according to james surowiecki, author of the wisdom of crowds, what’s interesting about decision markets such as the iem (iowa electronic markets) and the hsx (hollywood stock exchange) is that they function fairly well without much (or any) money at stake. however, evidence suggests that such markets operate better (i.e. the people participating in these make better decisions) when there are financial rewards attached to decisions made in the markets. extending the same idea to social news, propeller has been paying scouts for over a year now and is very happy with the progress they have seen, and newsvine has a somewhat different revenue-share model with its community which seems to be working just as well. at the same time, other major contenders (digg, reddit, and stumbleupon) refuse to reward their users.
the decision of some sites compensate community members has had the obvious impact of increasing participation and hypothetically the quality of the participation on those sites, but has also had an unintended side-effect. for example, newsvine is a mix of news with blogged content and links, but since users make money from ads on their content, it is in every user’s best interest to produce the best possible content to make the most money possible. at the same time, because some people are making money in the social news sphere (i.e. the hired scouts at propeller and the popular content producers on newsvine), people on other sites have been exposed to the idea of making money from social news. in the absence of any official ways to make money on these other sites, people are look towards external sources for income.
why do we participate on other social news sites?
here are some of the reasons i could think of:
- status and reputation: just because we want to climb to the top of the leaderboard and be recognized for our efforts.
- monetary reward: because we can make money through it. in this case this money isn’t coming from the site, rather from someone on whose behalf you’re participating.
- self-promotion: because we want to be in a position to push our own content and build traffic to our own site/product/service.
- helping others: because we can help other people out. part of the reason why i continue to participate on digg is because i know how much value the site can create for a content producer and if i can help someone get closer to that goal, that’s enough for me.
- idealism: because we believe in the principle of socially driven news and want to be a part of the movement.
what’s even more interesting about surowiecki’s analysis is his mention that for active participants in these markets, status and reputation is often incentive enough to get them to participate in something that is ultimately a game (much like social news). which means that just the existence of a leaderboard should be enough to keep people who are looking for rewards, interested in social news sites. the problem, however, is when one group is making money, the status and reputation doesn’t seem like a satisfactory enough reward, and what we notice is that the number of people is who are participating in social news either for fun or because they believe in the movement, starts to dwindle in favor of #2 and #3 from above.
of course there is genuine interest in the social news space, but this secondary reason (especially for long-time users with some clout) is becoming increasingly important. a substantial number of users are participating because they think at some point they will be able to get a return on their participation (their time investment in the sites), which can also be seen in the huge influx of content producers and marketers into the space, not because they want to genuinely participate, but because they are seeking the the future return.
what reward is rewarding enough?
if money corrupts social news participation (as many non-paying sites claim) and your name on a page is not rewarding enough any more, then how do social sites reward users that are bringing in millions of dollars in revenue for them?
this post is a part of my journey through james surowiecki’s the wisdom of crowds.