Are the most influential websites peer-produced or price-incentivized? Organizing value in the digital economy

Introduction

In 2006, Yochai Benkler, a Professor of Entrepreneurial Legal Studies at Harvard Law School, proposed a wager to Nicholas Carr, an author and former editor of the Harvard Business Review. Benkler argued that by 2011 the most influential websites would be based on content produced by people engaged in peer production. Carr maintained that the lure of money and the corporate hierarchies will be more effective. The Carr-Benkler wager, which was even reported in The Guardian (Arthur, 2006), triggered a debate in, at that time, bull blogosphere.

In 2012, Carr revisited the wager and inferred that he had won. ¹ Carr pointed to the most influential websites across major categories of online activity that were dominated by price-incentivized, commercial entities. Benkler had predicted that peer production would be the dominant mode of online production and Carr concluded that peer production had failed to realize that goal.

Benkler replied ² that peer production, a term he had introduced in 2002, referred to an emerging phenomenon that builds on the capacity for people to relate and connect to each other over the Internet. This peer-to-peer capacity had given rise to projects that “capitalize on an enormous pool of underutilized intelligent human creativity and willingness to engage in intellectual effort” (Benkler, 2002: 30). From the unpaid user reviews of Amazon and the voluntary content creation on Facebook to the commons-based Wikipedia or the Free and Open Source Software (FOSS) projects, this peer-to-peer capacity had been utilized in different ways and with different political orientations (Kostakis, 2018; Bauwens et al., 2019). Therefore, for Benkler, peer producers were the ones who had been contributing the critical amount of value to the most influential websites.

So, after 15 years, who has really won the bet? Are the most influential websites peer-produced or price-incentivized? To address these questions, in this essay we attempt to discuss peer production in relation to price-incentivized production, to examine the Carr-Benkler wager in the context of the current digital economy.

Nevertheless, the wager per se is not the point of this paper. The early exchange of arguments from the two sides shows the crevasse between two opposing realities: Carr looks at the market-oriented outcome of a, at the time, nascent digital economy, while Benkler looks at the peer-based process, on which the market capitalizes. We argue that the real stake of the bet concerns how different forms of value determine the organization of human relations in the digital economy. Our aim is to unravel these implicit assumptions about value, and look for a potential synthesis encapsulating the dynamics of peer production within and beyond the capitalist order.

Likewise, the analysis is not restrained to a conventional understanding of the digital economy that is merely the field of activities carried through over digital media. First, the hidden materiality of the infrastructures underpinning the (not so) digital economy inevitably has substantial physical implications, which are less reckoned in relevant debates (Lange et al., 2020; Morley et al., 2018; Sovacool et al., 2020). Second, the array of possibilities effectuated by the Information and Communication Technology (ICT) revolution convey a logic that gradually permeates all domains of human activity, online and offline. Any serious discussion on the future potential of the digital economy should simultaneously embrace both of these dimensions. This essay focuses on a more fair and inclusive deployment of the latter dimension, which might also positively affect the former one. While acknowledging the limitations of our focus, further exploration of the interplay between the material and transcending elements of peer production may arguably hold the key for future debates on sustainability.

The rapid changes brought about by ICT have sparked old and new debates around value, focusing on labor exploitation in Information Capitalism (Fuchs, 2010, 2012; Fuchs and Fisher 2015), affective relations and financialization (Arvidsson and Colleoni, 2012), and rent seeking (Rigi and Prey, 2015). The impact of social media and the digital platforms of the so-called sharing economy (Scholz, 2012; Slee, 2017) in our daily and professional lives has sparked discussions over the future of work and social security (Huws, 2019, 2020) and the potential exacerbation of gender issues (Howcroft and Rubery, 2018).

Combined with the ever-increasing concerns about the climate crisis and global inequality, the exploration of alternative economic approaches with more ethical (Arvidsson and Peitersen, 2016) or post-capitalist interpretations (Gibson-Graham, 2006) has been intensifying. A conceptual understanding of value as “the way actions become meaningful to the actor” within a “larger social whole” (Graeber, 2001: 254) opens up the exploration of value forms that encapsulate diverse contributions to society, ranging from social reproduction and care (Folbre, 2006; Skeggs, 2014, 2018) to the commons (Barbagallo et al., 2019; Caffentzis and Federici, 2014; De Angelis, 2017; Federici, 2004). Our engagement with value in peer production is an attempt to offer a common denominator to examine the broad array of these discussions.

