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Sorry for the delay – I meant to post this on Monday but got caught up and totally slipped my mind. Anyway, here’s the last part of the executive summary. You can read Par1 1 and Part 2 and Part 2 in this blog and download the full paper here.

I’m hoping to get up a full research page in the coming weeks, with all papers, short pieces, and presentations I’ve churned out over the last couple of years, so look for that soonish.

Anyway:

Conclusions: Locating Value and Courting Communities

Final Principles:

• Within market exchanges, things enter the transaction with a set value. In non-market exchanges, however, the value comes out of the transaction. So the value is actually created through. and comes out of, the context of the exchange, rather than being set before the good enters it.

• The difference, then, between gift and commodity exchange is not that one is socially regulated while the other is economically or rationally regulated, but rather the speci?c rules and regulations that come into play. The differences are in how these regulations are deployed, and the relative role of the context and terms of the exchange itself rather than the contents of the exchange.

• The networked and visible participatory practices online requires media producers recognize both market and non-market systems of exchange and the types of value and worth produced in order to engage audiences online.

• When we seek to build businesses around users generated content, or when we’re trying to engage in social media campaigns, or when we see violations of IP, all activities that are now becoming common in any media brand or property. We can’t simply take pieces of different systems of value and cobble them together and hope for the best, nor can we simply take one system and place it within the architecture of another.

• It does a potential disservice to media properties to simply apply the regulations of control from market systems onto non-market ones, such as in the case of DMCA takedown sweeps that remove content which not only fit within the boundaries of fair-use, but also stop audience activities that potentially generate more marketing value than cause damage.

• Ultimately, the essence to being able to court a community and build an enduring relationship with your brand requires an understanding what kind of system your fans and consumers think they’re in. That is to say, in trying to create a system that can be mutually beneficial, and generate both market value and social worth, you must fully acknowledge and honor the parameters of both systems of exchange.

Here’s part 2 of the executive summary to my most recent white paper, completed earlier this year and now available to the public. This part digs more into the differences in regulation and expectations between monetary and non-monetary forms of exchange. Part 1 is here.

Spreadable Media Across Market and Non-market Exchanges

To truly begin to understand how media spreads, we must come to understand how it comes to move across social systems, cultural forms, technological platforms, and modes of market and non-market exchange. All things used in exchanges — be they physical goods or more ephemeral things such as services, information, or experiences — carry three basic forms of interrelated value: use-value, symbolic-value, and exchange value.

• Use-value: An object’s use-value is most plainly the material characteristic of an object, that does not mean it isn’t subject to social or conditional regulation.
• Symbolic-value: The second dimension of value comes from an understanding of consumer culture. Symbolic-value is what differentiates goods or services that have similar use-values. Brands, for instance, are the bearers of symbolic-value.
• Exchange-value: Finally, exchange-value, is the translation of a good’s use-value and symbolic-value within a system of exchange. A good’s potential use-value to someone else determines the value that it can be

These then are the three key dimensions of value present in any form of exchange, whether that be one regulated by money and market logic or by social relations. It is therefore not a question of whether or not a form of exchange has value, but of the roles each dimension of value has in shaping the terms of the exchange.

The Social Dimension of Market and Non-Market Exchanges

The use-value and symbolic-value of an object is determined by its social context then translated into a monetary exchange-value. In a non-market gift exchange, it is the opposite wherein the context — the social relations — play the primary role. Rather than a question of whether something costs money or not, it is more a question of where the core value is determined, and for what ends.

There are three general distinctions that can be identified between market and non-market systems of exchange, as indicated in the table below.

Impersonal versus Socially Regulated Exchanges
Market exchanges, generally, are impersonal while non-market exchanges are socially regulated. The use of money as the primary token of value in market exchanges is precisely what makes them impersonal. The nature of the relationship between the parties involved in the exchange does not have an impact on the value of the good or service being exchanged in a market exchange. On the other hand, the value of an exchange in a non-market setting is heavily determined by the relationship between the people involved in the exchange.

Discrete versus Ongoing Transactions
Since market-exchanges are governed by asocial relations, they are also discrete in the sense that they don’t create an ongoing relationship. That is, market-exchanges are oriented towards acquiring the goods available for the cash you have; their purpose is not to make friends, or create an ongoing relationship. Non-market exchanges, on the other hand are engaged in “in order to evoke an obligation to give back a gift, which in turn will evoke a similar obligation — a never-ending chain of gifts and obligations” (Kopytoff 2006: 69). The completion of an exchange in a market-exchange situation finalizes and marks the end of the transaction.  In a non-market situation, the idea is to build an ongoing social relationship rather than to simply exchange goods and obtain the “counterpart value.”

