The Wealth of Networks

Yochai Benkler, professor of law at Yale, has given an interview for OpenBusiness. The interview explains some of his thoughts he has written about in his new book “The Wealth of Networks”. Most appropriately the book is published under a Creative Commons license.
From GNU-Linux to Wikipedia to collaborative platforms for the creation and distribution of music, text, and moving image, creativity is flourishing in online networks. In the sector of information, knowledge, and cultural production, the networked environment has brought together the imagination and productive powers of individuals to work on new and unique outputs. But according to Yochai Benkler traditional economics shaped by industrial norms has failed to explain the emerging pattern of open production. Against this context he introduces the concept of commons based peer production driven by non-monetary and non-propietary incentives. OpenBusiess of course had to ask where the money in this context is.

1. In your book you describe an emerging mode of production, which you call “commons-based peer production”. What does this mean? Can you give examples?

By “commons-based peer production” I mean any one of a wide range of collaborative efforts we are seeing emerging on the Net in which a group of people engages in a cooperative production enterprise that effectively produces information goods without price signals or managerial commands. The most widely known example is free or open source software, such as the GNU/Linux operating system or the Apache webserver. The phenomenon is by no means limited to software. Wikipedia is probably the most famous example outside of software, but the phenomenon includes things like the Open Directory Project, a comprehensive human-edited directory of the Web, Slashdot, perhaps the most important technology newsletter, and many of the major blogs. Some commons-based peer production efforts are less self-conscious on the part of the users, and emerge more as a function of distributed coordinate behavior, like del.icio.us or Flickr. The critical defining feature of these “enterprises” is that they rely primarily on social information flows, motivations, and relations to organize the group. Individuals self-identify, mostly, for tasks, and through a variety of peer-review mechanisms contributions get recognized by the group and incorporated into what emerges as the collaborative output.

2. You also mention “non-monetary” incentives. What are those?

There is something of a joke in the very posing of the question on a business site. Nonmonetary motivations are what make you stop on the street for a moment to answer a stranger who asks you for the time or directions; what makes you travel five hundred miles to be with you family for the holidays, and what makes you tell a friend a joke, or listen to it. They are also the motivations that lead some of the world’s leading minds to work for what, by comparison to other lines of business in which they could succeed, is a pittance–to satisfy their curiosity, for fame, or because of the sheer fun.
These are motivations on which all of us act many times a day, but which have been shunted to the periphery of the economy throughout much of the industrial period. What we see now, as the two core inputs into information production have become widely distributed in the population (that is, computation and communications capacity, on the one hand, and human creativity, experience, and wisdom, on the other hand), these same motivations have moved from the domain of the social and personal to occupy a larger role smack in the middle of the most advanced economies in the world today.

3. There are some heavily distributed collaborative projects, relying on thousands of volunteers, like the Wikipedia; can they be sustained?

There is no reason to think that these projects cannot be sustained. There are essentially two main concerns people suggest for skepticism: (1) where will the motivations come from over the long haul, and why won’t human selfishness ultimately rend these projects apart? (2) Why won’t these degrade into a cacophonous medley as more people join in who are less competent or engaged than original contributors? The answer to the first objection is that critical to the success of these projects is their ability to be broken down into discrete modules, capable of independent completion in relatively fine-grained increments. Because of this, people can contribute a little or a lot, and given large-scale connectivity as we have today, and diverse human motivations, it turns out that some combination of true believers, people who play around, occasional contributors, and people paid to participate at the interface of peer production and markets sustains these projects. What keeps them together differs in different contexts, ranging from technological platforms that serve what Clay Shirky described as social software, restraining anti-social behavior and allow communities to self-police, through social norms, in the case of free and open source software licensing techniques, in particular copyleft like the GPL. The answer to the second question is that quality control and continuous self-correction is itself susceptible to peer production, and we see most of the successful projects implementing various systems of collaborative peer review of the contributions, as well as collaborative production of the ultimate information good itself.

4. OpenBusiness.cc looks into how some of these “open projects” can be financially sustained. Did you come across, in your research, any interesting, new business strategies?

I think there’s a decent amount of work out there already about the sustainable business models around peer production, primarily in the context of free and open source software. While I think the interface with the market is an important question, I don’t see exploring those mechanisms as the most central to my work. Nonetheless, the one model that seems to be overlooked in the FOSS literature is the low-cost, low returns, high value model–like Criagslist. That is to say, a product of immense value gets produced largely through a minimally-built platform and enormous contributions from the community, which then is able to generate enough attention that peeling off a small segment of that value through sales to market actors is enough to sustain the low costs. Another interesting model to watch is MySQL which, like craigslist, has dual-tiered pricing for large commercial and other users, and which also seems to be implementing a coop-like model of incorporating some of the most highly respected contributors as members of the professional group. But it’s important to underscore that my own focus is on why these systems can survive, thrive and be efficient and innovative as social phenomena.

