The “New Economy” of Internet Volunteers

Time Magazine, Feb. 26, has an article called “Getting Rich off Those Who Work for Free.” It talks about highly visible new-digital-economy success stories that rely heavily on volunteer labor—Linux, Wikipedia, Firefox notable among them.

Is this the benevolent side of humanity emerging? Altruism? Cyber-generosity?

Chief guru for this movement-trend-whatever is Yochai Benkler, currently of Yale Law School, author of “Wealth of Networks”—downloadable for free, as befits the spokesperson for the “gift economy.” I downloaded it last year—all 515 pages of it. (I got through some of it).

Benkler talks about the economics of peer production, and what it’s good for. Is this the Next Big Thing?

Benkler says, “The question for the past decade was, Is this real? The question for the next half-decade is, How do you make this damned thing work?”

Not so fast—I’m still back in the last decade on this one.

First of all, Benkler’s a good example. He’s not a volunteer. He’s being paid—probably quite well—by Yale. He gets a lot out of writing free books and chatting up Web 2.0-erati. Office; health care; pension; tuition for the kids; that sort of thing. His potential consulting rate, whether he has used it yet or not, is pretty high.

His free book got him a lot of publicity—because free’s unusual for books. Try putting out a free CD of music. Not so unusual.

What does Yale get in return? Less talk about being the alma mater of a C+ president. More identification with a hip guru of the new economy. As the commercial says, priceless. I sense a sensible economic transaction.

What looks like volunteering is often just financing. Linux programmers are often paid by large companies, and/or are themselves investing in job training.

At the front end of new markets, high tech labor has its own version of venture capital. The “volunteers” are making investments; the cash flow problem is solved by financing—either through employment at old companies, or in the form of a loan to be paid back by greater job marketability later.

Back in the day (way back) when AOL begin outdistancing Compuserve, AOL had volunteer sysops for all the topical areas. My guess is, that role is no longer done by volunteers. (Any AOL’ers still out there to confirm?) But I’d bet there are a lot of ex-sysops whose experience with AOL helped them quite nicely, thank you.

Then there is the “Carr-Benkler” wager. Carr is a business writer who bet Benkler that, by 2111, sites like Digg, Flickr and YouTube will be run by paid people, not volunteers. Shades of the Simon/Ehrlich bet of 1980 (check the link, it’s really interesting).

Benkler’s no dummy—Harvard Law, Yale Law, Supreme Court clerkship—but I think he’s playing the Ehrlich role here (Ehrlich lost. Big time.)

Generosity is in fact an under-appreciated driver of human behavior, and linked to trust. We can see dozens of tiny examples of generosity every day on a small scale, and sometimes on a large scale.

I’m just not sure we’re seeing it here.

I’m happy to volunteer on cool cutting edge stuff—because it lets me get in on the cool cutting edge. And oh yeah it helps save the world. But hey I’d like some credit for my volunteering after I graduate, or when I make the VC rounds to do my own IPO. Or at least a job interview.

It’s the same old Invisible Hand at work here, we don’t need to invent a new one.


0 replies
  1. Brett Rogers
    Brett Rogers says:

    I love this… one thing I might add. Don’t you think volunteering is often just marketing, too? I think a lot of folks trying to contribute to the open source stuff are either giving to the cause because it’s something that they need for themselves or because they’re marketing their own value.

  2. will
    will says:

    Hi Charlie,

    You are right to point out the Academic origins of the open source community. Many linux distributions are in fact, computer science projects. I believe the "BSD" distribution refers to Berkeley San Diego ? I could be wrong, But I always assumed it was a California university system initiative.

    Students program open source, in part as part of their research, or even for term projects, for which they get credit, and also as you mention, for the prestige of being part of cutting edge projects. Also significantly for very practical reasons — just getting drivers written for the latest hardware, or porting over code into newer popular programming languages.

    I think the atmosphere of academic sharing, knowledge enrichment, and lots of funding creates this phenomenon. I think it’s amazing, and blessed be the environments of higher education from which we can all benefit.

    I also think that in the world where universities struggle to orient their students into practical work-oriented skills, Let open source be a testament to the freedom of having long hours to "mess around" with code and ideas.

    Universities should continue to be places where people can go and be creative and free to play while they learn; we all have gained so much from this.

  3. ~Neil
    ~Neil says:

    Give a kid a hammer, and the whole world looks like a nail =]

    Open Source Software (OSS) is about marketing in the sense that McDonalds is about healthy eating. However, there is a trust factor that plays strongly into the history.