Absolute Exchanges versus Legacies of Exchange
A purchase from a vendor demands no further obligations after payment because the exchange is ?nal and the producer of the good exchanged has no further say in how it can be used. In contrast, a non-market exchange creates a legacy of exchange where even when someone has given something, they have some expectations and claims to that gift and how it is used. In a system of market exchange, the symbolic-value is part of the goods and services being exchanged. Any copy of a book purchased from Amazon has the same symbolic value as any other copy. As long as what is exchanged is identical, so then is the value because the symbolic-value and the use-value is also identical. In non-market transactions, such as gift giving, the symbolic-value is tied to the actual exchange so that identical gifts given under different circumstances have different values. A book given to you by a close friend therefore has the same use-value as any other copy, but a totally different symbolic-value that is generated by the mutual ties expressed in the exchange.

Companies that try to make money from user-generated content must recognize that their users still feel some sense of ownership over the content they create, even after they’ve agreed to hand over their data and content in exchange for use of the service. Companies that fail to recognize this run the risk of alienating their user-base and leaving people feeling exploited, rather than served.

In the final installment coming next week, look for a rundown of conclusions, and a download of a full paper.

As promised in the twitter backchannel during Futures of Entertainment 4, my most recent C3 white paper on non-monetary social economies in spreadable media is finally going public!

Enormous thank yous to the entire C3 team for their enormous brains, and to Joshua Green for his editing-fu.

A few of you caught a preview of it at our annual C3 Partner’s Retreat in May in presentation form, and I’ll be sharing those slides as well in the near future. For the time being, I’ll be posting the executive summary here in three parts, then providing the full paper in a pdf download once I do some much needed reorganizing of this blog.

In last year’s foundational white paper If It Doesn’t Spread, it’s Dead, we argued that participatory culture and the networked information society are making more visible systems of value which are not predicated on the demands of market economies and the exchange of commodities. The digital media landscape is, instead, based on principles of collaboration, collective intelligence, and social participation. Companies looking to succeed online should find ways to engage consumers and audiences that respect their practices of community building and recognize the role consumers play in the production of value online.

Building on that work, this paper provides a deeper, more nuanced and systematic account of how value is created and exchanged in socially driven systems. To do so, it compares the ways value is created in systems that privilege social exchange and those which privilege monetary exchanges. Looking at the creation and circulation of value in monetary and non-monetary systems, this paper suggests ways we might more clearly understand how media moves across and between these systems as it spreads. Understanding the way content moves between these systems provides insight into how to develop brands online, court communities, and produce successful digital media strategies that can address both the social and monetary demands of mixed economies.

Some of the most successful and innovative new media companies and projects — YouTube, Wikipedia, Flickr, Facebook, Twitter, and even Google — rely on content and data produced through collective efforts of many networked individuals and the relationships they build with one another.  Kevin Kelly of Wired Magazine, in discussing the work of Clay Shirky, identifies four categories of collective production, circulation and information gathering behavior online: sharing, cooperation, collaboration, and collectivism. As more companies move into spaces predicated upon and shaped by principles of sharing and collaboration, we are seeing the emergence of mixed economies and models. Sites like Facebook, YouTube, or Hulu, for example provide services to users at no monetary cost, and in exchange monetize attention, labor, and the data of those users through more indirect means such as advertising. These companies, however, face challenges in responding to audience practices that run counter to expectations about media use. In some cases, this may result in “diminishing the level of trust within participating parties, and perhaps even wearing away the mechanisms which insure the legitimacy of economic exchanges” (Jenkins et al. 2008).

These challenges are the result of fundamental misunderstandings between the value is created within the socially driven circulation of content by consumers and the market-driven interests of media companies and content owners. We must therefore find new ways to understand the shifting nature of meaningful and fair interactions between consumers, producers, media companies, and advertisers in the contemporary media landscape. To do so, it becomes vital to understand the nuances and principles behind how different types of social value are generated online.

