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Is Web 2.0 an Engine of Inequality?

According to a Stephen Carr review of Nicholas Carr’s new book comparing the economic impact of the rise of the electrical grid and the rise of the internet, it may well be:

[Carr] describes a world in which a handful of lucky and brilliant entrepreneurs uses the World Wide Computer to tap humanity’s smarts and creativity for free, à la YouTube and Wikipedia, while putting legions of information professionals out of work. If that’s not dreary enough, he predicts that companies and governments will be able to harvest data from these networked computers to track our behavior and, ultimately, to control us.

I have a paper forthcoming on how some regulatory moves now could help assure that the “leveling effect” of companies like Google persistently helps society generally–rather than just transferring wealth from creators to new intermediaries. (I’ll get it on SSRN soon, I promise!) For now, let me recommend blogs like C.E. Petit’s, which has a good handle on the real economics of creative industries. I also think works like Soren Mork Peterson’s and Trebor Scholz’s ask interesting questions about the blurring of work and play online, though I don’t necessarily come to all of their conclusions. Here’s Scholz:

Jeff Howe of Wired introduced the term “crowdsourcing,” . . . [which] means that a company outsources a job usually executed by an employee to a large, undefined group of people through an open call over the Internet. This group receives little compensation or no pay at all.

[Don Tapscott’s book Wikinomics] describes with single–minded focus how to squeeze profits out of peer–to–peer technologies and even refers to the Katrina People Finder project. When interpreting the new conditions for production and consumption online, his sole mission is a socially friction–free update of [old] power dynamics. He discovers and celebrates how today, perhaps more than ever, fewer and fewer people can become richer and richer by using the very many who earn less and less.

Though I have a somewhat sunnier view of Wikinomics, I see Scholz’s point. People may laugh when critical scholars ask whether social networking sites are exploiting them. But when network effects are powerful enough, the analogy of a social network to a “company town” is not far-fetched. Given that dynamic, policymakers need to consider how to give users real options with genuine data portability and other rights.