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Introducing Microcontracts · Monday August 11, 2014 by Crosbie Fitch

Whilst modern civilisation is familiar with the local, offline marketplace in which people meet face to face, it is not familiar with the global, online marketplace in which people communicate via screen and keyboard – at least not from the perspective of mankind’s long history of commerce.

There remain big problems online, concerning the difficulties people face in terms of establishing each other’s identity/reputation, and how they exchange money (or ephemeral substitute), and how they exchange materials and products between each other. Laws instituting monopolies and otherwise restraining trade are a minor problem in comparison.

Some problems offline, aren’t actually problems online – we just think they are, because we try to replicate online the mechanisms we have become used to using offline.

For example, one doesn’t even need money as such (silver or gold say), because one can make exchanges without it (a loaf of bread for a cauliflower). However, people are still rather familiar with money (or the idea if not the practice). It is because it was once more convenient to make exchanges via an intermediary commodity that we developed facilities for exchanging via that commodity, i.e. silver, silver coins, dollar coins, dollar notes, dollar amounts, and finally, just amounts, e.g. BitCoin. Ultimately, you should realise that you don’t even need the intermediary quantity at all. You simply have a market of things to be exchanged (and some things are silver).

The problems of trading online can all be solved one day, but we can get a long way toward that if we solve one particular problem first.

I think this problem probably gives rise to this idea of a monied like button.

It is the problem of a paucity of mechanisms available for exchanging public works, i.e. products necessarily publicly accessible, such as drinking fountains or literature.

One can make it private, and sell it publicly, or one can sell it privately, and make it public.

In other words, exchange happens when things cross the boundary of a private domain. Money leaves someone’s pocket, or a product leaves someone’s workshop. You cannot sell something you have already given away, nor that which you will not part with. You cannot buy that which you already have, nor that which another will not part with.

In the case of public works, the recipient is effectively the public. Once one has sold a public work to those who bought it, one cannot sell it to anyone else, because everyone else already has it (or has easy access to it).

There are two approaches to the sale of public works. The first is to privatise what should be public in order to sell it back to interested members of the public. The second is to invite interested members of the public to fund the release of a private work to the public.

One can erect iron railings around a park and its fountains and charge admittance. One can invite a nearby community to fund the building of the park via subscription.

One can enact a privilege that abridges the people’s liberty to make copies in order to charge them for copies of a literary work. The author can also invite their readership to fund the writing of a sequel via subscription (or crowdfunding).

The exchange is between those interested in receiving a fountain or sequel, and those interested in supplying it. The product is consequently received by all those who funded it, but importantly, it is not necessarily denied to those who didn’t fund it.

Online, because it is not a place, but a communications medium, there are no effective fences, and no effective reproduction monopolies. So, all we have is the mechanism of subscription. There is no means of enclosure in a communications medium.

One can keep information private, or one can make it public. Of course, some try to do both, by relying upon friction and copyright to charge for copies (music) or access (paywall) even as they deliver their product to the public.

Ultimately, as attempts to enclose ‘virtual space’ or speech fail, and people recognise such attempts are doomed to failure, we revert to natural reliance upon the physical boundary of one’s private domain (office).

So, we have arrived at the private producer, those many interested in receiving their product, and the public as ultimate beneficiary.

There are four obvious ways of looking at this transition of product from private to public and remuneration in exchange:

  1. The producer gives away their products, in hope of receiving donations as a consequence (possibly also commissions).
  2. Those interested in the producer’s products donate in the hope this will reward, support and incentivise production.
  3. The producer completes a product, and advertises/offers it for sale to those who may be interested (possibly subject to private preview).
  4. Those interested in a producer’s product offer to purchase it in exchange for its production and delivery to them (possibly subject to private preview).

In all these cases, the product is considered a public work, and delivery of the product is considered publication.

A gift or donation is unconditional, i.e. is it made without any formal agreement of exchange.

A sale or purchase is conditional, i.e. money is paid on condition work is delivered and/or work is delivered on condition money is paid.

Notwithstanding the potential for altruism, there are tacit exchanges and explicit exchanges, i.e. patronage and subscription.

