It’s Time to Pay Digital Prosumers for the Data They Now Provide Free of Charge

A recent New York Times article made the case that users- prosumers- provide highly valuable information to internet sites such as Google, Facebook and Amazon.com. That information is currently worth $1,000 per user, an amount that will rise rapidly in the coming years. The argument is made that these companies, as well as the data brokerages (with current revenue of $150 billion a year) that purchase and sell such data, ought to be taxed. While this a radical suggestion, at least as far as those who run these companies are concerned, it does not go nearly far enough. If we are willing to say that these companies should be taxed for this information, a far more consequential change would involve actually paying prosumers for the information they now provide, consciously and unconsciously, free of charge.

Hidden from view is the fact that the vast success and wealth of Google, Facebook, Amazon.com, and other companies of their ilk are largely based on the free labor provided by prosumers. As things now stand, prosumers are even more exploited than the workers in traditional capitalist businesses. Such workers have generally been paid as little as possible (the fast food industry is a notable example), but those prosumers who “work” on these online sites receive no pay at all. They are expected to be satisfied with rewards such as the ease of ordering products online and of maintaining contact with, and being informed about the lives of, family and friends. This just not enough!

After all, those at the top of these digital businesses are billionaires many times over largely because of this free labor. (Admittedly, these entrepreneurs deserve to be rewarded for their ideas and for the infrastructure they provide online prosumers that allows them to consume and produce). In thinking about paying prosumers, consider how much it would cost these digital businesses to hire traditional market researchers to collect and compile all of these data. In fact, given the vast and rapidly growing amount of data, it would be impossible for them to do at any price.

Digital businesses are getting an incomparable gift from their users. It is time for them to offer economic rewards to these prosumers commensurate with their contributions to the corporate bottom line.

Customer Service or Disservice?

Consumer Reports (September, 2014) offered a revealing analysis of the accelerating trend toward customer self-service, or one aspect of what, in my terms, is “prosumption as consumption”. Customers who engage in self-service are, by definition, producing as they consume. To its credit, Consumer Reports makes no bones about why self-service has been embraced so enthusiastically. The reason? “To save money”. For example, if customers themselves place an online order, the cost to the company is pennies, while ordering from a live agent could cost between $2 and $10. In most cases, the corporations involved do not pass the savings on to customers in the form of lower prices. When multiplied by thousands, if not millions, of transactions, such savings mean much greater corporate profits. While such cost savings and profits have long been possible, they have been greatly increased in recent years by new digital technologies and by consumers who are not only familiar with them, but greatly prefer using them to interacting with paid employees.
Why do consumers do this work without pay or economic gain of any kind? Among the reasons offered by Consumer Reports are consumers’ feelings of empowerment, the ability to handle transactions more quickly, and the possibility of avoiding contact with employees who are increasingly likely to be less than stellar in their work. In fact, because corporations much prefer self-service customers, they are likely to hire fewer workers of lesser ability, to offer little training, and to accept marginal performance of the job. While many customers are cognizant of the incapacities of service workers, they generally seem unaware of many of the costs of self-service such as the loss of human contact, the paid jobs that are lost because they are willing to work for no pay, and the dehumanization of their relationships with corporations.
Because of the increasing acceptance of self-service by consumers, some corporations have taken the outrageous step- with nary a peep from consumers- of charging them fees for handling tasks the corporations used to perform without charge. Among the examples are airlines charging customers $50 for a paper ticket, $25 for having the audacity to make a reservation by phone, $20 for asking for a receipt for an e-ticket, and a $10 fee for having a boarding pass printed out by an agent. Fees such as these are likely to increase in price and to proliferate in number and variety in the coming years thereby further increasing the costs to consumers and profits for the companies.
Profit-making organizations have discovered that they can increase their profits by cutting personnel costs and by exploiting consumers to an ever-greater degree. There are many more customers than employees to exploit, they accept their exploitation meekly and, indeed, they often embrace it eagerly. This system greatly reduces the possibility of class consciousness among the declining number of employees who are ever-more fearful of losing their jobs. Worse, the system can operate without fear of the development of class consciousness among consumers who are too diverse and self-interested to think of themselves as a class, to become a class, and to act as a class. As much as one might like to hear it, we are not likely to hear consumers utter the clarion call- “Consumers of the world unite, you’ve nothing to lose but your iPad”.

