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Category: economics

The Razor and the Blade: Kumbaya Economics

There are a number of narratives located in the words “open source.” The most dominant narrative is the story about software development and maintenance through tightly coordinated iterations via inputs from a potentially unlimited and unbounded number of interested parties. The economics of open source require the diversification of the carriers of value from the traditional modes. I’ve purposefully begun this exploration with economics rather than the concept of free access to source code.

It’s the idea of “free” that has expanded to connect up with other “free narratives” to create confusion. It’s a kind of utopian vision: free beer, free speech, free love, free software. A binary opposition is generated that pits free + generosity against price + greed. The moral elements of the equation rise to the surface when comparing alternative software solutions. There’s a utopian narrative that has attached itself to open source software and simultaneously detached itself from any rational economics. It’s a story of free beer rather than free speech, and is utopian in its original meaning of “no place.”

Safety Razor

Chris Anderson has focused the conversation with his forthcoming book called “Free.” The emerging economic model he describes is woven from value transactions across multiple delivery and product modes– some free others at a cost. This blend results in a sustainable economic system. It’s the combined value of the whole set that matters, not the percentage of free delivery modes vs. pay delivery modes. And as we move further into the attention-gesture economy, the methods of payment will be more diversified as well. One-hundred-percent free in all modes, for all time, is simply a method of incurring debt. At some point the system has to come back into balance, either through the addition of a revenue component or bankruptcy. Hobbyist or enthusiast systems work through the attention-gesture economy, but so do services like The Google.

There are thousands of open source projects, but the ones that combine well with commercial projects are the most active and well supported. The number of active projects is actually quite small. Entrepreneurs are constantly searching for new combinations to produce excess value at viable margins. As products become more modular, value migrates to design. Apple’s operating system combines open source infrastructure with a highly-customized human interface. The combination creates superior value.

There’s a temptation to believe that all the players in a commercial market should contribute openly to the commons– that we should all come together and sing kumbaya. The fact that every new digital product will contain some form of open source module doesn’t change the competitive landscape. Companies may sing kumbaya, but they still wield the razor and the blade, and that’s as it should be.

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The Critic’s Role in Modern Attention Markets

Marcel Duchamp: Fountain by R. Mutt

One of the more interesting things a micro-community can do within a social network is come to terms and through their gestures establish a value for something. One of the best descriptions I’ve read of this process was by art critic Kenneth Baker, specifically in his review of Dale Chihuly’s exhibition at the DeYoung Museum in San Francisco. While Baker is discussing his reaction to the show and the role of his review in the larger swirl of opinions that make up the cultural value of the work, his words equally apply to the social and political objects in our midst.

Baker’s original review of the Chihuly show was intensely negative; he even took the museum to task for mounting a show that was more ‘craft’ than ‘art.’ Chihuly is a popular glass artist and Baker’s review incited a torrent of disagreement. I found Baker’s defense of his review to be some of his best writing. Here’s how Baker set the context:

In today’s culture, people need not merely critics to tell them what art is, but also artists, curators, art historians, art dealers, collectors – and the viewers’ own education and sensibility.

In the consensus as to the art status of a piece or a body of work, each such participant has something to contribute, and each type of contribution has to be valued differently.

The interesting bit here is that no perspective is authoritative, but each view has a unique value in the equation of cultural worth. Baker’s assessment is based on the network of connections to canonical work that forms our cultural mesh:

Hence, my practice of comparing one artist’s works with those made by others. Art is made of connections – connections available to any informed observer – not just of materials and good intentions.

The several readers who faulted me for comparing Chihuly‘s work with his more serious contemporaries’ uses of glass misunderstood my purpose: I was looking for redeeming linkages between his work and art – sculpture – of canonical stature, and could find none. No one who wrote to me in his defense mentioned any either.

Most of us would prefer to believe that “art” is a quality inherent in or infused in certain things, but the history of modern art, and of its enveloping social reality, has left us in a much more complex and ambiguous position. Those who refuse to acknowledge this are the very dupes that the culture industry banks on.

Baker defines the role of the critic in our modern attention markets:

I took a caustic tone because I believe, more or less as the poet John Ciardi put it, that we are what we do with our attention.

Every newspaper critic argues that readers ought to spend their attention in some ways and not others. A critic, no matter what his field, must be an expert in the uses of attention and their rewards – in terms of pleasure, expanded insight, challenges to habit and prejudice and much more.

Today art critics also find themselves having to push back against the tendency of many museums to market their programming as entertainment, which inevitably tends toward escapist uses of attention. “Chihuly at the de Young” is a prime example of this sorry cultural drift.

Ad Reinhardt

And of course, whenever the value of art becomes the topic of conversation we have to discuss the paintings of Ad Reinhardt, or Duchamp’s repurposing of a urinal as a sculpture entitled Fountain:

Marcel Duchamp’s notorious “Fountain” (1917), a mass-produced plumbing fixture turned on its back, signed with a pseudonym and presented as sculpture, proclaimed a fissure between the concept of art and its unambiguous embodiment in objects.

