The Freedom of Value

How Value-for-Value Fixes the Monetization of Information

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The internet has a problem. Few people know that this problem exists, but hey, that's the nature of serious, non-obvious problems: they are invisible until they aren't. The problem with the internet is that information wants to be free. And if something wants to be free as in freedom, given enough time, it will also be free as in beer.

Let me explain.

Poisoning the Air

We consume untold amounts of data every day. Every second of every minute, bits and bytes are streaming through the series of tubes that we all know and love: the internet. We take it for granted, and most of us take the current monetization model—as well as all the ills that come along with it—for granted as well. We seldom stop and think about the strange world of bits and bytes. How wonderful it all is, but also how alien. How it already has transformed our lives, and how it will continue to transform our future. Where do the zeroes and ones come from? What makes it all work? And, most importantly: who is paying for it?

The bits and bytes that are zipping through our fiber-optic cables are as invisible as the air we breathe. That's not a terrible metaphor, now that I think of it. As long as we have no trouble breathing, we don't need to stop and inspect every single molecule we inhale. Similarly, as long as we don't have too much trouble creating and consuming digital content, we don't need to stop and inspect all the various parts that make our attention economy work. 

Attention economy. What a fitting description. As we should all know by now, the stuff we consume isn't free; we are paying dearly for it: with our attention, among other things.

Paying Attention

In the high-velocity world of today, to maximize profits, you have to maximize attention. But it is a peculiar, shallow kind of attention. It is not the focused kind of attention that deep thought and meaningful conversations would require. I believe that this is, at least in part, why many things are so broken. Why our societal discourse is so fragmented, our politics so polarized, we so paralyzed, and our analysis often as shallow as our desires. 

The attention economy has us neatly segregated into echo chambers of personal truths. Ironically, the only truth worth pursuing in the attention economy is how to keep the maximum amount of people maximally outraged for the maximum amount of time. All while keeping participants unaware that they are trapped in an algorithmic prison of their own choosing.

You Are The Product

The idiom "if something is free, you are the product" can't be repeated often enough. For one reason or another, we expect most things to be "free" online. Of course, there's no such thing as a free lunch. In the case of online services, your data is harvested and sold to the highest bidder, which is usually an advertisement- or government agency. Or both.

Not only do all big data companies spy on you, but they will also use a multitude of dark patterns and unethical practices to squeeze out every last drop of data from your interactions. Whether it is the Facebook Pixel, Google Analytics, or something else doesn't matter. You are being tracked, surveilled, and cataloged. What you see, for how long, at what times, how frequently, and what you'll see next is carefully orchestrated by a profit-maximizing algorithm. Profit for the platform, not for you.

Of course, the idea is usually that everyone profits: users, creators, advertisers, and the platforms alike. However, the evolutionary environment that is set up by said incentive structures will often select for shallow, attention-grabbing, and sensationalist snippets. As of this writing—block 716,025—the epitome of such an environment is TikTok, a video-based dopamine machine that will show you the motion picture equivalent of heroin mixed with crack cocaine. Hard drugs for the mind, custom-tailored to your particular likings. A truly cursed app. Unfortunately, most platforms of this nature are just different in degree, not in kind.

Allowed Opinion

"It isn't so bad," we say to ourselves. "Look at all the useful information!" we exclaim as we scroll through our feeds, inadvertently feeding the machine that is feeding us dopamine hits in return.

But make no mistake: the companies in charge are not in the business of feeding us useful (or truthful) information. They are in the business of tricking us into feeding the machine.

How could it be otherwise? You are what you track, and you become what you optimize for. From the platform's perspective, this is clicks, not quality. At first, maximizing clicks and watch time might be an innocuous thing. After all, you have to make money to survive. It's just one ad. How bad can it get?

Unfortunately, the problems that come with it all are invisible at first. Just like cancer is invisible to the smoker who just smoked his first cigarette and liver cirrhosis is invisible to the drinker who just had his first drink, deplatforming, censorship, polarization, and manipulation of public opinion are invisible to the prosumer who just saw his first ad in a walled-garden ecosystem. We can probably agree that we are past the first inning when it comes to these issues. Censorship is the norm, deplatforming is cheered on, polarization is at an all-time high, and public opinion is manipulated manually and algorithmically like never before.

