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This Nut in a Nutshell · Thursday October 28, 2010 by Crosbie Fitch

I don’t recognise charity or donation as a business model. It can certainly help, and in some cases it can keep a venture afloat. Indeed, facilities for tipping or rewarding artists (Kachingle, Flattr, etc.) are being developed and are becoming popular.

However, for business or commerce you must have exchange: a free market agreement between two parties to exchange work for money at an equitable price. Kickstarter is enabling the less complicated transactions, e.g. “I’ll produce and/or supply intellectual work X for £Y”. One party being the producer, the other being those interested in the commission.

Ultimately, you can decompose this and similar transactions into a set of micro-transactions or micro-contracts between each micro-commissioner and the commissioned producer or supplier. Each micro-contract is a payment contingent upon a publicly observable event (such as the publication of a work). I’ve thus developed The Contingency Market as a back-end to facilitate the expression and processing of such bargains or deals (between an intellectual worker and those who would pay them to work).

One of the simpler examples I’m working on to demonstrate it is 1p2U where a blogger invites subscribers or sponsors to offer a penny in exchange for production of the next article. It’s not a donation because the blogger only gets paid if they do the work. Hence the exchange of intellectual work for money – and a business model that doesn’t depend upon copyright.

Jesse Thompson said 3215 days ago :

I really think that offering to bundle or simplify actual payment settling or escrow services will be what sells this solution to prospective users and helps to get things off the ground.

I believe there is a lot of mistrust in this market, people want some assurance (or possibly even insurance) that other people will not backpedal on agreed upon transactions. In your FAQ you mention gauging people based upon track record within the system, but you’ll need quite a bit of traffic through these halls before people can begin relying upon in-system reputation to hold agreements together from beginning to end.

That, and end-user facing simplicity is the lubrication that drives sales. I appreciate that the Contingency Market is a very wholesale type of service, but demonstrations of it’s application such as 1p2U would benefit from some retail polishing to that end.

I can’t easily determine from the site, but it sounds like 1p2U may not handle the money for the subscribers or publishers either, just handle the agreements. I would wager that service ought to do more to help avoid and resolve payment conflicts. There will always be trolls, bad apples and people who change their mind and bail. And even ignoring conflict, deciding on payment mechanisms are complicated enough to present a real barrier to entry. This speaks not just to adoption of 1p2U directly, but also as an example to others of how CM can be effectively utilized.

I’ve been thinking of building a micro-bounty system for bug tracking and feature requests whereby people can vote with money to effect changes in software instead of voting with displeasure. CM would be an interesting platform for such a project, but more interesting still if there were easily followed examples of how to tie in payment mechanisms and avoid and resolve end user billing/delivery disputes.

Crosbie Fitch said 3213 days ago :

Jesse, good comments.

With just a single pair of hands I have to focus on the lower hanging fruit, i.e. demo the system working first, and develop the more esoteric aspects (reputation systems, etc.) given additional funding (hopefully attracted as a consequence).

You’re absolutely right that things have to be extremely simple for the end-user.

1p2U is just the end-user interface that translates more familiar concepts such as sponsoring a blogger into their expression as micro-contracts or deals in the Contingency Market.

I’m rather sanguine about the prospects for conflict. When you are dealing with people en masse, they are much better behaved. Things are also greatly improved when people are paying a priori because they want to. Transparency also helps, e.g. if the vendor knows what proportion of a pledge is backed/liquid vs assured by good credit vs promised by newbies. If you know a publication will result in £500 definite, £250 v.likely, and £250 possibly one day, then it’s much better than £1,000 with luck. In other words, ‘default on payment’ ceases to be a problem.

As for free software feature/bug fixing bounty systems I presume you’re aware of microPledge.com ? I think they’re also waiting for the imminent climate in which funding for non-copyright revenue mechanisms starts flowing. However, their system sounds similar to the one you’re thinking of.

Once I’ve got the subscription control features implemented in 1p2U (start/stop subscribing, set subscription rate and limit) I’ll release the source code to it. Then I’ll hook it up to PayPal.

Arizona Patent Attorney said 3212 days ago :

Very interesting 1p2U idea – I assume multiple people can donate to the blogger, thus allowing the market to increase / reflect the value of the anticipated blogged content?

Crosbie Fitch said 3211 days ago :

Arizona Patent Attorney, well, an unlimited number of subscribers or sponsors can offer a penny in exchange for the blogger’s publication of a new item, i.e. contingent upon it. You might infer market value from the number of sponsors. This also provides a proportionate incentive to the blogger to blog – which may be important to some bloggers. The better their blogs become, the more subscribers they attract. The poorer, the more they lose. Obviously subscribers will be a fraction of readers, but the wise blogger does not sue their potential customers, nor lock their blog behind a paywall.



 

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