Tag: economy

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Economies

3 Drawbacks of Reputation as Currency

Three facesPhoto: Ygor Oliveira

We talked about how reputation as currency on the web has the potential to be quite powerful. But there are drawbacks to using reputation so fluently. Here are three:

1. You Can’t Have a Bad Day.
Our current economy uses money as a currency, which is great because you don’t need to know or trust me to exchange value. With money as a currency, it doesn’t matter if you’re in a good mood all the time or if you snap at the Home Depot cashier or not. It’s an impersonal exchange.

Reputation, on the other hand, doesn’t allow such flexibility. In fact, your reputation’s value is based solely on so-called “good” actions which are defined by a larger system’s expectations rather than what benefits your individual values or goals.

Reputation as the web’s currency (currently in use as the reviews you left on Amazon, your eBay seller ranking, your Klout score, etc.) sounds great until we realize it is a universal truth that you can’t have pleasure without pain.

People do have bad days (even on the Internet). More than that, people make mistakes and fail often. A system that ignores the very basis of how we learn and solely focuses on the positive is a difficult system to keep up with.

2. You Can Be Someone Different Entirely.
Which leads us to the next issue… reputation as currency forces everyone online to fit into a certain mold and exhibit certain behaviors until we have a web dripping in happiness. And a bunch of trolls. People can create a web presence that has nothing to do with their true selves. And on the flip side, they’re also forced to create anonymous profiles to express their real ideas.

Either way, people can create and manipulate who they are and their reputation easier than ever. That’s important because reputation is based on trust, and the more that we force people to be different than who they are, the more difficult it will be to rely on reputation as reasonable indicator of credibility.

3. You Have To Be Large and In Charge.
Trust development is being outstripped by technology. Whereas trust used to occur over a period of time as a result of working closely with another, now we feel like we can “trust” someone with a quick glance at their Google trail. And that’s a problem for the un-plugged.

“The people who have the highest reputation scores are usually the people who are the most public,” argues Paul Adams. Those who are willing to live their life more freely on the Internet are the reputation winners. No one is re-tweeting your stellar shoe recommendation to the stranger on the Metro. If you’re building relationships in real life or want to maintain some semblance of privacy, too bad.

Online reputation is inherently unbalanced toward the happy, fake and loud. It’s good enough for now, but if we want our social architecture to scale in any sort of useful or meaningful way, we need to re-program how reputation works on the web.

Categories
Economies

Browsing Toward a New Currency

Air on MacBookPhoto: kayakleader

This is a continuation of How the iPad is (Thankfully) Destroying Our Economy.

Historically, money wasn’t necessary. Within a community, barn raisings, shared child care, and borrowing tools all occured as part of the gift economy. You used trust, reputation, and identity as your currency and money was only used between communities that didn’t know each other.

(Money is a type of currency; it isn’t synonymous.)

This is essentially the same today.  My neighbor will give me his lawnmower or I can go buy one at Home Depot. In the transaction with my neighbor, we might say I got the lawnmower for free, but really I used our relationship as currency. In the transaction with Home Depot, I used money.

Money only exists because traditionally – and this is important – you haven’t been able to scale the gift economy. The bigger your neighborhood gets, the more difficult it is to know everyone. The more difficult it is to know, the more difficult it is to trust. As strangers, and without trust, we need a way to exchange value.

Whereas the gift economy might leave loose ends (relationships are messy, after all), an economy based on the exchange of money leaves no loose ends; it is something for something. Our current economy is built on that idea of quid pro quo, but the Internet came along and turned that on it’s head for a few reasons, some of which we’ve talked about:

1.  The Internet allows us to live by our screens, not among objects, decreasing materialism and increasing the value we put on knowledge and experiences.
2.  The decentralized web increases the viability of the peer-to-peer economy that doesn’t rely on or include large companies.
3.  The networked web is ruled by plentitude, not scarcity, which changes what we value, how we exchange value, and how we measure and acknowledge it.

In essence, the web allows our social architecture to scale. What that means is that for the first time ever, there is the potential for an economy that isn’t based on money. It means that currencies other than money – reputation, identity, data – can be used to exchange value on a peer-to-peer level and on a larger scale than ever before. And it means that we’re relying less and less on money as a currency (i.e., why we’re seeing our current economy collapse).

