Putting the gift back in the gift economy (with the fractional and the frictionless)

Kula ring see webspace yale edu anth 500 projects I've been corresponding with Dave McCaughan of McCann Erickson Japan.  We have been talking about the "gift economy." 

As I understand it, the "gift economy" ideas says that we are moving away from direct exchange to something more circular. 

Instead of trading "exactly this" for "exactly that," we now release things into the world (blog posts like this one, tweets, music, Youtube videos) with the hope that something will return to us someday in the form of some kind of value (revenue, reputation, social capital, cultural capital.)  In other words, we gift the world with our efforts, and we do so without expectation or guarantee of a return.  Adam Smith would be horrified. 

I like this idea and what's more I believe in it.  But it's not without its problems. 

Take the case of Jimmy Pantino.  He's spending his summer working at Denny's as a short order cook.  He would much rather have spent it shooting and editing shorts for YouTube.  He's got pretty good at it.  The trouble is YouTube doesn't pay him anything.  Nor do any of the 120,238 people who have seen his work on line.  In point of fact, at least from Jimmy's point of view, this is not a gift economy. It's a grab economy, which is to say, no economy at all.

The problem is not that people don't want to pay Jimmy and free him from his Denny's bondage.  They just don't want to pay him in the usual domination.  In our economy, in most circumstances, the smallest useful unit of payment is a dollar.  And we don't want to pay Jimmy a dollar.  It's just too much.  But we are prepared to pay him a nickle.  And at a nickle a hit, Jimmy's YouTube audience would have paid him around $6000.  This is not a princely sum.  No, as an alternative to working this summer at Denny's, it's actually much richer than that.

The further problem is that there isn't any financial architecture that makes it possible for us to pay Jimmy his nickle.  Certainly, there's no way to do it easily and swiftly.  Not only do we not want to pay Jimmy a dollar.  We really don't want to make a big production of it.  Unless it happens in the blink of an eye, we can't be bothered.  Which is to say, we want to spend as little in time as we do in money.  (What is the temporal equivalent of a nickle?  Two seconds, probably.  Click of a mouse.)

What we need is a financial system capable of delivering fractional amounts in a frictionless way.  When looking at one of Jimmy's videos we that they can just hit a button and keep going.  No signing in or keeping track.  Jimmy gets a nickle.  We fill up our virtual wallet every quarter or so, distributing fractional amounts til it's gone. 

The company that creates this system gets to be a hero to the kids.  (Expect abject worship from Jimmy in particular.)  It gets to be a participant in the new social networks and the plenitude of contemporary culture.  It gets to be a patron of the new society and culture now in the works.  Most simply, it gets to escape its status as an old order corporation and become a new order one.  Tactically, this is a seat at the most important table.  Strategically, its a chance to own some part of the future instead of tagging witlessly along behind it.  

The person who does it gets to be the next Jeff Bezos or Jimmy Wales. You will be interviewed by Wired Magazine.  You will be showered with honorary degrees.  Most important: You will get way better seats at basketball games. 

Building a system like this must be complicated.  Otherwise we would have one by now.  But surely it's not more complicated than Facebook.  It just has to be a little more secure.  Ok, a lot more secure.  (I would love to hear from someone who has an idea of what this sort of system would require from a technical point of view.)

My plea: let's put the gift back into the gift economy, and for that matter, the economy in the economy.  I mean, imagine what Jimmy Pantino could do for our culture if he was working with more than his free time and that crappy old computer his parents refuse to replace. 

Economies create great things.  Let's turn this one loose.


Mauss, Marcel. 2000. The Gift: The Form and Reason for Exchange in Archaic Societies. Reissue. New York: W.W. Norton & Co.

Sahlins, Marshall. 1972. Stone Age Economics. Aldine Transaction.

10 thoughts on “Putting the gift back in the gift economy (with the fractional and the frictionless)

  1. Zbigniew Lukasiak

    This micropayments idea keeps returning – but it is not feasible. The gist is that beside the money to exchange there is also a work to be done – people need to evaluate if the product is worth exactly the value it is charging. With normal amounts this is not a problem but with micropayments that work becomes much bigger than the money to be paid. There are more eloquent articles with that argument: http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=4D4F4B8AF0360CE816E449458A4936F1?doi= , http://openp2p.com/pub/a/p2p/2000/12/19/micropayments.html , http://www.dtc.umn.edu/~odlyzko/doc/case.against.micropayments.pdf , http://www.shirky.com/writings/fame_vs_fortune.html

  2. srp

    You’re entering well-trod and bloody grounds here–the micropayments wars. Instinctively, I agree that there ought to be a way to get them to work, but the technical issues are daunting. First is the sheer cost amortization problem of having the billing cost be low enough per payment relative to the payment size. Second is the integrity problem: Any system sufficiently automatic to create the desired low-friction environment will be subject to all sorts of spamming and spoofing and what not, trying to get people to click on things and pay without meaning to.

