Category: Economics

The Peer-to-Peer Economy is Expanding

Back in the 1990s, when the dust-up over Napster was a big deal, what Napster was doing–peer-to-peer sharing without the middleman–felt wrong to me. But we’re in the 21st Century now and I’ve come around.

In fact, 10 months ago I laid out my idea for a peer-to-peer solution for job seekers. Here’s the gist of what I said:

It would look like this: the dissatisfied job holder would post a reasonable description of their job on the site. Others looking to change jobs could browse by category to find a job they’d be happy to fill. The current holder would provide sufficient information for the job seeker to be able to at least secure an interview. The current job holder also would agree to quit, creating the opening for which the job seeker would apply.

It would be a way for people who are unsatisfied with their jobs to make this known in a confidential way and allow others browse for new work. Think an Airbnb for employment.Peer-to-Peer-300x225

The peer-to-peer economy, according to the Harvard Business Review, is unavoidable. So should not have been surprised to find a recent Washington Post article about a product such as I described that is designed specifically for lawyers. The article describes the company, called Lateral.ly, this way:

Lateral.ly, which launches today after months of beta testing, is aiming to replace the middleman with technology. It is similar to online dating for the legal business. Lawyers create their own online profiles with their geographical location, objectives and years of experience, and Lateral.ly connects them with firms that are looking to hire attorneys with the same background and objectives.

The article makes the claim that the law industry is ripe for this service, which I can’t dispute. However, I don’t think it is only law that could benefit, but rather many kinds of professional work. In fact, I could see an existing career site such as LinkedIn providing a premium service that encompasses peer economy-style job searching.

One of the toughest thing about the process of job hunting is finding enough quality information on the position you are considering, something that a service without a middleman could rectify. Better matching of the job seeker with the position is win-win.

Random Scribbles: Making economic sense out of online news

[Random Scribbles are my occasional posts of half-formed thoughts, half-baked ideas, and off-the-cuff observations.]

In his recent article “Build the Future: Journalism’s deathwatch is over” Jacob Weisberg of Slate.com discusses his vision of a sustainable future for digital news. This brief but informed review of the development of online news sites has, I think, some astute ideas on how this might work.

The end of the article has the most concrete points:

Slate is too dependent on advertising. So we’re trying to figure out how to get money from our readers, but without a paywall, because we like having a massive audience and fully participating in the digital conversation. Our latest experiment is a membership program called Slate Plus. Though we’re for-profit, it’s partly an NPR-style pitch: support the journalism you love. But it’s also like Amazon Prime: We’re thinking every day about what new benefits we can provide to our most loyal customers. The goal is to be thriving for another 18 years and beyond. The challenge is to think like a start-up while building an institution.

Last May, I shared my idea that news outlets should ask readers to pay to post comments, and interestingly enough was dismissed by many writers and editors. I still find the reaction odd, as if the ability to post comments for free is somehow a right that shall not be infringed.

In my view, when the ship (of journalism) is sinking, nothing should be sacred. So I’m interested in the ideas behind Weisberg’s Slate Plus, which could easily include the ability to post comments while locking out non-Slate Plus readers.

People who bash new ideas are not thinking “like a start-up.”

Nasty Comment, That Will Cost 99 Cents

Ever since I moved to the Nation’s Capital area, I’ve read the Washington Post. Recently, though, I’ve come this close to giving it up altogether.

The Post has a long reputation for quality reporting. It’s coverage of national and international issues has included breaking stories about the Watergate scandal, among others. Moreover, it is essentially my local paper, being a good source for restaurant and movie reviews. Plus, my kids enjoy the Sunday comics.

I’ve continued to read the “paper” as it has transitioned to the internet. But lately, I’ve been reading it less and less. It’s not because the reporting is worse or that using it online is a problem.

It’s because of the comments.

Art by me.

Art by me.

