26 Jul 2017
Incentivizing production of information goods
Just thinking about approaches to incentivizing production of information goods, and where futures markets might fit in.
Artificial property
Article 1, Section 8, of the US Constitution still covers this one best.
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
We know about the problems with this one. It encourages all kinds of
rent-seeking and freedom-menacing behavior by the holders of
property
interests in information. And the transaction costs are
too high to incentivize the production of some useful kinds of
information.
Commoditize the complement
Joel Spolsky explained it best, in Strategy
Letter V. Smart companies try to commoditize their products’
complements.
(See also: the list of business models in the Some
Easily Rebutted Objections to GNU’s Goals
section of the GNU Manifesto)
This one has been shown to work for some categories of information goods but not others. (We have Free world-class browsers and OS kernels because search engines and hardware are complements. We don’t have free world-class software in categories such as CAD.)
Signaling
Release a free information good as a way to signal competence in performing a service, or at least a large investment by the author in persuading others that the author is competent. In software, this works at the level of the individual labor market and in consulting. Also a major part of certain kinds of ad-supported business models.
Game and market mechanisms
With “gamified crowdsourcing” you can earn play rewards for very low transaction costs, and contribute very small tasks.
Higher transaction costs are associated with “crowdfunding” which sounds similar but requires more collaboration and administration.
From games to markets
In the middle, between crowdsourcing and crowdfunding, is a niche for a mechanism with lower transaction costs than crowdfunding but more rewards than crowdsourcing.
By using the existing bug tracker to resolve contracts, a bug futures market keeps transaction costs low. By connecting to an existing payment platform, a bug futures market enables a kind of reward that is more liquid, and transferable among projects.
We don’t know how wide the bug futures niche is. Is it a tiny space between increasingly complex tasks that can be resolved by crowdsourcing and increasingly finer-grained crowdfunding campaigns?
Or are bug futures capable of achieving low enough transaction costs to be an attractive incentivization mechanism for a lot of tasks that go into a variety of information goods?