Non-rivalrous goods have a natural price

Let’s imagine a model situation. Everybody gets every day 240 Coins - something like UBI. Let’s also set that instead of allowing people consume Non-Rivalrous Goods for free (ex. open source software, wikipedia articles,…), we require them to pay something, but as much as they want. What would be the outcome of such situation?

I run (what I consider) a similar experiment, on my crowdsourced portal. Not surprisingly, different people pay different prices to read a particular post. There are folks who always pay the bare minimum the system let’s them, others set “honest” price, based on the content quality. The free-riders are easily identifiable, because they pay the same, bare minimum amount, for every post.

I want to force the free-riders to pay the “real” price for each particular post … but … what is the “real” price and how do I make the free-riders pay?

This is what I came up with. I understand that even if all actors were honest and paid what they think a particular post is worth to them, I would get a price spectrum. I expect the prices would be something like normally distributed, with the mode and median values pretty close to each other. We can take the mode and call it the “natural” price for the good, as that is the price chosen by most people.

Now that we have the natural price, we can make the free-riders pay - by a kind of “clawback” mechanism. Practically, before consuming “normally” priced the NRG, consumers would be notified that they can choose liberally any price they want, but will eventually pay the consensual, “normal” price (within some allowed range). When all is set and done, the free-riders would end up paying additional funds, while the generous users would get a refund. There are couple of ways the “all is set and done” event can be determined - I think it is a technicality.

Practically, there must be a System, that has access to users’ wallets and can add, or subtract funds to make this work. In my system - NEO - this is the case.

What could go wrong? :slight_smile:

Okay, so I suspect you may be inadvertently conflating rivalry with excludability in your model. All software is a NRG since one person using the program doesn’t (in principle) prevent another person from using it, (compare: an apple) but stuff like FLOSS is also excludable (e.g.through copyright licensing).

This gives what economists call a’Toll Good’ or ‘Club Good’ - it has the unique combination of being a NRG but also being excludable.

If you want to make freeriders pay, then all you need to do is exclude everyone that doesn’t pay… and the system we have for that is copyright.

FLOSS novel contribution (and the ‘Free’ and ‘Open’ culture movement more generally) has been to point out that freeriding is very often, a successful strategy for production and distribution because it allows fast adoption, accelerated network effects and reduces ‘friction’ in the system and so forth.

The takeaway for me from this is the: ‘not all freeloaders are bad’.

My preferred model would be one that admits this reality. It identifies undesirable freeloaders and maintains a distinction between desirable freeloaders and undesirable freeloaders, according to some simple criterion.

Copyleft tries to do this by basically saying, 'everyone can freeload but if you contribute technically, then you cannot exclude anyone from your contribution.

That to me is a very perverse incentive structure… it’s basically a tax on engineers contributors! Exactly the opposite of what society needs, as well as a free pass to XaaS providers to exploit that free labor!

This is an observable phenomenon (GPL/Linux/Elastic and so on and so on)

The obvious fix to me is to explicitly exclude the ‘bad freeriders’ - which I reckon are large tech companies.

I have no interest in setting up micropayments schemes for intra-engineer business (small B2b stuff) or dual licensing (which feels pretty much like an extension of Freemium so companies have to ‘pay to win’).

I think the problem is like the proverbial elephant in the room… it’s the largest companies that are interfering in the software engineering ecosystem the most and quite simply, we just need to prohibit them and create a better system.

A couple of problems I see with your system is; 1) it reads as a fairly sophisticated proposition, possibly too sophisticated for most people and 2) it doesn’t seem to solve the problem that (we agree) needs fixing in the most elegant way IMO… so I would predict the best outcome you could hope for is it is bought up by some crypto platform for some specialist VC firm to create a loss to offset on their balance sheet to save them some corporation tax maybe?

Remember that declining average cost implies that large firms will always have a cost advantage over smaller firms on this type of system, no?

If so, when you run the system for a while and get enough attention, you will end up with very concentrated pockets of wealth.

First, thank you for digging into my ideas - really appreciate it.

Yes, we agree on the benefits of having as many people as possible to use an artifact and an obvious way to achieve that is to give it away for free. There are the reasons you mention and there are also psychological reasons, which I think are primarily at work when people choose to do so.

I also understand your approach and do not dispute it can work. It seems to be positioning the same product to be both - a public good in one context and a club good in another (similar to the dual licensing scheme). That I agree could achieve the outcomes we are after, but I think having a unified approach regardless of context would be a better option.

What I am attempting to do here: First, create a special type of club good, which most (all?) consumers interested in consuming can. This is by virtue of the UBI-like source of funding in the model, but availability of funds solves only one problem.

The 2nd problem I am attempting to address is the unwillingness of volunteer producers to set a price for their product, as instinctively they want to share it as widely as possible (give away). My model assumes that they will have easier time to step up from giving their product away for free, to something that looks like the “pay as much as you want” model, than setting a firm price. Therefore the “natural price” concept/mechanism should make the step more attractive for them. It also solves the freerider problem.

