Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Saturday, May 28, 2005

Peer Production, Markets, and the 3rd World

Citizen journalism, aka CCJ, is breaking like a storm, it seems, across the States. A couple of things strike me as noteworthy as mentioning about peer production.

1) The Spectrum of Peer Production Markets

If it's not already obvious, citizen journalism is a weak (the weakest) form of peer production. The productivity of peers is bounded by how costly access to the means of production is, and how costly it is to coordinate the sharing of ultraspecalized information about inputs and outputs (ie, who's the 'best' citizen journalist for a particular article/paragraph/sentence?).

Now, bringing these costs down is a function of technology. I call creating such a discontinuous cost advantage a coordination economy.

It's easy to create coordination economies for things like newspapers and encyclopedias. So we can visualize a peer production spectrum: on the one hand, low complexity goods (like newspapers and encyclopedias), which require little technical knowledge, and on the other hand, high complexity goods, like fabs, which require detailed technical knowledge.

What's interesting about this? Well, the fact that entrepreneurs are focusing, at the moment, at the extreme ends of the spectrum. But there's a whole range of possibilities in between - and these possibilities are really where the returns are.

That's because each peer production market (ie, news, music, etc) will be a winner-take-all market. Now, by definition, prices for low complexity goods will be lower than prices for high complexity goods. But costs for peer production infrastructures stay relatively stable in complexity. So you're better off investing as far up the spectrum as you can.

In fact, smart VCs and entrepreneurs were ahead of the curve by investing up the peer production spectrum. Plays like SecondLife (LindenLab) and Habbo Hotel (Sulake), I suspect, are going to be about much more than virtual marketing - they will ultimately become peer production platforms. This is already happening to a great extent on SecondLife.

2) Peer Production and Human Capital

It's obvious that peer production depends crucially on human capital - on communities of ultraspecialized microproducers each contributing their own tiny chunk of larger goods.

Now that I'm back in the 3rd world for a few weeks to take care of my grandmother, it strikes me as how impossible peer production is here.

A huge proportion of the population is still illiterate - let alone being able to user a computer, surf the net, and contribute knowledge.

So, I think, peer production is going to bring the human capital gap into stark relief.

I mean, here, mass media hasn't even really happened properly, let alone peer production and micromedia. It's quite amazing.

-- umair // 12:56 PM // 0 comments


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