    One of the important factors that led to Chevrolet’s dominance, in the earlier days of cars, was the 1957 Chevrolet. The quintessential hot rod. The importance of the car was it’s tinkerability. Car geeks bought it, because parts were cheap, and modifying it was relatively simple. They sold lots. But a big reason they sold lots, was because people could make it do what they wanted.

    A large driving factor in OSS is that other stuff won’t do what we want. I want to write documents the way *I* want to write them, not the way Word thinks I should have done. If I can’t get Safari to do what I want, I can go program it into Firefox. But I don’t want to *write* a web browser. That would be a waste of my time, if I did it alone. OTOH, a few thousand people who think like me have gotten together and done it.

    I’m sure that you have sat down, at some point, with others in your field and discussed how to best do something … well, the programmer version of that is to collaborate on a piece of software.

    But, we do arrive at trust.

    Phil Katz was arguably the first internet multimillionaire. He made millions off of giving away PKZip, and trusting people to send him money if they liked it. It worked. Oddly, Phil stole most of the code from another small company (although he was, legitimately a genius at improving their code.)

    Shareware and freeware have largely been formalized into OSS. One of the biggest differences tends to be that OSS projects are more rigorously copyrighted and more diligent in their observance of others’ copyrights.

    The formalization of OSS is due, in part, to earlier cases similar to SCO trying to sue because they had Linux code in their own, or because of ‘submarine patent’ issues, such as Unisys claiming millions of dollars in royalties off of the GIF format, which Compuserve had been giving away for free for years. Other collaborative programs that had been free changed to a closed-source, commercial model; meaning that people who had been contributing and using them suddenly had to pay.

    Part of the appeal of projects such as Firefox (aside from their nifty usability) is the trust factor. You can be assured that if you start using it, it isn’t going to be pulled out from under you, because it’s written that way in the license. The people in charge do a lot of code review, and pretty-much guarantee that if you help write something, it will continue to do what you want to do.

    There are, of course, a lot of technical reasons, too, but this doesn’t seem like that kind of forum. And you are correct; there are selfish reasons. OSS projects are a way to work with better programmers than yourself, and to learn what they do. There are also amateur reasons (in the sense of radio or theater) but a lot of it frequently has to do with tweaking and trust.

  4. ~Neil
    ~Neil says:

    BSD = Berekely Software Distribution. It is, as you thought, a product of Berkeley (as a lot of the software we use harks back to). In the earliest days of UNIX, there were two branches, AT&T, and BSD. All versions of UN*X, Linux, and BSD are derivatives of one (or both) of them.
    BTW, one of the freeware contributions of BSD was the code for a ‘stack’ for TCP/IP; which makes the Internet possible. That piece of code is still present in Microsoft’s networking code.

  5. Shaula Evans
    Shaula Evans says:

    Charlie, are you familiar with the Portrait of J. Random Hacker from the Jargon File?

    The Jargon File is a collection of hacker slang that goes as far back as the MIT Tech Model Railroad Club in the 1950’s, and really got its start as a compilation around 1975 with the Stanford and MIT AI labs and several ARPANET communities.

    The Jargon File includes the Portrait of J. Random Hacker, which is a stunningly accurate description of the archetypal hacker nerd — if you’ve ever spent time around real hackers, reading this is uncanny.  (Note that ‘hacker‘ here is used in the technical sense of someone who pushes hardware or software [or ‘ tech competence’ in the broadest definition] past its limits, not the non-tech community’s pejorative sense of someone who breaches security systems.)

    [In fact, based on the eclectic scope of this blog, the guitar playing you’ve mentioned, and the other glimpses the site sometimes reveals of your personality, I’d be shocked if you didn’t recognize yourself in the description to some extent, too — at least the good parts.  For example, your Best in the World post makes perfect sense from a hackish perspective.]

    The Profile includes this description of a hacker’s personality characteristics:

    " Hackers are generally only very weakly motivated by conventional rewards such as social approval or money. They tend to be attracted by challenges and excited by interesting toys, and to judge the interest of work or other activities in terms of the challenges offered and the toys they get to play with."

    All of which (the impromptu unsolicited hacker history lesson) is to say that, while I suspect that your perception of Adam Smith’s Invisible Hand is possibly very accurate in Benckler’s case, and for that matter probably represents how many business people and economists perceive what Time called "those who work for free," I respectfully offer that I don’t know that it really captures the essence of what motivates the typical open source developer.  True hackers are really in it for the love of what they do (and most hackers recognize that they really aren’t motivated by money at all, which often stymies their non-technical managers to no end). 

