Consider a basic laissez-faire market model in which each party tries to maximize its own gain, and in which their is no trust between the parties. There will be many cases like the Prisoners’ Dilemma in which cooperation is the optimal group strategy, but the individual strategy is uncooperativeness. A promise institution can change these outcomes, aligning the individual’s best interest with the group’s. As an outside force acting on the participants, the institution uses some condoned enforcement mechanism to deter breach of promise and incentivize cooperation.

The character of the promise institution may vary considerably. We can divide the set of institutions into two core classes of social and legal. Each operates differently, yet they overlap considerably in their scope. We rely on the social promise institution when we make promises with friends or family, or within a community. These are agreements that we would never expect to go to court. The social promise institution uses emotional, interpersonal, and community enforcement, such as gossip, guilt, shaming, or decrease in standing or reputation.

We invoke the legal promise institution in matters of government or business, where the social enforcement lacks sufficient scope or strength to ensure cooperation. The legal institution offers the greater trust firepower needed to deal with corporations and governments, yet at a cost of higher barrier to entry and far greater stakes. Participating in a legally binding contract generally often involves lawyers, fees and time for at least one party, and potentially severe legal ramifications for breach.

Promiserver lives in the social end of the spectrum, but cautiously dips its toes into legal territory. Enforcement is reputation based—clearly the social promise institution—but it aims to extend social enforcement further into the space in which people would traditionally feel the need to turn to the legal institution.

These promise institutions are critical, to both life and business. The more we trust the accuracy and efficacy of the institutions, the more we may trust in the promises we make. If I trust my community and feel they are fair and reasonable, I am more likely to make a social promise. If I feel the legal system is fair and reasonable, the more trust I place in the contracts I sign. In either case, good institutions incentivize cooperation.

Yet these institutions are not owned by any person, company, or government. They are created and owned by all of us as members and participants. Though at times the individual best interest may run counter to the enforcement laid out by the institution, the purpose of the promise institution is to protect the best interests of the group as a whole. If a corporation bribes a judge, thereby corrupting the legal institution, it may temporarily serve the best interest of that corporation, but in the long run it hurts everyone because it adversely affects our trust in the institution. This sort of “fragile, owned by everyone, benefits everyone” resource is classically referred to as the commons.

This line of thinking has reaffirmed for me that Promiserver is dabbling within a critical space. I’m currently reading Peter Barnes’s interesting Capitalism 3.0, which makes a case for creation of new policy to protect endangered commons like the environment using market incentives, and has me interested in how we approach other, intangible commons. So I’ve stepped onto this ride that is my thesis. It’s been a little slow and creaky on the uphill, but it is leading to something, and I see some interesting curves approaching.

Another recent grad, Kelly has been busy settling into Google’s team in Atlanta, and recently releasing Google Web Toolkit (GWT) for the Mac. GWT is a package for developing rich AJAX applications in Java. Your Java code compiles into compact and efficient Javascript. He has a more accurate and helpful description on Google Mac blog. Nice work Kelly.

Microtransactions for digital assets and virtual goods is a rising, potentially multibillion dollar industry. To succeed, entrepreneurs who are building networked systems based on user content . . . must realize that anything displayable is copyable; the value lies instead in service and in server-side functionality. Content is like songs around a campfire: destined to be enjoyed for free. Those who build businesses around hosting campfires would be wise to focus on making the campfire experience great, rather than charging listeners by the song. (full article)

In designing OPENSTUDIO we’ve experimented with simple models for small transactions trading in digital content, and to a lesser extent with the same for exchange of services. On the content side we’ve found ourselves wandering into the territory of DRM, licenses, creative commons, and participatory media. These are all relevant data points in a struggle to understand how to define ownership of digital media that is both effortlessly copyable yet paradoxically often fleeting and ephemeral.

I’m working in contracts as an attempt to understand the service side, to decouple services from any specific economic systems, communities, mediums, or infrastructures, and to create the standalone endpoint at which people come together to create and bind themselves to their own lightweight, private laws written in the community’s own vernacular. If the term microtransaction refers to mini-payments, then let’s claim the term microcontract to describe these mini-agreements. While media companies should follow Koster’s advice and try to make their campfires comfy, I’m happy to wander among the fireflies.

Like Kate and Annie’s original, the system provides a mechanism by which viewers can offer feedback on advertisements via a simple +/- voting system. Each vote then affects the likelihood of that ad subsequently displaying for that publisher. This feedback option is a simple but fundamentally different idea, and it makes sense from the media consumer, publisher and advertiser perspectives. Advertisers get feedback from consumers, and through the feedback their ads naturally tend to display on pages where they are most positively received. The plus/minus scores act as a fitness measure for each ad within a particular publisher space. Site owners and publishers ensure that only the most relevant ads appear on their site, not via some hip premier system, but collectively by the community members themselves. Finally, individual consumers and viewers see the ads that are likely the most relevant to their own interests, and they have a chance to participate in the ad selection process.

Inspired by Google’s AdSense, I designed the inclusion code for publishers to be extremely simple. Including an ad is as easy as signing up and then inserting a short snippet javascript customized to use the publisher’s id. The viewers do the rest.

<script type="text/javascript">
clickback_ad_publisher = "brent";
clickback_ad_width = 728;
clickback_ad_height = 90;
clickback_ad_channel ="";
clickback_frame_border = 1;
</script>
<script type="text/javascript"
  src="http://panoramic.media.mit.edu:3000/show_ads.js" >
</script>

If web publishers only list ads that they prefer, it increases the credibility of the advertisers and targets the ads better to the community. This is perhaps the next step beyond what The Deck is doing with preferred advertising. As someone in my group mentioned, The Deck perhaps marks the new era of media conglomerates. Rather than an exclusive “premiere” network, a market approach potentiates new forms of distributed, p2p marketing. It’s marketing (and profiting) for the rest of us.