Date: Wed, 7 Feb 2007 18:32:00 -0600
From: SuitWatch 
To: suitwatch@ssc.com
Subject: SuitWatch - February 7



                             SuitWatch -- February 7, 2007


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 Building a Relationship Economy

   A few years ago I had a Socratic exchange with a Nigerian pastor named Sayo,
   whom I was lucky to find sitting next to me on a long airplane trip.  We
   were both on speaking junkets.  He was coming from an event related to his
   latest work: translating the Bible to Yoruba, one of the eight languages he
   spoke.  I was on my way to give a talk about The Cluetrain Manifesto, a book
   I co-authored.

   My main contribution to Cluetrain was a chapter called "Markets are
   conversations".  He asked me what we meant by that.  After hearing my
   answer, Sayo acknowledged that our observations were astute, but also
   incomplete.  Something more was going on in markets than just transactions
   and conversations, he said.  What was it?

   I said I didn't know.  I as close to verbatim as I can recall it, here is
   the dialogue that followed...

   "Pretend this is a garment", Sayo said, picking up one of those blue
   airplane pillows.  "Let's say you see it for sale in a public market in my
   country.  And you are interested in buying it.  What is your first question
   to the seller?"

   "What does it cost?" I said.

   "Yes", he answered.  "You would ask that.  Let's say he says, 'Fifty
   dollars'.  What happens next?"

   "If I want the garment, I bargain with him until we reach an agreeable
   price."

   "Good.  Now let's say you know something about textiles.  And the two of you
   get into a long conversation where both of you learn much from each other.
   You learn about the origin of the garment, the yarn used, the dyes, the name
   of the artist, and so on.  He learns about how fabric is made in your
   country, how distribution works, and so on.  In the course of this you get
   to know each other.  What happens to the price?"

   "Maybe I want to pay him more and he wants to charge me less".

   "Yes.  And why is that?"

   "I'm not sure."

   "You now have a relationship".

   He went on to point out that, in his country, and in much of what we call
   the developing world, relationship is of paramount importance in public
   markets.  In the industrialized world, prices are set by those who control
   the manufacturing, distribution and retail systems.  Customers do have an
   influence on prices, but only in the form of aggregate demand.  The rates at
   which they buy or don't buy something determines what price the "market"
   (meaning: the demand side) will bear.  But the whole economic system is
   viewed mostly through the prism of price, which is seen as the outcome of
   tug between supply and demand.  Price still matters in the developing world,
   Sayo said; but there is a higher context that tends to be invisible if you
   view markets exclusively through the prism of price.  That context is
   relationship.

   He said relationship is not reducible to price, even though it may influence
   price.  It operates at a higher level.  Families and friends don't put
   prices on their relationships.  (At least not consciously, and only at the
   risk of cheapening or losing a relationship.) Love, the most giving force in
   any relationship, is not about exchanging.  It is not fungible.  You don't
   expect a payback or a rate of return on the love you give your child, your
   wife or husband, your friends.

   Yet relationship has an enormous bearing on the way markets work, Sayo said.
   And it is poorly understood in the developed world, where so much comes down
   to "the bottom line".

   I shared this conversation a few weeks later with Eric S. Raymond, who put
   the matter even more simply.  "All markets work at three levels", he said.
   "Transactions, conversations and relationships".  Eric is an atheist.  Sayo
   is a Christian.  I began to figure there was something more to this
   relationship business.

   Here's a question.  Why do we write free or open source code? Linus says (in
   the title of his only book) he does it "Just for Fun".  Yes, there are
   practical purposes -- there have to be.  Scratching itches, etc.
   Development communities are notoriously long on conversation (check out the
   LKML for starters), and on relationship as well.  Not a whole lot of
   transaction there, either, since the code is free.  Next question: Are there
   economies involved?