Using Games to Motivate Makers

Allowing and even using games to motivate paid workers has a long tradition (see Donald Roy’s [1960] famous paper on “banana time”). Such games are used to motivate poorly paid workers to continue to work in monotonous jobs. Makers generally do not perform what they consider to be monotonous work and they are not poorly paid- in the main they are paid nothing at all. While most seem to get a great deal of satisfaction from what they do, the capitalist organizations for which they labor as part of the long tail of talent still feel the need to motivate them in various ways, including through the use of games. It is important that organizations keep makers, with their gift of free labor, happy.

For example, Quirky is a web-based company that uses the crowd of makers to “develop better products” (179) and based on these contributions it puts two new products a week into production. Each new Quirky product involves inputs from hundreds of makers. Unlike many other similar systems, the inventor might earn thousands of dollars. Furthermore, everyone involved gets paid although in most cases “it’s just pennies” (180). The process involves a variety of steps- submitting ideas, voting and commenting on those ideas and later the designs, having a say in product names, etc.. Countdown clocks and competitions are employed throughout the process with the result that the entire process “feels like a game” (180).

Similarly, Kickstarter is a web-based system of crowdfunding that is “fun” and has “made a game out of raising money” (174). Deadlines are set, minimum funding levels are defined and if they are not met the project is canceled, various thank-you gifts are offered at different levels of giving, etc. For their efforts and money, investors do not expect a financial return, but rather the new product promised by the project or even just “the emotional reward of knowing that they had something to do with bringing that product into existence” (173).

As in the case of earlier factory workers, fun and games are used to keep the noses of the makers to the grindstone.

Exploiting the Makers

The increase in the number of makers is enabled by the fact that many people have an array of largely untapped skills; they are part of what Anderson calls the “long tail of talent” (127). New technologies both allow for the greater utilization of those talents and create a larger audience for their products. This stands in contrast to the past, and to some degree the present, model where organizations draw only on the talents of those employed in them. No matter how well an organization recruits its employees, nowhere near all of the very best people are likely to be employed in any given organization, nor are they ever likely to be.

Open-sourcing the long tail of talent opens up a whole new arena for the exploitation of makers who exist outside the confines of the organization. In Anderson’s view, this “can create an unbeatable economics for companies whose products are developed in this way” (109). All sorts of tasks- research and development, marketing, and support- can all be done free (a long-term concern of Anderson’s, see Free: The Future of a Radical Price) of charge by the makers who are part of a company’s long-tail. Of course, the free work that they perform was likely performed at one time by paid workers and the replacement of the latter creates increased unemployment. More important in this context is the fact that the makers are paid nothing, or perhaps a pittance, for their contributions. How are companies able to find, and to retain, the makers? Largely by offering them “social incentives” (109) such as elevating the best “volunteers” to “moderator status” or giving them a “`noob ninja’ badge”. Such rewards cost the company nothing, but seem to satisfy most makers. In any case, the makers are more likely to be doing what they do because they are involved in a collective effort in which they want to participate, doing things they want to do, and that will be of use to others. If that is insufficient, Anderson proposes a meager, largely, demeaning, reward hierarchy that runs from T-shirts, to coffee mugs, free hardware, a trip to a development meeting, and for a very few makers equity in the project.

Anderson proudly describes a small robotics company of which he is part owner. There are about 100 contributors to the company, but only 20 are paid employees. The rest are unpaid volunteers with some of them putting in “what in some weeks amounts to full-time work” (149). Anderson’s company earns profits and grows larger mainly because of the unpaid, and therefore heavily exploited, labor of these volunteer makers.

The makers who sell their handmade goods on Esty.com enrich that organization which in April, 2012 had 300 paid employees, sold $65 million worth of goods a month, and after only six years in existence was valued at more than 2/3rds of a billion dollars. What about the makers? Most don’t make a living on what they sell on Etsy and at least some come to the realization that their hourly pay compares poorly to those who work at McDonald’s. Anderson reassures us they are likely to be satisfied by, for example, having an audience for their products. In any case, we are supposed to be relieved to learn that while Etsy is on the road to being a billion dollar company, “it’s not about the money for most of” the makers (183).

While in the past capitalists thrived on exploiting poorly paid employees, it is now creating an even more exploited class of unpaid makers. Seemingly oblivious to the exploitation built into this system, makers are happily contributing to the emergence of a new, even more exploitative, capitalist system.