The Sharing of Valuable Goods On-line

The Wharton School

University of Pennsylvania

Sharing is Everywhere

• How to mix an "Americano" cocktail?
• Where do you find "Electrical Storm" by U2?
• Do you need a Web server software?
• How do you crack a computer security system?

It's ON-LINE!

Internet Reality

• Valuable information is freely available
• Mass voluntary transfer ("sharing") of digital goods
• Open source software

Common Presumptions

• Individuals act solely to increase their utility
• Social supervision is needed to prevent exploitation of public goods

Organizational Setting

• Internet-based organization
• Devoted to the transfer of digital goods among its participants
• Behavior is naturally occurring, intended, stable and repeated

Technological Setting

• Huge archived electronic bulletin board for text or files
• Completely public
• Accessible by anyone
• No supervising authority
• Participants can hide their identity and presence

Technological Setting creates Natural Controls

• Contributors cannot trace or identify beneficiaries
• Reciprocation is not guaranteed or enforceable
• No gain from externalities
• Free riding is present and known
• Pledge-based governance, weak sanctions

Voluntary Sharing

• Hundred thousands of music tracks
• Respond to requests
• Requires time and effort
• Participators hide their identities

Types of Interaction

1. Requests for information
2. Discussion of governance
3. Enforcement of group norms
4. Chatting and joking

Requests for Information

"How do I listen to a file before downloading?"

• Four replies within two hours
• Posted follow-up question
• Discussion developed
• Problem solved within seven hours

Discussion of Governance

• Create order in a chaotic environment
• Prevent duplication of effort

"Don't post requests in binaries group"

"Limit your postings to 75 MB/day"

"Read the FAQ before posting questions"

"Do we need a new 2000s group?"

Enforcement of Group Norms

• Based on good will of participants
• No controlling authority, no traceable identities, universally accessible
• High degree of conformity

"I don't understand, and I don't care about your schedule and whether or not you keep to it"

Chatting and Joking

"Because we're among friends widely ranging topics and personal issues are sometimes discussed"

• Not very common
• Often frowned upon

Sharing

"I try to scan through every request just about every day."

"I love music and I'm fascinated with computer technology. I also like to help people, so that's why I participate in the group"

"This group is a social organization. It's about people and music as well as technique."

"The medium makes sharing imperative. It's not yours to begin with, so deriving personal benefit from its distribution is viewed as criminal. That is an ethic unique to Usenet."

"there are untold thousands who are benefiting from that collaboration."

Implications for Research

• Economic action is embedded socially and technologically
• Altruistic behavior is naturally occurring, intended, and stable even under extreme "marketplace-like" conditions
• Time for a socioeconomic theory of the firm

Implications for Managers

• The Internet is not an e-marketplace
• What can be digitized, will be shared (Napster)
• Cooperatives are important economic forces (Linux)
• Buyer-side coordination is a growing phenomenon (Discussion lists)