Ed: You are looking at the structures of ‘virtual production networks’ to understand the economic and social implications of online work. How are you doing this?
Mark: We are studying online freelancing. In other words this is digital or digitised work for which professional certification or formal training is usually not required. The work is monetised or monetisable, and can be mediated through an online marketplace.
Freelancing is a very old format of work. What is new is the fact that we have almost three billion people connected to a global network: many of those people are potential workers in virtual production networks. This mass connectivity has been one crucial ingredient for some significant changes in how work is organised, divided, outsourced, and rewarded. What we plan to do in this project is better map the contours of some of those changes and understand who wins and who doesn’t in this new world of work.
Ed: Are you able to define what comprises an individual contribution to a ‘virtual production network’ — or to find data on it? How do you define and measure value within these global flows and exchanges?
Mark: It is very far from easy. Much of what we are studying is immaterial and digitally-mediated work. We can find workers and we can find clients, but the links between them are often opaque and black-boxed. Some of the workers that we have spoken to operate under non-disclosure agreements, and many actually haven’t been told what their work is being used for.
But that is precisely why we felt the need to embark on this project. With a combination of quantitative transaction data from key platforms and qualitative interviews in which we attempt to piece together parts of the network, we want to understand who is (and isn’t) able to capture and create value within these networks.
Ed: You note that “within virtual production networks, are we seeing a shift in the boundaries of firms” — to what extend to you think we seeing the emergence of new forms of organisation?
Mark: There has always been a certain spatial stickiness to some activities carried out by firms (or within firms). Some activities required the complex exchanges of knowledge that were difficult to digitally mediate. But digitisation and better connectivity in low-wage countries has now allowed many formerly ‘in-house’ business processes to be outsourced to third-parties. In an age of cloud computing, cheap connectivity, and easily accessible collaboration tools, geography has become less sticky. One task that we are engaged in is looking at the ways that some kinds of tacit knowledge that are difficult to transmit digitally offer some people and firms (in different places) competitive advantages and disadvantages.
This proliferation of digitally mediated work could also be seen as a new form of organisation. The organisations that control key work marketplaces (like oDesk) make decisions that shape both who buyers and sellers are able to connect with, and the ways in which they are able to transact.
Ed: Does ‘virtual work’ add social or economic value to individuals in low-income countries? ie are we really dealing with a disintermediated, level surface on a global playing field, or just a different form of old exploitation (ie a virtual rather than physical extraction industry)?
Mark: That is what we aim to find out. Many have pointed to the potentials of online freelancing to create jobs and bring income to workers in low-income countries. But many others have argued that such practices are creating ‘digital sweatshops’ and facilitating a race to the bottom.
We undoubtedly are not seeing a purely disintermediated market, or a global playing field. But what we want to understand is who exactly benefits from these new networks of work, and how.
Ed: Will you be doing any network analysis of the data you collect, ie of actual value-flows? And will they be geolocated networks?
Digital gaming, once a stigmatized hobby, is now a mainstream cultural activity. According to the Oxford Internet Survey, more than half of British Internet users play games online; more in fact, than watch films or pornography online. Most new games today contain some kind of a virtual economy: that is, a set of processes for the production, allocation, and consumption of artificially scarce virtual goods. Often the virtual economy is very simple; sometimes, as in massively multiplayer online game EVE Online, it starts to approach the scale and complexity of a small national economy.
Just like national economies, virtual economies incentivize certain behaviours and discourage others; they ask people to make choices between mutually exclusive options; they ask people to coordinate. They can also propagate value systems setting out what modes of participation are considered valuable. These virtual economies are now built into many of the most popular areas of the Internet, including social media sites and knowledge commons — with their systems of artificially scarce likes, stars, votes, and badges. Understanding these economies is therefore crucial to anyone who is interested in the social dynamics and power relations of digital media today.
But a question I am asked a lot is: what can ‘real’ economies and the economists who run them learn from these virtual economies? We might start by imagining how a textbook economist would approach the economy of an online game. In EVE Online, hundreds of thousands of players trade minerals, spaceship components and other virtual commodities on a number of regional marketplaces. These marketplaces are very sophisticated, resembling real commodity spot markets.