In this journal, 3 years after the 2007 financial crash, Prichard and Mir (2010) edited a special issue called “Organizing value” with the aim to reinstate relations of value in the field’s discourse and analysis. Among the various contributions, Arvidsson (2010) pointed out to new forms of “ethical” value emerging in technologically enabled forms of social production, that potentially gain prominence over capitalist relations. Conversely, Willmott (2010) indicated how these very forms of sociality can become themselves the new subject of exploitation.

On one hand, the digital economy is dominated by profit-driven corporations that exploit human labor through more of the same managerial practices, be it in subcontracted sweatshop factories and warehouses, in traditional firms, or in “agile” teams and user groups. On the other hand, there is a rich motivational diversity that organizes human relations beyond labor in online and offline communities of contributors.

The ambiguity of value in the digital economy can be summarized in the words of Harvie and Milburn (2010: 635) in the same issue:

“[. . .] value is also contested. We have also suggested that this mode of organizing human activity—the capitalist mode of production—is not the only mode. Although the value system that is capitalism’s sine qua non values only market or economic value, it is not the only value system.”

Peer production is a new mode of production, as well as an alternative value system (Pazaitis et al., 2017) that, arguably, comes with emerging forms of organization that do not register to conventional managerial practices.

Yet, mainstream management scholars and professionals have arguably been more proactive in assessing the value of peer-production, interpreting pro-social behaviors through distorted categories, such as “crowdsourcing,” “co-production,” “social-innovation,” or “open innovation.” Conceptually, these categories range from vague in meaning, to outright contentious. Still, they fit the standard criteria for measurement in the conventional outlook. Harvie and Milburn (2010: 634) righteously summon the McKinsey slogan “what gets measured gets managed” to demonstrate that measurement capacity comes with the power to control and co-opt new forms of value creation under the profit logic. Consequently, critical scholarship can only react to these developments after they have gained certain traction, and it is no surprise these categories most often than not fall right into the scope of the field’s critique.

Analysis of economic relations and questions of value are crucial for critical organization studies. There is an analytical distinction between the two, but in reality, they are tightly interwoven and indistinguishable. Consequently, value creation debates are dominated by conventional economics and strategic management studies. This reality does not only limit the scope and impact of critical organization and the related fields; most importantly, it deprives critical studies of the tools to acknowledge and document existing alternatives.

Lacking an alternative general theory of value, in this essay we attempt to provide some perspective and enrich the current discourse on value and organization, by examining the digital economy context through the lens of the Carr-Benkler wager. In the following sections we break down the various layers of digital production and identify the respective value systems at play. Finally, we draw some conclusions on the outcome of the wager, and a call to place our own bets for the future.

Is all peer production the same?

One should be aware of the subtle difference between peer production and commons-based peer production (CBPP). Such a difference between the two concepts, which are often used interchangeably, has become more and more evident in the last decade. Various forms of Internet-enabled socio-technical infrastructures can be identified, each of which may lead to different forms of social and political organization (Kostakis and Bauwens, 2014). On one hand, consider the utilization of peer production by Facebook, Google or Bitcoin. On the other hand, see the commons-oriented models of Wikipedia, L’Atelier Paysan, Farm Hack or FOSS projects (Arvidsson, 2010; Giotitsas, 2019).

The for-profit initiatives utilize peer production practices to maximize shareholder value while the commons-oriented initiatives utilize such practices to maximize sharing and commons creation (Bauwens et al., 2019). Adopting a profit- or a commons-oriented socio-technical infrastructure and institutional design is the locus of social conflict because the choice between them qualifies some behaviors over others. Hence, peer production can be seen as a wider phenomenon from which CBPP emerges. So, Facebook, Google, or Amazon use peer production in a different way to Wikipedia or the myriads of FOSS projects (e.g. Linux, Apache HTTP Server, Mozilla Firefox).