The main problem however I see all proposals discussed on this forum share is, how to make the majority of volunteer producers to even start contemplating the idea that they should start charging for their work in the first place. We might want to discuss this in a separate thread. No licensing scheme will help here and that is why I (and others I cited before) believe, we need a new economic system for this.

Now to your objections:

Admittedly I developed the mechanism with a particular use case in mind, but I think it is quite a common one - individuals consuming NRGs. I am pretty confident that in that context it can work, as I have tested a similar mechanism for several years. We can go into details, if necessary.

If a product is bundled as a component into a larger product, I think a workable approach would be for the component producer to negotiate the percentage of the total value the component adds to the final product and then use the single-user-determined “natural price” to calculate the total cost, based on the total number of the product users. NEO today has mechanisms that can distribute rewards while respecting inheritances, but that is a different story.

I think I addressed this above?

Did I address this in the segment about bundling?

This is actually not a threat in NEO, because profit is consumed by the producers in the form of non-monetary signaling reward. The exchange value of a reward is (indirectly) distributed to all NEO participants.

Found a paper from 1995 describing what seems to be the same idea

(…while reading this post

)

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I appreciate the effort you have gone to to defend the aspects of your project that I find unconvincing.

…there are also psychological reasons, which I think are primarily at work when people choose to [share].

I think the motivations for sharing software are fairly well understood, and reasonably well documented through empirical work. They do resemble, but also differ from the motivations for sharing other things quite considerably in some cases.

For example, the reasons why I give away some javascript are less likely to be the same reasons why I share money by sponsoring a crowdsourcing project, or volunteer for a local community project but very similar to why I may donate a book to a library or donate my old laptop to a charity shop.

All of this debate however depends on a anxiety-inducing approach of ‘resemblance’ which. IMO is Wittgenstein asking us to (pretty much) abandon ontology all together.

After all, I reckon you can pretty much pick up any object in one hand and cook up a resemblance of some kind to any other object you might pick up with your other hand… so …

The three main surfaces for analysis that I think are most salient here are:

  1. Subjective/cognitive/affective - so that is 'What’s in it for me?" kind of thing
  2. Institutional/convention/custom/social - so that is ‘Is it likely to be meaningful to others?’ type of thing and
  3. Objective - so that is ‘Is it predicted to reliably effect change in the world?’

I would be very skeptical of a model that did not take into consideration these three surfaces, and suspicious of a model that suggested that one is more salient than any of the others.

Without the complex interplay between these concepts, I believe most models will over-generalize and over-simplify the analysis and thus lead to weak model implementations and skewed outcomes… they will ultimately ‘fail’.

I think there is no such thing as a “natural price”?

That sounds like “invisible hand”? - If so, then that is a fundamental commitment to markets that I simply cannot commit to. Markets are mediated by (among other things) people and groups and thus the idea of equilibrium is a myth. All you get is concentrations of wealth. As we all can observe.

If by “natural price” you are linking that to the VALUE of “work done” (not the price others pay) then that is not so problematic, and all we would need to establish is something like a zero knowledge proof of work done?

Your system does seem logically consistent within itself and you have made good progress in meeting my initial objections but I do still worry about how it will fare in the world. mainly because of the historical moment we are in, in particular the heavy influence and control on development by global tech giants and also because the underlying assumption on the primacy of ‘psychological’ motivations for sharing in this moment seems fanciful.

By the salience/primacy of the psychological aspect I meant in relation to motivation, but in that context everything boils down to psychology … so I might have as well not say anything and we would avoid this issue.

I share the belief that a good model should be sound, regardless of the perspective of inquiry chosen. I would be happy to discuss all aspects you mention, but am not sure this is the forum for doing so (others can chime in to let us know).

Re. “natural price” - I did not mean to suggest anything deep was going on there. I could have used a different, less loaded label for the concept and maybe I should. At this stage I am just happy to have found what seems like a solution to a concrete problem. It looks like I might be alone with this belief here, but I do believe everybody needs to pay for NRGs. Even if my “natural price” is not natural in some deeper sense, it is better that 0. I believe non-zero cost for everybody is necessary, because forcing everybody to pay is the key to viral adoption of reciprocity. This must be done right to work of course.

The core ideas of NEO go against intuition (even mine, couple of years back), but so far neither I, nor anybody else (unfortunately, not many tried) have been able to falsify them. The real-world evidence obtained running the NEO implementation also suggest this should work; participants do not need to fully really understand or agree with the concepts to use the system.

Go ahead. If somebody doesn’t want to engage with it, they can just click on a different topic in the forum.

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Primarily, the assumption that actors will choose between two fixed strategies and give up when you employ your own fixed strategy to foreclose one of theirs. That may be the case in communities with high trust but it is not true in general.

