The Next Generation Sharing Economy

The press has been deluged in recent times with reports about the surveillance and eaves dropping employed by intelligence and security agencies around the world. Barely a week goes by without a new revelation being announced. But it cannot be ignored that surveillance is big business and this is in fact the way in which many of the largest Internet companies make the vast majority of their revenue. These businesses don’t call it surveillance of course, they call it advertising.

Google generated revenue of $66 billion in 2014, 89.5% of which came through advertising, while Facebook generated 88.5% of their $12.5 billion revenue via the same source. As I said, selling access to us and our data is big business. American cryptographer Bruce Schneier summed the situation up very nicely advising that ‘surveillance is the business model of the Internet’. Informing us, as others did before him, that we are not the customers of these services, we are the product itself, the advertisers are the customers.

This model has been the dominant force for a number of years, but is it all the fault of the Google’s and Facebook’s of this world? Can we lay all the blame at their door? Maybe in part, but we were the all too willing recipients of the ‘free’ services. I suspect that only a small minority of us stopped to think that the seemingly complementary search, mail, maps and social networking platforms came with a higher price. Although most of us didn’t realise the extent of it at the time that price was and is our privacy.

But it is not only our freedom and liberty that is at stake. Our economic well being is also at great risk. This may seem a counter intuitive statement at first glance, how can free services be bad for our economic situation? It may be bad for our privacy, but surely it’s good for my wallet!

Companies such as Google and Facebook act as central intermediaries between us and our data. They pay a substantial amount on infrastructure costs (servers, data centres, support staff…etc…) which they use to host their platforms and our data. But when you think about it, how much information and useful content do they actually produce? The answer you quickly realise is very little. They are in fact aggregators and organisers of other people’s content.

So if you think about YouTube (owned of course by Google), Facebook or Google search, it is not their video’s, feeds and search results being shown, they are ours. We are the content creators here, yet how much are we financially benefiting from this arrangement? Very little of that $66 billion is coming our way.

So, this centralised architecture also centralises who benefits financially from the Internet, creating what technologist Jaron Lanier (in his excellent book Who Owns The Future terms ‘a winner take all economy’. Consider the following chart.

Compensation-existing

What this depicts is a minority of earners taking the vast majority of the revenue, concentrating the power and wealth in the hands of just a few. This is what the centralising architecture of the Internet currently creates and this is the economy we continue to choose to support when we use these services.

Our desire for free (in the monetary sense) content and free services will lead to an ever greater sphere of influence being harnessed by an elite group of people and companies, making decisions that improve their own financial well being, not ours. It should not escape our attention that many of these large Internet companies are public, significant as the law dictates that their duty is to increase the profitability of their shareholders which is likely only to exacerbate the problem.

As Lanier points out, there is an alternative to this winner take all economy, however, one that will improve the online distribution of wealth. That is to reward everyone that contributes to the Internet, directly compensating the content creators rather than channeling the incentives into the hands of just a few. It would seem like a much fairer and more sustainable system where we provide value to those who create it, rather than those who aggregate it. Don’t get me wrong, aggregation and the hosting of others data is a valuable service, but it should not receive 100% of the reward.

In this context, content creators could be a: blogger, journalist, artist, film maker, musicians, application developers, even end users with a social network account and a video camera. As my colleague Paige Peterson pointed out in an earlier post, the advent of crypto currencies like safecoin, with their almost zero transaction fees, enable almost instant micro payments and donations to take place.

Bloggers could be paid or tipped by users as their posts are read and enjoyed. News websites could function in the same way, or they could charge a subscription for providing well researched and useful information. Potentially, artists and film makers (this also includes those sharing funny home clips on YouTube) could make use of the SAFE Network’s optional watermarking system to ensure that they are rewarded as the originator of content and continue to be rewarded as snippets of their song or film are built upon and used by or aggregated by others. Digitally recording the content creators (through an anonymous ID) of each piece of work will enable the network to manage and pay out rewards without human intervention and without corruption.

