The [Public] Good, The Bad, & The Ugly
A Call for Digital Commodities as Public Goods for Local Internet Communities
“If we only treat code as a commodity then producers have clearly lost the war on value.”
Nadia Eghbal, Working in Public
*Part 1 of a 2-part essay series on digital public goods. This essay is followed by “In Favor of Heterodoxy.”
Public goods are many things.
Formally, in economics, they represent a subset of goods that are non-excludable (no one can prevent anyone else from consuming them) and non-rivalrous (one person’s consumption does not affect the consumption of others). The best example is the air we breathe. Because of the resultant free-rider problem, public goods are also an instance of market failure—that is, the market does not efficiently allocate resources to produce them.
Since the market fails to provide public goods, government has traditionally stepped in to fill the gap. And as in most instances of government intervention, public goods are then condemned as barely-masked rationales for state coercion, which raises a host of questions. Why should governments have power fund projects through forced taxation? How should governments decide where to allocate public resources? Are government decisions even reflective of the public’s preferences?
But public goods can also be a source of opportunity and radical innovation, with the government shouldering the necessary funding and long-term investment horizon required by genuine technological research and development. Rather than remain in the silos of self-interest, the pooling of collective resources towards public goods allows humanity to achieve remarkable things. Those who take this perspective tend to point to the government’s crucial role in the development of new technologies like the Internet and the iPhone.
Accordingly, public goods tend to create widespread value, or public “good.” The research organization, Other Internet, states, “Any definition of public goods presupposes a shared understanding of what is in the public’s benefit, and why.” It follows that public goods are also moral dilemmas: arguments swirl around how to define public goods and who should decide what is actually good for the public.
Turning towards the digital realm, I argue that the majority of digital commodities should be freed of artificial restrictions and provided as public goods by “local” Internet communities of mutual exchange.
In this, the first of a two-part essay, I introduce the case study of open source software (OSS) as a paradigmatic example of digital public good provision. I then apply the learnings to other goods distributed online and categorized generally as content—including textual, visual, and audial artifacts. Illustrating the current state of the value-destructive market for artificially-commodified digital goods, I present my argument for an alternative system of exchange—one built on “open source” information, knowledge, and culture goods. To support this idea, I outline three primary building blocks of a new, public goods-based digital economy: the changing relationship between producers and consumers, intrinsic motivators of human behavior such as status and reputation, and “local” Internet communities defined by shared values.
Commoditize This
“From its earliest days, the free exchange of information has therefore been firmly embedded within the technologies and social mores of cyberspace.”
Richard Barbrook, The Hi-Tech Gift Economy
Barbrook’s quote illustrates the well-documented history of digital public goods, particularly within the OSS ecosystem. Just like one of the most prominent categories of physical public good, infrastructure, anyone can consume (“read”) OSS. But, specific to OSS, anyone with the technical capability can also copy (“fork”) and improve it, making the code a shared resource that can be innovated upon. As a result, OSS—which includes TCP/IP and HTTP protocols, internet browsers, and the Linux operating system—has been able to aggregate global human capital in a completely new, collaborative way, and form the foundation of the modern digital world. Illustrating just how invaluable OSS is, Nadia Eghbal proclaims, “If an open source project goes down, it can literally break the internet.” Non-excludable by design, investing money and labor into OSS has nevertheless generated immeasurable benefits for the public.
Despite bearing near zero marginal costs to reproduce and distribute, software is not always allowed to remain open source—or a public good. And this applies to other digital goods as well—goods that broadly reside within the categories of content and information. These goods, including everything from blogs to mixtapes to memes, have historically had a strong association with the commons and non-market exchange. However, the reaction of private companies to the inherent global distribution and non-excludability of digital goods has been to erect artificial gatekeeping in order to create more functional, “free” markets and apply their vestiges of traditional business models. Where the Internet has undermined the basic features of commodity exchange—primarily the ability of sellers to force consumers to pay for the goods they use—producers and distributors have restricted access to enable monetization. As a result of for-profit mandates, software was initially put into a box that could be more easily commoditized and sold—a physical constraint that has since been complemented by legal ones in the form of patents, copyrights, and licenses.
Culture has always been disseminated through content, just as knowledge is disseminated through information. The restricted distribution of code and other forms of digitally-recorded content and information imposed by commercial self-interest—not the limitations of technology—has thus suppressed culture and knowledge, and decreased overall social welfare. For that reason, we must fight the commodification of these digital goods. The conclusion that social value would instead be maximized by open distribution and free consumption demands that a new system supplant the entrenched regime of commodity exchange. Therefore, I call for an alternative model founded upon the widespread provision of digital public goods to ensure more efficient production and maximal public “good.”
