Monday, December 29, 2008

Will Work for Praise: The Web's Free-Labor Economy

Will Work for Praise: The Webs Free-Labor Economy

It's dawn at a Los Angeles apartment overlooking the Hollywood Hills. Laura Sweet, a graphic designer in her early 40s, sits at a computer and begins to surf the Net. She searches intently, unearthing such bizarre treasures for sale as necklaces for trees and tattoo-covered pigs. As usual, she posts them on a shopping site called Asked why in the world she spends so many hours each week working for free, she answers: "It's a labor of love."

Later this morning, a half-hour's drive to the west, a serial entrepreneur named Gordon Gould strolls into the Santa Monica offices of ThisNext. Gould has managed to entice an army of volunteers, including Sweet, to pour passion and intelligence into his site for free. Traffic on ThisNext is soaring, with unique visits nearly tripling in a year, to 3.5 million monthly. What's in it for the volunteer workers? "They can build their brands," Gould says. "In their niches, they can become mini-Oprahs."

Here's how it works. Entrepreneurs like Gould build meeting places that provide visitors with tools to express themselves, mingle with friends and strangers, and establish their personal "brands." The result, when it works, is an outpouring of creativity. It has produced not only ThisNext, but also YouTube and even American Idol.

Abundant Nonfinancial Rewards

You might think that with the economy crashing, the free-labor business model would be crashing, too. Will people continue to invest in their personal brands during hard times? Gould is betting they will. Between investor visits during a late November trip to New York, he sips a soy latte and speculates. During the downturn, he says, firings are sapping loyalty to companies and steering people toward goals of self-sufficiency. In Gould's acerbic phrasing: "The only person I can rely on not to screw me—hopefully—is myself."

Beyond brand-hungry strivers, masses of free laborers continue to toil without ever seeing a payday, or even angling for one. Many find compensation in currencies that predate the market economy. These include winning praise from peers, earning an exalted place within a community, scoring thrills from winning, and finding satisfaction in helping others.

But how to monetize all that energy? From universities to the computer labs of Internet giants, researchers are working to decode motivations, and to perfect the art of enlisting volunteers. Prahbakar Raghavan, chief of Yahoo Research (YHOO), estimates that 4% to 6% of Yahoo's users are drawn to contribute their energies for free, whether it's writing movie reviews or handling questions at Yahoo Answers. If his team could devise incentives to draw upon the knowledge and creativity of a further 5%, it could provide a vital boost. Incentives might range from contests to scoreboards to thank-you notes. "Different types of personalities respond to different point systems," he says. Raghavan has hired microeconomists and sociologists from Harvard and Columbia universities to match different types of personalities with different rewards.

Virtual Focus Groups

To date, he says, most of the research on recruitment and incentives comes from far simpler domains such as frequent-flier programs and cell-phone subscription campaigns, where goals and incentives are usually aligned. But the volunteer economy has many more variables. What are the signs that a participant will be enthusiastic and well-informed? How do leadership qualities manifest? Do recruits bring in networks of potentially productive friends? Researchers comb through petabytes of network behavior searching for telltale patterns. One of the current studies rates the probability that a person who's gifted in one domain is likely to perform well in another.

Communispace, a market research company near Boston, conducts similar studies as it enlists volunteer marketing consultants.

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