   I think the answer is yes, and they are concentrated on the manufacturing
   end.  We make useful code for its "because effects".  Thanks to Linux, much
   money will be made; but because of it, far more than with it.  Just look at
   Google and Amazon as two obvious examples.  Perhaps a billion of the world's
   Websites are Apache on Linux.

   Relationship is involved here, too.  Writing code that serves as abundant
   and free building material is an act of generosity.  Dare we say we do it
   for love? Certainly a lot of us love doing it.

   Likewise with performing artists.  Musicians don't take up an instrument and
   develop their skills just to make money at it.  They do it for love of the
   experience, of playing together with other musicians, of giving something to
   an audience, and to the world.

   Of course, professionals like to get paid for their work too.  That's what
   makes them professionals.

   What if the goods are essentially free (as in beer, air or love)? That's the
   case with code, music, art, and anything else that can be digitized and
   copied.  Many artists want or need to be paid for what they do.  The
   question is how we get our love to fund theirs -- how we can relate in ways
   that work financially for both supply and demand of essentially free stuff.

   The entertainment industry has had an answer ever since the Net showed up.
   Hollywood wasn't blind to the Net.  Quite the opposite.  They correctly saw
   the Net as a way for every device to be zero distance from every other
   device -- and to pass identical copies of anything between anybody a cost
   that rounded to zero.  They saw this as a threat to their businesses, and
   came up with a way to deal with that threat: DRM, or Digital Rights
   Management.  The key with DRM was to cripple the goods so they couldn't be
   copied or used except by those whose rights were managed by suppliers.

   It hasn't worked.  Yesterday Steve Jobs himself said so, in a statement
   published at this Apple URL: http://www.apple.com/hotnews/thoughtsonmusic/ .
    It's a landmark document that not only admits the failure of DRM, but
   subtly recruits customers and fellow technologists to help Apple convince
   the record industry that it's good and right to sell music that isn't DRM'd.
    He concludes, "Convincing them to license their music to Apple and others
   DRM-free will create a truly interoperable music marketplace.  Apple will
   embrace this wholeheartedly".

   The operative verb here is "license".

   Okay.  So now let's ignore the record companies for a minute.  Instead, lets
   look behind them, back up the supply chain, to the first sources of music:
   the artists.  Part of the system we need is already built for these sources,
   through Creative Commons.  By this system, creative sources can choose
   licenses that specify the freedoms carried by their work, and also specify
   what can and cannot be done with that work.  These licenses are readable by
   machines as well as lawyers.  That's a great start on the supply side.

   Now let's look at the same work from the demand side.  What can we do -- as
   music lovers, or as customers -- to find, use and in some cases pay for,
   licensed work? Some mechanisms are there, but nothing yet that is entirely
   in our control -- that reciprocates what Creative Commons does for artists.
    Yes, we can go to websites, subscribe to music services, use iTunes or
   other intermediators and deal with artists inside those systems.  But there
   still isn't anything that allows us to deal directly, on our own terms, with
   artists or their intermediaries.  Put another way, we don't yet have the
   personal means for establishing relationships with artists.

   For example, I relate to Stewart Copeland, though he doesn't know it.
   Stewart is best known as the drummer in The Police, even though the band
   hasn't recorded an album since 1983 and Stewart has since then established
   himself as a first-rank composer of soundtracks, including "Rumble Fish",
   "Talk Radio" and "Wall Street".  IMDb lists him as a composer of sixty-nine
   movies and TV productions.  You have to hit "page down" six times or more to
   get to the bottom of the listings.  Still, much as I appreciate Stewart's
   compositions, I've always loved his drumming.  I'm not a drummer, but I'm a
   serviceable percussionist.  (When I pick up bongos, congas, a rub-board or a
   tambourine, I get approving nods from real musicians I jam with -- as rarely
   as I do it.) When the Police ceased touring and producing albums, I missed
   Stewart's drumming most of all.