    Most open source developers I know don’t get paid for their work at all; and most of the time they’re developing for an Operating System or using languages that have nothing to do with their day job. 

    As for whether open-source development (and by extension hacker culture) is the Next Big Thing, well, look back to 1960 to how the Internet got started and then developed. (For that matter, hacker is a broader term than just computers, and the there’s a good chance that the first Neanderthal who tied a rock to a stick was regarded as hackish by the rest of the clan.)

    I think what may be the actual Next Big Thing is the business world (a) finally paying some respect to the validity of the open source development model; and (b) doing so because they perceive an opportunity to profit from the unpaid labor involved.  (The impact of (b) subverts the impressiveness of (a), unfortunately.)

    A final thought: the article conflates Linux developers with someone who submits the link to a topless Paris Hilton photo to Digg.  To Time, they’re all just free labor.  In reality, what motivates them each is not necessarily the same.

    For business people who want to "get in on" the unpaid labor boom, I’d really recommend:
    – mentally frame this as a cross-cultural project;
    – ask more questions than you make assumptions;
    – recognize that just as, for examle, "Asia" is a big place and not everyone who lives there is the same, "online volunteers" is a pretty big place too and you need to consider the subcommunities in a more sophisticated way than that;
    – what motivates you or turns you on may not hold true for all of the different subcommunities you now have in play, just as what holds true for one of those groups may not be the same for the others.

  6. ~Neil
    ~Neil says:

    I did go back and read the Time article. IMHO, it’s written by somebody who really has no understanding of the reasons behind what they’re writing about. ‘Managing the nonmoney’ tends to be somewhere that people fall down with the kind of people who write OSS. Enough so that IBM even bought a guide on it.
    BTW, will, Linux was originally, as you say, a student project (minix implementation) but one aspect that helped launch it was the proliferation of GNU tools – which had been written over years as freeware,  frequently open-source, tools for the commercial UN*X platforms.

    I think probably one of the best models for making money out of OSS is the Firefox/NetScape model.  They share a codebase, but FF is OSS, and NS is closed-source, commercial. By financially supporting FF, AOL gets a return on their investment in terms of a better NS. The best classic commercial model is RedHat: give the software away for free, sell service. The software is a platform to support a service industry.

  7. Charlie (Green)
    Charlie (Green) says:

    Wow!  Who knew?  It always delights me to see the range of talent who assemble here for a few moments in time, and leave their insights.

    Shaula, thanks for giving a name to my inner hacker (ages ago I wrote a bit in Basic and Fortran).  Will and Neil I think provide rich examples of the complex interplay of institutions and motivations at work here.  I agree—Time, maybe Benkler, and certainly I, have painted with too broad a brush.

    Neil, interesting to hear you describe Red Hat’s strategy as substantially similar to that of Gillette from decades ago—cheap razors, expensive blades.  Thanks for the deep education all.

  8. ~Neil
    ~Neil says:

    At this point, you start getting into a discussion of just what the limits are on altruism. I believe you get something out of anything you do. I also believe that some people do some incredibly good things (nurses, for example) at least in part because it makes them feel good about themselves. What parents get out of christmas isn’t strictly that it makes the children happy; but that making the children happy makes the parents happy. Take any major altruistic icon — Mother Theresa, the Underground Railroad, whatever — they are not motivated by what is happening, but by how people *feel* about what is happening. Game theory, appears to indicate that altruism is a survival strategy.
    So, i agree, on some level everybody involved is doing what they do for somewhat selfish reasons. But that doesn’t make it less altruistic. And here is an illustration of why I think it isn’t specifically important…
    An estimated 25% of the US population carry a genetic disorder called hemachromatosis, which is essentially the opposite of anemia — the blood holds onto too much iron (these are the people who set off metal detectors everywhere). The simple fix for hemachromatosis is to donate blood; which is a double-good, because if you’re receiving blood, you need all the iron you can get.
    Thing is, blood banks have an ‘altruism’ clause; if you receive any benefit out of donating blood, they have to throw it away, *and* charge you for taking it.

  9. ~Neil
    ~Neil says:

    I agree that the Norelco strategy sounds similar (and if I recall it was effective). But don’t you think that long-range it would be more financially advantageous to reverse that?
    Take printers, for example. Expensive printer/cheap ink vs cheap printer/expensive ink. Aren’t you less likely to actually *use* the cheap printer, if the ink is expensive? Aren’t guys less likely to shave often if every time they pick up the razor they think how expensive the blades are?

