Review of “The Wealth of Networks”

The Wealth of Networks: How Social Production Transforms Markets and Freedom.  Yochai Benkler.  Yale University Press, 2006.

In “The Wealth of Networks”, Yochai Benkler examines how the Internet and digital technology is changing society.  Benkler describes new types of collaboration as “social production”. In his view, non-market innovation is reshaping markets, while at the same time offering new opportunities to enhance individual freedom, cultural diversity, political discourse, and justice. Benkler also highlights the role for law and politics, calling for “an embrace of the networked information economy by anyone who values human welfare, development, and freedom”.

Benkler is a Yale law professor. Prior, He was a professor at New York University School of Law and Harvard Law School. He was a faculty co-director of Harvard’s Berkman Center for Internet & Society.

Benkler uses the first part of the book to describe “networked information economy”, a term he uses to describe the production, distribution, and consumption of information as enabled by digital technology and the Internet. Benkler’s focus is on commons-based approaches to creating information in networked environments.  

Benkler then went on to examine the impact of the shift from industrial to a networked information economy, specifically liberating individuals to better able to do things “for and by themselves”. Benkler further points out its culture implication, and predicts the decline of mass-media as a result of the newly-gained freedom. Individuals are better informed, empowered to act, thus becoming more “active participants in producing their own cultural environment”.

Finally, Benkler offers his perspective on the necessary social practice and political actions, to protect the emerging “networked information economy”. Benkler believe the incumbents, such as Hollywood and recording industry, will attempt to influence policy and laws to resist change. He calls for law and regulations to embrace the rise of commons based information production.

In analyzing the book’s arguments, Benkler makes a strong case for the phenomenon he calls “networked information economy”. Throughout the book, Benkler provides concrete evidence, with sufficient in-depth technology descriptions, and solid data, to back up his claims. Benkler is particularly strong in capturing the essence of complex technology, in the context of digital economy.

Benkler’s thesis of “social production” is built around how network information economy has empowered individuals, and consequently, encouraging collaboration among peers to produce information of significant social value.  Again, Benkler deployed his legal expertise, backed up by an amazing array of intriguing stories, like the one about rice genome (337).

However, Benkler’s presentation of “peer production” tends to underestimate the role of leadership and management, which leaves a critical gap. Benkler sometimes mixes mass production with collaboration. Benkler’s take on the NASA Clickworkers experiment (69) is such an example. In this case, success has everything to do with the cleverness of the designers. Dividing up a large task into discreet ones to be performed by the mass is quite different from active participation through collaboration. The role of leadership is as significant in social production as in a corporate environment.

Also absent from Benkler’s analysis are those less successful social productions. The absence from Benkler’s analysis leaves a significant gap.

Benkler seems to view participants as equals, and provides little insight into the organization of a social production system. Clearly, the role of leadership is uniquely different in a social production system. Many believe that large scale efforts such as Wikipedia is successful not because it lacks a management structure but because it has a very good one. Therefore, examining the structure, the communication, and the minds behind them will provide more insight into how networked information economy functions, and its long term impact.

In analyzing the economics of social production, Benkler’s take on motivation is rather scholarly, complex and inconclusive. As an academic, Benkler does not often see the pragmatic side of motivation. Consider these from a (professional or amateur) individual’s perspective:

• Learning new skills
• Enjoyment of solving problems
• Showcasing one’s talent
• Pride and Recognition
• Opportunity to contribute

All of the above have positive career and economical benefits. And the Internet provides the perfect platform. For those in the IT profession, playing a recognized role in a social production project carries great prestige and benefits. Given the low cost of entry, it is well worth the time and effort. This is not to negate Benkler’s search for noble causes, which absolutely do exist everywhere. It is just as important to acknowledge that the rise of the network digital economy does not fundamentally changes human motivations. Rather, it simply provides the better platform to act on them.

In conclusion, Benker’s work in “The Wealth of Networks” is a profound. He pulls together perspectives from technology, law and politics, referencing an impressive array of evidence both in breadth and depth.

While the thesis is well argued and supported, Benkler’s academic approach has some limitations. Specifically, he significantly underestimates the role of leadership in networked digital economy. In doing so, he missed an opportunity to examine the emerging new and perhaps superior managerial structure that has potential implications on how work and individual careers are organized.

More than two years after its initial publication, “The Wealth of Networks” is still thought-provoking, a must read to understand and explore the social, cultural and political consequences of the digital age.

