this quote:

    “Adding money alters the overall relationship. It makes some people “professionals,” and renders other participants, “suckers.”

  4. Seth Finkelstein

    “It just is not so easy to assume that because people behave productively in one framework … 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.”

    As a literal statement, I would say that’s absolutely true. But it leaves open whether you can do it with DIFFERENT people and SIMILAR behavior. And then out-compete (whether by fair or foul means) the old people.

    In which case the dispute of about radio should be reframed. As I see it:

    Carr: Radio was once a commune. Now it’s big corporations.

    Benkler: The big corporations used the government to destroy the communes.

    Finkelstein: Got it. So what stops the same “enclosure” from happening NOW?

    In other words, again, as I see it, Benkler does in fact agree that there was an economically exploitable value where (my terms!) robber barons took it over from the peasants. And is only saying the peasants could have continued to be a commune if they had been left in peace by the robber barons. Which may be true, and is indeed a more complex process than pure economic displacement. But the deeper point, that there’s monetizable economic value, isn’t refuted by illegitimate means of developing it.

    I would suggest distinguishing between these three propositions:

    1) Communes can exist (pretty clearly true)

    2) Communes will always be fairly out-competed by corporations in the free market (perhaps less clearly true than some think)

    3) In communes vs. corporations, communes will lose, even if corporations have to violate the formal rules of the free market to win.

    Key points: Proposition #1 does not refute proposition #2, and proposition #3 can still be true if even proposition #2 is false.

    By the way, why can’t we apply here one of the favorite excuses of blog evangelism: “It’s Early Days”. There’s no reason that the monetization system has to be gotten right on the first try. Maybe a flat-rate is the wrong way to do it, maybe he’s offering too little for the top stars, maybe it should be base rate plus commission, and so on. Plenty of start-ups fail even in established businesses niches, without that taken as meaning business itself is a failed system.

  5. Joining Dots

    ‘Adding money alters the overall relationship. It makes some people “professionals,” and renders other participants, “suckers.”‘

    …and therein lies the problem with a site like Digg and why it is different to [email protected] They both require altruistic participation but Digg is being run as a commercial enterprise in a market economy. At any point in time, the owner(s) can sell out and all participants become monetary “suckers”.

    Cooperative systems succeed in a market economy when they provide motivation to participate – that motivation doesn’t have to be monetary, as demonstrated by the likes of Flickr and, but there must be some form of gain for the participants. Cooperative systems that depend on altruistic participation belong in a gift economy. Digg is not in a gift economy.

    I’ve waffled more on my blog: Gifts vs Markets

  6. Nick Carr

    Yochai, If at the end of your comment you’re trying to argue that, under a different regulatory regime, amateur broadcasters would have held onto their amateur status as the popularity of their programs expanded, I think you’re arguing against history and common sense. The most popular amateur broadcasters would have gone pro to extract the monetary value from their popularity. Over time, they would have expanded and consolidated, and the radio landscape (airscape?) would have ended up looking up pretty much the same. In fact, it was already happening when the amateurs were pushed off into the short wave spectrum (for more complex reasons than just corporate pressure). In 1920, for instance, one of the most popular amateur broadcasters, Frank Conrad, went pro, moving his studio from his garage into a Westinghouse facility and operating under the call letters KDKA. The amateurs revealed the commercial potential of radio, but that potential was always going to be fulfilled, one way or another and regardless of regulation. Nick

  7. solstag

    Hi Nick,

    I would just like to point out that for Frank Conrad, and probably more, going pro (market) might have been natural, perhaps because of the content and audience of his broadcasts, but besides him there were many others, producing content of different nature and audience, who either would not profit from (because of scale) or not make sense to go market (because of purpose conflicts / conflict with social gains), and even others who would go market, but not wholeheartedly market like commercial radio stations are.

    The point being that the sheer existence of a multitude of non-market producers at the bottom, if not crushed by the lobbyists, would – as I understand – have made radio a much more democratic, critic and rich medium, as we would have a strong community based small-scale information broadcast system, and still have the Frank Conrads around to provide a global basis of communication, who additionally would feed off from those small-producers, and in doing that probably provide a much better service to society than spectrum-monopoly-based commercial radio stations, or at least a service less vulnerable to the harms of media monopoly.

    Connecting this to the web, ‘Joining Dots’ above made a good point, that some sites as a whole end up being ‘in the market’, even if the contributors are not. If Digg makes money out of the effort of the community, it might come that a next-Digg, which is more transparent and, let’s say, shares its full liquid revenue with users not as a ‘payment for a service’, but as a ‘commons sharing of resources achieved by the community’ might actually still have a place for contributor rewarding if Calacanis fails.

    But who is in the market there? Everyone is, but as a commons, not as competing individuals “posting for cash”, rather, they’d be “posting to contribute to the community, which as a whole makes cash out of our contributions, and that cash is then shared with me as one of its members”. And even that would be mostly commons based production as we see in agriculture, nothing new.

    But still, that’s only for this services which actually end up in the market, as ‘Joining Dots’ pointed out. Many others are naturally fully placed inside the social-production system, and who’s to decide that? Well, it depends on scale, on modularity and many issues (Benkler discusses that in his book), but yeah in the end it’s the market, together with society, which will decide the optimal way to place resources – as it should be – again nothing new or controversial.

    Therefore, I see a big misunderstanding when people, just because some form of market production or interaction might also play a role, try to deny all the evidence that non-market content production has a major role – and a highly beneficial one – that should be preserved and perhaps promoted, but certainly not destroyed by legislation.

    And this is not utopia, because – c’mon – we are all eye witnesses. I read Benkler’s book and as I understand he does not advocate an all-non-market production system for all kinds of information goods regardless, he does try to make the point that non-market production has a major and beneficial role that should not be brought down by lobby-oriented legislation, and perhaps should in fact be protected, by legislation, from unfair practices of companies that are (right now) trying to hijack most, if not all, of our cultural references from the public sphere.

    And warns that, ultimately, legislation will be a central factor in determining whether we’ll have the mixed-model (market and non-market as society plus market sees fit) which is all winners, or a monopoly-like model that is win-lose and where, unfortunately, who loses is the public good.

    That’s, somehow, my understanding of why we should take sides on this issue, not as a childish dispute over “my way of production is better than yours” (which is what Calacanis calls for), but as a matter of what kind of actors will be allowed into this enterprise, or more explicitly, “do we want to ban social production from the internet?”.

    Many big-(old)-media executives and people influent in the government are dreaming of that right now. (and probably dreaming of electric sheep too)

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