The Digg Economy: Socialist Bookmarking

Filed as News on November 6, 2006 8:00 am

Here’s what the University of Chicago free-market economist in me has to say: Laissez-Faire Kevin Rose. Let it be.

This decentralized system of coordination is viewed by supporters of capitalism as one of its greatest strengths. They argue that it permits many solutions to be tried, and that real-world competition generally finds a good solution to emerging challenges. In contrast, they argue, central planning often selects inappropriate solutions as a result of faulty forecasting.

It appears that Digg has changed their stance towards their ‘economy’.

The Digg economy is the reward system for the users who contribute to the website by submitting content. This ultimate reward is the glory by way of user rankings, calculated as a function of total stories submitted by a user that made it to the front-page.

Keeping this economy in mind, you could say that the recent algorithm ‘upgrade’ at Digg is actually a shift from a capitalist free market state, to a socialist state of equality.

Prior to this change, the Digg economy was a capitalistic one. One that emphasized fairness and allowed each individual user to create his own fate. Under this system, each user was rewarded appropriately, based on their level of contribution to the system. This economy has now become a socialistic one (not to be confused with communistic economies), which emphasizes equality over fairness.

The ambiguity arises from the misunderstanding of the definitions of fairness and equality, a distinction that is very important to understand. Fairness, in the power-to-the-people, democratic, and capitalistic sense that Digg once did and should continue to espouse, means that everyone has an equal opportunity to contribute to the community, and an equal chance to reap the rewards of making good contributions. Equality, on the other hand, in the socialistic sense that Digg seems to be adopting now (of course they are doing this under the ruse of fairness, but the two things are distinctly differing ideologies) means that everyone is equal, irrespective of differing amounts (and qualities) of contributions to the community.

Let’s look at an example from an agrarian perspective, shall we? And please tell me (in the comments section) which situation is better for the community:

Case 1: Every farmer is allowed to keep a percentage of his produce depending on the level of effort (and the quality of effort), assuming both things are monitorable (as in the case of Digg). If the farmer puts in high effort, the harvest is better, and he gets to keep a higher percentage of the harvest. Both the community and the farmer are better off.
Case 2: Every farmer gets the same percentage of the total community produce, regardless of his individual effort (and the quality of his individual effort). No farmer has an incentive to work more than is minimally required, and each takes home a small amount.
If you don’t see the parallel between our hypothetical farming community, and the Digg community, let’s elaborate a little bit.

Case 1: Every Digg user is evaluated independently of all other users, and has an equal chance of being featured on the front-page of Digg. The only factor taken into account when featuring a user on the front-page is the quality of the content (the produce). The more effort and individual puts in looking for content, and the better the quality of the content he finds and submits, the more rewards the person receives (a better front-page ratio).

Case 2: The case of the new Digg algorithm. Rather than rewarding good contributors based on monitorable past actions, Digg actually penalizes them. The more front-page stories you get, the harder it is to make it to the front-page. This is the equivalent of saying that if one farmer consistently puts in more effort, rather than letting him keep his fair share of more produce, we should create a mechanism which makes sure that the harder the farmer works, the harder it should be for him to produce better results (poisoning the land?).

Digg si opting for the second case, to ensure that the average community member gets on the front-page of Digg just as much as the not-so-average Digg power user does. This is done by handicapping the veteran Diggers, while assisting the newcomers reach the front-page. Talk about a contrarian philosophy.

Ultimately, in order to succeed in democratizing the flow of information, and truly giving power to the people, Digg will have to lean towards the free-market model and emphasize individual efforts and reward (not penalize) people based on their efforts (the only reward I am taking into consideration here is stories being promoted to the front-page, and nothing more).

Sure most people say that the only reason they contribute to social bookmarking sites is to share interesting and relevant content with their peers, but who doesn’t appreciate some recognition? Ultimately, Digg is just a game. If the rules aren’t fair, people won’t play.

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  1. By Haasim posted on November 6, 2006 at 9:50 am
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    Interesting analysis, but are you saying this new algorithm is already in place or is it coming soon?

    And to take your metaphor further…

    which would you prefer:

    case 1: a small number of big companies (digg users) control everything (front page digg stories) New companies can’t compete (newbie digg users) because the big companies have a strong immovable foothold.

    case2:small businesses and large corporations competing with each other thanks to limiting the the size of “big corporations”. The large companies still have a big slice of the pie, but customers don’t have to be at the mercy of all powerful corporations who control everything.

