People Power

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First, steam power replaced muscle power and launched the Industrial Revolution. Then Henry Ford’s assembly line, along with advances in steel and plastic, ushered in the Second Industrial Revolution. Next came silicon and the Information Age. Each era was fueled by a faster, cheaper, and more widely available method of production that kicked efficiency to the next level and transformed the world.

Now we have armies of amateurs, happy to work for free. Call it the Age of Peer Production. From Amazon.com to MySpace to craigslist, the most successful Web companies are building business models based on user-generated content. This is perhaps the most dramatic manifestation of the second-generation Web. The tools of production, from blogging to video-sharing, are fully democratized, and the engine for growth is the spare cycles, talent, and capacity of regular folks, who are, in aggregate, creating a distributed labor force of unprecedented scale.

The evidence is all around us. There are standard-bearers like Wikipedia and Yahoo’s Flickr photo-sharing service. There are entire realms that Second Life users are creating from scratch. And there is the enormous audience that YouTube has conjured with its idiotproof video-sharing technology.

There’s also gold in the casual Web droppings we all leave online. Much of the value of Amazon and Netflix comes from their tens of millions of customer reviews. Your click trail on Amazon is used to create better recommendations for those who follow. Your query on Google and the pages that you find relevant give feedback that fine-tunes the search algorithms. The ads you click don’t just boost revenue for Google, they also tell it how much to charge the next advertiser. These companies have found ways to harness the wisdom of the crowd, extracting information that was there all along, just latent and lost.

But the real miracle is in the more intentional work millions of us do to populate the Web: 80 million MySpace pages, 40 million bloggers, nearly a million amateur encyclopedians. The result is a shared culture of fandom, commentary, and camaraderie. And then there’s open source software, which has changed both the corporate server (Linux) and the consumer desktop (Firefox) – and given new life to IBM, a company that now thrives by building software and services atop peer-produced code.

Previous industrial ages were built on the backs of individuals, too, but in those days labor was just that: labor. Workers were paid for their time, whether on a factory floor or in a cubicle. Today’s peer-production machine runs in a mostly nonmonetary economy. The currency is reputation, expression, karma, “wuffie,” or simply whim.

This can all sound a little like, well, ’60s-style utopianism. After all, Marx himself believed that the industrial proletariat would revolt against the bourgeoisie, creating a state where the workers own the means of industrial production. It’s easy to see an echo of that in blogosphere triumphalism.

But it’s a mistake to equate peer production with anticapitalism. This isn’t amateurs versus professionals; it’s each benefiting the other. Companies aren’t just exploiting free labor; they’re also creating the tools that give voice to millions. And that rowdy rabble isn’t replacing the firm; it’s providing the energy that drives a new sort of company, one that understands that talent exists outside Hollywood, that credentials matter less than passion, and that each of us has knowledge that’s valuable to someone, somewhere.

Who’s doing it?

Amazon
Peer reviews

Google
User-based algorithms

News Corp.
80 million MySpace pages

Yahoo
Flickr photo-sharing

- Chris Anderson