Money Can Get In The Way Sometimes But It Doesn't 'Ruin Everything'

Studies

from the peer-production dept

Matthew Yglesias points to a paper by John Quiggin (of Crooked Timber fame) and Dan Hunter that looks at the growing importance of non-financial incentives for the production of information goods. They point out that efforts like Wikipedia, free software, and the blogosphere are organized in a way that’s fundamentally different from traditional for-profit enterprises. Many contributors participate for reasons other than financial gain, and the overall project doesn’t have a centralized decision-maker the way Microsoft and the Encyclopedia Britannica do. The authors advocate the reform of legal institutions, such as overly restrictive copyright laws, that implicitly assume that creative works are always produced for financial gain.

This all seems right to me, and indeed, Hunter wrote a Policy Analysis for the Cato Institute (for whom I’m an adjunct scholar) that made some of the same points. However, I think the authors overstate their case, as suggested by the title of their paper, “Money Ruins Everything.” I assume they intended this to be somewhat tongue-in-cheek, but they nevertheless do seem overly hostile toward commercial efforts. It certainly is true that in many cases, adding money to a volunteer effort will create more problems than it solves. For example, I’ve argued in the past that Wikipedia should resist the temptation to accept advertising because arguing about what to do with the money could begin to overshadow Wikipedia’s organic editing process. However, I think they go overboard when they denigrate the value of venture-backed startups. They suggest that the investments of the dot-com bubble “may have rewarded their promoters, but they produced little of lasting social value, at least by comparison to the vast sums that were invested.” But I think that if anything, the exact opposite is true. As we’ve pointed out before, the dot-com bubble was great for the economy at large, because it allowed people to experiment with a lot of new technologies and business models on venture capitalists’ dime. Investing in a bubble may be a bad investment strategy, but the results are often good for the broader society. So of course we shouldn’t adopt policies that hinder the success of non-commercial projects like Linux and Wikipedia, but we should also ensure that the legal system remains hospitable to commercial development.

Filed Under: commercial production, dan hunter, john quiggin, money, user generated content, web 2.0