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Socially Created Value

Everyone is utterly familiar with the market narrative for how “value” is created through property rights, contracts and money. But we have far fewer stories, let alone rigorous analyses, about how social communities create value – and how that value can be retained by those communities (GPL and CC licenses are two key tools, but what else can work?) My pet theory is that socially created wealth tends to “disappear” from view because market players are so adept at appropriating and monetizing it, and then pretending that they created it in the first place. The standard IP narrative kicks in, and voila! – the role of the value-creating community is obliterated.

I think about this dynamic a lot these days as I contemplate how online communities are becoming the real engines of value-creation on the Net (think blogging, wikis, P2P, public domain archives, social networking websites, massively multiplayer online games, open source software, etc.). It’s a real mind-bender for traditional content vendors to understand that piracy is not their fiercest long-term competitor; it’s user-created content and online community. Only a relatively few savvy businesses understand that there’s a business bonanza to be made by providing open platforms that leverage people’s social impulses (to share pictures, trade web bookmarks, gossip, make professional connections, rate books, meet like-minded hobbyists, and so on). The troglodytes continue to pursue the pay-per-view, lock-it-all-up model of online information and creativity — but the real money gusher will come from those who convene social communities and unleash their social energies.

Which leads me to a question that I’m grappling with – for which I don’t have the answer. When will a major player in journalism recognize these facts and invent an online business model for reputable journalism that leverages social community and rivals the profits and influence of a CBS News, USA Today or the WSJ?

In some ways, this is already happening with major blogs and alternative news sites; it just hasn’t been publicly recognized.
Jay Rosen’s essay
for a “Journalism, Blogging and Credibility” conference in January 2005 is germane here: social trust is migrating to online venues, but mainstream media haven’t learned how to follow. Why not? I think it’s because the business of journalism, a captive of its mass-media paradigm, can’t recognize the value-creating capacities of readers in the networked environment, and change itself accordingly. Its failure to innovate could be fatal. As social credibility and trust migrate online, the agenda-setting power and influence of mainstream mass media will decline. It already has; think of the betrayals of trust committed by Judith Miller, Bob Woodward, Dan Rather, Jayson Blair and more generally, the Washington press corps – many of which were exposed by bloggers. As Craigslist, Huffington Post, Raw Story and other online venues become more efficient, trusted, versatile and speedy in providing everything from classified ads, news-gathering, punditry and even celebrity gossip, traditional mass media will lose their economic base. Their “voice of God” objectivity and brand franchises are already taking a drubbing.

I’m convinced that distributed user communities will be the foundation of a new genre and generation of journalism. That’s where the real value-creation is occurring. But how will the MSM adapt? Can it adapt without a wholesale change of identity? These are questions I keep returning to.