Take a moment to wrap your head around that; it’s exciting. Or possibly scary, depending on how you look at it.

“Trust networks are able to be tapped for recommendations and referrals, while predictive analysis algorhithms can suggest the kinds of people, products, services, or events that would resonate with our personalities or value set,” argues digital theorist Vanessa Miemis. “A new set of filtering tools are emerging that are shaping where we direct our attention and resources, namely intentions and actions… These contextual clues around data become currencies in themselves, as they give us more information in order to make a choice or decide who to trust.”

Soon, it won’t matter that I don’t know you. We will still be able to transact with each other – I’ll borrow a dress from you, or you’ll take a spin in my car – because our reputation, identity and data currency will travel with us. The goodwill you build on Twitter, or at your job as an insurance salesman, will inherently influence the transactions in your life.

Early efforts at the peer-to-peer web, eBay rankings or reviews on Etsy for instance, show a small piece of that reputation currency. You can also see some attempts at personalization on today’s web. But that’s really all only the beginning. Facebook, for instance, has the power to be the ultimate bank, building a new economy based on the identity information we feed into our profiles and the mass amount of data they’re collecting. Even better, if this type of data were open across the web and we could own it, these currencies could inform the foundational underpinning of our interactions. And then, well, I can’t even wrap my mind around those possibilities…

You can see why who has the most data, and who controls the data, is increasingly important then. Every byte is almost like a dime in this new economy we’re building on the web.

I’ll continue to dive deeper in this series on digital economies and currencies in future posts, including the drawbacks of reputation as currency, why these new currencies aren’t the same as Free, and the rocky transition time we have ahead of us in this half-changed world.

Categories
Economies

How the iPad is (Thankfully) Destroying Our Economy

iPad 2 - HomescreenPhoto: connorsmac

There are a cohort of people who are still buying McMansions in the suburbs; I see the photos on Facebook, “Our New Home!” revealing beige wall-to-wall carpeting (still mysteriously associated with upward mobility), reminiscent of the early 90s, chosen to soften the echoes of monstrously high ceilings usually reserved for public spaces. The outside of the home is similarly beige with french windows framed by a brick veneer and a peaked roof that inevitably evokes some strange sense of American pride and envy… for it does look nice if you’re just glancing by in a car.

But despite the constant commercial endorsement of this wearisome American Dream, such idyllic photos no longer sway the hearts or pocketbooks of the majority of young people who have made it clear they will not be the ones to save the housing market. Even the young billionaire Mark Zuckerburg rents, and in the city, not the suburbs.

It wasn’t too long ago that people flaunted materialism. “Goods [were] exclusive or status related rather than universal, private rather than public” reports economist Tyler Cowen. But whereas the automobile enabled freedom for previous generations, today’s generation use digital devices as a means for self expression. That has made possible an economy focused on knowledge and experiences, not consumer goods.

E-book author Ev Bogue took a photo of every single item he owns and encourages visitors to his site to “count, there aren’t many.” His belongings total a fundamental 32 things. Bogue is a proponent of augmented humanity, and encourages his readers to “cultivate presence at the intersection of life and Instagr.am,” a popular iPhone photo app.

“The incentive with these apps is to live a more extraordinary and present life,” Bogue argues. “If you aren’t living, there’s nothing much to Instagr.am, and thus people will forget about you. No one necessarily wants to see an Instagr.am of a desk. We know this, so I don’t often see photos of desks on Instagr.am.”

While Bogue may fall on the side of extreme in the experience economy for his privileged stylings, his penchant for walks in the forest over a new dining set is shared by his peers. We prefer to live by our screens, not among objects, and so the knowledge economy is just that – in our minds (and on our iPads) and not in the revenue-generating sector of the economy.“The funny thing is,” Cowen argues, “getting away from materialism on such a large scale – whatever the virtues of the switch – really, really hurts. It is the hurt that we in America are living right now.”

We assumed innovation would arrive the way it always has, but technology gave innovation new forms, and insistence on the-way-it-always-was kind of economy subsequently delivered the situation we’re in today: a growing income inequality, stagnant median income, and the financial crisis.