Gift Economy and the Fallacy of “Free”

A striking aspect of social sharing and collective activities online is that the participants gladly contribute their labor, creative content, and time without expecting any sort of monetary payment in return. People are uploading images under Creative Commons licenses on Flickr to be shared and used by all, or contributing their expertise and time to articles on Wikipedia, or writing fanfiction and editing fan videos to be enjoyed by the community at large, free of cost.

The gift economy provides a better way to frame and understand the types of exchanges that are increasingly being labeled “free” under the currently popular discourse of the “freeconomy,” or what Wired editor Chris Anderson has called “the economics of giving it away” (Anderson 2008). To understand how media spreads online, it is especially important to understand that whether paying for a good or service, or being given one with social obligations tied, both are transactions which involve the exchange of some form of value. It is not a matter of one having a cost and while the other doesn’t; Both exact a form of “cost” in return, though what is deemed a valuable and acceptable form of “payment” in each system is different. Many systems of sharing, cooperation, and collaboration online generate value through creating mutual ties and reciprocal expectations and social “payments.” Like the offer of coffee from your neighbor, these “free” content producers and laborers actually do expect a form of (social) payment in return for their work.

To do business online, we must recognize that nothing is absolutely free, only things that operate under systems of exchange in which money is not the main or immediate form of value exchanged. Value production and exchanges online involve a complex web of different transactions, through different systems of value that are codependent. Sites like Facebook and YouTube could not generate revenue, for example, if users were not using the sites to create social worth for themselves, and in the process producing the data and attention that advertisers desire. The framework of the gift economy thus gives us a way to analyze social worth as a core value. By acknowledging that what is happening is not a “giveaway” but another form of exchange operating under a different set of standards and regulations, we can begin to examine what those standards and regulations are, and how they are formed and negotiated, and how they can be most useful.

In the next installment: a breakdown of three core dimensions of value — use-value, symbolic-value, and exchange-value — and the critical social differences between monetary and non-monetary exchanges.

[image from nicely85, licensed under creative commons]

Back in March, I wrote a piece critiquing Anderson’s model of the “Freeconomy,” calling it a fallacy. My critique was not necessarily of the models he was proposing, but the way he was conflating things that had no cost with things that were “free.” I argued that rather than being “free,” no-cost goods and services (such as YouTube, facebook, etc) in fact were not giving anything away, but rather exchanging services with its users for things such as data, labor, attention, and social capital.

The debate around “free” as ramped up since then, with Malcolm Gladwell’s review of Anderson’s book in the New Yorker, where Gladwell takes Anderson to task through a series of examples of services and information that are emphatically not free:

The biotechnology company Genzyme spent five hundred million dollars developing the drug Myozyme, which is intended for a condition, Pompe disease, that afflicts fewer than ten thousand people worldwide . . . in this case, information does not want to be free. It wants to be really, really expensive.

And there’s plenty of other information out there that has chosen to run in the opposite direction from Free. The Times gives away its content on its Web site. But the Wall Street Journal has found that more than a million subscribers are quite happy to pay for the privilege of reading online. Broadcast television—the original practitioner of Free—is struggling. But premium cable, with its stiff monthly charges for specialty content, is doing just fine. Apple may soon make more money selling iPhone downloads (ideas) than it does from the iPhone itself (stuff). The company could one day give away the iPhone to boost downloads; it could give away the downloads to boost iPhone sales; or it could continue to do what it does now, and charge for both. Who knows? The only iron law here is the one too obvious to write a book about, which is that the digital age has so transformed the ways in which things are made and sold that there are no iron laws. (Gladwell 2009)

Anderson then responded by explaining that “free” also encompasses other forms of non-monetary payment that may in the long run lead to monetary payment:

* Wired.com makes good money selling ads on GeekDad (it’s very popular with advertisers)
* Ken gets a nominal retainer, but has also managed to parlay GeekDad into a book deal and a lifelong dream of being a writer
* The other contributors largely write for free, although if one of their posts becomes insanely popular they’ll get a few bucks. None of them are doing it for the money, but instead for the fun, audience and satisfaction of writing about something they love and getting read by a lot of people.

So that’s the difference between “paying people to write” and “paying people to get other people to write”. Somewhere down the chain, the incentives go from monetary to nonmonetary (attention, reputation, expression, etc). (Anderson 2009)

Many others have since jumped in the fray, including Valleywag’s slightly meta take on the accuracy of some of the numbers cited by Gladwell as well as the perhaps ideological frame of the debate itself. Perhaps more interesting is the piece at continuations that attempts to disaggregate some of the fuzzy economics behind “free.”