In CBPP, participants produce shared value through open contributory systems, govern their work through participatory practices, and their output can be used in new iterations (Bauwens et al., 2019; Benkler, 2006). Peer producers or, in that case “commoners,” create non-rivalrous use-value, in the form of digital commons of knowledge, software, and design. That is to say, they produce resources that are shared according to the rules and norms determined by the productive community itself (Bollier, 2014; Ostrom, 1990).

However, there is no organizational consistency among the diverse multitude of CBPP projects. For instance, the FOSS realm includes projects that are “completely centered on one developer to projects that are highly decentralized and exhibit a distributed pattern of conversation between developers and active users” (Crowston and Howison, 2005). But the fact that the product is a commons enables the commoners to use and modify it either within or outside the boundaries of a certain CBPP community. Commoning, that is, the capacity of contributing to- and benefiting from the commons, enables modes of asynchronous and synchronous collaboration beyond the limitations of time and space (Kostakis, 2019).

Facebook, Google, Amazon and the likes do not produce commons. Their users have no say in defining the protocols that dictate how content production takes place on the for-profit platforms (Kostakis, 2012). Moreover, peer-produced content creation is not the only way for-profit-maximization companies are utilizing peer production. Their technological infrastructures are also based on CBPP artifacts to a considerable degree, as we discuss in the following section.

So, all peer production is not the same. There is no definitive way to speak for one way of organization or another. Parker (2005: 367) postulates that “[i]t seems to depend on interpretation, and not some absolute dividing line between the critical and the co-opted.” Whether or not peer production seriously challenges capitalist value system and organization or whether we have “merely the death of an old king and the crowning of a new one” (Parker, 2005: 356) is up for interpretation, which necessitates a closer look inside.

What are the most influential websites made of?

“Open up your phone. Your social media, your news, your medical records, your bank: they are all using free and public code.” This is how Eghbal (2019: 2) starts her report, commissioned by the Ford Foundation, which discusses “the unseen labor behind our digital infrastructure.” Eghbal shows that not only the software behind the most influential websites, but also nearly all software used by Fortune 500 companies and governments is based on FOSS: from Apache, the most popular web server, to GNU/Linux, on which the top-500 supercomputers run, to WordPress, the most popular content management system, to OpenSSL, the most popular encryption protocol to secure transactions.

Although the majority of the most influential websites seem to be run by commercial companies, a considerable part of their technological infrastructure is based on CBPP. But, one might ask, who is funding the FOSS communities? Indeed, Google, IBM, Facebook, Intel and Amazon have been funding and supporting many of the communities. Even Microsoft, whose former CEO Steve Ballmer had said in 2001 that GNU/Linux is a “cancer,” has now been an ardent supporter of FOSS (Bright, 2019; Greene, 2001).

Microsoft’s ambivalent feelings is only indicative of the relations between Big Tech and FOSS. Lately we have increasingly observed the embracing of open source as a viable business strategy, from conventional outlets such as The Economist (2019), or Forbes (Solomon, 2020), to consulting firms like Deloitte ³ and PricewaterhouseCoopers, ⁴ which is further validated by the corporate adoption of the language of “openness,” “community,” and “sharing” (Lund and Zukerfeld, 2020).

But the relations between peer production communities and corporations have been, and continue to be, conflicting at many levels, which demonstrates the clash of the underlying ethics. The recent shifts of FOSS databases like MongoDB and Elastic to the Server-Side Public Licence ⁵ have been explicitly to force for-profit “as-a-service” applications that rely on them, Amazon Web Services being a major one, to reciprocate. Likewise, as Google and other Big Tech continue to be among the major benefactors ⁶ of Wikipedia, Wikimedia Foundation is currently devising ways to get these companies to pay their fair share for the value they freely utilize (Cohen, 2021).

So, the question should not be whether major tech companies are contributing directly or indirectly to FOSS. Rather, it should be whether these companies are contributing enough, and to what extent their contribution or support influence the direction of a certain FOSS project. In January 2019, Jacob Kaplan-Moss, the co-creator of the FOSS Django web framework used by Instagram and Disqus among others, wrote on Twitter: “Tech companies make billions off OSS [Open-Source Software] and give almost nothing back. They could solve the problem today and barely dent their bottom lines. If companies actually cared about OSS instead of virtue signaling, they’d turn those massive exits into windfalls for open source maintainers and foundations” (Jacobian, 2019). He also wrote in the same thread that it would take less than $1 million per year to make Django totally sustainable, as may be the case for many FOSS projects, while Google alone made $33 billion in the third quarter of 2018.