If Duchamp’s gesture had found no resonance in the wider situation of culture, his prank would have been forgotten long ago. But the peculiar cultural condition that he diagnosed persists: We still seldom see thought and thing brought together seamlessly outside the realm of mechanical engineering. Artists’ struggles with this problem continue to produce bizarre and fantastically various results, some provocative, illuminating and pleasing, most not.

Political philosopher Hannah Arendt defined artworks as “thought things,” that is, things that materialize thought, things to be thought about and, in rare cases, things to help us think.

As we consider the “thought things” that are collaboratively filtered through our social media networks, often we imagine a democratic process where each participant in the network has an equal vote. Presumably the top vote getter is the thing that deserves and wins our attention. Baker imagines an attention market where the votes of contributors are given different values. We accomplish this to some extent by using the Friend, Follow and Track tools to create a directed social graph that filters the firehose of information pouring off the Network with each tick of the clock. These tools are coarse filters when compared with the finely-tuned mesh of the art markets. Baker’s vision of value discovery in our attention markets reveals a possible future state of our social media toolset.

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XMPP Tribes: Have You Ever Been Experienced?

Jimi Hendrix and Buddy Miles

As we start to gather in tribes across the real-time web, dimensions of the value that is created begin to surface. How can the tribe help the individual where The Google can’t? I’m starting to read Richard Thaler and Cass Sunstein’s Nudge, a book about behavioral economics. In the introduction of the book, they discuss the idea of Choice Architecture. And it was immediately apparent that this concept needs to be included in Vendor Relationship Management. There are many aspects to choice architecture, but I’d like to focus on a common false assumption:

…that almost all people, almost all of the the time, make choices that are in their best interest or at the very least are better than the choices that would be made by someone else.

Imagine yourself buying a digital camera, selecting a health plan or planning a diet. How much experience do you have in each of these areas? Do you have what it takes to make the optimal decision?

In many areas, ordinary consumers are novices, interacting in a world inhabited by experienced professionals trying to sell them things. More generally, how well people choose is an empirical question, one whose answer is likey to vary across domains. It seems reasonable to say that people make good choices in contexts in which they have experience, good information and prompt feedback–say, choices among ice cream flavors.

How can I augment my experience in any specific transaction context? My XMPP Tribe can help me right now, in real time, through my iPhone. So why is asking the tribe better than reading user reviews? Because the more you read online reviews, the less you know. If there are a large volume of reviews, you can be certain that almost every possible viewpoint will be represented. My real-time tribe can even help me properly filter anonymous reviewers.

The normal sales transaction context involves a high degree of information asymmetry. VRM attempts to turn the signaling context around. Rather than the vendor signaling the customer, the customer signals the vendor– but this does nothing with regard to the uneven distribution of experience within the transaction. VRM can’t just be about signaling and paying for what you like. It’s also about creating a consideration set and making a choice that leads to a transaction. And if domain experience is lacking, the real-time tribe makes up the difference and augments the customer’s knowledge– an instant injection of experience.

Have you ever been experienced? Well I have…

If you can just get your mind together
Uh-then come on across to me
We’ll hold hands and then we’ll watch the sunrise
From the bottom of the sea
But first, are you experienced? 
Uh-have you ever been experienced-uh? 
Well, I have
(well) I know, I know, youll probably scream and cry
That your little world won’t let you go
But who in your measly little world, (-uh)
Are you tryin’ to prove to that you’re
Made out of gold and-uh, can’t be sold
So-uh, are you experienced? 
Have you ever been experienced? (-uh)
Well, I have
Uh, let me prove it to you, yeah
Trumpets and violins I can-uh, hear in the distance
I think they’re callin our name
Maybe now you can’t hear them,
But you will, ha-ha, if you just
Take hold of my hand
Ohhh, but are you experienced? 
Have you ever been experienced? 
Not necessarily stoned, but beautiful

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The iPhone’s Missing Copy & Paste: The Dog that Didn’t Bark in the Night

The great american philosopher Steven Wright wrote this profound fragment about the Network and Identity, or maybe it was just a joke.

I woke up one morning and looked around the room. Something wasn’t right. I realized that someone had broken in the night before and replaced everything in my apartment with an exact replica. I couldn’t believe it…I got my roommate and showed him. I said, “Look at this–everything’s been replaced with an exact replica!” He said, “Do I know you?”                    — Steven Wright

You can look to Jameson or Baudrillard to learn about the simulacrum, but Wright really nails it. In the digital world the line between an original and a copy is blurred. That’s why it’s difficult to bind a unique digital identity to a person. And as Chris Anderson has noted, the cost, or lack thereof, of digital copies has disrupted the economics a number of industries.

This connects to a mystery about the iPhone. What’s the reason that copy and paste is missing? The underlying operating system is OSX, so it’s obviously supported. It’s a function has been supported from the very beginning of the computer. Perhaps it’s a signal of a new kind of limit being enforced on the digital world.

Imagine an abstraction layer up the stack from the digital. Imagine a new digital world where there are no originals and there are no copies. The iPhone only consumes pointers, names that point to a location. The location can be secured and access controlled, and a form of the old economics emerges. Sure, once you’ve downloaded a file, digital economics rule the day, but not on the iPhone. No copy and paste.

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