   Last year I got a big charge out of hearing an IT Conversations podcast
   ( http://www.itconversations.com/shows/detail342.html ) interview with
   Stewart, though I was disappointed to hear he doesn't drum much anymore.

   Then I heard yesterday on the radio that the Police may be getting back
   together and touring again.  I can relate to that.  But how? Stewart's
   website is one of those over-produced flash-filled things where nearly every
   internal link leads to a link-proof something-or-other in the same window.
   So let's forget relating through that.

   Instead let's look at relating through the IT Conversations podcast.  I say
   that because yesterday Phil Windley, who runs IT Conversations, posted
   Funding Public Radio (and ITC) with VRM
   ( http://www.windley.com/archives/2007/02/funding_public_radio_and_itc_with_vrm.shtml )
   on his blog, and listed some of the things he might be looking
   for from VRM or Vendor Relationship Management.  That is, from something
   that lives on the user's side, but can relate on mutually useful terms with
   the vendor -- which in his case is IT Conversations.

   Here's the first thing: it can't be limited to a browser.  I want a button,
   or a something, on my MP3 player that allows me to relate not only to IT
   Conversations as an intermediary, but to the artist as well -- if the artist
   is interested.  They may not be.  But I want that function supported.  What
   we need on the user's side is a tool, or a set of tools, that support both
   independence and engagement.

   If what we're looking for doesn't exist, how hard will it be to build? I'm
   sure it won't be easy, but it will be less hard than it was before the
   roster of open source tools and applications grew to six figures, which is
   where it stands now.  And that's not counting all the useful standards that
   are laying around too.

   What do we need?

   First, I think we need protocols.  These should be modeled on the social
   ones we find in free and open marketplaces.  They should work like the ones
   Sayo talked about in his Socratic dialogue with me on the airplane.  They
   should be simple, useful and secure.

   Second, we need ways of supporting transactions.  This is a tough one,
   because to work they need to be low-friction.  I should be able to pay IT
   Conversations (or any public radio station, or any podcaster) as easily as I
   pay for a coffee.  Or better yet, as easily as I tip a barista.  So PayPal
   won't cut it.  (Not the way I've experienced PayPal, anyway.)

   Third, we need ways of selectively and securely asserting our identities,
   including our choice to remain anonymous.  This means getting past sign-on
   hurdles on the Web, and past membership silos out in the physical world
   (such as the ones that require a special card, or whatever).  Again, the
   friction should be as low as possible.

   Fourth, we need ways of expressing demand that will bring supply to us.
   Let's say I want to hear other interviews with Stewart Copeland.  I don't
   want to go through the standard Google/Yahoo text search.  I want to tell
   the marketplace (in some cases without revealing yet exactly who I am) that
   I'm looking for these interviews, and then have them find me.  Then I want
   an easy way to pay for them if I feel like it.  As Sayo suggests, I might be
   more willing to pay something if I can relate to the source, and not just
   invisibly use goods produced by that source.

   In Putting the Wholes Together
   ( http://www.linuxjournal.com/node/1000180 ), which I posted Monday at
   Linux Journal, I said public broadcasting would be a good place to start --
   not just because public broadcasting needs to find ways to make more money
   from more listeners and viewers, but because payment is voluntary.  Seems to
   me that when payment is voluntary, relationship will drive up the percentage
   of those who pay.  It's just a theory, but one that should be fun to test.

   Tomorrow in Linux Journal I'll put out a challenge for developers (that's
   you, if you write code) to help out on this.  Some developers are already
   collected at ProjectVRM ( http://projectvrm.org ), which is where we're
   organizing the effort.

   I'll be speaking at a public broadcasting conference two weeks from now, and
   it would be way cool if we had something to show the

     -- Doc Searls is Senior Editor of Linux Journal, a Visiting Scholar with
     the Center for Information Technology and Society at UC Santa Barbara, and
     a Fellow with the Berkman Center for Internet and Society at Harvard
     University.

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