The task to measure the value of FOSS is quite challenging, yet a number of indications have been made. A 2009 study by Black Duck Software suggested that FOSS is cumulatively worth $387 billion in savings (Asay, 2009). Tapscott and Williams (2006) estimate that IBM investments in Linux saves the company ca. $1 billion annually from developing and maintaining proprietary software. Since then, no other studies, to our knowledge, have tried to quantify the value of FOSS.

The European Commission has recently published the primary results of its on-going study on the impact of FOSS and open source hardware (Grzegorzewska, 2020), comprising extensive data from GitHub commits and users, as well as economic data from various sources. The first quantitative results already showcase a substantial contribution of FOSS to the European Union’s economy, estimating that an increase of 10% in the number of commits, that is, individual changes in a software project, from 2017 to 2018 is translated into a 0.4% growth of the European Gross Domestic Product (GDP), which in 2018 was €63 billion per year. A marginal increase in the number of commits and contributors is expected to lead to an annual increase of the EU GDP of more than €100 billion.

Nevertheless, there is not enough public data on the quantity and the quality of major tech companies’ contribution to FOSS development. Hence, one cannot have a clear idea about how much value the companies get from FOSS and how much value they reciprocate back to the communities. However, Kaplan-Moss’s tweet further above echoes the general consensus within the FOSS communities as documented by Eghbal’s (2019) interviews with many of their most prominent figures.

Moreover, we can argue that the value created in CBPP is often reduced by profit motives. Wikipedia and Facebook as organizations are driven by different motives, but that does not necessarily imply the same for their users. Facebook users do not actually share any part of the platform’s profits even though it heavily relies on their activity and attention. Conversely, the motivation behind this activity is, to our best knowledge, pro-social, whether it concerns one’s information or personal status, maintaining of relations or simply time passing (Dogruer et al., 2011). Similarly, the latest available data from Wikipedia editors’ survey (2012) demonstrate that people contribute in Wikipedia for a variety of reasons, including Wikipedia’s mission, but also personal fulfillment or the intrinsic value of knowledge sharing.

The above is not surprising. This pro-social behavior is embedded in human societies and is also partly why information content in social platforms is highly relevant and, hence, highly valued. However, platforms like Facebook manipulate the flow of information to boost these types of interactions that are most relevant to their advertising clients. In turn, the wealth of the content shared on Facebook is reduced to whatever sort of information can help someone sell stuff to people. At worst, (a)morally void, profit-driven interaction is systematically exploited to assert political influence or fuel hate-speech (Knaus et al., 2019; Wong, 2019), thus destroying the social fabric that makes social media valuable in the first place.

Contrastingly, commons-based projects have exhibited a relatively high resilience to exploitation for utilitarian motives. Wikipedia is the first result on many of the terms searched in Google and has transparent and accountable rules to flag and remove self-advertising contributions. Back to the FOSS realm, a recent study with the Debian community (O’Neil et al., 2021) demonstrates that, despite the increasing role of commercial entities in FOSS projects, for instance, by paying developers’ salaries, the impact on the contributors’ working relations is considered insignificant. Conversely, livelihood opportunities offered by the financial support allow some less privileged contributors to work more on projects that interest them, thus strengthening the community ethics and potentially allowing more diversity. The impotence of the profit motive in CBPP reduces the impact of greed, while allowing more pluralistic forms of meaningful interaction and value creation, not accounted in standard managerial practices, to become visible.

The infrastructure behind the most influential websites seems to be more peer-produced (commons) than price-incentivized (profit maximization). However, both elements co-exist within an ever-changing environment. Financial drives fuse with pro-social heterogeneity that stimulated early Internet-mediated collaboration and enable new possibilities for different groups over others. Peer-to-peer forms of organization and identities appear to still maintain resilience, as commercial interests are compelled to adapt to the community rules to assert power, even as this struggle takes place in an unlevelled playing field, as we discuss in the next section.

