Sharing the Wealth

A couple of weeks ago, Henry raised a key issue in the global discourse on user-generated content. That issue: should users benefit financially from content they have created with industry-provided tools (or shared via industry-provided distribution systems?) Here’s a good quote from the post:

If consumers are helping to generate the intellectual property and helping to market the product, shouldn’t they receive some economic return on their participation? Lund says no — that this would fundamentally change their relationship to the company…

I made a few comments on Henry’s post which I’d like to echo here. To the point: I think it’s clear that economic returns, while not always the best (or even appropriate) creative incentive, are not inherently contrary to the spirit of user-generated content. In some cases, financial incentives may even grease the wheels of UGC.

MIT Professor Eric Von Hippel has been researching “lead users” (the non-media world’s creative consumers) for many years now; his research was the context for Henry’s post. So let’s talk about Von Hippel’s research. One of his observations was that many (not all) “lead users” innovated precisely because they were seeking some sort of “economic return”. For example: the farmer who invents a new irrigation system because commercially-available models have not met his business needs. Eventually, a corporation discovers the farmer’s invention and commercializes it. Von Hippel’s research has shown that this phenomenon is exceedingly common, and has been the root of a surprising number of profound innovations. (The farmer story is actually a true example.)

At the core, a “lead user” is just an individual who has good reason — which may be economic, social, and/or something else entirely — to innovate (and who has the skills and tools necessary to do so). A pure desire for self-expression counts as a “good reason.” Now, as long as companies don’t “pervert” the lead user’s environment with reward systems that overly-incentivize unproductive behavior, economic benefit-sharing should not inherently be a problem.

Case in point: Google Adsense. Adsense has enabled many users (who couldn’t easily monetize their online content before) to earn a financial return on their creative efforts. It’s hard to argue that Adsense has stifled or overly-perverted user innovation. And it’s hard to argue that Adsense has tainted the reputations of the bloggers who employ it — a pretty large number of popular blogs feature ads.

Profit-seeking Second Life users seem to be doing OK too (on both the innovation and reputation fronts), despite the fact that their efforts are generating millions of dollars in collective revenue. And what of the many successful contests that have rewarded user creativity with valuable prizes (or jobs); do those count? (Examples: 1, 2)

Does great user-generated content often stem from non-financial incentives? Absolutely. I can’t say for certain, but I’m pretty sure that the guys who first made Counter-Strike didn’t do so out of expectation for eventual financial reward. (The again, Valve did hire them to continue making games, and I guarantee the consumer world noticed…) But I digress. There are a million great examples of UGC that was inspired without financial incentive. I merely wish to debunk the notion that financial incentives are inherently bad.

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