According to the Pew Research Center, the “vast majority” of Americans today views news in some kind of digital format. And anyone who has read journalism or quasi-news online recently knows this problem of hateful, vitriolic, anonymous comments. A recent article (from the Post, ironically) succinctly describes how journalism organizations nationwide have struggled with what to do about it. “The wide-open, anonymous comment was the source of a huge amount of complaints from every one of our papers,” the article quotes a senior newspaper editor.

According to the article, newspapers are concerned that if they turn off the comments they will lose readers and therefore lose advertising revenues. But what if there were another system.

To me, the obvious reason hateful online comments have proliferated is because they are free.

Basic economics has demonstrated over and over again how a free resource will be abused, especially if the users are anonymous. Land will be destroyed, air will be polluted, water supplies will be strained, highways overcrowded. By supplying the ability to provide unlimited and anonymous comments, newspapers are essentially subsidizing hate speech.

So I think it’s time to kill the subsidies and make commenters pay a reasonable fee. Set a flat rate for a fixed amount of text, let’s say 99 cents for 300 characters. They can pay through their subscription account or some third party system, such as PayPal.

It will accomplish two goals at once: raise revenue for the journalists and cut down on the trolls. I think it could work, and I’d love to see someone test the theory.

Some might argue that such a system stifles free speech. But that argument fails for several reasons.

First, there already exist restrictions on speech. The famous example is that you don’t have a right to falsely shout “Fire!” in a crowded movie theater. More than that, all of our existing means of communication–telephone, the internet, the mail–come with a fee of some sort. Anything outside of face-to-face conversation, you have to pay.

Furthermore, this would by no means put a stop to online comments. As has been demonstrated repeatedly by patrons in karaoke bars and the TV shows like American Idol, there is a nearly unlimited willingness of people to spend time and money to make fools of themselves in public.

Finally, as the Supreme Court recently reminded us, money does not prevent free speech. Rather, money is speech.

[Updated 5/13/2014 with reference to the Pew Research Center.]

Take My Job, Please

shake

[Updated 3/25/2014.]

According to Gallup, only 29 percent of Americans consider themselves “engaged” in their work. This percentage has held essentially constant for more than a decade.

This means that, at any given moment, there are 71 percent of us who are, at best, disinterested in our jobs, and at worst really hate them.

At the same time, there are millions of people looking for work, feeling that they cannot get hired no matter how hard they try.

I suppose one should be thankful for just being employed. But something is not right here, and the intractability of the status quo shouldn’t prevent us from reaching for something better.

Here’s the thing: people are clinging to their jobs–jobs they don’t really like–as if castaways to a life raft, a situation known as “job lock.” It’s no cognitive leap to realize that anybody feeling “stuck” in a job is not going to be very productive.

There are various reasons for people’s reluctance to change jobs, including:

If the labor market were truly functioning properly, those who are dissatisfied with their work would transition to new, more engaging jobs, freeing up positions to be filled by those who are seeking employment. Economists assume, in theory, that a job market is unfettered, and that labor can move to where labor is most valued. But this isn’t happening.

Some of this is due to the jobless recovery we are living through. But with all this wonderful technology we have today, it seems like there ought to be a way for people who are unsatisfied with their jobs to make this known in a confidential way and allow others browse for new work. Think an Airbnb for employment–I’m vacating my job and I’m inviting you to fill it.

It would be a part of the so-called peer economy. “The peer economy is the growing business segment of transactions between individuals – one person to another – without a middleman to manage and package it,” says Sunil Paul, co-founder of the internet company SideCar. “It [once] made up the entire economy before industrialization when corporations came to rule economic activity.” He lists Skype, PayPal, Etsy, and Airbnb–and of course SideCar–as examples.

It would look like this: the dissatisfied job holder would post a reasonable description of their job on the site. Others looking to change jobs could browse by category to find a job they’d be happy to fill. The current holder would provide sufficient information for the job seeker to be able to at least secure an interview. The current job holder also would agree to quit, creating the opening for which the job seeker would apply.