For example, suppose we live in a world where most people are in population A, paying the minimum, and fewer people are in population B, paying an honest assessment of the price. It follows that for some individual project, receiving an incremental token is worth more than that token because it enables a clawback from population A. We can therefore model the value of a token received as that token, plus some clawback value.

In comes a third actor. They pledge to return all tokens sent to them, which they can do because they’re not running a real project and have no cost. Moreover, they will also return half of the clawback value to each contributor. Sending all your tokens to this actor is now the optimal strategy, so what was your market of A/B is now mostly C. That is, until they become the popular choice, take the tokens and run.

In general, it is very hard to design a marketplace when there are financial incentives involved. It is even harder when the regulator pursues a well-defined, objective strategy that is known to all market participants.

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In abstract, this makes sense.

In the concrete case of NEO, a new project can be set up as “meritware,” meaning, that 100% of a payment made to it is irreversibly converted to a reputation-like Merit score, assigned to the project shareholders. Merit scores are non-transferable and can not be redeemed for exchange value. A system that only allows meritware-type projects should thus be immune against C-type attack.

In this context, I have contemplated a possibility for existence of schemes that might try to game the Merit score acquisition. For example, actor A can purchase tokens for national currency (or run the scheme C to get tokens) and send them to actor B, who in turn will use them to buy actor A’s project. Actor A effectively converted their tokens into Merits. However, in NEO, all transactions are transparent and actions violating the system rules punishable by the users (buying Merits is a no-no). The system can also implement mechanism that will detect and prevent (this particular at least) Merit-buying scenario, without user involvement.

Needless to say, game-theoretical constructs traditionally have not adequately modeled the “fine structure” of utility function and as a result, many predictions the theory made, have not panned out in the real world.

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Well, TBH I got lost in the implementation details so I returned to your problem statement(s).

The UBI-like source of funding assumes the problem is with contributors not getting paid. I don’t see it like that. I agree with @kemitchell maxim which states (pretty much) that the problem is not on the contributions side, it’s on the benefits side.

The phenomenon of collective action gives rise to collective action problems.

The collective action problem here is not how to pay contributors, but how to stop large scale freeriding.

If we can stop large-scale freeriding, (the ‘race to the bottom’ if you like) then smaller scale rewards such as rewarded technical collaboration and fair terms would flourish among participants in these clubs - AFAICT.

Prohibiting global tech from all the git clubs would be extremely easy and effective.

I think the motivation to give away as much as we can is not dichotomous with the motivation to be rewarded, *provided we solve the large scale freerider problem.

Imagine, a popular monorepo that was unavailable to the XaaS behemoths. That would attract all kinds of public and civic support from groups and individuals happy to share their technical expertise and spare change to support the maintainers.

Now look at our current historical moment, where successful maintainers get hired by billion dollar companies simply because the conditions for creating fairer conditions are deliberately made absent.

Regarding UBI - I agree with your and @kemitchell position. The reason why I mentioned it was to convey the idea that in the modeled situation actors have funds available to them that are almost as easy to obtain as UBI. In particular, in NEO (almost) any type of work is rewarded and the process between performing the work and having the money appear on one’s account can be made easy (reporting work, providing proofs, having the report verified).

I of course also agree with your position on free-riding being a mayor problem. However, as I suggested earlier, I believe an important piece of a potential solution is to make everybody pay; if not for other reasons, then because we can get everybody also start requiring payment from others (virality). Not sure, but this aspect might require a new thread, in order to keep focus on the topic of this one.

Yes. There are mixed purposes to this discussion.

My POV is that the problems you are trying to fix do appear to be addressed by your proposal to some degree, BUT it is hard for me to convinced of it’s broader utility within the context of international private law codes and procedures.

My hunch is rovas/NEO as a systems archetype is something like a blend of these?

  • Shifting the burden—A problem symptom is addressed by a short-term and a fundamental solution. The short-term solution produces side effects affecting the fundamental solution. As this occurs, the system’s attention shifts to the short-term solution or to the side effects.
  • Limits to success—A given effort initially generates positive performance. However, over time the effort reaches a constraint that slows down the overall performance no matter how much energy is applied.

…while a legal framework that may lead to a more successful fix looks it might be a long way off?

The core argument in The Social Role of Private Law was that law is unified and animated
by social groups. Everyone (like that term itself) ‘lives simultaneously as oneself and as one of a
kind’. Had Gierke been American, his motto might have been E Pluribus Unum. As one
organism, Gierke believed all law must pursue a common goal. The Roman abstractions of
public and private, person, property or contract, were unneeded. They were also unwanted. If
property were seen as a relation between persons and things, it would obscure the irresponsible
abuse of rights toward other people

I do have a feeling about the nature of your objection, but am afraid my interpretation is likely incorrect and there are things I simply do not get. For example the difference between short term and fundamental solution, in the “shifting the burden” point. The “limits to success” - can you elaborate on the constraint part?

Thanks for the pointer to Gierke’s work. Looks interesting - I will check it out.