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PhUSE 2009


Benkler’s book provides a scholarly theoretical and philosophical analysis of the ‘networked information economy’ from the perspective of economics.

“We have an opportunity to change the way we create and exchange information, knowledge, and culture. By doing so, we can make the twenty-first century one that offers individuals greater autonomy, political communities greater democracy, and societies greater opportunities for cultural self-reflection and human connection. We can remove some of the transactional barriers to material opportunity, and improve the state of human development everywhere. Perhaps these changes will be the foundation of a true transformation toward more liberal and egalitarian societies. Perhaps they will merely improve, in well-defined but smaller ways, human life along each of these dimensions. That alone is more than enough to justify an embrace of the networked information economy by anyone who values human welfare, development, and freedom.” (Benkler, p. 473)

Some of Benkler’s economic analysis will be considered in more detail later in this paper. WIKINOMICS: HOW MASS COLLABORATION CHANGES EVERYTHING – Tapscott and Williams

Tapscott and Williams also have a chapter that explains peer production with the examples of Open Source software development and new media styles typified by the Wikipedia:

“…. [Peer production] is a way of producing goods and services that relies entirely on self- organizing, egalitarian communities of individuals who come together voluntarily to produce a shared outcome. In reality, peer production mixes elements of hierarchy and self-organization and relies on meritocratic principles of organization—i.e., the most skilled and experienced members of the community provide leadership and help integrate contributions from the community.”

“In many peer production communities, productive activities are voluntary and nonmonetary. They are voluntary in that people contribute to these communities because they want to and because they can. No one orders a worker to post an article to Wikipedia or to contribute code to the Linux operating system. They are nonmonetary because most participants don’t get paid for their contributions (at least not directly), and individuals determine if, what and how much they want to produce. Just because people don’t get paid to participate in peering does not mean, however, that they do not benefit from their participation in other ways. We’ll come back to this point in a moment.” (Tapscott and Williams, p. 67)

“…. Peer production works because: the new economics unleashed by technology have permanently altered the costs and benefits of producing information and collaborating; it is more efficient than firms or markets at allocating time and attention for certain tasks; it is really good at attracting a more diverse, broadly dispersed talent pool than individual firms can muster; and contributors enjoy the freedom and experience of peer production. In short, peer production works because it can.” (Tapscott and Williams, p. 71)


The software industry is in the middle of a paradigm shift that O’Reilly compares to the 1981 introduction of the PC with off-the-shelf components that opened up the design to other manufacturers. He says that IBM did not understand the consequences of its decision in 1981 and that Open Source developers do not fully understand the consequences now. To help understand the shift we need to look at how three long term trends that are expressed in Open Source:

  • The commoditization of software

  • Network-enables collaboration

  • Software customizability (software as a service)

Commoditization Like several other observers, O’Reilly describes the trend towards commoditization of software that is driven by standards and a communications-centric environment. But he also analyzes the effects of the commoditization, in that there is an apparent large drop in the value of software as measured by the market revenue it earns. While revenues can drop to near the marginal cost of zero, the social value to users of the software greater than before the commoditization.

The more important observation by Clayton Christensen and quoted by O’Reilly is that even if the opportunity for profits on the commoditized software disappears, new opportunities emerge in related activities such as software as a service and software support services that add value to the software.

Collaboration The cooperation and sharing of resources observed in Open Source projects does not date from Richard Stallman’s formal specification of the General Public License and the formation of GNU project in the 1980’s. The practice was typical in the early days of computing when hardware, not software, was the primary source value.


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