by on July 3, 2006 · 2 comments

Last week Paul Graham posted another great essay, this one on insiders and outsiders:

What are the genuine advantages of being an insider? The greatest is an audience. It often seems to outsiders that the great advantage of insiders is money– that they have the resources to do what they want. But so do people who inherit money, and that doesn’t seem to help, not as much as an audience. It’s good for morale to know people want to see what you’re making; it draws work out of you.

If I’m right that the defining advantage of insiders is an audience, then we live in exciting times, because just in the last ten years the Internet has made audiences a lot more liquid. Outsiders don’t have to content themselves anymore with a proxy audience of a few smart friends. Now, thanks to the Internet, they can start to grow themselves actual audiences. This is great news for the marginal, who retain the advantages of outsiders while increasingly being able to siphon off what had till recently been the prerogative of the elite.

Though the Web has been around for more than ten years, I think we’re just beginning to see its democratizing effects. Outsiders are still learning how to steal audiences. But more importantly, audiences are still learning how to be stolen– they’re still just beginning to realize how much deeper bloggers can dig than journalists, how much more interesting a democratic news site can be than a front page controlled by editors, and how much funnier a bunch of kids with webcams can be than mass-produced sitcoms.

The big media companies shouldn’t worry that people will post their copyrighted material on YouTube. They should worry that people will post their own stuff on YouTube, and audiences will watch that instead.

I suspect that the generation now growing up will think it positively perverse that in the 20th century, the average consumer had to content herself with 3 or 4 major TV networks, one or two local newspapers, a couple dozen radio stations, and handful of new movies each week for their news and entertainment. The line between amateur and professional is already starting to blur–the most successful bloggers already have larger audiences than a lot of professional pundits, for example. As technologies for distribution of music and video mature, there’s every reason to think the same will occur for those media.

Last week, Ed Felten had a good post on the same theme:

Second Life, the virtual world run by Cory’s company, Linden Lab, lets users define the behavior of virtual items by writing software code in a special scripting language. Surprisingly many users do this, and the demand for scripted objects looks like a long tail distribution. If this is true for software innovation in general, Cory asked, what are the implications for business and for public policy?

The implications for public policy are interesting. Much of the innovation in the long tail is not motivated mainly by profit–the authors know that their work will not be popular. Policymakers should remember that not all valuable creativity is financially motivated.

But innovation can be deterred by imposing costs on it. The key issue is transaction costs. If you have to pay $200 to somebody before you can innovate, or if you have to involve lawyers, the innovation won’t happen. Or, just as likely, the innovation will happen anyway, and policymakers will wonder why so many people are ignoring the law. That’s what has happened with music remixes; and it could happen again for code.


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