Some content creators may earn slowly at first, but as their content is used over and over again and accessed by a global network of consumers, their income will grow. This will give rise to a possibility of migrating from a ‘winner take all economy’ to a more bell shaped distribution of wealth (depicted below) where income is much more evenly spread amongst a greater volume of earners. In this paradigm, power and wealth would not be focussed toward the elite minority creating a next generation sharing economy.

 Compensation-SAFE

We may also find that under this new model the content itself will start to improve. The act of paying for something would increase user expectations and we would demand better material from creators who potentially have more time and effort to devote to their chosen area as the ‘real’ jobs used to pay the bills are no longer required.

You may be reading this in agreement with the concept of paying for content and the benefits it may bring, but believe the mindset and economic shift required to make this transition too big and unrealistic. Why would people voluntarily start paying for something that we currently get for free? If I was suggesting that people pay with existing FIAT currencies then I would be inclined to agree. But if users were rewarding content creators with safecoins that they earn by contributing their spare computing resources to the network then I believe you have something very exciting.

Safecoin will have a very low barrier to entry, making it possible for anyone with a standard commodity PC and an Internet connection to earn them. The SAFE Network also enables micro payments to occur at network speed with almost zero transaction fees. Content creators can then convert the safecoin they receive into another crypto currency or even into cash using decentralised exchanges

With the SAFE Network coming to fruition in the not too distant future, I anticipate that it is the beginning of the end of our reliance on advertising and surveillance as a business model. The technology companies of the future will be fairly compensated for the service they provide (1 x safecoin per hundred searches, or 1 safecoin for every 20 posts, for example) on a new Internet where creating valuable data will become the new dominant business model in an economy in which we all share.

12 comments

    1. The reason I had written almost zero transaction fees was that it may be a possible for an adversary to attempt to overload the network with a huge volume of transactions without a disincentive (fees) for doing so.

      1. A large section of ‘annoyance’ on the net is caused by the zero cost of transactions. Spam email, advertising both rely on mass distribution of content which has very low relevance, but retains a “quantity x clickthrough x ‘purchase rate’ “ratio still exceeding cost, making it an attractive business case for the distributor. An asymmetric cost model , that makes mass distribution disproportionately expensive, or that penalises traffic such as those we call ‘background noise’ on the current Internet would need to permit (for example, broadcast video).

        Perhaps, senders that are authorised by recipients pay nothing. But ‘requests for authorisation’ carry a cost.

        Safecoin is an ideal commodity for this.

      2. It’s a good way to help deal with the noise issue, Michael. Recipients advise that they are open to receiving adverts on specific topics/interests could even be paid by the advertisers for allowing them to send their promotions. Alternatively, or in addition to this, companies are given X number of messages to send, but their sending mail box can only send this fixed amount. If they are getting no response from recipients, they will be compelled to keep the list clean and relevant to maximise returns. This also makes mass distribution only possible if the recipients have opted in, while incentivising advertisers to concentrate on the relevance of their lists.

        I agree, safecoin will be a nice way to transfer this value around the network.

  1. Historically we have always argued for a free and open internet so that to pay for many of the services, advertising became the answer. This pays, as you have said for all the servers that provide the access to the services and the aggregation to the contributions of us, the mass. With a ‘pay as you go’ and if our content is accessed then we get paid. That leaves the mass of servers that aggregate this content, the lines of communication (the cloud) mainly provided by the world’s largest telecommunications companies that connects all these safely distributed servers, the points of connection to the massive cloud of interconnection and the ‘last mile’. Most of us are paying for the ‘last mile’, but won’t this concept result in the other participants to providing the service that we want from this cloud now feel they are entitled to some compensation? It is a fairer equation for all but, in the end, we, the consumer, may find that the service becomes more costly.

      1. The world cloud is a mass of communication lines, servers, routers, points of interconnection and so on. In your concept, how will these other participants to the world cloud be paid? Will we the user, consumer or business, have to pay some charge for the use of all that makes up what we call the cloud?

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