Some basic rules would be needed. The job holder would submit a good faith disclosure of the reasons for giving up his or her position, including nightmarish working conditions. The job seeker must be self-aware enough to bid successfully for the job and not apply randomly out of desperation. Like any web product, it would need to take suitable precautions against being hacked, being taken over by trolls, or being otherwise abused.

No one wants to take a leap of faith without some prospect of finding a place to land. If job seekers had a realistic possibility that they could land a job if they took the leap, it stands to reason that job mobility would increase. Job lock would decline; productivity would improve.

We all face an uncertain future when we take a job. In his novel Reflex (1980), Dick Francis eloquently summarizes the predicament of work:

Most people think, when they’re young, that they’re going to the top of their chosen world, and that the climb up is only a formality…. Somewhere on the way they lift their eyes to the summit and know they aren’t going to reach it.

When you reach that plateau, it would be nice if you could find a helping hand to a higher, or at least more rewarding, place to be…without the middleman.

What Am I Worth?

Recently, I completed a copy-editing job involving three related reports for which I was paid a decent sum. It was a flat rate for what eventually took me about four weeks to complete, while juggling all of my other responsibilities. It got me to thinking about price of one’s work.

Wondering what my hourly rate would have been, I did some basic calculations and found that I earned about $100 per hour. Wow, I thought.  That sounds great! My estimation of my own self-worth got a little bump up. If I were to hang out my shingle and became a freelancer, I could charge a handsome amount!

But after the euphoria wore off, I wondered if I could really, in the marketplace, charge that much. If an item’s value is based on not only what the seller is willing to sell it for, but also what a buyer is willing to pay, what am I really worth?
Will Work for Food

One of the hardest things to do in any economy is set prices.  Oh, I suppose it’s easy enough if you sell apples or pencils, something of uniform quality and unquestionable utility (although even that is not without problems). It mostly comes down to supply and demand, and what the buyer is willing to pay.

When you sell intellectual services, such as lawyering, consulting, or editing, the issue of price gets much more complicated.  Is your service of equal quality to the next guy’s?  Is what you are offering the same or different? How much experience do you have? And, on top of all that, what is the buyer willing to pay?

Prices for intellectual services are all over the map. I once hired a job coach who charged $100 an hour.  At the time, I thought it was high, but her advice was solid and she was completely focused on my needs, and if I could be worth that much, she certainly could too. I’ve also hired a lawyer for $200 an hour. Again, that seemed high, but he got the job done and I had no complaints. Recently, a discussion board I follow mentioned that editing services commonly run in the range of $50 to $70 per hour, but can be purchased for as little as $2 per hour in India! Clearly, we are far from a settled price for this kind of thing.

For someone just starting a business, it is almost impossible to know what a fair market rate is. Some set prices too high, only to find that no one is buying. Others are tempted to give their services away, just to get established. But as one job coach points out, “Every professional-grade project you complete [for free] is a contract denied to professionals who can’t possibly compete with your rates. Your arrangement is devaluing your skills and theirs.”

It is even harder for someone fresh out of school to understand business economics. Up until the point of graduation, most students do work for no pay at all. In fact, many pay to do the work. Then, when entering the job market, they’re expected instantly to have some idea of how much they can charge for their labor, and are often criticized for not knowing how to function in the marketplace (the level of snark in most of this criticism is a bit much for my tastes). But since they don’t have adequate training or any real-world experience, it is unreasonable to expect them to know.

As much as we’d like to believe that self-worth is independent of what others think of us, the reality is not so simple. People are social animals, and having others find you useful has a huge bearing on how you perceive yourself. And in the market, usefulness becomes dollars.

After nearly 20 years in the corporate world, I still don’t know what I’m really worth.  If I were to start my own business tomorrow, would I succeed gloriously or fail miserably?  Would someone think I’m worth $100 per hour or would they go with the service from India at a 98 percent discount? Would my own self-worth match how others value my work, or would they be worlds apart?

Often, I just don’t want to know.