Cowen admits “you can be an optimist when it comes to our happiness and personal growth yet still be a pessimist when it comes to generating economic revenue or paying back our financial debts,” and “even if we can, at the personal level, manage to feel fulfilled under slower economic growth, it is not compatible with how modern politics [and economics] is structured, namely as a ravenous beast.”

Obviously Cowen knows something screwy is happening. But for all of Cowen’s awareness of trying to fit a square peg into a round hole, he never goes as far to eschew the current economic framework, a system simply not suited for a knowledge and experience-based economy.

That system is legacy-based, and its “operating system for money is obsolete,” argues media theorist Douglas Rushkoff. “It is optimized for a different era than the one we are living in today. It is incompatible with Web 2.0 and the Interneted world.”

The Internet has allowed an economy where money, the dependency and abstraction of which has caused the financial crisis, is not the singular centralized currency. On the decentralized web, reputation is a currency. Authority is another. Data, influence, badges, credits and identity are also currencies. There are several currencies on the free and open web in fact – none of which are widely recognized at J. Crew. Increasingly that’s because the point is not to exchange value for consumer goods, but for the stuff inside our screens.

I’ll take a deeper dive into the economy and currencies our digital lives are creating in part two of this post later this week.

Categories
Media

The Devolution of the Huffington Post, Forbes, and Hopefully Not The New York Times

With the arrival of the open web, it was okay not to pay writers. And when you didn’t pay writers, you needed more of them. As an editor, perhaps you invited writers to contribute that you wouldn’t normally to increase page views. You weren’t serving the reader, you were serving the advertiser. Soon you had the Huffington Post, which at one point was the darling of the free and open web, with nary a question on the model, because the content was good.

Inspired by its decentralized technology, the open web was supposed to shift the power from the corporation to the people. Many imagined a sort of utopian society that relied on abundance instead of the current economy’s premise of scarcity. And the web did fulfill the promise of abundance in the form of Free, but utopia would have to wait.

With distribution came dislocation, and companies were able to use the web to extract more and more value out of the people creating the value. The same industrial model worked on the networked net because technology still favors efficiency over say, any other human value.

As a result, the most popular articles on the Huffington Post today read more like TMZ or People magazine: “Awkward Wedding Photos: Who Knew That Tying The Knot Could Be This Hilarious?,” “Khloe Kardashian Talks Weight: ‘Love Handles’ And ‘Fat Days’,” “Courteney Cox on ‘Strictly Platonic’ Vacation With Co-Star Josh Hopkins,” “’Dancing With the Stars’ Recap: Week Two Elimination,” and “Woman Can’t Close Her Eyes After Bungled Plastic Surgery.”

Not to mention, the advertisements on Huffington Post are indistinguishable from the content, and both are seemingly designed that way: “The Original Crime Family – The Borgias Premiere Sunday 9p e/p on Showtime.”

Whatever Arianna Huffington banked from that list of articles (ads?) allowed her the audacity to poke fun of the New York Times paid subscription model this past April Fools’ Day. To be fair, the post pokes fun at the New York Times and the Huffington Post simultaneously, declaring in jest that the Huffington Post’s move to digital subscriptions will be “one that will strengthen our ability to provide high-quality journalism to readers around the world.” (We’re all in on the joke; Huffington hasn’t valued high-quality journalism for a great while.) Later, Huffington facetiously describes HuffPo’s signature offering as an adorable kitten slideshow. Which isn’t far from the truth. In fact, a kitten slideshow might be an improvement on their most popular offerings.

Nevertheless, other sites have followed suit (if anything, the web excels at copying). Almost a year ago, Forbes.com announced that it would open the door “to 1000s of unpaid contributors and [rather than commissioning quality in-house journalism] ‘Forbes editors will increasingly become curators of talent,’” reported Tech Crunch writer Paul Carr.

Carr predicted that the Forbes decision would result in the magazine suffering the “Death of a Thousand Hacks,” which has two meanings: “The first, much like the death of a thousand cuts, is that they’re chipping away at everything they used to represent by replacing real reporting with SEO-driven bullshit and an army of unpaid amateur hack bloggers. The second meaning is that those thousand hacks are going to kill their brand.”