  2. By Jon Tillman posted on November 6, 2006 at 10:11 am
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    Premises:
    1) Digg wants an audience, and it wants that audience to be as large as possible.
    2) Given that Digg trades in information, that audience must want information.
    3) Not everyone is interested in the same types of information.
    4) In order to have as large an audience as possible, the variety of information presented must be as wide as possible.

    Given those three reasonable premises, Digg must take action to preserve as wide a pool of information as possible, and avoid narrowing that pool to the opinions and interests of a small minority. That is exactly what the new algorithm is designed to accomplish. Perhaps it is flawed in accomplishing those goals (I have not looked at it), but it is fairly obvious to see what the purpose is – to keep and build a larger audience than would be possible under your “Case 1″.

  3. By Denis Krukovsky posted on November 6, 2006 at 12:00 pm
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    Shall Digg propose ad revenue share to its contributors?

  4. By Mathew Ingram posted on November 6, 2006 at 12:42 pm
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    That’s a good overview, Muhammad — although I think you are making it a lot more black and white than it really is.

    I think Digg is trying to balance inherently conflicting impulses or desires — one of which is to have users who are engaged and who want to spend the kind of time required to post good links and vote others up or down, and the other being a desire to keep the system open and prevent a small group (including Digg’s own founders and friends) from hogging the limelight.

    I think Digg, like a lot of other “social media” enterprises, is trying to find the appropriate balance there.

  5. By Dave posted on November 6, 2006 at 6:40 pm
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    I agree with Haasim and Mathew, but I would like to add to their comments. Digg offers a forum for people to express (through submitted stories) their interests. As a majority, people like it when others agree with them (digg their stories). and like to see their stories hit the front page (egoism). I think that to grow a bigger, more satisfied audience, Digg is trying to level the playing field. Purist will disagree, but to make Digg a success with a wider variety of people they need to make it appeal to a wide range of users. For example, I believe that MySpace is so popular because almost anyone can publish their own content then sit and wait for the masses to befriend them and partake. No one ever looks at my MySpace page, but I could fool myself in to thinking that my 150 “friends” care about my ranting and pictures. Digg is catering to the masses by making it easier for users to feel like they are part of the group.

  6. By screenwalker posted on November 6, 2006 at 8:37 pm
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    We have today pointed to a situation at Digg that a story that nobody can access is “spammed” to the front page. If things like that happen this means that actual “users” have long been marginalized and have no influence at Digg anymore.

    And there are now already people online who offer promoting your story at Digg as a service…..

    So besides this 2 questions:
    1. How can you recommend a story that you have never seen?
    2. What does Digg do about it?

    Well if you follow the model that Digg is using as their current “selling point” you can’t

    And Digg acted swiftly. It has removed our story showing that (currently) 600 Digg users – with only 20% of their users digging at all – have dugg a story they have never seen.

    The story nobody has seen is still going strong…

    The web site as well as cache or mirrors still show nothing when trying to access it. Maybe we are already at a point with web sites as big as Digg doing recommendation services they can hardly stay up with their weaponry to fight the spammers.

    The info is at: http://www.duvet-dayz.com/archives/2006/11/06/126/
    The story in question is:
    http://digg.com/design/The_History_of_Windows_in_Screen_shots

  7. By vampares posted on November 7, 2006 at 2:24 am
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    The freemarket model works provided that there are a finite number of articles that can be posted. Which is about the reality of it since there is no real gain in multiposting bogus articles. In a freemarket taxation is a major issue if those tax dollars are focused on a particular region since as that money spent deseminates it is further reduced by taxation (in the simple tax model) causing local price skew and market sector skew in which case subsidies are required. The taxation of posters is really non-existant in the user rank rewards. The only requirement would perhaps be that the posters read other posts to see what is popular but really this is an investment in a posters own techinical knowledge of the site making him more efficient.

    One model that could be used is have a static number of diggs/no diggs that someone earns from others digg his or her posts. Only problem is where do no diggs come from and what happens to them? There is really no incentive to spend diggs other then maybe to get no diggs. No diggs could act as an arbitrary taxation, taken diggs could be returned to the collective in the case of articles or articles diggers in the case of posts. The hostilities of a freemarket would be preserved and this would be the driving force of the economy.

    The site itself makes money through advertisements and a model that rewards unique posts that intrest readers would be best.

  8. By David posted on November 7, 2006 at 10:17 am
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    So your core argument is that the only reason anyone does anything is for a prize?

    Is that why a parent kisses their child?

  9. Pro Social Bookmarking » Is Digg something more than a bookmarking site?November 10, 2006 at 6:00 am
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