Googlenomics

I've been contemplating Google lately (which hardly makes me unique) and trying to understand their economic model and what it means for the future, blah blah.

Here's the essence, in my view:

• They extract value from massive amounts of freely available stuff. Doing anything massively requires a big computation infrstructure, so there's a barrier to entry.
• They provide some added value for free to the community (search, tools for making more stuff). This brings them attention, the important currency of this economy.
• They figure out a way to extract some money on the side (literally in their case, that's where the ads are).

Of course, that's the user's view. In reality the tail wags the dog, and the advertising part of Google is actually much bigger and more important than the first two points. Google puts much more effort into the advertising side than in the search side, which makes sense -- all those free meals and fancy buildings and jet planes have to be paid for somehow.

In the meantime here I am creating content for free using Google-owned tools.

Recently bhyde and others have commented that long-tail economics brings benefit only to the hubs, the filtering and aggregating services. I don't think that's quite right. Assuming Google as a paradigm, it actually does bring some benefit to small content creators who can run advertising and take a share of the money stream. The people who are going to get killed are the middle-sized middlemen. Economies of scale will produce a few massive hubs like Google or EBay, consumers and small producers on the edges will get some benefits, and the smaller aggreators (like the huge publishing house that I work for, or the small publishing house that my friend runs) will suffer.

Note: I do not actually have an Internet pundit license and may have no idea what I'm talking about.

Netarchy

For some reason, the term "netarchy" is not being used to describe the social/governmental structures that are going to subverty nasty old hierarchical structures we are saddled with. It is not a totally unknown term but does not appear in google blog search (until now). I'm not even sure what exactly netarchy means, although it sounds attractive. It seems as if it would be a good title for a book by some high-powered internet pundit, which I am not, although I suppose I must have some aspirations in that direction or I wouldn't be blogging stuff like this.

So what the hell is netarchy? Rule by social networks, I guess. It could encompass a wide swath of social network theory, but it's emphasizing that these networks aren't just for chatting, but for coordinating goals, actions, and power. This is the interesting part of SNA (to me) but often seems lost with the emphasis on dating services like friendster or job-finding services like linkedin or marketing tools like visible path. The important social networks are outside of such simple-minded mapping schemes, I'm pretty sure. Something like theyrule.net is a little closer to the mark, but too conspiracy-minded, as is the ridiculous Discover the Network site, beautifully parodied here. Netarchy acknowledges such traditional power-networks, but instead of reacting in horror accepts them as a given and tries to work with them. One way to do this is simply by mapping and talking about the power networks, as the above sites do. Another is by encouraging the formation of counter-networks.

There's a paper by Valdis Krebs called "It's the Conversations, Stupid!" where he points out that ordinary social networks are a strong determinant of voting behavior. A somewhat obvious point, except that most analyses of voting behavior are in terms of individuals, demographic groups, or interest groups. These are not the same as networks, and the network approach provides some interesting strategic insight. Networks already are a big, unacknowledged part of democracy, even if they are not yet acknowledged by changing the name to netarchy. Netarchy encompasses not only the crony networks that are the obsession of conspiracy theorists, but the more bottom-up networks of a functioning democracy.

Netarchy can be used to describe existing political phenomena but may also be used as a guide, or at least a slogan, for generating some new ideas about how to run a society. Maybe it's time to revisit the lovely but rather old-fashioned models of democracy we have inherited. Direct democracy doesn't scale and lacks the damping factors of a separate political class; representative democracy has some of the opposite problems -- elites lead to self-serving corruption. The old science-fiction model of an electronic plebescite voting on issues directly might not be so great, if the model of California's ridiculous ballot propositions is anything to go by. But why not some sort of more flexible network based representation system? How about a website where I can pick new political representatives for myself at any time, rather than at artificial 2, 4, or 6 year intervals? How about if I can pick specific ones for particular issues? I don't have time to study every environmental question in detail, but I'd be happy to be able to designate the Sierra Club or the Viridian Underground as my representative on such questions, with an option to override on specific bills. When it's time to draw up the new constitutions for the Devolved Former States of America, let's try and be open to these and other netarchy-inspired ideas.