Our economist would doubtless point out several ways its efficiency could be radically improved. For example, EVE players can only see prices quoted in their current region, likely missing a better deal available elsewhere. (In physical commodity markets, prices are instantly broadcast worldwide: you wouldn’t pay more for gold in Tokyo than you would in New York.) Our economist knows that providing more information to market participants increases the market’s efficiency, and might therefore suggest modifying the game such that all players gain instant and galaxy-wide access to the same price information. This would improve the overall efficiency of the galactic market.
This change would obviously be a blow to those players who have specialized in gathering and trading this price information. It would also reduce the opportunities for arbitrageurs: players who rummage the galaxy for underpriced goods, transporting them to regions where they will fetch a profit. Of course, these players could always turn themselves into haulers, the space equivalent of truck drivers. Increased efficiency would probably increase cross-regional trade, meaning a boom-time for haulers.
But wait – realizing the infinite malleability of virtual economies, the textbook economist might decide to eliminate regions altogether. Distance is what economists refer to as a transaction cost: the economy would run much more efficiently without the need to transport things around. In a virtual environment goods and characters could be instantly teleported, or the galaxy simply collapsed into a single, dimensionless point. The efficiency of the virtual economy would certainly be greatly improved. But who would pay a subscription fee to participate in such a boring economy!
Why did our strawman economist make such a horrible mess of the game economy? Conventional economic laws are work equally well in virtual environments: the equilibrium price of a commodity in a competitive market is determined by the interaction of supply and demand, regardless of whether you are in the market for magic swords or soya beans. The crucial difference is in the objectives the economy is intended to fulfil. When conventional economists design and analyse economies, they take it as read that the purpose of the economy and its institutions is to solve the so-called economic problem: the allocation of limited resources so as to best satisfy human needs. Microeconomists do this by designing mechanisms that are as efficient as possible, while macroeconomists are concerned with maximizing economic output.
But in game economies, the economic problem doesn’t really exist. The needs that players experience are contrived, created by positioning otherwise useless goods (magic swords) as desirable status items. The scarcity of resources is likewise artificial, enforced through programme code. If games designers wanted to solve the economic problem, they could do it with a few keystrokes; no markets or other economic institutions are required for this purpose.
Different multiplayer game economies have different aims, but one key objective stands out: the economy helps create and hold together the social fabric of the game. Regular interaction generates interpersonal ties and trust. Having people consume the fruits of one’s digital labour generates a sense of meaning, a sense of a role to play in the community. Division of labour and the resulting mutual interdependence moreover creates solidarity and social cohesion. In short, the economy can act as a wonderful glue holding people together.
The social fabric is important to game developers, because the stronger the ties between players, the longer the players will keep playing (and paying fees). Some games developers expend considerable resources in their own style of economic research, experimenting with different exchange mechanisms and institutions to find the designs that really strengthen the social fabric. When we examine the resulting virtual economies we can see that their design choices are often very different from the choices that a conventional economist would make.
I will give an example. One aspect of designing a market is designing an exchange mechanism: the concrete mechanism through which the buyer and the seller meet, settle on a price and quantity, and execute the transaction. The simplest exchange mechanism is two people meeting face to face to negotiate a trade, and then exchanging the goods on the spot. A more sophisticated mechanism is an online auction, like eBay. Stock markets use an even more sophisticated mechanism, where participants submit buy and sell offers, these are matched by an algorithm, and trades are executed automatically.
Given that many exchange mechanisms are possible, what kind of an exchange mechanism should be build into your market? When governments and companies create markets they usually turn to microeconomists specializing in this kind of mechanism design. The microeconomist’s answer is that you should choose the exchange mechanism that is most efficient, in the sense of allocating goods optimally and minimizing all transaction costs: in the best case it may not even be necessary for the buyer and the seller to know each others’ identities.