The consensus is that you are too stupid to know what is good for you and your public opinion is too outrageous to be voiced publicly. Even worse, it shouldn't be your opinion in the first place. "Here is why you're wrong. Here is a source pointing to an allowed opinion. Here are some experts that agree with us. Our smart and helpful algorithms did all the thinking for you and they are never wrong. Neither are the experts."

This is the world we are already living in. You are not allowed to speak freely. You are not allowed to think freely. You are not allowed to express yourself freely. Your picture is offensive; thus, it has to be removed. Your meme is too close to the truth or too criminally funny; thus, we have to put you in Twitter jail for a week or two. You are saying something that we don't agree with; thus, we have to ban you for life—even if you are a sitting president, mind you. You have said the wrong word in a video or played a copyrighted song in the background; thus, we have to take away your income. You have posted a picture of yourself without a mask; thus, we'll have to ban you and report you to the authorities.1

The fact that the sentence above is not purely in the realm of dystopian science fiction anymore should have everyone worried. Removed from cyberspace for wanting to breathe free. Strange times.

Evolutionary Pressure

How did it come to this? If I were forced to give a short answer, I would give the following: We moved from protocols to platforms, and platforms are only as good as their incentives.

The incentive structure of the platforms we inhabit is the evolutionary environment that dictates survival. Everything that wants to survive has to align with it.

Of course, this is true in all areas of business. Pick print magazines, for example. For very human evolutionary reasons, if your magazine doesn't sport a beautiful female face on the front cover, it won't be bought as much as those who do. Thus, it won't be able to replicate itself and, consequently, will die. Similarly, if your online news outlet does not generate enough ad revenue, it will fail to replicate and die. This is why every magazine has a beautiful female face on the cover. And this is why every ad-based online news outlet devolves into clickbait. 

One of these faces is not like the others.

Similarly, this is why feed-based recommendation engines devolve into slot machines for your dopamine receptors. The longer you stay glued to your screen, the more ads you will see, the more revenue will be generated for the platform. This is also why most YouTube channels devolve into 7-15 minute snippets with thumbnails that portray the face of someone who  just stepped on a piece of Legos. Short enough to convince you to watch it, long enough to make you forget what video you wanted to watch in the first place. Like rats pushing buttons in hyper-personalized Skinner boxes, we are conditioned into addiction cycles to maximize shareholder profits.

Maximizing Profits

Platforms are companies, and companies are incentivized to maximize shareholder profits. There is nothing wrong with profits, and there is nothing wrong with shareholders. However, I believe that the information revolution we find ourselves in has split the evolutionary landscape into two. Let's call these landscapes "broad" and "narrow."

To maximize profits via broad advertisements, controversies and extreme opinions have to be minimized. Thus, just by catering to the lowest common denominator, politics and censorship immediately enter the picture. Conversely, if profits are made via narrow, targeted advertisements, controversies and extreme opinions have to be maximized. Thus, just by showing different pieces of information to different sub-groups, polarization and fragmentation are continually increased.

Mainstream Cohesion vs. Algorithmic Division.

These two extremes are two sides of the same coin. It might seem like it is Cable TV vs. the algorithmic news feed, but it actually is two different approaches pursuing the same goal: to keep as many people glued to the screen, so they watch more advertisements. The first is a sedative, the second a stimulant.

Granted, the above characterization might be an exaggeration, but the problem remains: if we aren't paying for something directly, we will be paying for it indirectly, one way or another. Always.

The point is the following: free speech platforms can not exist. Only free speech protocols can exist. If someone can control what is being said, someone will control what is being said. If you can monitor, filter, and censor content, you will monitor, filter, and censor content. 

All platforms will run into this problem, no matter how pristine their intentions. Even if you position yourself as a free speech platform at first, you will be forced to step in and censor in the long run. After all, if you can be squashed by the state for content you host or transmit, you will be squashed by the state for content you host or transmit.

Self-Censorship

However, long before state censorship will rear its ugly head, the chilling effect of self-censorship will be felt. If others are deplatformed and demonetized for voicing certain opinions, most people will be very careful to voice said opinions. Consciously and subconsciously, we slowly silence ourselves. 

When it comes to self-censorship, advertisements have a role to play too.

After all, you wouldn't bite the hand that feeds you, would you? In the worst case, advertisers and executives will tell you what can be said and what is off-limits. They will tell you what opinions are inside the Overton window and which ones are outside of it. And if they don't, you will make an educated guess and adjust what you say accordingly.

