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August 02, 2006
The problem with paying One Percenters
(Note: This is part 2 of a two-part series about the motivations of One Percenters. Part 1 is here.)
Does it make sense to pay One Percenters? Even if they are happy as volunteers?
That describes the Jason Calacanis experiment. He is offering to pay "the top 50 users on any of the major social news/bookmarking sites… $1,000 a month for your 'social bookmarking' rights. Put in at least 150 stories a month and we'll give you $12,000 a year" to "work" at Netscape. (He later amended the offer to the top 12 social bookmarkers.) "Talent wins, and talent needs to get paid," he writes.
A microeconomic approach if there ever was one. The volunteer cultures at Digg, Wikipedia, Del.icio.us and others would probably baffle Adam Smith, the most famous, and perhaps most influential economist of all time. He theorized in 1776 that "we are not ready to suspect any person of being defective in selfishness… It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest." Smith's influence is still felt today as companies continue to offer cash, points or rewards in exchange for loyalty or word of mouth. The greatest reward of all is cash, or so the thinking goes.
Which partly sums up the Calacanis experiment: Talent shouldn't work for free. This raises a larger question: Since the One Percenters are producing work on behalf of a commercial operation, and that work increases the value of the operation, should they receive fair compensation like laborers? Part of the answer is: they're not laborers. They're hobbyists.
As hobbyists, they have embraced the principle of the participatory Web. How else to explain the success of commercial online operations, such as the aforementioned Digg plus Flickr, Channel 9, YouTube and thousands of volunteer forums, like TreoCentral, that are volunteer, de facto customer support sites? These sites prove the viability of what Lawrence Lessig might call "non-commercial culture" but in the context of commercial culture. The hobbyists are already contributing to a commercial commons without expecting payment or commercial gain.
The One Percenters do it because it’s fun. Hobbies are supposed to be fun (except maybe latchhooking). It frees them from the expectations of labor. Their only expecations are of themselves or the community to improve their skills as hobbyists. So it follows that paying a hobbyist turns social bookmarking into labor, and probably eliminates the fun. Then it's a job, and not a well-paying one at that; $12,000 per year is slightly above the poverty level. The median annual salary of a counter attendant at a fast-food restaurant is $24,000.
It's the network effect that make sites like Digg, Flickr, Reddit, YouTube, MySpace and others valuable. With a potent mix of transparency, participation and community ownership, all of which are democratic principles tied to citizenship, the sites have grown as communities. As more people join them, their value and potential utility grow. Of course, growth introduces more noise, but that's a challenge with every network, every neighborhood, every community. Nonetheless, their organic growth is due to a sort of democratic, social Darwinism.
That's another challenge to the Calacanis experiment: the economics of families. Gary S. Becker, the Nobel prize-winning economist, theorizes in "The Economic Approach to Human Behavior" that within families, there is a distinct "unimportance of the distribution of income." That is, not everyone in a family expects a "fair share" of income. "The head’s concern about the welfare of other members provides each, including the head, with some insurance against disasters," he writes. In other words, if family members think their leader has their own best interests in mind, they'll sacrifice "distribution of income" because they value the family, especially if it adds to an insurance policy against disasters. This, of course, is dependent on the head of the family not being a lunatic.
For instance, when Michael Marx was asked why he spends his free time running the Barqsman Blog, a fan site dedicated to the root beer from Coca-Cola, he said, "To keep the brand alive." Based on the work he and other fan sites do, which is to promote and critique, they are working to reduce the risks of worsening product quality, deteriorating customer service or falling behind competitors. They are contributing to a family insurance policy.
So Calacanis' offer to turn pro overlooks the nature of hobbyism and the family bonding that occurs over time. Digg.com launched in December 2004 and took about 18 months to acquire 400,000 registered users and a core community of contributors. Their contributions signify their loyalty, and creating loyalty is a slow, challenging process.
So paying some social bookmarkers while not paying others would probably create a hieracrchy that democratized sites like Digg disdain. It might even be a disincentive for other Netscapers to contribute. As Digg founder Kevin Rose said to us in an email, "It's the users that need the power to moderate, and giving each one of them a slice of the power is the best way to do it." The communities have helped shape their own futures, thereby giving them a sense of ownership, of citizenship. That power may be more valuable than cash.
There are indications the Digg culture is already rejecting the idea of cashing in. The blogger Tyson Hy, one of Digg’s top contributors, wrote on his blog that he declined Calacanis' offer because "I don’t need to be paid what I do now. I will commit my time to Digg whenever possible, that’s how much I enjoy Digg; It’s not about the money, it’s what you enjoy, and this is what I like."
Better for Jason Calacanis to take 12-18 months to create his own community of One Percenters who believe in him, the site or his plan to change the world of news aggregation. If they believe in the cause, they'll do the work for free.
Update: The first wave of hirees are unveiled, and a few Diggers take the offer. The next question becomes: Will paying one-time volunteers make a difference? Does it give Netscape any competitive advantage? It's probably too soon to tell.
Other blogs that reference The problem with paying One Percenters:
» Interesting article on Social Networking. from SethDude
[Read More]
» Paying Bloggers and Social Bookmarkers? from Barq's - The blog with BITE!
Ben McConnell over at Church of the Customer Blog wrote an entry yesterday exploring the idea of paying top participators in online content/social bookmarking creation. A close look at the Jason Calacanis offer is fodder for the debate. Ben describ... [Read More]
When thinking about the pay-to-play type of strategy (or pay-for-play depending on your perspective) marketers and 'community developers' need to think though their strategy using ideas of external vs internal attribution (answering the user's question: why am I doing this)? The good news is that money (external) can induce new behavior, the bad news is an 'overjustification effect' (cf Wikipedia) that when external cues ($$) compete with internal motives (having fun, creating personal value, contributing to community value people will slowly (or more quickly) drop away. Sustaining involvement in social networks won't come from purely financial motives over the long run - not that some people won't try it for a while.
I think you raise some very valid points. Curious to see how this applies to online video site like Revver (which does revenue sharing as opposed to actually hiring people to do things or paying directly for content). A smart move because creating your own video content (though a hobby) still takes time and effort. Plus, if a site is making money through that user generated content, then revenue share seems the right thing to do.
sk
While 'different strokes for different folks' still applies, I too like the idea of revenue sharing, especially when there is the opt-in provision to respect those who are creating content for their own non-monetary reasons. Would the costs of managing the process be the largest hurdle in implementing such a system?
This is the best analysis I have found on Jason's strategy so far. Great post, Ben.