Games economists, in contrast, tend to favour exchange mechanisms that involve social interaction; often through a virtual face-to-face meeting, where the tedious parts (explaining item characteristics) are automated, but negotiation over prices and quantities is conducted manually. Some locations in the virtual world often spontaneously emerge as sort of bazaars, where buyers and sellers congregate to search for deals. These double as social hubs where people come to meet friends and put on performances and displays, thereby building social capital. One might later consider one’s trading acquaintances when putting together a team for some quest.
More sophisticated exchange mechanisms, such as auction houses and the commodity spot markets in EVE Online, are also common in games, but they also avoid completely displacing social trade networks. In EVE Online, players must either move around in space or use their social networks to obtain price information from neighboring localities. This way, EVE Online’s developers have struck a balance between efficiency and social ties. One thing that virtual economies can teach is to look for other objectives besides efficiency and output as variables that need to be maximized in an economic system.
I would argue that a focus on social fabric — rather than just on efficiency and output – can usefully inform national economies. First, in today’s affluent societies, we are close to solving the economic problem: in the United Kingdom or the United States the need for life-sustaining material basics is all but fulfilled. Keynes predicted 90 years ago that the economic problem will be solved within 100 years; in the affluent parts of the world, it looks like he may have been right. The greatest problem faced by the UK and US today is not the economic problem, but the disintegration of the social fabric. Virtual economies show how economic institutions could be arranged so as to strengthen it.
Second, even in that greater part of the world where the economic problem still remains acute, it is not the case that we should focus on it exclusively. Poor countries should not have to go through social disintegration to reach economic affluence. Third, as I have already mentioned, games and virtual economies have become significant phenomena in their own right. Their creators are smart people who have developed many economic insights of their own. They are eager for knowledge on how to better design and operate these economies, but conventional economic advice that focuses solely on efficiency fails to address their needs. Economists and economic sociologists should widen their research to develop answers that satisfy the needs of virtual economy designers – and also of a more ‘social’ national economy.
Now, to be fair, the fact that markets and other modern economic institutions can serve important social functions has been known to sociologists since Émile Durkheim. But this has been regarded as something of a side effect, and certainly not the purpose for which these institutions are created. Game economies are radical in this respect – that they are created entirely to serve these other functions, rather than any material function. Economic anthropologist Karl Polanyi argued in The Great Transformation that in the transition from a traditional to a market society, social structure was rearranged to serve the needs of the economy. What game economies do is in some ways the opposite: they rearrange the economy to serve the needs of the social structure. And that would seem to be a very worthwhile endeavor.
Vili Lehdonvirta is a Research Fellow at OII. He is an economic sociologist who studies the social and economic dimensions of new information technologies around the world. His particular areas of expertise are virtual goods, virtual currencies, and digital labour. Vili’s book Virtual Economies: Design and Analysis (with Edward Castronova) is published by MIT Press.
In the journal’s inaugural issue, founding Editor-in-Chief Helen Margetts outlined what are essentially two central premises behind Policy & Internet’s launch. The first is that “we cannot understand, analyze or make public policy without understanding the technological, social and economic shifts associated with the Internet” (Margetts 2009, 1). It is simply not possible to consider public policy today without some regard for the intertwining of information technologies with everyday life and society. The second premise is that the rise of the Internet is associated with shifts in how policy itself is made. In particular, she proposed that impacts of Internet adoption would be felt in the tools through which policies are effected, and the values that policy processes embody.
The purpose of the Policy and Internet journal was to take up these two challenges: the public policy implications of Internet-related social change, and Internet-related changes in policy processes themselves. In recognition of the inherently multi-disciplinary nature of policy research, the journal is designed to act as a meeting place for all kinds of disciplinary and methodological approaches. Helen predicted that methodological approaches based on large-scale transactional data, network analysis, and experimentation would turn out to be particularly important for policy and Internet studies. Driving the advancement of these methods was therefore the journal’s third purpose. Today, the journal has reached a significant milestone: over one hundred high-quality peer-reviewed articles published. This seems an opportune moment to take stock of what kind of research we have published in practice, and see how it stacks up against the original vision.
