Social networking Web sites such as MySpace and Facebook provide a means for people to share their lives with others, but are these sites turning their subscribers’ free content into economic gain — a new form of sharecropping?
It certainly seems that way, according to Nicholas G. Carr, author of Does IT Matter.
In his blog, Rough Type, Carr noted:
“MySpace, Facebook and many other businesses have realized that they can give away the tools of production but maintain ownership over the resulting products. One of the fundamental economic characteristics of Web 2.0 is the distribution of production into the hands of the many and the concentration of the economic rewards into the hands of the few.
“It’s a sharecropping system, but the sharecroppers are generally happy because their interest lies in self-expression or socializing, not in making money, and, besides, the economic value of each of their individual contributions is trivial. It’s only by aggregating those contributions on a massive scale — on a Web scale — that the business becomes lucrative.
“To put it a different way, the sharecroppers operate happily in an attention economy while their overseers operate happily in a cash economy. In this view, the attention economy does not operate separately from the cash economy; it’s simply a means of creating cheap inputs for the cash economy.”
Carr explained that the business dynamic created by sharing sites is an unusual — maybe even unique — one.
“They’re building businesses on the freely donated labor of millions and millions of people,” he told the E-Commerce Times.
“The people contributing the free labor are happy because they’re getting this platform to talk about themselves,” he continued, “but what becomes interesting is that once you’re able to get millions and millions of these little bits of content that people contribute for free, suddenly it can become a very lucrative business.
“Contributors don’t feel exploited because their economic contribution isn’t all that meaningful economically,” he added, “but when you look at the entire population of contributors, it seems like a form of economic exploitation.”
There are those who would argue, though, that a population of users cannot be exploited as long as they have choices.
“People are making a choice to use the service, so it’s not exploitation,” Mike Masnick, CEO of Techdirt told the E-Commerce Times. “If they feel exploited, they can move elsewhere or they can choose not to bother with it at all.”
One of the advantages of the Web is the ease at which alternatives can be mustered, he added. “If there’s a real feeling of resentment among users, then all that is is an opportunity for someone else to come along, set up a business that doesn’t create that same kind of resentment and watch the people move over.”
“That’s the key here,” he added. “If they were feeling exploited, they’d be moving to other sites now that weren’t exploiting them,” Masnick explained.
A Threat to Traditional Producers
Nevertheless, Carr contends that “Web-cropping” may have some disturbing consequences.
“It’s a threat to the traditional producers of creative goods — journalists, photographers, encyclopedia entry writers or whatever,” according to Carr. “Suddenly they’re competing with free labor, which is very hard to compete against.”
Moreover, in the longer term, he continued, the model concentrates a huge amount of wealth in a small number of people.
“If you can get all your content produced for free, you can have an extremely small company that can suck huge amounts of economic value out of the marketplace,” he explained. “We saw that in YouTube, which had about 60 employees and was valued at $1.65 billion; we see it in Craigslist, which has sucked a huge amount of economic value away from newspapers with its free classified ads and is run by less than 20 employees.
“This is very unsettling,” he added. “It’s something we haven’t seen before, and I don’t think we know how it’s going to play out.”
This story was originally published on Dec. 29, 2006, and is brought to you today as part of our Best of ECT News series.