Online Communities:The Future of Business Organization ValueUSC Annenberg Program in Online Communities January 2009

ETHAN BAULEYETHANBAULEY.COM@ETHANBAULEYETHANBAULEY@GMAIL.COM

Who can explain what the Internet is?

© Ethan Bauley

Who owns the Internet?

• Nobody!

• The Internet itself is "open source"/"peer produced" (TCP/IP)

• These characteristics inform the shape of productive strategies

© Ethan Bauleyworldofends.com

Commons-based peer production

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• Who owns it?

• "No single person has exclusive control over the use and disposition of any particular resource in the commons." (TWoN, 61)

• General Public License: derivative works must be available under same license

Open-source software

• What is it? (anyone can contribute)

• Economic characteristics of information (code, video, text, audio, etc)

© Ethan Bauley

Open-source software

• Why do people contribute?

• Why do people like it?

• What are some examples?

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Google vs. Yahoo

• Yahoo! Directory v. Link structure of the Web

• What are the differences between the two?

• How does this relate to F/OSS & peer production?

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Markets, Networks, Communities

• More efficient than individual firms

• These forms of organization have cheap coordination costs, are geo-agnostic

• Examples

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Wikipedia v. Britannica

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• Nature comparison

• Wikipedia: community design (pillars, editors, etc)

Craigslist v. Classifieds

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Apache v. Microsoft

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SETI@home v. Big Blue

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P2P v. Akamai

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Peer-to-Peer Communication

• How it used to be

• How it is in the networked world

• Velocity

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Designing communities

• Wikipedia policy

• Slashdot

• Hacker News

• Usenet

• Avoiding situations wherein individual rationality hurts the common good

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Game Theory

• Mathematics of social science

• Beautiful Mind

• Cold War

• Rigorous analysis of conflict...aka "interaction"

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Game Theory

• Volunteer's dilemma: free riders

• Prisoner's dilemma: individual rationality hurts the common good

• Backward induction paradox

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Game Theory & Community

• Historically, a principal source of advantage is information asymmetry

• What happens when all players have full information?

• Connectivity (broadband, social media, social needs of people) drives awareness, which drives strategy

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Game Theory & Connectivity

• A perpetual state of peer review (student blog example)

- Does it change behavior?

• Backward induction, connected consumers & lemons

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Game theory of connectivity

You may work together in the future; everyone else sees how you played your last move (and all moves beforehand).

This is a powerful incentive towards "good" behavior (and is why "Be Good" is razor sharp strategy).

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Game theory + open source = Cooperative advantage

• Cooperative advantage: Life is not a zero-sum game. We can grow the pie by working together.

• Goal is to be the "most desirable collaboration partner"

• You can't do everything

• Business networks (not "chains")

© Ethan Bauley

Source of advantage

• Talent (a.k.a. human capital + social capital)

• In a world of increasingly rapid change, disruption is the new equilibrium

• Only sustainable source of advantage is: ability to learn faster than competition

© Ethan Bauley