A Problem and a Paradox

Back to the original problem: why can't we sell information like a regular good? Why does the simplistic approach—putting content behind a paywall—produce such bad results? I believe there are two reasons, which I will call the "MTX problem" and the "DRM paradox."

The MTX problem, with MTX being short for "mental transaction," refers to the problem of irreducible mental transaction costs inherent to every transaction. Every time you hit a paywall, you have to make a conscious decision: "Do I want to pay for that?" 

As Szabo convincingly argues, most of the time, especially if the cost is tiny, the answer will be no. This is not for any technical reason but for psychological reasons. It turns out that the hassle of figuring out whether this transaction is worth it or not—a process that is happening in your head—is simply too much. If you have to think about a micro-purchase, the chance that you will make said purchase diminishes drastically. This is why flat rates and subscriptions are king: you only have to think about them once.

For the smallest of micro-transactions, this is even true from a strictly economic standpoint. Using an hourly wage of $20 USD, thinking, "Is this worth 21 sats?" for two seconds will cost you a little over 1¢, which is more than the price of the microtransaction in question.2 It is unfeasible, both psychologically and economically. This, in a nutshell, is the MTX problem.

But this isn't the only thing that is plaguing the monetization of digital content. As mentioned above, there is also the DRM paradox.

DRM, short for "digital rights management," is a futile effort that tries to prevent information from being copied. It should go without saying that non-copyable information is an oxymoron, but, alas, in the age of NFTs and plenty of other nonsense, I'm afraid this needs to be spelled out explicitly. So, let me spell it out for you: You can not create information that can't be copied. Period. Or, in the words of Bruce Schneier: "trying to make digital files uncopyable is like trying to make water not wet."

The nature of information is such that if it can be read, it can also be copied—with perfect fidelity. No amount of trickery or artificial restrictions will change this fact. This is why digital artifacts such as movies and music will always be available for free. It is trivial for someone who has access to said artifacts to copy said artifact—at near-zero marginal cost, mind you—and make it accessible to others. Thus, given enough time and popularity, every movie, every song, and every document will be available to the general public for free. The nature of information does not allow for another outcome. Hence the saying: information wants to be free.

Although trying to create something that can't exist—information that can't be copied—is paradoxical in itself, this isn't what I mean by the DRM paradox. What I mean is something more hilarious. It is again psychological, not technical in nature. The paradox is this: content will only stay behind a paywall if it is shitty. If it's good, someone will set it free.

We all know this. If an article is actually worth reading, someone who is behind the paywall will screenshot it and post it to social media. If the movie is worth watching, it will be available on various websites that have pirate ships as their logos. If the song is worth listening to, it will be available on streaming sites for free. It is only the terrible articles, the most obscure movies, and the songs that make your ears bleed that stay locked behind paywalls. Hence, the paradox: content will only stay locked behind paywalls if it sucks. If it's good, it will be set free.

Personally, I believe that the MTX problem is a bigger deal than the DRM paradox. The traditional solution to the MTX problem is the subscription model, à la Netflix, Spotify, Amazon, and so on. The DRM paradox still remains, but it turns out that this is not an issue if you make the "legitimate" access to information convenient enough.

The opportunity cost of downloading, storing, maintaining, and curating a private collection of songs is simply too high for most people. The more convenient solution is to pay for the damn Spotify subscription.

That being said, we can already see one of the problems inherent in the subscription model. The following comic describes it well:

Comic by /u/Hoppy_Doodle

The proliferation of streaming platforms forces you to get a Netflix subscription, an Amazon Prime subscription, a Hulu subscription, a Disney Plus subscription, a YouTube Premium subscription, and so on. And that was just streaming video. The same subscription zoo exists for music, books, games, newsletters, blog posts, etc.

So, what is the solution?

Accept the Nature of Information

The solution begins with acceptance. Selling digital content in the traditional, transactional way doesn't work, or at least doesn't work very well. A transaction involving a digital photograph of an apple is very different than a transaction involving a physical apple. 

George Bernard Shaw said it best: "If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas."

Because digital information behaves like an idea, there is no reason to make it artificially scarce. This is not only true philosophically, but technically, too. Computers are copying machines. Always have been, always will be. The only way to move information from one machine to another is to copy it. This alone should make the futility of treating information as physical objects blatantly obvious.

When it comes to monetizing information on the open web, we have to align our ways of thinking with the nature of information. As outlined above, information is non-scarce, easily copied, easily modified, and wants to be free.