Review of Anderson’s “Free: The Future of a Radical Price”

In “Free, The Future of a Radical Price” (Hyperion, 2009), Chris Anderson describes the new digital age as a world of “abundance”. He argues that businesses can profit more by giving things away than they can by charging for them – Free becomes a business strategy.

Anderson has had an accomplished career. With a degree in physics from George Washington University, he did research at Los Alamos National Laboratory. He launched coverage of the Internet at The Economist. He has also worked at the journals Nature and The Scientist, before becoming editor-in-chief of Wired Magazine. His previously authored “The Long Tail: Why the Future of Business is Selling Less of More”, which became a New York Times Best Seller.

Anderson’s thesis is based on the observation that technology has been driving cost down to a level that is “too cheap to matter”, bringing disruption to the traditional economic model based on scarcity. Anderson uses many examples to illustrate how Internet and digital age has brought abundance of information, and how companies react and compete in this new environment.

Anderson starts by examining the history and psychology of free. He explains that free is an age old tactic that has been used successfully as a business model. Free is a weapon to generate tremendous interest, according to Anderson, therefore “there is huge difference between cheap and free” when it comes to market penetration.

Anderson then proceeds to explore abundance in the digital age. He examines the effect of faster, better, cheaper technologies – processing, storage and bandwidth, coming together to constantly driving down the cost of all things digital, which built on these three technologies. Anderson concludes that there is only one end state, which is free.

Finally, Anderson explores free as an economic model. He provides numerous examples to show how savvy businesses are already succeeding with the model. Anderson uses cable companies to illustrate the cross-subsidies model (giving away a DVR to sell cable service). He uses Flicker to illustrate the freemium model (offering Flickr for free while selling the superior FlickrPro to serious users). In music industry, Anderson highlights Radiohead’s successful name-your-own-price experiment with its latest album. Anderson went further to also examine the use of free model in the international market, including China and Brazil. While piracy accounts for a large percentage of consumption, artists can still benefit from publicity generated by free, and profit from concerts and merchandising. Anderson brings collisions of thoughts to the readers vividly, by telling stories of email battle between Google and Yahoo, as well as Microsoft’s war with open source and Linux. The most effective price is no price at all, argues Anderson.

In analyzing the thesis and arguments, I agree with much of Anderson’s assessment of the technology revolution and its impact. Anderson brillantly pointed out that the key difference between “atom” econony and digital economy is the difference between scarcity and abundance. In the digital economy, marginal cost, or the cost to make a digital copy is practically zero. With examples such as Google and Craigslist, I think Anderson has convincingly presented the case that free can be a viable business model in some cases.

Anderson is less convincing with a radical “one price fits all” model. Will all things digital eventually be free? In arguing for the case of technology driving down cost, Anderson mainly focused on content distribution. There is little coverage about content creation which is a critical aspect . In the example of music and DVD piracy, Anderson discards DRM and copyright technology, which I agree. However, by ignoring copyright in favor of free, can we sustain a creative and artistic ecosystem? Prehaps the answer is yes, but more analysis and evidence remains to be seen.

Anderson’s over-simplification sometimes weaks the argument. In his detailed analysis of Microsoft’s battle with opensource (chap7, competing with free, 101-112), he presented the a case of the software giant going from denial, anger, bargaining, depression, to acceptance. Anderson told a great story but did not serve to support his arguments. The fact is, Opensoure has gained a relatively small portion of the server market, with no significant growth. Even its biggest fans are not predicting the demise of Windows Server. From a business point of view, Microsoft probably executed quite well over the years, protecting its revenue stream, and maintaining its leading position in coroprate America.  In fact, the example is a case of coexistence of free with paid software. 

As a comprehensive study of the free economic model, Anderson paid surprisingly little attention to consumer’s role in the free economy. Low cost technology does not produce content, consumer participation does. It is an equally powerful force that works in parallel with technology, to bring abundance of content. Finally, Anderson largely ignored non-economic and social motivations behind the free movement.

in conclusion, Anderson brilliantly captured a trend and phenomenom, and brought it to world’s attention. It is well argued and supported by intriguing obeservations and real-world stories. However, there are many other factors at play in business and the world in general. Anderson’s “Free” is definitely an interesting and rewarding read, but businesses and inviduals are advised to conduct analysis and exercise judgement before applying in their specific scenarios.