Online Communities:
The Future of Business
Organization Value
USC Annenberg Program in Online Communities
January 2009
ETHAN BAULEY
ETHANBAULEY.COM
@ETHANBAULEY
ETHANBAULEY@GMAIL.COM

Who can explain what the
Internet is?
© Ethan Bauley

Who owns the Internet?
• Nobody!
• The Internet itself is \"open source\"/\"peer
produced\" (TCP/IP)
• These characteristics inform the shape of
productive strategies
worldofends.com © Ethan Bauley

Commons-based peer
production
• Who owns it?
• \"No single person has exclusive control
over the use and disposition of any
particular resource in the
commons.\" (TWoN, 61)
• General Public License: derivative works
must be available under same license
© Ethan Bauley

Open-source software
• What is it? (anyone can contribute)
• Economic characteristics of information
(code, video, text, audio, etc)
© Ethan Bauley

Open-source software
• Why do people contribute?
• Why do people like it?
• What are some examples?
© Ethan Bauley

Google vs. Yahoo
• Yahoo! Directory v. Link structure of the
Web
• What are the differences between the
two?
• How does this relate to F/OSS & peer
production?
© Ethan Bauley

Markets, Networks,
Communities
• More efficient than individual firms
• These forms of organization have cheap
coordination costs, are geo-agnostic
• Examples
© Ethan Bauley

Wikipedia v. Britannica
• Nature comparison
• Wikipedia: community design (pillars,
editors, etc)
© Ethan Bauley

Craigslist v. Classifieds
© Ethan Bauley

Apache v. Microsoft
© Ethan Bauley

SETI@home v. Big Blue
© Ethan Bauley

P2P v. Akamai
© Ethan Bauley

Peer-to-Peer
Communication
• How it used to be
• How it is in the networked world
• Velocity
© Ethan Bauley

Designing communities
• Wikipedia policy
• Slashdot
• Hacker News
• Usenet
• Avoiding situations wherein individual
rationality hurts the common good
© Ethan Bauley

Game Theory
• Mathematics of social science
• Beautiful Mind
• Cold War
• Rigorous analysis of conflict...aka
\"interaction\"
© Ethan Bauley

Game Theory
• Volunteer's dilemma: free riders
• Prisoner's dilemma: individual rationality
hurts the common good
• Backward induction paradox
© Ethan Bauley

Game Theory & Community
• Historically, a principal source of
advantage is information asymmetry
• What happens when all players have full
information?
• Connectivity (broadband, social media,
social needs of people) drives awareness,
which drives strategy
© Ethan Bauley

Game Theory & Connectivity
• A perpetual state of peer review (student
blog example)
- Does it change behavior?
• Backward induction, connected
consumers & lemons
© Ethan Bauley

Game theory of connectivity
You may work together in the future;
everyone else sees how you played your
last move (and all moves beforehand).
This is a powerful incentive towards \"good\"
behavior (and is why \"Be Good\" is razor
sharp strategy).
© Ethan Bauley

Game theory + open source
= Cooperative advantage
• Cooperative advantage: Life is not a zero-
sum game. We can grow the pie by
working together.
• Goal is to be the \"most desirable
collaboration partner\"
• You can't do everything
• Business networks (not \"chains\")
© Ethan Bauley

Source of advantage
• Talent (a.k.a. human capital + social
capital)
• In a world of increasingly rapid change,
disruption is the new equilibrium
• Only sustainable source of advantage is:
ability to learn faster than competition
© Ethan Bauley