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Thanks to the network and access provided by the Internet, companies are creating platforms that organize, aggregate, and empower people and assets, resources they don’t control. It is a tight collaboration I call “Peers Inc.” I see these new companies less as common carriers and more as common-pool resources, which the late Nobel Prize–winning economist Elinor Ostrom described.
Common-pool resources have two defining characteristics: they produce a steady stream of benefits to the participants, and it is very difficult to exclude individuals. One can see how this maps closely to what is happening within the Peers Inc model. Some Peers Inc companies are able to exclude certain people; at Zipcar, for example, we were able to exclude people with bad driving records. But if we think about 99 Designs, or Elance-oDesk, for instance, there is almost no ability to exclude. Platforms thus become a commons for individuals cocreating services on them.
Platforms develop the rules by which peers play.
Like governments, platforms develop the rules by which peers play. And therein lies the rub. Will this rule making benefit the platform financiers, the participating peers, or strike some balance between the two? If there is competition among the platforms, one would like to imagine a fair balance of power would result, where value is shared in a more-or-less equitable way. Otherwise the peers would refuse to participate. But will this new economy of Peers Inc companies tend toward competition or monopoly? I don’t know yet. Not enough time has passed. I can see it going either way.
I encourage the managers of these platform companies to remember that their business model is based on collaboration with peers. They should look to Ostrom’s research, which codifies eight design principles for durable common-pool institutions. What company does not want to be long-lived? These principles ensure that the participants have power over rule making and feel fairly treated. While I think it may be too much to ask many private platforms to hand over the kind of control Ostrom advocates, these rules make sense. As befits such a powerful new engine for generating wealth, Peers Inc enterprises will eventually have to address the degree to which peers share both the power and the enormous value created when a platform becomes a smash hit or a ubiquitous standard.
Ultimately I agree with Sabeel Rahman that we need to rethink our regulatory toolkit. We should consider a Peers Bill of Rights that ensures economic fairness and protection when individuals work on platforms, in the event of lack of competition or adherence to Ostrom’s principles. This is effectively what the net neutrality debate, and common carriage, is all about: a fair set of rules.
Another path imagines not Peers Inc collaborations, with the platform financed and built by a central firm, but collaborations among peers exclusively. The free and open source software movement is one example. Tools developed under its aegis—such as the block chain, the backbone of Bitcoin—have opened a new world of possibility and can continue to do so. In that world, platforms will not be operated by individual companies; authority will be dispersed. People will not just transact on platforms; they will build them and they will determine the applicable rules of engagement.
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But I do miss the hymns, / the small, hard apples with their dimpled skin. I do miss / things.
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