  10. Charlie (Green)
    Charlie (Green) says:

    Rob—still seems evident to me that Carr is more right. You see the other way. Tomato, tomahto I guess.

    Neil, I think the Gillette (not Norelc0) strategy is founded on very firm ground. One of the psychological points noted by scholars of influence is that if you put two expenditures next to each other, the smaller one will look less consequential.

    So for example, when you buy a car you may say oh what the heck throw in the $200 digital sound system (or whatever). Whereas, if you went shopping for digital sound systems a la carte, you’d probably agonize a fair bit over the $200 vs. the $150 system. Hence the logic for making one price (the razor/printer) much more expensive than the blade/cartridge.

    Similarly, another principle is at work: once you buy something once, it gets easy to buy it again. The multiple purchase of course is the blade/cartridge. Hence the logic for extracting maximum profit out of the repeated purchase item.

    As proof of concept, I’d be quite willing to bet that HP makes a ton more money on cartridges than on printers.

    Finally, as a shaving guy, I’d say every day I’m likely to meet women is a day I’m likely to splurge on blades. The solution when you’re really poor is not less blades, it’s a beard.  When all you’ve got is lemons, make lemonade…

  11. Charlie (Green)
    Charlie (Green) says:

    Neil, re limits on altruism—stay tuned to this blog.  The length of time in question has a profound effect on understanding not just altruism, but trust, relationships, collaboration, competition, partnerships.  The classic Prisoner’s Dilemma case is a great example.  But that’s another blog.

  12. will
    will says:

    the free software model is not the same as the Gilette or HP model.

    There is more to it than just giving away the software.

    The software is free because the Gnu Public License,  guarantees the distribution of source code. This is very important. All linux distros can be downloaded as source code. This can have tremendous advantages.

    There is nothing comparable to this with Gilette or HP. They are not giving you their trade secrets.

    If I download source code, I can do the following:

    1. Modify it for my own needs.
    2. use it on newer hardware without waiting for the vendor to make this upgrade for me. i.e., I can make new binaries for faster chips…I need to know how to do this, and this encourages me to learn and become knowledgeable, because this knowledge sets me free from dependency.But also this knowledge is available for free.
    3. I can look for security holes myself or hire someone to examine the source code for problems of logic. — this is important. Do you trust Microsoft to provide the best environment for military secrets?

      instead of paying them millions, why not use the free source code, and hire some wizzes to examine it with a fine-tooth comb, looking for holes, or worse — back doors. — they can modify it, stripping down unessential and possibly dangerous processes, and anyone who understands the source code and knows what it does can see for themselves if there are deliberate security holes.

      The software that runs voting machines for examples, should, without question, be open source. That way you don’t fuel any fears of hackers getting into the system, or back-doors from the manufacturer. Or just sloppy, crappy code that can waste time and hurt lives.

      I can’t think of something that should be more owned by "the public" then the process of voting.

      The company that wins the voting machine contract,best implements this source code and does the best testing — but there is not reason not to involve a community to make sure that the source code is the best it can possibly be.

    4. with LGPL Lesser Gnu Public License, I can use an open source library in my closed source program, as long as I distribute the source code of the library; my own code that uses it need not be revealed open source, so one can have the best of both worlds.

      If you modify this library, you must release your modifications, so it encourages sharing of at least some of your knowledge.

    In a world of proprietary only software, each company is constantly re-inventing the wheel. 

    Sharing established algorthms and ways of doing things means we can all move forward. It also means that there is a commonwealth, that our common knowledge is getting enriched by this process. I think that this is very civilized.

  13. Ann
    Ann says:

    A late addition to this post commentary –  I was reading today about a project at Wharton and MIT’s Sloan School titled "We Are Smarter Than Me"  to publish a book about the ways in which companies are learning to leverage social networks and the power of communities to improve their performance by allowing customers or others to take over functions traditionally performed by experts.   In line with that topic, Wharton and Sloan are seeking to use a community-based approach by calling for business people to volunteer to collectively author the publication.  You can learn more at:

  14. Charles H. Green
    Charles H. Green says:

    Shaula, what an awesome reference; I went to that site and loved the discussion, and have subscribed to the feed.

    Then I went back to this post (which honestly I had forgotten about) and re-read the discussion here–and wow, how did I forget this, this is also a great discussion.

    And 2011 is not that far away, there’s a good chance someone in that thread will remember to go back and note the outcome of the Carr-Benkler wager here, and we’ll all go back and rediscover a great conversation yet again. 

    And it’ll probably be you, Shaula!  Many thanks, I’m in awe of your ability to remember content and make connections.


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