At the most general level, the journal’s articles fall into three broad categories: the Internet and public policy (48 articles), the Internet and policy processes (51 articles), and discussion of novel methodologies (10 articles). The first of these categories, “the Internet and public policy,” can be further broken down into a number of subcategories. One of the most prominent of these streams is fundamental rights in a mediated society (11 articles), which focuses particularly on privacy and freedom of expression. Related streams are children and child protection (six articles), copyright and piracy (five articles), and general e-commerce regulation (six articles), including taxation. A recently emerged stream in the journal is hate speech and cybersecurity (four articles). Of course, an enduring research stream is Internet governance, or the regulation of technical infrastructures and economic institutions that constitute the material basis of the Internet (seven articles). In recent years, the research agenda in this stream has been influenced by national policy debates around broadband market competition and network neutrality (Hahn and Singer 2013). Another enduring stream deals with the Internet and public health (eight articles).
Looking specifically at “the Internet and policy processes” category, the largest stream is e-participation, or the role of the Internet in engaging citizens in national and local government policy processes, through methods such as online deliberation, petition platforms, and voting advice applications (18 articles). Two other streams are e-government, or the use of Internet technologies for government service provision (seven articles), and e-politics, or the use of the Internet in mainstream politics, such as election campaigning and communications of the political elite (nine articles). Another stream that has gained pace during recent years, is online collective action, or the role of the Internet in activism, ‘clicktivism,’ and protest campaigns (16 articles). Last year the journal published a special issue on online collective action (Calderaro and Kavada 2013), and the next forthcoming issue includes an invited article on digital civics by Ethan Zuckerman, director of MIT’s Center for Civic Media, with commentary from prominent scholars of Internet activism. A trajectory discernible in this stream over the years is a movement from discussing mere potentials towards analyzing real impacts—including critical analyses of the sometimes inflated expectations and “democracy bubbles” created by digital media (Shulman 2009; Karpf 2012; Bryer 2012).
The final category, discussion of novel methodologies, consists of articles that develop, analyze, and reflect critically on methodological innovations in policy and Internet studies. Empirical articles published in the journal have made use of a wide range of conventional and novel research methods, from interviews and surveys to automated content analysis and advanced network analysis methods. But of those articles where methodology is the topic rather than merely the tool, the majority deal with so-called “big data,” or the use of large-scale transactional data sources in research, commerce, and evidence-based public policy (nine articles). The journal recently devoted a special issue to the potentials and pitfalls of big data for public policy (Margetts and Sutcliffe 2013), based on selected contributions to the journal’s 2012 big data conference: Big Data, Big Challenges? In general, the notion of data science and public policy is a growing research theme.
This brief analysis suggests that research published in the journal over the last five years has indeed followed the broad contours of the original vision. The two challenges, namely policy implications of Internet-related social change and Internet-related changes in policy processes, have both been addressed. In particular, research has addressed the implications of the Internet’s increasing role in social and political life. The journal has also furthered the development of new methodologies, especially the use of online network analysis techniques and large-scale transactional data sources (aka ‘big data’).
As expected, authors from a wide range of disciplines have contributed their perspectives to the journal, and engaged with other disciplines, while retaining the rigor of their own specialisms. The geographic scope of the contributions has been truly global, with authors and research contexts from six continents. I am also pleased to note that a characteristic common to all the published articles is polish; this is no doubt in part due to the high level of editorial support that the journal is able to afford to authors, including copyediting. The justifications for the journal’s establishment five years ago have clearly been borne out, so that the journal now performs an important function in fostering and bringing together research on the public policy implications of an increasingly Internet-mediated society.
And what of my own research interests as an editor? In the inaugural editorial, Helen Margetts highlighted work, finance, exchange, and economic themes in general as being among the prominent areas of Internet-related social change that are likely to have significant future policy implications. I think for the most part, these implications remain to be addressed, and this is an area that the journal can encourage authors to tackle better. As an editor, I will work to direct attention to this opportunity, and welcome manuscript submissions on all aspects of Internet-enabled economic change and its policy implications. This work will be kickstarted by the journal’s 2014 conference (26-27 September), which this year focuses on crowdsourcing and online labor.