5. Can copyright block these open forms of collaboration – how?

Certainly. Copyright blocks access to the inputs into information production that are copyrighted. Imagine for a moment that tomorrow we decided that, because the time horizon of investors investing in movies was, say, 18 months to three years, the term of copyright in music should be no more than, say, twice that, and we extinguished copyright in movies after their sixth year.
I predict that if that were to happen, within no time at all an entire culture of rip, mix burn of movies, mash ups, and creative play, and for it a much larger industry in platforms for making movies and rating and exchanging them would grow up. None of this is possible now with all but the most ancient of movies. OK, so this is a pipedream and a speculation, but it gives you a sense of the possibilities we cannot even seriously dream of because of copyright. Annotated books, illustrated editions, updated guide books, so many other things that are much easier to imagine, once one looks at wikipedia or sites like tripadvisor provide a much more immediate sense of how much is lost because of copyright. Now, that doesn’t mean that we should get rid of all of copyright immediately. It is merely to offer an example of how copyright dampens the possibilities of social production, because it increases the costs, and often simply blocks completely, access to the raw material of any information production activity–existing information. More threatening still is not copyright proper, but the steady assault that the copyright industries have been mounting on the free information ecology through statues like the digital Millennium Copyright Act and the efforts to pass a regulatory requirement that all equipment capable of rendering digital media be designed so that it will behave predictably in the hands of its user, and that users will not be able to do things–like implement new pieces of software or copy files–that might threaten the tightly controlled distribution pipes of copyrighted material. These acts threaten the very foundations of the networked information ecology, because they seek to change the basic instrumentalities of social production and the free and easy flow of information across the network that makes it possible.

6. There is a tricky economic question when it comes to free (as in beer) distribution of media – books, text, music, film – how can, in this environment, artists be remunerated?

I think here the answer is different for different forms of expression. In general, thinking at the broad abstract level of “copyright” and “information” leads to excessive concern with copyright. For music, for example, it seems that the costs of production and distribution have declined enough that bands can record and distribute freely on the Net, and the long term model is one where musicians continue to make most of their revenue from performances, but they simply don’t need the big recording industry deal to cut into the revenue of their recorded music sales. It seems to be turning out that at moderate prices and when the recipients are the musicians not the labels, fans are willing to pay for recorded music as well. Much of text publication has long been outside the needs of copyright: -newspapers and magazines have long been based on advertising and attention brokerage, not on copyright. Books are different, and the current solution–which is that people habits of reading books are still allowing free distribution online to be couple with sales may not be long lived. Films too are a different story, because of the likely continuing high costs. Still, their control over the social experience good–going out to the movies–provides an important source of stable revenues, one that used to be until 20 years ago the sole source of Hollywood revenue–that is, throughout most of its period. We will also, however, see a change in taste, so that much more film will be done on a small scale, as well as being itself social-motivation based on commons-based. And, as we have seen from TV, the attention brokerage/advertising model is not likely to go anywhere as a mode of funding film.

6 Responses to “The Wealth of Networks”

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  1. [...] And that new paradigm is the peer-to-peer world. A relatively new book, “The Wealth of Networks,” takes Metcalfe’s law seriously, and explains the point that many others have been making for a while. From an interview at Open Business: By “commons-based peer production” I mean any one of a wide range of collaborative efforts we are seeing emerging on the Net in which a group of people engages in a cooperative production enterprise that effectively produces information goods without price signals or managerial commands. [...]

  2. Administrator says:

    Thanks for this. The BBC’s move is not surprising, but will they be able to re-create a structure like MySpace? I doubt it: they have grown up in a culture of “clearance and permission seeking” for everything. They have never dealt with self-policing communities, which are needed to sustain something like Wikipedia.

  3. [...] OpenBusiness » Blog Archive » The Wealth of Networks Interview with Benkler regarding his new book (tags: business economics social) [...]

  4. [...] Charlie Leadbetter will start blogging on OpenBusiness today. He is a prolific writer and researcher has been working on a new book to be published in 2007: “We-think”. The former FT editor was one of the first to write about the rise of the networked economy. In the wake of p2p economics (Benkler), wisdom of the crowds (Surowieki) and democratizing innovation (Hippel) he not only adds a new inspiring perspective, but also in the spirit of the times has opened his book to the innovation of the readers, which is available as a Wiki. [...]

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  6. Monique twin says:

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