“Strange things happen when a gift economy and a market economy collide”

(Peter Lyman, Political Scientist, as quoted in The Social Life of Information, published 2002)

There’s been a great debate over Jason Calacanis’s offer to pay Digg’s top contributors if they defect over to Netscape to build a similar service in return for payment. Kevin Rose from Digg responded and Jason argued back. Nicholas Carr wrote about it, siding with the monetary outcome. Yochai Benkler provides a balanced response. When describing why introducing monetary reward breaks down peer-produced systems, Yochai makes the comment:

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

The challenge facing sites such as Digg is that the relationship is constantly in danger of being altered in just that way. If the owners decide to sell up and cash in on the site’s success, all participants become monetary “suckers”. It’s unlikely to be an issue when the site’s value is generated by a service that benefits all participants, such as Flickr (everyone gains from being able to store and share photos), Deli.cio.us (ditto for storing and sharing bookmarks), and YouTube (ditto for storing and sharing video). But when value is dependent on altruistic reasons, the relationship is subtly different. What do participants gain for promoting links on Digg? The system works because it is operating as a gift economy, but it is being run by a commercial enterprise in a market economy. The owners could convert the gift into money at any time – winner takes all, participants receive nothing. I think that is the nerve that Jason Calacanis has touched.


Filed on site under: Internet Economics

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