Our published articles will continue to be highlighted here in the journal’s blog. Launched last year, we believe this blog will help to expand the reach and impact of research published in Policy and Internet to the wider academic and practitioner communities, promote discussion, and increase authors’ citations. After all, publication is only the start of an article’s public life: we want people reading, debating, citing, and offering responses to the research that we, and our excellent reviewers, feel is important, and worth publishing.
Ed: You have been looking at “networked cultural production” — ie the creation of cultural goods like films through crowdsourcing platforms — specifically in the ‘wreckamovie’ community. What is wreckamovie?
Isis:Wreckamovie is an open online platform that is designed to facilitate collaborate film production. The main advantage of the platform is that it encourages a granular and modular approach to cultural production; this means that the whole process is broken down into small, specific tasks. In doing so, it allows a diverse range of geographically dispersed, self-selected members to contribute in accordance with their expertise, interests and skills. The platform was launched by a group of young Finnish filmmakers in 2008, having successfully produced films with the aid of an online forum since the late 1990s. Officially, there are more than 11,000 Wreckamovie members, but the active core, the community, consists of fewer than 300 individuals.
Ed: You mentioned a tendency in the literature to regard production systems as being either ‘market driven’ (eg Hollywood) or ‘not market driven’ (eg open or crowdsourced things); is that a distinction you recognised in your research?
Isis: There’s been a lot of talk about the disruptive and transformative powers nested in networked technologies, and most often Wikipedia or open source software are highlighted as examples of new production models, denoting a discontinuity from established practices of the cultural industries. Typically, the production models are discriminated based on their relation to the market: are they market-driven or fuelled by virtues such as sharing and collaboration? This way of explaining differences in cultural production isn’t just present in contemporary literature dealing with networked phenomena, though. For example, the sociologist Bourdieu equally theorized cultural production by drawing this distinction between market and non-market production, portraying the irreconcilable differences in their underlying value systems, as proposed in his The Rules of Art. However, one of the key findings of my research is that the shaping force of these productions is constituted by the tensions that arise in an antagonistic interplay between the values of social networked production and the production models of the traditional film industry. That is to say, the production practices and trajectories are equally shaped by the values embedded in peer production virtuesand the conventions and drivers of Hollywood.
Ed: There has also been a tendency to regard the participants of these platforms as being either ‘professional’ or ‘amateur’ — again, is this a useful distinction in practice?
Isis: I think it’s important we move away from these binaries in order to understand contemporary networked cultural production. The notion of the blurring of boundaries between amateurs and professionals, and associated concepts such as user-generated content, peer production, and co-creation, are fine for pointing to very broad trends and changes in the constellations of cultural production. But if we want to move beyond that, towards explanatory models, we need a more fine-tuned categorisation of cultural workers. Based on my ethnographic research in the Wreckamovie community, I have proposed a typology of crowdsourcing labour, consisting of five distinct orientations. Rather than a priori definitions, the orientations are defined based on the individual production members’ interaction patterns, motivations and interpretation of the conventions guiding the division of labour in cultural production.
Ed: You mentioned that the social capital of participants involved in crowdsourcing efforts is increasingly quantifiable, malleable, and convertible: can you elaborate on this?
Isis: A defining feature of the online environment, in particular social media platforms, is its quantification of participation in the form of lists of followers, view counts, likes and so on. Across the Wreckamovie films I researched, there was a pronounced implicit understanding amongst production leaders of the exchange value of social capital accrued across the extended production networks beyond the Wreckamovie platform (e.g. Facebook, Twitter, YouTube). The quantified nature of social capital in the socio-technical space of the information economy was experienced as a convertible currency; for example, when social capital was used to drive YouTube views (which in turn constituted symbolic capital when employed as a bargaining tool in negotiating distribution deals). For some productions, these conversion mechanisms enabled increased artistic autonomy.
Ed: You also noted that we need to understand exactly where value is generated on these platforms to understand if some systems of ‘open/crowd’ production might be exploitative. How do we determine what constitutes exploitation?