  3. Ben

    As Grant writes, simplicity of making a payment is the key here. “Evaluating if the product is worth exactly the value it is charging” is something we do anyway. In fact, we do it all the time. If a system like this were on YouTube (just a little dollar icon besides every video), it would surely be a start.

    I do see the problem of transaction costs potentially exceeding the value of the payment itself. I think it can be solved, however, by automatically lumping the micropayments together into bigger sums (say, only actually make transfers in “500 nickel lumps”).

    People will try to game the system. But is there a system which is not being gamed on the web?

  4. Joe Wasserman

    Though not the same, Project Wonderful ( https://www.projectwonderful.com/ ) is an advertising system that works with micropayments. Advertisers add money to their accounts via PayPal, which they can then use to pay for advertising. And because ads can cost as little as $.01/day, there are very frequent transfers of tiny amounts between accounts. I expect what makes this feasible is that the money doesn’t actually “go” anywhere until people withdraw it from their Project Wonderful account to PayPal, so Project Wonderful has essentially a pool of money and keeps track of who has how much of it without actually “moving” the money anywhere.

  5. aj

    extending the post by SRP, there could be a way to cerate ‘virtual’ ledgers of accounts, and one need not tarnsfer actual money till the sums are much bigger, i.e. $ 10/20/30. This thought may or may not be combined with the idea of people opening a ‘debit account’ up front, underwriting their access/ use of such sites. the third variable can be that while the debit order can be made upfront, committing the money by teh user, the actual transer may take place only when the sum becomes bigger, providing relatively more confort to teh users. Skype call is using the debit balance rout with its clients already. But as long as there is a ‘commitment to pay’, it hardly matters if the payment is made upfront or later, as long as a payment company who organises this service, can figure out the ‘working capital’ requirements. and with interest rates low at this point in time, and excess liquidity in the system, it might just eb possible to get a line of credit from a bank for using as working capital at a minimal rate of interest. If the payment is extracted after using teh services by a cleint, his/ her ledger account could be sent to teh user to varify, before teh payment is extrcted from his/ her account, reducing teh chances of unwanted invaders. and this way, because accounting system is seperate from payment system, one need not have too much security on accounting ystem, as long as the payment system is secured, which will be less periodic, and more in bulk – making teh transaction cost lower, and transactions more secure. makes sense?

  6. Grant McCracken

    Clearly, this is one of those issuesthat requires the big initative: sending smart people to the desert to figure it out and no I don’t mean Burning Man.

  7. chris

    I’m just thinking why aren’t more companies making better use of creative people out there with creative outputs, some of whom are brand fans. Why go to an advertising agency when you can announce somewhere that anyone can make a short video placed on youtube that showcase their brands – viewers get to see them and click on some small $ sign icon if they like the video(s), and there can be different denominations – the more you like it the larger the amount you click on, and the company pays for the creator for the fantastic piece of work done that’s been evaluated and rewarded by viewers taking a second to click on those $ sign buttons. If every click is a nickel, Jimmy can get $6000 doing what he really likes, the company saves a whole bunch in advertising costs in hiring a fancy digital agency while winning over fans and having real measures of viewers and pass-on rate, etc. Or perhaps this is being done somewhere already and I’m just not too aware of it?

  8. AJ

    Two new books you should check out on the subject: The Whuffie Factor, by Tara Hunt (about reputation-based social economies) and Trust Agents, by Chris Brogan and Julien Smith. Two of the authors are acquaintances of mine and all now live in Montreal….

  9. Scott Ellington

    The value of 120,238 pairs of eyeballs paying attention to Jimmy’s work is not deemed worthless by Sony (for example), which offers to feature his portfolio and profile on a dedicated Sony-culture site that demonstrates (by means of in-depth artist profiles and artist-authored tutorials…) just how the people who use Sony products manage to produce valued art.
    “Jimmy did this. You can too. Here’s how:”
    Call it patronage or sponsorship, the recognition by Sony of Jimmy’s contribution to my attention/culture is only the start of a “circular” snowball of gifts awarded for my payment of attention that begins when YouTube eyeballs come to rest on the prominently-featured link that says, “click here to learn more about Jimmy’s gift to you, and Sony’s gift to your culture.”
    Every click of that link puts a buck in Jimmy’s pocket. Critiques of Jimmy’s work credit every author with an incremental discount on related Sony products. Peer reviewed critiques increase in value to the author (Especially Jimmy’s review of specific critiques).
    The money funding the infrastructur of this circular system of rewards comes from off the top of executive bonus packages. That’s so they pay attention.

  10. botogol

    Micropayments are feasible with electronic cash systems – like mondex http://www.mondex.com. The key thing here is that the transfers are non-accoutnable – just like cash: the technology transfers 5c from my card (computer) to your card (computer) with no 3rd party being involved. It’s exactly like giving you a nickel.

    ecash hasn’t caught on as you would expect, given how useful it would be in facilitating micropayments.

    some people think this is because governments miliate against electronic cash: for it can also, of course, be used to make macropayments – as an alternative to, say, a briefcase full of used $100 bills. Govts don’t like the idea of easy, untracable cash payments of any size. for obvious reasons.

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