Wednesday, February 25, 2009

Thoughts on Benkler

by James de Haan

Networked Information Economies; according to Yochai Benkler, the man behind the term, is a "system of production, distribution, and consumption of information goods characterized by decentralized individual action carried out through widely distributed, nonmarket means that do not depend on market strategies". The internet is a new form of information exchange that seemingly allows this to happen; the information technology of the internet allows for unprecedented amounts of collaboration, to a point that simply hasn’t been seen before. Creative Commons, Wikis, and open source are all examples of the good this level of collaboration brings; Benkler’s own book on the subject was even published in creative commons. He goes on to argue that this level of communication allows for a culture to be much more self reflective and empowered than it would be otherwise; we see this already with the blog phenomenon, wherein a large number of people eager to be relevant and to have their opinions matter jump onto a system has the power to seemingly do that.

From this new system of communication, a new form of production has seemed to come through; that of a cooperative, non-market based model. And when I say non-market based, I mean that in the strictest of senses; it literally has little basis on physical money and, while certain market principles still hold true, it is not dependent on money. Rather, it is dependent on the community and how they view you and your production. This, in Benkler’s view, is what makes networked information economies so democratic; the consumer and the producer are at the same level and have the same say in things. Contrast this with a industrial information economy in which monetary and physical capital constrained this from happening and you see a new form of economy that one would be foolish not to wish to be a part of.

But what of motivation? After all, can a group of consumers really be motivated to do something that does not have any monetary gain in it. In Benkler’s eyes, this is an oversimplification; people cannot simply be reduced to positive and negative utility whose actions can be translatable to money. He gives this example; “If you leave a fifty-dollar check on the table at the end of a dinner party at a friend's house, you do not increase the probability that you will be invited again.

We live our lives in diverse social frames, and money has a complex relationship with these - sometimes it adds to the motivation to participate, sometimes it detracts from it.”[1]

He goes on to discuss the viability of there being two markets; one based on social incentive, one based on monetary incentive. One market does not directly respond to the incentives of the other, but the market based on monetary incentive could lead to desperate people selling faulty product; the example he cites is the blood market, with people with bad blood seeking to sell and those with good indulging in the altruistic model. So there are two markets with two different rewards; one leads to higher economic standing, and one to higher social standing. The blood example is a pretty good way to show how communities can work in web 2.0; we don’t do it because we get money, we do it because we get fame and this system can even prove more efficient.

But will any of this pie in the sky market idealism work? I don’t believe so. Benkler sees this new networked information-based economy as joining hands with the market based; social standing and monetary benefits work together to motivate more efficiently than simply market incentives alone. Right now, you need a lot of social standing to motivate as well as money can; I can’t do much, even in my group of friends, but if I monetize their reward for fulfilling my demand they are much willing to do it. That isn’t to say my standing socially doesn’t help with this, but money works quicker and better. Even if society adopts this new community-based incentive system, it still wouldn’t be as efficient and easy to motivate, as it was with money alone. So maybe we are moving to a point where what we add to a production is valued higher than it is now, but the two systems will never go hand-in-hand in the way Benkler envisions.

[1] -

Wednesday, February 18, 2009

User Innovation Networks

by Jennifer Arcero

User innovative networks are “not suppose to exist “in others words they are anomalies which defy one of the underlying principals of economics. Community innovative projects continue to arise, despite their nature which can seem quite frankly gain less. The benefits from these user innovative projects are hard to detect if one is uninformed of the process and community of users. The tedious nature of code writing causes one to think, “Why would you just simply give away your work?” It just makes sense, user innovative community’s work together to tailor a product which fits their needs. Authors of code generally produce code to create a product to fit their needs avoiding inefficient manufacturers and of course the high cost of manufactured programs.

Programmers release their code to the public but that does not affect the use of their code; they constructed the code to serve their own purpose. Programmers release their “DNA” allowing others in their community to genetically modify their original product thereby allowing the creation of new innovative programs. The programs which arise from the parent “DNA” may be useful for the original writers cause. Sharing the code prevents the “reinvention of the wheel” allowing greater productivity. For example, when a group of scientist mapped the human genome they did not keep their work cooped in their inner circle, instead they allowed other “free riders” to use their findings. Free Riders can provide a service for producers they can find glitches and can add their own knowledge to create a better product. Free riders unknowingly provide a service for the producers. This creates the opportunity for multiple tools to stem from one central source. The community can then create more specific and tailored programs which will better fit the community’s special interest. The easiest way to explain this is “if you want things done right… Do it yourself! Who else can better design a tool than the person seeking the new tool? This is a new and innovative path to acquiring what you want faster, better and cheaper.