[Beyond] The Gift
“Man’s economy, as a rule, is submerged in his social relations. He does not act so as to safeguard his individual interest in the possession of material goods; he acts so as to safeguard his social standing, his social claims, his social assets…The economic system will be run on noneconomic motives.”
Karl Polanyi, The Great Transformation
Transitioning from a digital economy steeped in forced commoditization to one that runs on a foundation of public goods requires individuals and companies to maintain open-source software, remove paywalls, and expand access to APIs. However, predictable pushback from traditional economics would assert that self-interested, rational actors would never participate in any of these activities if they are unable to sell or exchange their efforts for a price. To this, I submit the following—each to be addressed in turn:
Removing restrictions on digital goods and freely distributing them as public goods engenders a fundamental change in the relationship between producer and consumer;
Moving beyond extrinsic financial incentives means leaning on intrinsic motivators of human behavior, such as status, reputation, and a sense of community; and
Maximizing social welfare requires gathering consensus regarding what is “good” at a smaller, “local” level, and scaling towards a global public.
Prosumers
Without excludability, sellers lose the ability to force consumers to become buyers and pay for the goods they produce. However, within digital environments, users become developers and content creators, blurring the lines between consumer and producer and creating powerful implicit incentives to engage in the exchange of goods and labor. This unique structure gives rise to what Alvin Toffler called a “prosumer” and has generated feedback loops of innovation and quality assurance within the OSS space now envied by some of the biggest corporations. Just look at Wikipedia, the consummate example of how consumers became creators within the business of information, coming together to form a hugely successful collaborative online environment.
Crucially, distributing free goods on the Internet—producing digital public goods—does not arise from the goodness in people’s hearts. Instead, it integrates both altruistic and self-interested motivations, as participants acknowledge the value of what they receive in return for their labor. In the case of Wikipedia, contributors receive both personal and social satisfaction in exchange for their efforts, such as the sense of solidarity or allegiance with other contributors. Writing more generally about digital markets, Rishab Aiyer Ghosh points out the asymmetry of goods exchange that takes place online. In exchange for producing one thing of value, an individual is able to freely consume “millions of unique goods made by others.”
This component of a public good-based digital economy aims to replace the asocial producer-consumer relationships of a traditional market system with a new model founded upon positive-sum cooperation rather than zero-sum extraction. And because this new socio-economic system of production has prompted more altruistic behavior within the digital world, some have likened it to a gift economy. DeLong and Froomkin explain:
“The relationship between producer and consumer becomes much more akin to a gift-exchange relationship than a purchase-and-sale one…The user sends money to the producer not because it is the only way to gain the power to use the product, but out of gratitude and for the sake of reciprocity.”
Much has been written about gift economies, within which reciprocity underlies economic exchange and social relations. For our purpose, analyzing the concept of reciprocal exchange on the Internet helps reveal rationales for why some would voluntarily give, as well as potential solutions to the free rider problem. And only then, do “free” digital goods begin to appear not so free after all.
Status
In the gift economy of the Internet, individuals produce digital public goods not for money, but for alternative, scarce mediums of exchange: attention and status. In “Homesteading the Noosphere,” Eric Steven Raymond identifies the novel incentive structure within the free software movement as a gift culture, where reputation is determined not by what you control but what you give away. Reciprocity plays out as users pay through the allocation of their attention—and the associated assignment of status—which the developers repay through the production of future public work. By aggregating attention and promoting the accumulation and display of reputation, platforms such as Github then enable a status economy to form, gradually shifting the focus from what the developers make to who they are. Expanding this concept to all digital creators, Eghbal continues, “In today’s world, increased social status is the expected reward for making things. It’s how platforms motivate creators to continue publishing things”—a perspective that is expanded upon in Eugene Wei’s canonical essay. This way, earned status and reputation become the most important determinant to the future earnings of social actors within digital economies.
We build and share things on the Internet for the social and cultural significance of our work—that is, because we know others will see them. Yet, to support the producers of digital public goods, the associated status and reputation must be easily convertible into economic value, which I see increasingly playing out through patronage, curation (or paying-for-quality), and digital token-based ownership.
i. Patronage supports a creator based on their public work and reputation, and includes mechanisms such as grants and retroactive funding. If performed consistently and effectively, this funding mechanism sends credible signals to creators that funders will continue to pay for their future work. In this sense, it is important to distinguish patronage from donation or charity, as patronage is a means to ensure the continued production of a consumer’s preferred goods. Enforcing a value-added system of patronage thus incentivizes persistent creativity and innovation on behalf of the producers, instead of an extractive system of patents and royalties that uphold static commodities and enforce the maintenance of the status-quo.
ii. In addition to paying to make sure your favorite creators keep producing, in the Internet of abundance, it will be increasingly important to pay for quality. In his adaptation of ESR’s essay, Alex Danco states:
“Abundant environments may surprise you: even though they’re lacking in material scarcity or literal friction, there’s still plenty of work to do. It’s just a different kind of work: the work of dealing with complexity, clarity, curation, and especially synthesis.”