I will probably have more in-depth and articulate thoughts in the near future, once I polish off a draft of some of the transnational television research I’m currently mired in. But for now, I’d simply like to suggest that part of the problem and part of why we can’t seem to come to an agreement about the complex economic models being build online is that “free” is simply the wrong way to talk about it.

This is similar to the way “viral” media masked the agency of the users, thus preventing us from thinking clearly beyond whether or not something “goes viral” to how and why and for what social and cultural reasons. “Free” masks the systems of value-exchange that are in place in all of these models. Moreover, as Gladwell points out, it is not a matter of information simply “wanting” to be free:

And then there is his insistence that the relentless downward pressure on prices represents an iron law of the digital economy. Why is it a law? Free is just another price, and prices are set by individual actors, in accordance with the aggregated particulars of marketplace power. “Information wants to be free,” Anderson tells us, “in the same way that life wants to spread and water wants to run downhill.” But information can’t actually want anything, can it? Amazon wants the information in the Dallas paper to be free, because that way Amazon makes more money. Why are the self-interested motives of powerful companies being elevated to a philosophical principle? But we are getting ahead of ourselves. (Gladwell 2009)

These so-called “free” services are entangled with a number of players: content creators, users, platforms, advertisers, etc. All of whom have different investment, different needs, and different desired outcomes. Rather than paying attention only to one criteria of value — monetary cost — by calling it free, and ignoring all the other criteria and social contracts that are in play, we have to start looking at what different systems of value exchange are being enacted every time something is offered for “free.”

In just looking at Youtube, you not only have the exchange between the service and the content, data, and attention provided by the users. You also have an exchange of those things with advertisers. You also have a number of social exchanges between the users themselves, as they build communities and social capital through uploading content, commenting, responding, and sharing. And these are just some of the most immediately visible forms of exhange, each of which follow their own criteria of value and parameters and regulations. And more importantly, the are all interconnected and dependent upon one another. To gloss over it all as “free” ignores the complexity and the deeply entangled nature of both monetary and non-monetary exchanges. The iron law of the digital world isn’t that everything is free, it is that everything is connected, including different forms and systems of exchange.

(credit: images used under CC license from cayusa)

“The idea of a pure gift is a contradiction.”
– Mary Douglas

“Free” is a term that has come into vogue in recent years to describe many of the systems of information and services made available in the so-called new media landscape. In 2008, Wired.com editor Chris Anderson proclaimed “free” to be “the future of business” (Anderson 2008) on the web. But the word “free” means to be exempt from something, so in calling these things free, we need to be able to answer the implicit questions of what, exactly, are they free from?

“Free,” in many cases, has been conflated with “no-cost,” with the suggestion that the web is rife with free goods and services — free email, free social networks and video hosting sites, free content and information — because we don’t have to pay for them. The Free Software movement is a great example of a thoroughly-considered use of the term that addresses its multiple implications, both economic and ideological. But for the most part, “free” in popular marketing discourse is commonly assumed to be a measure of monetary value. And though the specific uses of “free” deployed by Free Software is outside the focus of this piece, there’s certainly an important lesson to be learned from an old joke amongst users of Linux: it’s only free if your time isn’t worth anything. This joke gets to the heart of why the term “free” is problematic for describing the new economic and social models emerging online: to continue to call these things “free” implies that money remains the only thing of value to be given or gained, a proposition that runs counter to how most of these systems are regulated.

As we suggested in “If It Doesn’t Spread, It’s Dead,” the flow of information and services online is in many cases regulated in ways similar to those of gift economies, in which things like social prestige, reputation, and cultural capital are the central tokens of value and exchange. These types of exchanges are the ones typically referred to as “free.” However, as Mary Douglas reminds us in her foreward to Marcel Mauss’ foundational text on Gift economies:

“the whole idea of a free gift is based on a misunderstanding. What is wrong with the so-called free gift is the donor’s intention to be exempt from return gifts coming from the recipient. Refusing requital puts the act of giving outside any mutual ties. Once given, the free gift entails no further claims from the recipient. The public is not deceived by free gift vouches. For all the ongoing commitment the free-gift gesture has created, it might as well never have happened. According to Marcel Mauss that is what is wrong with the free gift. A gift that does not to enhance solidarity is a contradiction” (Douglas 2000: vii)

In other words, something that is totally free — something given completely exempt of both cost and social obligation — is extremely undesirable in the context of any economy because it precisely does not enable any form of exchange, monetary or otherwise. A totally free gift — a true give away — is a unidirectional, one-time action, in which nothing is returned.

