The Carr-Benkler wager and the peer-powered economy

When you look around at the web and the state of the online economy, does it look like it has been colonized by large corporations for their own purposes, or do you see a world that is powered primarily by peer-to-peer networks? That’s the question behind one of the longest-running wagers of the modern web era — a bet that author and web sceptic Nick Carr made with Harvard professor and networking theorist Yochai Benkler in 2006. Carr claims that he has won, since commercial interests rule the web, but Benkler maintains the web as we know it is clearly based on what he calls “commons-based peer production.” So who is right?

The wager got started after Carr wrote a blog post criticizing Benkler’s book The Wealth of Networks, which he called a “techno-anarcho-utopian magnum opus.” Benkler argued that networks like the web were allowing individuals to come together for various purposes that had economic value — including content creation — without the requirement for traditional pricing systems or managerial structures. In other words, Benkler said there were would be more and more entities involved in some form of economic production based on peer relationships rather than corporate structures.

Carr — whose latest book, The Shallows, argues that the internet is changing our brains for the worse — maintained that the only reason social content-sharing networks such as Digg existed outside of the normal economic system (in other words, were powered by volunteers) was that a market hadn’t developed for such goods yet. Once that happened, Carr argued, the usual pressures of a capitalistic structure would assert themselves and profit-oriented or professional players would take over.

Carr says the web is mostly run by corporate interests

Nicholas Carr

The wager with Benkler, which had no monetary value, was set to expire in 2011. In a recent blog post, Carr argues that he has clearly won, since the majority of players in the media sphere in particular — such as YouTube, Hulu and Netflix — are professionally run and filled primarily with paid-for content (or at least that makes up the most valuable content, according to Carr), and so are music-based services such as Spotify or Pandora. And what about Facebook and Twitter, both of whom rely on massive amount sof free content created by unpaid volunteers? Carr effectively says that they don’t count:

[M]ost contributors are not getting paid for their activity, but many of the most popular tweeters and Facebook pages are motivated by commercial interests – entertainers and other celebrities promoting their (profit-making) careers, journalists contributing as an element of their (salary-paying) jobs, corporations using the networks as PR or marketing channels, etc.

One thing Carr doesn’t mention is that in the original wager, he predicted professional players like entrepreneur and then-Weblogs owner Jason Calacanis would swoop down on socially-driven networks like Digg and siphon off all the most popular content producers by paying them for their content. This, of course, didn’t happen (as Benkler points out). Digg tried to reinvent itself to please its financial backers and wound up destroying the very community that created the value it was trying to monetize, and as a result its more community-focused competitor Reddit wound up winning the battle.

Benkler says peer networks are the real power source

Yochai Benkler

Benkler, meanwhile, has responded to Carr in his own blog post, arguing that he has clearly won the wager, and marshalling a substantial number of examples — far more than his opponent. If you look at content sharing and discovery, he says, it’s obvious that services like Twitter, Facebook, Reddit and Tumblr are dominant, and all rely on “commons-based peer production” for their value. Similarly, he says, in the world of photos (Flickr, Google Images) and video (YouTube, Vimeo) and travel and restaurant reviews (TripAdvisor, Yelp), peer-to-peer is much more commonplace than a corporate service based on paid-for content.

I think Benkler is also right when he singles out Kickstarter as a growing force in the digital economy — and one that supports his argument. As he puts it:

[I]n 2006, would you predict that artists would get funded by people ponying up real money without expecting to make big bucks in return because of social motivations; or would you predict that the industry would find ways of monetizing it all and re-asserting control over independent artists? The former is where I was standing.

In the end, I don’t think there’s any contest here: Benkler has clearly won. While there are large corporate entities with profit-oriented motives involved in the web, a group that includes Facebook and Twitter, the bulk of the value that is produced in those networks and services comes from the free behavior of crowds of users. Yes, all of the companies involved in those networks and services are trying hard to monetize that value, but it doesn’t come from charging them directly — and very little of what is produced comes in return for a salary, which was a key part of Carr’s argument.

You could argue that relying on networks such as Facebook and Twitter (or Google, for that matter) has a downside, since they are corporations with interests of their own, and they have a significant amount of control over what happens to the freely-produced content generated by their users. But the fact that those users produce that value of their own free will — and that this makes up the majority of the web’s value — is not really in doubt. Time to admit that you lost, Nick.

Post and thumbnail images courtesy of Flickr user Images of Money and Wikimedia Commons

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