I believe that the right monetization model has to respect these values and needs to have similar properties. It has to be open, transparent, extensible, and, last but not least, completely voluntary. 

This model has a name: value-for-value.

Revivifying Busking

The idea is simple but sounds radical: you provide your content for free, for everyone, without access restrictions. If people enjoy it, if people get value out of it, you make it easy for people to give value back.

It might sound outrageous in this day and age, but this model has worked for thousands of years. It is the model of street performers, the model of buskers, the model of voluntary giving. However, in cyberspace, we don't run into the physical limitations of traditional busking. Digital content scales in ways that performances in meatspace never will. 

The value-for-value model flips the traditional payment model on its head. Traditionally, enjoyment follows payment. In the value-for-value approach, payment follows enjoyment—voluntarily.

You are free to listen to the street musician and walk on, but—and this is something that the audience intuitively knows—if you want the music to continue, you should throw a couple of coins into the hat.

One beautiful thing about this model is that it re-aligns incentives. You are not trying to maximize clicks, or view time, or any other of the countless metrics. You will want to provide value for your audience, and that's it. And if your audience got value out of it, a certain percentage will give back. All you have to do is ask.

A Valuable Alternative

We are at the very beginning of this monumental shift. My hope is that the value-for-value model will continue to emerge as a viable alternative—an alternative to advertisements, censorship, deplatforming, and demonetization.

The value-for-value model removes the "they" from the equation. They filter, they censor, they demonetize, they deplatform. It doesn't even matter who "they" are. If a "they" exists, they will find a way to fuck it up.

Value-for-value removes "they," and puts you in charge. You are the ruler in the kingdom of one, solely responsible for your thoughts and your speech. If we want to have liberation (and salvation) in cyberspace, we need to put the individual in charge once more. As always, freedom and independence require responsibility.

In the best of all worlds, creators are incentivized to do nothing but create. Catering only to themselves and those who are interested in their creations. No intermediaries. Directly, person-to-person, value-for-value.

What Lies Ahead

Granted, as of today, it isn't exactly easy to self-host your infrastructure. It is intimidating to run your own node in order to receive payments in a self-sovereign manner. But, not only will it get easier, increasingly, it will be necessary.

In addition to making it all easier, we need to be cognisant of the MTX problem outlined above. Every step that manages to reduce the mental transaction costs in the value-for-value ecosystem is a step in the right direction.

The value capability of Podcasting 2.0 is such a step. It enables and automates payments by the minute, without any additional interaction required by the user. Once you are set up, your wallet will make payments automatically.

I believe that further iterations of this idea can be integrated into all media types, whether it be audio, video, images, the written word, and so on. I believe that we are close to the protocol version of Patreon: all the benefits of reducing the mental transaction costs to zero, without the friction and the censorship inherent in a platform-based solution. Whether it will come in the form of BOLT12 recurring payments or something else entirely is yet to be seen. I am confident, however, that it will come in time.

Conclusion

Not only is our fiat money broken, but the monetization model of the internet is broken too. The advertisement-based platforms of this day and age optimize for engagement via division and polarization, using dark patterns and addiction by design. It won't be easy to break out of the compulsion loops that are set up for us, but thanks to the self-sovereign tech stack that is currently emerging, there is a viable alternative: the value-for-value model.

The "busking" monetization model has worked for many centuries in the past, and thanks to Bitcoin and the Lightning Network, I am confident that it will work for centuries into the future. We are almost there. We just need to figure out how to position the hat correctly on the ground and where the best places in town are to perform, so to speak.

Value-for-value does away with the DRM paradox in its entirety and - with the right amount of automation and sensible defaults—will solve the MTX problem too. If we get this right, we might be able to free ourselves from the evolutionary survival-of-the-richest environment of platforms, allowing ourselves to step into the quasi-immortal realm of protocols.

There is much to be explored, many tools to be built, and plenty of pre-conceived notions to be shattered. There is a seismic shift happening right in front of our eyes, and I'm looking forward to riding the waves with all of you. Onwards!


Further Resources

Further Reading


Original cover image cc-by-sa Gonzalez85.

  1. The fact that I decided to include the sentence about masks (and, in some way, my opinion on the matter) in this paragraph will probably reduce the potential audience who will share this significantly. If I were to optimize for "number of people who will read this," removing it would be the smart choice. The irony is not lost on me. 

  2. Moscow time 21:09 @ 716,411. 

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