Can peer production beat the market in its own game?

CBPP draws from a diverse set of motivations. Contributors participate to gain knowledge, to produce something useful for them, to build their social capital, to communicate and have a sense of belonging, but also to get financial rewards (Erden et al., 2012; Von Krogh et al., 2012) So, the price-incentivized production does exist in CBPP but it is relegated to being a peripheral concept only (Benkler, 2006). Nevertheless, the increasing interest of major tech companies may alter the importance of extrinsic motivations (e.g. financial rewards) over the intrinsic ones.

But this conversion is not a “natural” outcome of the free market, as there is nothing natural about the free market in general (Chang, 2010). All economic outcomes are essentially a result of political choices reified by the established institutional order. That is why we have elsewhere argued that the state should support CBPP (Bauwens et al., 2019; Pazaitis and Drechsler, 2020). In contrast to the major tech companies on which the citizens have no control, the state, assuming we still live in a democracy, involves a set of institutions on which the citizens can have a say. For example, see how the city of Barcelona outsourced tech projects to local small and medium sized enterprises (Albers, 2018). With institutional and structural support CBPP can create emancipatory spaces for alternative organizational forms.

As Mazzucato (2013) has established, despite the conventional narrative of markets alone determining the fittest and strongest, the state has always been instrumental in picking winners, and not accidentally so. For instance, every technology that makes the iPhone a smartphone – Internet, GPS, touchscreen, battery, hard drive, voice recognition – was developed by researchers paid by the state. The same applies to Google’s search algorithm. Then, these companies instead of sharing their public-money-funded technologies as a commons, they filed patents and made huge profits. In addition, many of them systematically exploit loopholes in global tax rules to avoid giving back their fair share.

Moreover, public infrastructure and institutions make the digital economy possible to begin with. There would obviously be no value of any website if no one could access it, which is possible through the world wide web and the Internet infrastructure, both of which were initially public investments. Public institutions regulate and oversee the conditions under which service providers can offer services, information is transmitted and users get access to it. It is only after all the above are in place that competition and price-incentives can actually function.

Hence, the dominance of one modality over the other is not an outcome of “natural selection,” rather a result of political definition. The state steers competition and profit-motives, implicitly rationalizing the produced economic outcomes, in the way they are measured in the national accounts. Alternately, CBPP can be an equally, if not more, viable political choice for the state to enable the direct creation of public purpose value by the civil society and commons-based entrepreneurial coalitions (Bauwens et al., 2019).

Technological development and innovation have long been recognized as a cumulative, collective process. Society plays a significant role that goes beyond the taxpayers’ contribution to research and development. People use and adapt new technologies and formulate the socio-cultural framework that tech companies respond to. CBPP has enabled an unseen capacity for people to do so more directly, more effectively, and in ways accountable to their needs and preferences. In this perspective, the involvement of tech giants to CBPP is merely a means for them to adapt to this new environment and take the lead, before their competitors, in profiting from it.

Benkler (2002, 2004) has eloquently presented the advantages of peer production over price-incentives in terms of slashing transaction costs and utilizing excess capacity for certain categories of goods. His contribution has confidently raised awareness on behalf of economics and management scholars on a new mode of social production in terms they can understand and appreciate. However, these features simultaneously created the conditions for a new set of managerial “best practices” to coalesce around the efficiency gains of peer production. The same features that gave peer production an advantage over price-signaling on the Internet, were the forces that came to reassert price-signaling.

But this relation can be turned over, as it has historically been the case before. Right now, economic analysis positions peer production to a voluntary or recreational sphere, until commercial exploitation defines the returns to deem it “economic.” Conversely, the progressive economic agenda focuses on issues of redistribution and fixing the relation between value creation and value extraction (Lazonick, 2017 ; Lazonick and Shin, 2020) or, “Makers and Takers” (Mazzucato, 2017) to realign the global economy with social prosperity.

Without diminishing the urgency for such incremental reforms, we need to also acknowledge the potential of CBPP for the re-organization of economic life around meaningful work and commons-based innovation. The state is instrumental in rationalizing this transition. In Mazzucato’s (2013) terms, state support to CBPP helps socialize the returns from technological innovation, rather than the risks only. It enables greater capacities from public, private, and social actors to influence technological progress for the common good. CBPP has signified far more than a new way to produce web content; it initiated a learning process informing a paradigm shift in organization and institutional design.