As the digital goods on the Internet become ever more abundant—particularly with the proliferation of our fellow AI creators—a hyper-focus on the quality of those goods will surface. This increased focus on curation and synthesis—making sense of all the noise—will depend on a third scarce resource within the Internet’s gift economy: legitimacy. Determining and ensuring the legitimacy of creators, and the code and content they produce, will generate significant value—meaning consumers will increasingly be willing to pay for it. As a consequence of the bottom-up cultivation of interests and culture they enable, decentralized autonomous organizations (DAOs) will be in a prime position to provide these curation services and distribute the ensuing value to their members.
iii. The first two compensation methods would mean nothing if creators were unable to accumulate and maintain ownership (i.e. capital) over the value they create—the value of their Internet “homestead.” This function is, of course, enabled through the value distribution and accounting capabilities of blockchain-based tokens. As argued in a previous essay, I believe this value will primarily take the form of tokens representing digital cultural capital—accumulated skills, knowledge, and experience that promotes perceptions of the possessor’s legitimacy and status. I wrote that the potential benefits of this type of capital represent “integral elements that constitute individual identities and produce certain advantages in a given social context.” Tokens earned through the production of digital public goods will accrue value through the time, labor, and skill necessary to obtain them—value that can then be realized through the enhanced liquidity offered by the tokens themselves.
Locality
I now turn to the final foundational element of a new digital economy: “locality.” In his essay, “Vertical Communities,” Noah Smith worries about the future of physical public goods because of the preference fragmentation engendered by online spaces. Smith differentiates between “horizontal communities” dictated by geographical proximity and the “vertical communities” enabled by technology and united by values. Because the Internet lets us find and connect to people with similar interests, rather than interacting with whoever is closest to us, our preferences are shaped globally rather than locally. And since economics teaches us that public goods are easier to provide when people have homogenous preferences, vertically-formed communities will likely continue to exacerbate the problems facing governments in the provision of public goods.
Adopting this framework, I argue that promoting the efficient provision of digital public goods—the public goods strategy that maximizes social value and welfare—depends upon the participation and coordination of small, “local” online communities. In this sense, I use the term “local” to indicate verticality, representing the communities that are formed by means of closely aligned interests and values rather than proximity. These communities can then be organized into DAOs in order to coordinate the funding, creation, and maintenance of their common resources and goods. Instead of 1000 true fans needed to support a successful online creator, I claim that small, local communities (represented here by the trope of 1000 true fans) will support and scale the successful provision of digital public goods
Like physical infrastructure, the value of digital public goods exists on a social level—that is, they derive their value from those who use and depend upon them. Other Internet adds, “No matter their claim to universality, instantiations of public goods are always local.” In the digital world, locality is created through shared space and time, as well as the interests and values that generate shared conceptions of what is considered “good.” Egbhal insightfully claims:
“Infrastructure is recursively defined by public consensus. It’s the set of structures we’ve collectively decided are most valuable in any given moment, and, therefore, its boundaries and definitions are expected to change over time.”
To maximize social value, sustainably provide digital public goods, and overcome the challenges faced by local governments today, deliberation and consensus need to occur at a local level on the Internet. Accordingly, small online communities, operated through DAOs, will evaluate which goods to support, build, and maintain. Instead of the top-down assignment of value imposed by large companies and capital allocators, perceptions of worth will be cultivated from the bottom up—a visual that underscores the verticality of these communities.
Conclusion
Along with OSS, the production of knowledge and cultivation of culture on the Internet has a long history of occurring in an environment dependent on the provision of public goods. As Yochai Benkler states:
“The most valuable resources—information and knowledge—are themselves a public good, and the best way to develop and maximize this good is through millions of networked people pooling that knowledge and working together to create new products, ideas, and solutions.”
As a result, I fear the restriction and stagnation imposed by today’s dominant companies and platforms. But when you combine the ability to build global communities of mutual exchange and reciprocity around interests, with the ability to capture and monetize the value produced within and between those communities through blockchain technology and digital tokens, the future of digital public goods looks bright.
And as we will see, this organizational structure—characterized by modular, local online communities—generates positive externalities for all digital social actors. In the second part of this essay, I will explore these effects, along with the ways web3 technology uniquely enables the widespread provision of digital public goods, answering the important question: why now?
More specifically: what has changed within our digital world to make this shift not only possible, but necessary?