The effectiveness of user innovation is surprising, the structure and the communication within the group is impressive. The question is how sustainable is this system? If one cornerstone of the system fails will it all fall? Yes, the open source network is dependent on passion, organization and recognition without structured community and the aspiration to become part of the “core” is removed. The sense of earning respect and weighted say is essential to open source because it drives the ability of a group to maintain its project goals. The "open" in open source is one of the major components essential to the survival of the open source project themselves. The generosity of the authors positively affects their group as well as themselves. Peer review and revision helps eliminate or at the least detect errors more efficiently. Allowing the creation of a better product, where not just a select few review but the masses come together to peer review one another’s work. As Hippel explains, open source is the proof that communities can create product without the middle man. The elimination of this middle man will increase the potential for growth and extended innovation. My question is how open source is affecting the way we operate, what if open source can lead to group based mass production rather than the corporate based production. Shifting the way corporate America works? This is obviously an idealistic hope, which would most definitely result in the reinvention of corporate and manufacturing system. The real question is, will this change be better for our market??
It will be interesting to see how open source changes the way we operate as consumers, will we lose respect for the professional photographers, will we never pay for another program or will we just demand lower prices and better product in order to compete with the freeware out there. The internet and freeware is undeniably changing the manner in which society operates but because we are currently living the change it is hard to evaluate the extent of its influence over our lives and how this is changing the way we operate and it may be possible that our entire lives is moving online, whether working collaboratively online, creating and sharing online.

Tuesday, February 10, 2009

The Long Tail: Misses are no Longer Bad

by Andrew Paster

With such a variety in the market these days, it is rather difficult to appeal to everyone. Stores cannot always stock what appeals to the few people who have non-conformist needs. In order for a business to be successful, it must make a profit. The best way to do this is to appeal to the masses. By selling “what’s new” or “what’s hot”, a business is guaranteed to generate enough profit to progress. Although satisfying the masses takes care of most people, how are those “others” satisfied? It is difficult to satisfy our needs, when those needs are not highly demanded by the masses. In his article “The Long Tail”, Chris Anderson says, “retailers will carry only content that can generate sufficient demand to earn its keep.” This makes sense for an actual store. There is no reason to carry a product that only sells one copy a year. However, that was geared for the 20th century. Before the Internet, “an audience too thinly spread is the same as no audience at all.” This statement completely dismisses all sorts of potential customers. Although a store cannot physically stock every product, it allows for newer technologies and outlets to emerge to satisfy those who cannot so easily accommodate their needs.

Anderson says that, “this is the world of scarcity. Now with online distribution and retail, we are entering a world of abundance.” Who doesn’t love abundance? The Internet provides us with so many options that would never exist. It challenges Pareto’s principle that only 20% of something will be a hit, while the other 80% a miss. With only a one in five chance of success, a miss is easily obtained. The Internet has allowed for this rule to change. Such companies as Amazon and Rhapsody have learned how to take those “misses” and make them successes. Since there are so many misses, the money from them is bound to add up. Since the Internet is free of physical capacities, a miss can be able to be stocked, not costing anything, and only making profit whenever that random person comes across it.

For example, Rhapsody’s online music library stocks well over 735,000 tracks. With such a vast library, stores like Best Buy and Tower Records cannot compete. There are enough songs on Rhapsody for a specific genre to have its own store. The thing about Rhapsody is that as quickly as it adds new content, a few people here or there immediately pick it up. With such offers online, it is hard to see what it is that keeps people continuing to buy from stores themselves. It could be the convenience of getting something while you’re out, or the satisfaction of physically possessing something (as opposed to buying a file from the web). Barnes and Noble stocks roughly 130,000 titles. More than half of Amazon’s book sales come from outside of their top 130,000 titles. It is impossible to physically beat the web when it comes to variety and accessibility.

The most interesting thing I learned and realized while researching The Long Tail came from Chris Anderson’s article. It was something I had never realized, and would never have expected. Returning to online music, it is viewed as a single-driven business, like that of the 1950s. People tend to only purchase one or two songs from an album. This way of buying singles is much like the 50s, where only a few songs from the album were sold as their own separate record. Who would ever have thought that something so modern, new, and efficient would send us back in time? All of this available content allows us to experience new things and diversify ourselves. With such an ease of exposure, the Internet can allow us all to connect and share in a way never known before.