Monday, January 10, 2005

The Karma Economy

The above is an interesting article about the value of reputation in a post-scarcity economy. Using a premise recently popularized by Cory Doctorow (boing boing contributor and author of the interesting book, Down and Out in the Magical Kingdom, et al.), the story discusses several different online communities where one contributes (i.e., produces) in order to up one's reputation. In other words, as money and the resources it buys aren't necessary in these communities, the much-misunderstood "profit motive" of classical economics sublimates into a desire to increase one's standing in the community. Some examples of places where you can see this behavior are slashdot and metafilter and, in a very self-referential way, blogshares.

Why would one's standing in a community be important? Why would one's number of posts or karma count for anything? Well, for one, just as in Real Life (tm), being a person of some repute engenders gracious and sometimes even deferential treatment within the community- not to mention that's it pleasant just to be well liked.

Sometimes one's standing in an online community translates into access to actual resources, e.g., professional advice or insider information, being the first to know about breaking news or "the next big thing." It can even afford admittance to even more exclusive communities with access to real goods, things like films or games, days or weeks before they hit the public.

Naturally one's "karma" can overlap into the real world, and the results are sometimes old school cash. In a recent interview with Wired, the inventor of Bit Torrent (a peer-to-peer file sharing program that facilities the transfer of very large files), we discover that the goodwill of the users of this program are supporting it's inventor and distributor:

For Cohen, it's all a little surreal. He gets up in the morning, helps his wife feed their children, and then sits down at his cord-and-computer-choked desk to watch his PayPal account fill up with donations from grateful BitTorrent users - enough to support his family. Then he goes online to see how many more people have downloaded the program: At this rate, it'll be 40 million by 2006.

It isn't exactly Cohen's karma that's earning him money; it's his product. But he certainly generated a lot of goodwill by distributing his program for free and by continuing to upgrade and support it.


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