Column: Online Marketplace Delayed

Let’s monetize the internet! This is what critic Jaron Lanier, formally known as virtual reality-evangelist, suggests in his latest book Who owns the future?. The problem, Lanier thinks, is that more and more jobs are being converted into some sort of information services. The effect of this, he thinks, will be that sooner or later these services will become free. Nobody is going to pay for them anymore. The remaining revenues will go to Google and other big players, while ordinary folks will end up with empty pockets (see also Waldemar Ingdahl’s recent Netopia-column on Robots Will Take Your Job.

Fortunately, Lanier has not only detected a problem, but also a solution to offer. He proposes to turn the internet into a real economy – an economy, where money is being paid for information, and where the producers of information get their share from the profits.

Let’s think about this. Sure: The owners of “Big Data” have gained enormous power. It was the combination of algorithms, robotics and real-world data, fed into the car’s navigation system, which made it finally possible for Google’s engineers to create a driverless car. Nobody had this expected to happen so soon. Frank Levy und Richard Murnane in their widely observed book The New Division of Labor: How Computers are creating the next Job Market had still claimed in 2004 that autonomous driving wouldn’t be possible in the near future. The internet also has led to the co-evolution of innovative business models like Amazon’s Mechanical Turk and a rising class of freelancers which are particularly vulnerable to exploitation. One example of a player in this field is the platform ODesk, where freelancers from all over the world are selling their work. Whoever, as a seller, wants to profit from that marketplace has to cope with competitors from the Philippines and India offering to work for less than three Euro per hour.

Is this situation, which can be observed in the field of creative services, really indicative for the economy at large? Rather not. Take self-employment. Recent cross-national studies by NYU-Sociologist Richard Arum and by the Mannheim Centre for European Social Research reveal that self-employment and solo-entrepreneurship is neither ever-expanding, nor dominated by sub-contracting and temporary work. In fact, the combination of low income and high academic or professional qualification (which describes pretty well the situation of many freelancers in the creative economy) does not even appear in the statistics! Whatever happens to those jobs in the creative field: It should not be confused with the larger picture concerning middle-class income opportunities.

Another point is this: Although it is true that many services and products in the information sector are offered for free, it does not follow that workers in that field suffer from low income for that very reason. Indeed, earnings for software engineers have rather been rising in the last years, although many of the most successful products are offered for free and open source.

Thus, the problem which Lanier describes is rather ill-stated. But his solution is worth considering nevertheless. Bringing money into the game could help to create high-quality content and services which are not accompanied by tracking and privacy-violations. Some might claim that monetary rewards would crowd-out incentives for volunteering and thus destroy the gift-economy which makes projects like Wikipedia possible. This must not necessarily be the case, as the German net-activist Markus Beckedahl has recently explained in an interview: Financial gains could also be used to secure funding for collaborative open source-projects.

One obstacle still stands in the way to turning the online-world into a marketplace where ideas and creative content are traded not for reputation and attention, but for real money: Micropayments are still rather expensive. Whereas paying with cash imposes no additional costs upon the customer (and using a credit card causes little or no direct expenses), PayPal charges 1.9 per cent plus 35 cent for each transaction – which, for small payments, is almost prohibitive. In addition to that, one would rather like to see this business in other hands than those of a monopole player. Helping an alternative online-currency emerge would, in the end, be a task for the government. Government is funding the production and distribution of cash. It should also help micropayments to develop into a viable alternative.

Ralf Groetker
Journalist, writing on Science, Technology & Society