The facilities for tacit exchange or patronage, that is, donation for publication, are well catered for, and not particularly fraught with difficulty. I am not too concerned with them, e.g. see snowdrift.coop for a project intending to develop a rather sophisticated donation facility.

The 3rd case in which a producer has already completed a product can be considered a special case of the 4th, that has a production delay of zero.

So, we are left with subscribed production. The producer and their subscribers (interested would-be receivers) are interested in exchanging a product for money (whether respective of consequential public benefit or not).

So in this exchange we can easily identify four things, the two parties making the exchange, and the two items each party has to exchange:

  • Producer – The producer of a public work (an individual or team thereof)
  • Product – The public work (a complete work, or a part, or an improvement thereof)
  • Subscribers – Persons interested in the production of the product
  • Commission – The total amount offered to be paid by the subscribers in exchange

We can also identify other things that may be involved:

  • Production – the producer’s process of producing a product
  • Subscription – the subscribers’ process of commissioning a producer/product
  • Price – the amount the producer would readily accept in exchange
  • Pledge – the amount offered by a subscriber
  • Subscription fee – the amount paid by each subscriber (if only one or more amounts are available), which does not exceed the amount pledged.
  • Public – the ultimate beneficiaries
  • Auditor – the persons involved in any preview of product or sponsorship on behalf of producer/sponsor.

Having examined the elements of the bargain between producer and subscribers, the next thing is to look to how we facilitate this online.

We are not dealing with a town hall of 200 people, a debate and a show of hands concerning a subscription for the building of a bridge (or repairs thereof).

An online subscription facility must cater for potentially vast set of geographically and politically disparate people, whose only commonality is a shared interest in the producer and/or their products. There is no practical opportunity to facilitate internal debate between them, or haggling on their behalf with the producer.

Each potential subscriber must also be considered to have a minuscule budget in terms of time and money. The subscription decision cost must therefore be negligible, and the expenditure must be disposable (‘fire & forget’ as it were). That is not to say that facilities cannot cater for those with more time and money than most.

We are also not primarily concerned with how to optimise the facility for rapid popular take-up, but how it must operate in the long term, and on a large scale.

Let us imagine a button that a producer can place on their website (effectively and incidentally identifying the producer) that invites the interested members of their audience (would-be subscribers) to pledge $1 in exchange for the production and publication of their next product.

A pledge is just a promise, the expression of an intention to pay money in exchange for something. It doesn’t need any commitment, beyond the initial, one-time registration at the subscription facility’s website. The subscriber’s micro-contract is “I offer $ in exchange for delivery, so if I don’t pay, I don’t receive delivery”. Thus each subscriber can make good their pledges at their convenience (and in accord with their enthusiasm to receive delivery of what they have subscribed to).

Now we can deconstruct monied like. The would-be subscriber is someone who is interested in the producer and their work, therefore they ‘like’ the producer and their work. The would-be subscriber is so interested that they can easily decide to offer a small amount of money in exchange for delivery of more of what they are interested in, more of what they like. Hence, their ‘like’ is a monied one – a ‘monied like’.

It is important to note that the ‘monied’ part is not a donation, nor, more critically, is it the relinquishing of monies. Thus making pledges does not consume the subscriber’s funds. Nor even does delivery. It is receipt that does so, and receipt is in the control of the subscriber. So pledges or ‘likes’ are effectively consequence-free, but they are nevertheless monied.

Conversely, the producer should always be fully informed as to the constituency of their current subscriber base, i.e. in terms of their subscribers’ status.

Examples of subscriber status

  • New = not yet provided any funds
  • Producer = have received funds as a producer
  • Good = have provided funds at some time
  • Unfunded = have no funds
  • Part-funded = have insufficient funds for this subscription
  • Funded = have sufficient funds for this subscription at certain fee levels (within amount pledged).
  • Fully-funded = have sufficient funds for this subscription at all fee levels (within amount pledged).

It is important to note that a subscriber can have a single dollar funding their account, and appear as a Good, Funded subscriber to a million producers (for dollar subscriptions). That therefore magnifies the power of a subscriber’s funds immensely, whereas donation consumes them and renders them insignificant drops in the ocean.



 

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