Isis: The question of exploitation in the context of voluntary cultural work is an extremely complex matter, and remains an unresolved debate. I argue that it must be determined partially by examining the flow of value across the entire production networks, paying attention to nodes on both micro and macro level. Equally, we need to acknowledge the diverse forms of value that volunteers might gain in the form of, for example, embodied cultural or symbolic capital, and assess how this corresponds to their motivation and work orientation. In other words, this isn’t a question about ownership or financial compensation alone.
Ed: There were many movie-failures on the platform; but movies are obviously tremendously costly and complicated undertakings, so we would probably expect that. Was there anything in common between them, or any lessons to be learned form the projects that didn’t succeed?
Isis: You’ll find that the majority of productions on Wreckamovie are virtual ghosts; created on a whim with the expectation that production members will flock to take part and contribute. The projects that succeed in creating actual cultural goods (such as the 2010 movie Snowblind) were those that were lead by engaged producers actively promoting the building of genuine social relationships amongst members, and providing feedback to submitted content in a constructive and supportive manner to facilitate learning. The production periods of the movies I researched spanned between two and six years – it requires real dedication! Crowdsourcing does not make productions magically happen overnight.
Ed: Crowdsourcing is obviously pretty new and exciting, but are the economics (whether monetary, social or political) of these platforms really understood or properly theorised? ie is this an area where there genuinely does need to be ‘more work’?
Isis: The economies of networked cultural production are under-theorised; this is partially an outcome of the dichotomous framing of market vs. non-market led production. When conceptualized as divorced from market-oriented production, networked phenomena are most often approached through the scope of gift exchanges (in a somewhat uninformed manner). I believe Bourdieu’s concepts of alternative capital in their various guises can serve as an appropriate analytical lens for examining the dynamics and flows of the economics underpinning networked cultural production. However, this requires innovation within field theory. Specifically, the mechanisms of conversion of one form capital to another must be examined in greater detail; something I have focused on in my thesis, and hope to develop further in the future.
Isis Hjorth was speaking to blog editor David Sutcliffe.
Isis Hjorth is a cultural sociologist focusing on emerging practices associated with networked technologies. She is currently researching microwork and virtual production networks in Sub-Saharan Africa and Southeast Asia.
Read more: Hjorth, I. (2014) Networked Cultural Production: Filmmaking in the Wreckamovie Community. PhD thesis. Oxford Internet Institute, University of Oxford, UK.
The last 2010 issue of Policy and Internet has just been published! We are pleased to present seven articles, all of which focus on a substantive public policy issue arising from widespread use of the Internet: online political advocacy and petitioning, nationalism and borders online, unintended consequences of the introduction of file-sharing legislation, and the implications of Internet voting and voting advice applications for democracy and political participation.
Links to the articles are included below. Happy reading!
Welcome to the third issue of Policy & Internet for 2010. We are pleased to present five articles focusing on substantive public policy issues arising from widespread use of the Internet: regulation of trade in virtual goods; development of electronic government in Korea; online policy discourse in UK elections; regulatory models for broadband technologies in the US; and alternative governance frameworks for open ICT standards.
Three of the articles are the first to be published from the highly successful conference ‘Internet, Politics and Policy‘ held by the journal in Oxford, 16th-17th September 2010. You may access any of the articles below at no charge.
The second round of panels included a number of scientific approaches to the role of the Internet for the recent UK election:
Gibson, Cantijoch and Ward in their analysis of the UK Elections drew attention to the fact that the 2010 UK General Election was dominated not by the Internet but by a very traditional media instead, namely the TV debates of party leaders. Importantly, they suggest to treat eParticipation as a multi-dimensional concept, ie. distinguish different forms of eParticipation with differing degrees of involvement, in fact in much the same way as we have come to treat traditional forms of participation.
Lilleker and Jackson looked at how much party websites did encourage participation. They found that first and foremost, parties are about promoting their personnel and are rather cautious in engaging in any interactive communication. Most efforts were aimed at the campaign and not about getting input into policy. Even though there were more Web 2.0 features in use than in previous years, participation was low.