May 04, 2006

Markets vs. the Peerosphere

Zbigniew Lukasiak has been reading the (naturally) excellent Wealth of Networks, and wondering about the relation between the Peerosphere and the market.

Anyway, here was my comment, which I think is worth repeating.

I think the really interesting thing is that for a long time paid, exchange economies have driven out gifting ones. And suddenly, on the internet, that's being reversed.

Suddenly, gift-economies are able to compete with, and out-perform, exchange economies. My guess is that this is something to do with scale : there comes a time when you cross a threshold of number of people, and the cheaper, asynchronous co-ordination of gifting is more effective than the more expensive synchronous co-ordination of payment.

Obviously, as Benkler says, the wider distribution of productive capital is a necessary precondition.

I think I have a three-part answer to the "how to make money" question.

1) In the short term, you sell services around the peer-produced information products. That can be anything from customized modification of free-code, renting server-space, through to some higher-level reviewing, indexing, derivitive services.

The problem is, these become commoditised really quickly. That's why everyone from SourceForge to MySpace to Google is offering you gallons of free hosting for your content in return for an infinitessimal advertising revenue.

I recently got a bit annoyed when I discovered that I couldn't create any more "sets" on my free Flickr account. But I see the point. Flickr give away commodity hosting, but require me to pay for access to a higher value, highly abstract categorisation resource. Ironically I can have free disk-space but not free name-space.

I don't think this will last. Competition will commodify "sets" just as it commodified disk sectors. But I think it's an experiment that shows Flickr are looking in the right direction.

2) To avoid getting commoditised, you have to look more closely into two strategies : what Umair Haque is calling "edge competencies", and what OReilly is calling "data inside". How do you become a non-commodity, essential hub / partner in an ecosystem of peer-production, in such a way that people have to pay you?

EBay, Amazon and Google can all take a cut of transactions you do through them, because the peer-production is inalienable from their service. The challenge is how to get yourself into this position.

3) Ultimately though, we're moving towards full Netocracy, where links (or live attentional connections) start to be valued and "imploitable" in themselves. I'll give away content because the connection with the audience is more valuable to me than any money I can make. At first we'll asssume that this is simply a kind of investment, because, ultimately, downstream we will be cashing out those links into real money. But money itself is is something we might pursue without worrying about how we actually spend it - sure, ultimately it will buy us food, but we may hold on to it and invest it for decades before we end up eating it.

In the same way, we may hold on to, and invest in, and trade links for decades before we finally expect them to be "exploited" (converted back into money).

So as our recognition of netocracy grows, we'll worry less about the ultimate payment and more about how our peer-production is helping with our link portfolio.
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