Purpose-driven media, quarternary economics, asymmetric competition

This entry is inspired by a presentation in Standblog on purpose-driven software projects, which in turn refers to Tim O’Reilly’s take on purpose-driven media, and the notion of asymmetric competition from Frank Hecker. The latter is a very interesting description of the nature of competition between a for-profit player Microsoft and a purpose-driven player, the Mozilla Foundation. In summary: they’re is a new kind of player, for whom profit is secondary to purpose, and when a traditional for-profit company has to compete with them, this competition is asymmetric, since the different players follow different rules.
These are important new concepts that can be put in a broader context of a shift to quarternary economics, of which peer production is a part. I strongly recommend you read the previous 3 contributions in full as well. Here’s my own take on it.
In a previous entry, I have presented the evolutionary account of economic life, as presented by Wim Nusselder, which describes the current emergence of a quarternary economics, based less on the quest for profit than on ideological leadership. The following quote summarizes this view:

The quarternary economy is based on “ideological leaders” which can frame common goals and common belonging and is based on membership and contribution. Contributing to the best of one’s ability to common goals is normative and the key question becomes: to follow an existing group or to create one’s own, i.e. to convince or be convinced. Contributions to many groups can overlap making the decision over wants a more autonomous process. Power is dependent on the power to convince, on influence, and varies depending on one’s relative place in the different groups.

To fully understand the innovative nature of this process, the encyclopedic entry on quarternary economics explains the logic behind the three previous modes, with the tertiary model being the one based on profit alone.

This thesis is echoed in a recent article in the New York Times, on purpose-driven media, from which we are quoting as well:

“These are new-media ventures that leave the competition scratching their heads because they don’t really aim to compete in the first place; their creators are merely taking advantage of the economics of the online medium to do something that they feel good about. They would certainly like to cover their costs and maybe make a buck or two, but really, they’re not in it for the money. By purely commercial measures, they are illogical. If your name were, say, Rupert or Sumner, they would represent the kind of terror that might keep you up at night: death by smiley face.

Probably the best-known practitioner is Craigslist.org, the online listing site. Although it is routinely described as a competitor with â€” and the bane of â€” newspaper classified ads, the site is mostly a free listings service that acts as a community resource. When the company contemplates imposing fees for using its site in a particular city, as it has recently in New York, it does so cautiously and thoughtfully, as a means to weed out real estate brokers who are abusing the site by posting their ads over and over.

The twist about Craigslist and its ilk is that their egalitarianism could make them very valuable someday â€” although Craigslist’s founder, Craig Newmark, has proclaimed no interest in cashing in. EBay, no doubt sensing the commercial potential, bought a 25 percent stake from a former employee last year. Other examples are the “for sale by owner” Web sites that have cropped up across the country, in which people can sell their homes at a cost that is a small fraction of the usual broker’s fee.”

In my opinion however, the distinction between for-profit companies and purpose-driven entrprises paints to broad a brush, and I would like to complicate matters a little. This is necessary to avoid being naive. In other words: 1) yes there are profit-driven companies who do not really care what they make, profit is primary; 2) there are many hybrid entreprises, which combine purpose and profit: these are according to me akin to the netarchical capitalists, who combine support of participatory practices, with the making of a profit out of this enablement. These companies are part dolphin part shark. They remain dolphin through the pressure of the wisdom of the crowds that they enable, but their shark nature is always waiting to express itself; 3) peer production entreprises however, have purpose as a primary motivation, and money is only a means towards that end. Within this group however, there will be those where the income stream will not be clearly distributed to all contributors; and others, who practice better governance and revenue-sharing methods which are more equitable. To continue the metaphor, only the latter are true dolphins, having shed the last vestiges of the shark nature, while bad governance may endanger equity and re-ignite the shark within.

Reports however which gloss over this issue tend to represent an idealisation of reality, they are part of the new netarchical ideology itself. They say yes to purpose and participation, but in the end can only see it in the context of a capitalist market.

1 Comment

Poor Richard June 23, 2012 at 11:03 am

Michel writes: In my opinion however, the distinction between for-profit companies and purpose-driven entrprises paints to broad a brush, and I would like to complicate matters a little. This is necessary to avoid being naive. In other words: 1) yes there are profit-driven companies who do not really care what they make, profit is primary; 2) there are many hybrid entreprises, which combine purpose and profit: these are according to me akin to the netarchical capitalists, who combine support of participatory practices, with the making of a profit out of this enablement. These companies are part dolphin part shark. They remain dolphin through the pressure of the wisdom of the crowds that they enable, but their shark nature is always waiting to express itself; 3) peer production entreprises however, have purpose as a primary motivation, and money is only a means towards that end. Within this group however, there will be those where the income stream will not be clearly distributed to all contributors; and others, who practice better governance and revenue-sharing methods which are more equitable. To continue the metaphor, only the latter are true dolphins, having shed the last vestiges of the shark nature, while bad governance may endanger equity and re-ignite the shark within.

I generally agree, but I’m concerned that we are insufficiently wary of what may become a new form of p2p or digital feudalism. Non-monetary motivation is all well and good, but we all have to make a living. Can p2p extend into the kinds of production by which participants expect to make a living? I hope so. Part of my shark nature is the need to eat.

This is why I see a continued need for the kind of conditional patents and copyrights that demand proportional royalties on commercial revenues — in other words largely traditional forms — with the exceptions that noncommercial, non-profit use is free and encouraged rather than discouraged; and that monopoly durations are short enough to avoid inhibiting derivative innovation.

1 Comment →

Poor Richard June 23, 2012 at 11:03 am
Michel writes: In my opinion however, the distinction between for-profit companies and purpose-driven entrprises paints to broad a brush, and I would like to complicate matters a little. This is necessary to avoid being naive. In other words: 1) yes there are profit-driven companies who do not really care what they make, profit is primary; 2) there are many hybrid entreprises, which combine purpose and profit: these are according to me akin to the netarchical capitalists, who combine support of participatory practices, with the making of a profit out of this enablement. These companies are part dolphin part shark. They remain dolphin through the pressure of the wisdom of the crowds that they enable, but their shark nature is always waiting to express itself; 3) peer production entreprises however, have purpose as a primary motivation, and money is only a means towards that end. Within this group however, there will be those where the income stream will not be clearly distributed to all contributors; and others, who practice better governance and revenue-sharing methods which are more equitable. To continue the metaphor, only the latter are true dolphins, having shed the last vestiges of the shark nature, while bad governance may endanger equity and re-ignite the shark within.
I generally agree, but I’m concerned that we are insufficiently wary of what may become a new form of p2p or digital feudalism. Non-monetary motivation is all well and good, but we all have to make a living. Can p2p extend into the kinds of production by which participants expect to make a living? I hope so. Part of my shark nature is the need to eat.
This is why I see a continued need for the kind of conditional patents and copyrights that demand proportional royalties on commercial revenues — in other words largely traditional forms — with the exceptions that noncommercial, non-profit use is free and encouraged rather than discouraged; and that monopoly durations are short enough to avoid inhibiting derivative innovation.
PR