Hacking Society

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= a conversation about how networks are transforming our economy and society, and what this means for the future of innovation, regulation, advocacy and politics.

URL = http://hackingsociety.us

The first session took place at April 24, 2012 at Union Square Ventures. Lots of attention is being put on measuring value


Description

"On April 24, 2012, a small group of activists, thinkers, investors and entrepreneurs gathered at Union Square Ventures in NYC to discuss this topic, joined by online listeners & tweeters from around the world."


Discussion

Mike Masnick:

" In effect, what companies like Kickstarter and Craigslist have shown is the way in which a more strategic player avoids the trap of the incumbent. By thinking that they're not trying to maximize revenue, they actually do end up maximizing revenue, because they take more of a public-first mentality, which drives more business and more opportunity... in part because so much of the value flows back to the public.

And therein lies the challenge of measurability. There is all sorts of economic activity that isn't properly measured today. When people look at Craigslist and say it's not maximizing revenue, that ignores the massive value that it has created, in part by leaving money in the pockets of others (who used to have to pay for similar services) while at the same time providing a tremendously useful service. But, because it's not a direct transaction, it doesn't get "counted" in the traditional sense. Tim O'Reilly really drove this point home in the discussion, talking about how we need to better measure that "hidden economy." That is, we need to measure the true value of something over time, rather than the limited value of just the direct cash transactions.

To some extent, this is a fault of economic linguistics. We measure economic value in monetary value -- even when it doesn't involve money directly. And, yet, because of this, we often forget that non-monetary transactions have tremendous costs, price and value as well. Thus they get ignored. Economics is supposed to be (in part) about that intersection of cost and benefit -- but a very, very large percentage of the economy is not about monetary costs and benefits, even if that's how it's often measured.

The end result, then, is that we're not properly recognizing the benefits (or, indeed, the costs), because we're ignoring the vast majority of those in assuming that anything that doesn't involve monetary exchange has no benefit or cost.

If one thing comes out of this discussion is that I think it's time we start looking for ways to change this. I'd like to start. We've already been doing some research that hopefully highlights costs and benefits in ways that weren't clearly stated previously, but that was very narrowly focused. I'm hoping that as we move forward, we might be able to start to construct new models and new research that really explores the true value of all the benefits and costs of such things. If that, alone, can help companies recognize that the path of incumbency is actually not the best one for long term maximization of benefit, then perhaps we can get more companies to act like Craigslist or Kickstarter -- where even they don't think that they're maximizing revenue, because they choose not to seize the largest possible percentage of the pie today, knowing that by allowing much greater consumer surplus, they're actually expanding their own opportunity for tomorrow. " (http://www.techdirt.com/blog/innovation/articles/20120425/01215118644/hacking-society-its-time-to-measure-unmeasurable.shtml)


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