Currently, our economic institutions largely assume that people are driven solely or primarily by price signals, even though the larger part of human activity is even today, stubbornly, not price-incentivized. From our friends and family relations, to our work interaction beyond the strict terms of our job description to the broader social interaction in our neighborhood, village or city. And so is our Internet-mediated social interaction as well. The Internet has enabled this productive sociality to happen at large scale. Peer production is this particular domain where the qualities of social production are simply more visible and measurable.

Bold statements about emerging phenomena often become self-fulfilled prophesies. The technological sphere is a field of competition and struggle where economic, social and political agents tap on new opportunities for dominance. A friendly wager between two renowned intellectual adversaries may as well stimulate a process of real political and economic ferment mobilizing resources on either side.

Who has won the bet?

The overwhelming majority of the most popular websites are owned by for-profit-maximization companies. One cannot argue against that. However, the extent to which they are organized around price-incentives is highly debatable. On one hand, paid professionals work for maintaining and improving these platforms. Moreover, paid professionals produce content that directly or indirectly contributes value to the platforms. In the currently dominant organizational reality, the price incentive is often considered as a feature that determines the design of our organizations. And, as was discussed, the design may qualify some behaviors over others.

On the other hand, one should consider the amount of value that unpaid users contribute to the most popular websites. The voluntary contribution is a form of peer production utilized by companies with the ultimate goal to maximize shareholder value. In addition, a considerable part of the vital infrastructure of the most popular websites is produced in CBPP, whereas price incentives, where present, are still considered peripheral. Finally, price-incentives alone can neither create nor guarantee the complex relations impelling the digital economy. As Bollier (2014: 175) reminds as, “the commons is . . . a sector of the economy (and life!) that generates value in ways that are often taken for granted.” Similarly, the contribution of CBPP in the so-called “digital economy” largely goes unnoticed at the level of scholarly and political discussion that can make a difference.

Measuring how much of website content is price-incentivized or peer-produced gets us already in the wrong direction. Any measurement is not neutral, and, in a market-driven economy, measure of value is only reflected in the exchange of one thing for another. This being the sole determinant of how the digital economy is organized, so will we continue to assess its outcome. But even if the market instrumentally validates the management of the interaction taking place in a platform, it does not necessarily determine the organization of user affairs in the first place. A large part of Internet-mediated collaboration today has been, and continues to be organized autonomously, either between volunteers, or professionals, following peer-to-peer signaling and based on heterogenous motivations.

Website content is no more price-incentivized than peer-produced, in the same way that an artwork is no more a product of the artist’s livelihood than of her inspiration and expression. Being able to get paid for a piece of art does not necessarily affect the artist’s expression, but it massively affects the artist’s livelihood. CBPP provides a humane framework to encapsulate a greater variety of both drives. But in a price-driven world art managers and exhibition rooms are always going to measure art with the money they make out of it. By limiting our attention to whatever translates to prices we dismiss a large part of what CBPP has to offer for our troubled times and, further diminish the sustainability of the contributors. Above all, this paper is a call to scholarly attention to systematically examine and unveil the hidden value of CBPP and the organizational structures that support it.

Among the different options available, CBPP provides the favorable ground to move beyond the critique. Critical research is often invested in each respective field’s struggles, shedding light to important subjectivities. CBPP can offer a structured framework to bring together a critical mass of in-depth critical research and function as a boundary object to place them in a wider perspective.

So, who has won the bet? Black or white questions like this reduce the possible answers to only two. However, the reality, as is often the case, is more complex. We saw that unpaid labor co-exists with paid labor, profit-maximization co-exists with commoning, and the homo economicus co-exists with the homo socialis. In 2006, Carr and Benkler had agreed that a dinner would be paid by the one who would lose the wager (Benkler, 2011: 191). Hence, it seems that Carr should pay the main course while Benkler should pay the dessert. Where we choose to place our own bets has to do with our vision and hopes for the future, as a dinner treat is the least we are bound to lose.