You create revenue sharing schemes, people will expect to be paid?

This essay will look at the rise and possible effects of revenue-sharing schemes for user generated content, in which people who makes contributions to a website (whether its an online post, a video, music, product review, etc.) receive a share of the advertisement revenues. In studying the anarchic production of software and the anarchic distribution of digital media, the hardest hurdle in my acceptance of Moglen’s arguments has centered around people’s willingness to contribute; whether contribution is developing open source software, providing material on a wiki or blog, or voluntarily donating money to an artist – paying $8 when you are only required to pay $4. However, it seems empirically evident that people always don’t always act as the profit maximizing “economic man”, and that the free-rider problem hasn’t stymied the development of digital anarchic production and distribution. That being said, the rise of various revenue-sharing schemes for user generated content raises the question whether the anarchic production of online content will begin to be dictated by more traditional economic incentives. If revenue-sharing schemes multiply, in which non-professional users are paid for their collaboration, regardless of how small, will monetary incentives become required to induce online collaboration? If so, how will this effect the quality of the online collaborate process? Though the source and motive of creative activity continues to be multi-faceted - for “money, love, reputation”, I wonder if money will continue to dominate.

The Rise of Revenue Sharing for User Generated Content

Within the continued struggle over the market for eyeballs, websites have begun to create revenue-sharing schemes to induce people to post the most eyeball attracting content on their sites and thus increase their advertising revenue streams. All forms of media have begun to experiment with this trend: blogs (and user’s comments) , social networking , journalism , photography , user created videos , product reviews , essays and articles , surveys and polls, and many others. For proof that this trend isn’t solely restricted to fringe providers of digital media, more established news sources like the BBC have begun to adopt this model , and You-Tube is also considering this approach . These schemes have been further facilitated by Google Ad-sense, in which users can create an account with Google, receive an ID number, and post this number along with any contributed content on participating websites and get a percentage of the Google Ad revenues. All proceeds are reliably distributed through Paypal . [FN1]

While on its face, revenue sharing doesn’t seem to affect the market for eyeballs as it currently stands, it could have impact on collaborative websites. A revenue sharing site for discrete, self-produced pieces of media like music, videos, essays and photography appears to be no different then someone producing their own websites with advertisements. Although the sites may provide the benefit of centralization, one would expect the websites that use these schemes would eventually become obsolete as it becomes easier (or just more common) for people to distribute their work online by themselves, and capture 100% of the revenue. However, where this type of payment for contribution could be important is for collaborative websites such as wikis, social networking sites, and discussion boards - where a single person’s contributions (ie comments to a blog, correcting the work on a wikipedia article), could carry with it the expectation of payment. Taken to an extreme, one could imagine an online environment in which users expect some amount of remuneration for every online post, review, and comment, as the market for eyeballs is seized by the very eyeballs that comprise it. While Wikipedia can currently operate based on voluntary contributions, could it be crowded out by a competing website that pays its contributors (derived from either higher collection of voluntary financial contributions or ad revenue) for the same actions? If I could write an insightful comment to a news article that keeps the reader on the page for an extra 30 seconds, and they are willing to pay me for it, would I still be willing to comment for free on another site? While it may be unlikely that this type of expectation would take hold throughout the production of all online media, the rise of revenue-sharing schemes indicatse that this possibly shouldn’t be entirely discounted either.

Money Corrupts Everything?

The question then becomes, how will the production of user generated content, especially in a collaborative process, be affected by monetary incentives? Youtube’s founder, Chad Hurley, offered his less than sincere reticence over revenue sharing:

We didn’t want to build a system that was motivated by monetary reward. We wanted to really build a true community around video. When you start out with giving money to people from day one, the people you do attract will just switch to the next provider who’s paying more. We’re at a scale now that we feel we can do that and still have a true community around video.

Ignoring Hurley’s profit-motivated desire not to pay contributors, he may have a point. There are two apparent concerns that financial incentives could introduce upon digital media production:[FN2] 1) The possibility that profit motivated content could crowd out production motivated by creativity (assuming the former is inferior to the latter). 2) There is the concern that online communities could be stymied by the knowledge users’ participation is disingenuous and at least partially motivated for profit. In 1970, Richard Titmuss theorized that offering compensation for blood donations would crowd out voluntary donations [FN3] , and one must wonder how this would be applied to contributions to collaborative digital media production. One could easily imagine people fashioning their online profiles, comments, online discussions and other collaborative projects to be oriented towards Google keyword searches, in order to provide more advertisement revenue. As for paid social networking sites, one can easily imagine the effects monetary incentives could have on the number of Facebook friends people acquired, and the authenticity of the social relationships created in such forums. On the other hand, its possible that these corruptions, inherent in financially motivated collaborative online projects, would make them far inferior to the uncompensated variety, and therefore inhibit and altogether preclude the prevalence of revenue-sharing schemes in these settings.

1 See survey of websites at: http://www.mundanetechnologies.com/goings-on/workshop/melbourne/papers/ChaiPotdarChang.pdf

2 http://www.virtualgoods.org/2007/16_VG07_Ahrens_Hess_Freese.pdf

3 http://www.ne.su.se/research/enter/pdf/johannesson.pdf

-- AdamCohen - 14 Nov 2008

You're writing in the Web. What sense does it make to put URLs in footnotes? Please take a look at Rick Schwartz' paper to get some tips on how to write hypertext.

Although you say you have accepted that there are some results that are evidence from the Free World on the subjects you are writing about, you don't actually consider those results, and so you resurrect the old story about "incentives" as though it were the common sense of the present, when the whole point of the discussion you are joining is that half the discussants think it's the dead common sense of the past.

Your particular inquiry centers on whether if some contributors to self-assembled works of creativity are paid, others will begin refusing to contribute. Free world thinking says the facts are already fully available, and unsurprisingly they fail to confirm the defective theory on which the question is constructed. If roughly 40% of the contributors to the 100 or so most commercially important free software programs are paid to contribute full time to the project on which they work, for example, that means 60% aren't. We see no significant difference between the efforts of those who are paid to work on free software by non-owning employers and those who are working on the same projects without being paid. The same phenomenon is noticeable throughout social life, if one looks for it.

This doesn't surprise the people who don't think the "incentives" story was ever true in the first place. In their view, you were looking for evidence to test a proposition that had nothing but fiction to recommend it from the beginning. Legal alchemy, or in other more familiar words, transcendental nonsense. But you don't actually engage with the position you are supposedly answering. The "heretic" position now proving out asserts that "incentives" thinking was an artifact of the narrow heuristic of the neo-classical economic viewpoint captive to a fallacy of mensuration, that what can be counted is what counts. The story that the root of creative and "innovative" human conduct was solely or even mostly in the domain of material inducements, rather than in the domain of culture--or the symbolic systems that give meaning to human life--was never believable, in this view. But the forms of human social action that falsified it did not contribute to the asset classes that were the economeretricians' only sources of data. Mutual aid flew beneath their radar, to put it as simply as possible.

Now, in the altered landscape of frictionless reciprocity, and given the power of networked communications to aggregate randomly-motivated and diversely-scaled individual creative and supportive acts into dominantly sized highly valuable capital assets without capital investments, the soi-disant scientists are confronting the illusory nature of their certainties.

That's the heretic position, which of course might well be wrong. But you can't discuss the ideas it presents by asking and answering questions that are biased entirely by the "common sense" assumptions that it attacks. Undoubtedly you would have something valuable to say in this conversation if you engaged it. But it is hard to contribute effectively to the conversation without acknowledging what half the participants actually say.

-- EbenMoglen - 16 Nov 2008