In monetary, commercial market exchanges, the exchange is “free” in the sense that it’s discrete and does not insist on future ties and obligations to the vendor because I pay for the thing being exchanged. If I get a cup of coffee from a Starbucks, in paying for my coffee, I have severed all further obligation to the place and the person selling me the coffee. In fact, it would be incredibly strange for me to bring my barista a cup of coffee the following day. In non-monetary, non-market (or “gift”) exchanges, the content of the exchange is “free,” but the exchange itself comes with social ties. So if my neighbor invites me over for a cup of coffee and I accept, I don’t have the pay for the coffee, but it would be considered rude if I totally ignore my neighbor later if we were to pass in the hall.

Thus non-monetary — so-called “free” — exchanges are actually the opposite of free in the sense that they actually create ties and obligations between the parties involved in the exchange. These ties may be informal, such as a set of implicit social protocols of behavior such as acknowledging the presence of something you’ve shared food with, or they might be formalized within a Terms of Service agreement. Thus, if I contribute a photo to a flickr community, or upload a video onto Youtube, or write and share a piece of fanfiction, I have given away my work for “free,” but I have opened the door to form social ties with the communities I am engaging in. Similarly, sites like Youtube and Flickr are offering me a “free” service, but establishing an ongoing exchange with me for the contribution of content, audience-draw, and data. That we continue to call these exchanges free suggest that we need to expand our definition of what is valuable.

The fallacy of “free” therefore, comes down in many ways, to a problem of language. However, as we showed in “If It Doesn’t Spread, It’s Dead” with the use of the term “viral,” language is never a small matter because it both describes and enacts power. That is to say, the words we use to describe things also influence how we understand them. In the case of “viral” marketing, as we persisting in talking about it as such, we continually obscured user-agency in the passing of content, which prevented people from asking the crucial question of why and for what purposes content circulated. Similarly, if we continue to talk about these systems as “free” or “give away,” we perpetuate the perception that there is nothing being given back, that there is no exchange. In short, it makes it difficult to analyze the changing terms of transactions between businesses and users in so-called “free” models if we persist in speaking as if there is no transaction taking place.

Anderson’s proposed models are a perfect example of the difficulty the language of “free” presents. Anderson himself clearly understands and acknowledges the need to expand the definition of value, concluding that “[Attention and reputation] are the new scarcities . . . Free shifts the economy from a focus on only that which can be quantified in dollars and cents to a more realistic accounting of all the things we truly value today.” However, he suggests that some of the most successful web companies, such as Facebook and Google, are instances of a two-sided market wherein “the minority of customers who pay subsidize the majority who do not. Sometimes that’s two different sets of customers, as in the traditional media model: A few advertisers pay for content so lots of consumers can get it cheap or free” (Anderson 2009).

The problem here is that even as Anderson pushes for moving the economic focus away from monetary value, the suggestion that advertisers are paying in the place of the users puts the emphasis back on money as the only measure of compensation, when in fact the users are paying — they are paying in data and labor that makes services like Google and Facebook work. So advertisers are, in fact, paying for users, not in the sense of paying in place of them, but paying for the value they have handed over to the web company in exchange for services.

My point here then is not to pass judgement on the models that “free” seeks to describe, but rather to point out that the discourse of “free” is locking us into a very limited definition of value that is insufficient in describing the complex and evolving sets of social and economic relations that characterize a significant portion of what generates worth in a digital, networked economy. In continuing to frame these increasing complicated and multi-party exchanges as “free,” we inherently devalue everything that is not money, everything that does not fit within the previously established criteria and business models that we have already proven to be out of date and in many way insupportable in the current media landscape. And in doing so, we continue to speak as if social worth, brand goodwill, fan advocacy, is still somehow “surplus,” just a byproduct or precursor to the real return, when what we need to do is recognize that these things are the exchange. What is happening is not a giveaway, it is another form of exchange operated under a new set of standards and regulations, and it is not until we recognize this that we can begin to examine what those standards and regulations are, and how they are formed and negotiated.

References