Law in the Internet Society

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

The is a second draft of my essay that has undergone significant revisions in response to Professor Moglen’s comments. While I still believe there will be a rise of revenue-sharing schemes as middle-men attempt to attract a differentiated product through financial incentives, this revenue sharing is just another incarnation of the business model of the movie studios and the music industry, and will likely fail for the same reasons.

It does not take much to accept the argument that people naturally create and contribute for creation’s sake, and are not simply slaves to economic incentives. This innate desire to create is coupled a desire to share, a desire for recognition and attribution. Now this ability to share one’s production involves a choice. This choice centers on how to distribute one’s creations, which website to host one’s material, which social network to engage in, etc. With the rise of revenue sharing user generated content, I wonder if these online forums and communities will become differentiated. It’s pretty clear that people aren’t paying for non-functional goods anymore (at least not forcibly paying), and if they still are, their children certainly won’t. So the question becomes whether revenue-sharing sites will be able to co-exist with free outlets for non-functional goods, and whether there will be a perceptible difference in quality (at least as measured by hits/advertisement revenue).

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 .

From what we have studied in class, it seems that this approach is a non-starter. Previously, the large studios had a monopoly of distribution over cultural production in our society, which lead to the extraction of huge rents from the artists themselves and led to the output of products aimed at mass distribution rather than artistic quality. It’s empirically evident that the profit-driven commoditized production of non-functional goods led to the production of mostly bad music and bad movies. While it may be difficult, if not impossible, to judge relative quality of non-functional goods, I think its fair to say that movies and music developed under this model have at least become formulaic, based on whatever sold well previously, and that creativity took a backseat in the artistic process.

The rise of revenue sharing sites is an attempt of no-value adding middle men to extract these same rents from artists in the new user generated content environment. The difference in this circumstance is that the profits derived would come solely from advertisement revenues, rather than sale of tangible pieces of media. It seems that that this system could be expanded to profiting from more diverse types of cultural production – such as collaborative websites like 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 an expectation of payment.

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. As Professor Moglen notes below, “given the power of networked communications to aggregate randomly-motivated and diversely-scaled individual creative and supportive acts”, it doesn’t seem like bribing people to produce on your website it going to work. For one thing, as we’ve discussed in class, people will begin to defeat internet advertisements altogether with easy adoption of currently available Firefox add-ons. But even assuming that advertisers figure out ways around this, ultimately any material produced on these revenue-sharing sites is going to be sub-standard.

There are two apparent concerns that financial incentives could introduce upon digital media production: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, and one must wonder how this would be applied to contributions to collaborative digital media production. 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.

It seems that the production of online collaboration, solely for money, is going to bear the same qualities as today's Hollywood movies and pop music,for the reasons mentioned above. When payment is based upon the number of internet hits one can derive, inevitably the product will devolve in quality into the current form of pop that we are inundated with today.

Cultural production that is supported by voluntary donations, as described by in class, or through some of the other methods discussed on this wiki (voluntary contribution, fan groups, merchandise sale, or government subsidy)could lead to the production of better music. When the goal isn’t to get the most internet hits by appealing to the lowest common denominator, it makes sense. Maybe it’s self evident, but the ability to play to one’s peers/core audience in the online collaborative environment seems like a better recipe for production versus revenue sharing. If this is the case, then we’ll be lucky when these revenue sharing schemes eventually die off.

-- 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

I have always been a little skeptical of revenue sharing in collaborative sites, and am following the life of which adopted the approach in either 2005 or 2006 alongside the more recent emergence of sites like Spot.US. Like you, I'm skeptical of Gather's model yet the site still exists. Perhaps it is just a case that the Gatherers haven't yet discovered the Spot.US model? Possibly the adoption of the voluntary contributions model hasn't become quite as frictionless as it might well become?

It is also interesting to think how both models play out. In raising capital for the Gather model you are raising money against the idea that advertising works - a simple principle - with which many funders are familiar. Moreover, income rises or falls with costs and that there is a sort of cynical momentum that could be generated by sites that pay for content as writers people may bring their friends with them to make money. (Think Amway online!) The voluntary contribution model is counter intuitive - voluntary, donations, (You mean some months we might get nothing to cover overhead? Are you crazy?) I share this as it suggests to me the death of revenue sharing models may take longer than would be expected at first glance.

-- TomGlaisyer - 23 Dec 2008



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r6 - 12 Jan 2009 - 22:32:55 - IanSullivan
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