Since then, hundreds of bloggers received invitations to join Forbes.com including myself. The email I received implored me to “Just continue to do what you do best–write. I am not looking for exclusive content (although it’s most welcome), request copyright or ask that you blog any more than you already do. Forbes does not wish to control, alter or affect your blog in any way,” the editor told me. “You can publish simultaneously on your blog and your personal Forbes.com blog… As an uncompensated contributor, your posts will be available to millions of dedicated Forbes readers.”

To be clear, the editor is only requesting permission to copy my work onto the open web in exchange for increased exposure instead of compensation. I wouldn’t even have to be held accountable for blogging regularly. When I inquired about the possibility of a consistent, paid position, the editor replied: “Can I *promise* regular, consistent writing position? That’s something you can do with your blog. Which brings us to your next question: Can I *promise* paid writing at a later date? I can say it is a possibility.”

Her response seemed fair and promising. However, when I asked her to point me to any examples of any bloggers on Forbes that started uncompensated and were now paid, the editor came up short. “This is such a new platform that I honestly can’t,” she replied. Instead, the editor supplied me with the contact information of a writer she had to cut when she lost her freelance budget, but was now excited to bring back with “some compensation.”

I expect this would be no surprise to Carr if he heard. He argued Forbes would do “what the Huffington Post does: pay a meager stipend to a tiny percentage top traffic drivers to save face [indeed, Forbes admits this proudly], and then expect the rest to work ‘for the exposure’. As the old saying goes, people die from exposure – but in this case, it might just be the whole publication that’s not long for this world.”

Companies of formerly strong reputation take on the content farm model, and then editors have the job of throwing spaghetti on the cupboard to see what sticks. Forbes calls this curation, but I sensed a distinct desperation from the editor who emailed.

The value shift from core product to peripheral offerings on the free web means companies extract enormous amounts of value from writers who rely on the promise of monetizing their exposure, in the form of, say, speaking engagements or TV appearances, instead of their work.

“Of course, the people hiring us to do those appearances believe they should get us for free as well, because our live performances will help publicize our books and movies. And so it goes, all the while being characterized as the new openness of a digital society, when in fact we are less open to one another than we are to exploitation from the usual suspects at the top of the traditional food chain,” argues digital theorist Douglas Rushkoff.

“The very same kinds of companies are making the same money off text, music, and movies—simply by different means,” argues Rushkoff. “Value is still being extracted from everyone who creates content that ends up freely viewable online. It’s simply not being passed down anymore.” Writers aren’t being paid, but advertisers are.

The New York Times has thus refused such a model in the interest of creating value, not extracting it. Good journalism, after all, is expensive. It takes time, money, bodies, effort and significant resources. While it can be replicated by machine, it can’t originate from one.

The recent introduction of the New York Times pay wall however, did not inspire the valuation of content from readers, but a further alignment with corporatism.

“When we insist on consuming it for free, we are pushing them toward something much closer to the broadcast television model, where ads fund everything,” argues Rushokoff. “We already know what that does for the quality of news and entertainment. Yet this is precisely the model that the ad-based hosts and search engines are pushing for. By encouraging us to devalue and deprofessionalize our work, these companies guarantee a mediaspace where only they get paid. They devalue the potential of the network itself to create value in new ways.”

So eager are we to let advertising dictate the availability of quality content that the free and open web has only given us an abundance of copies. The aggregation of creative material and original thought has declined.  No longer can we rely on corporate interests to create, sustain, build and evolve our platforms in a post-scarcity society. The solution, simply, is to value content, to respect the labor of individuals.

Lest you think such an approach is pie-in-the-sky, turn your attention towards The New Yorker, which “puts investigations of national security on the cover instead of celebs, yet it has the highest subscription renewal rate of any magazine in the country. A privately owned company, it is thought to be turning a profit of around $10m. Editorial decisions there are never made by focus groups,” reports Matt of 37signals.

If we want anything more than the most mediocre culture to survive, inform our consciousness and influence our future, writers deserve to get paid.