The Wealth of Networks

1. The networked information economy enables decentralized individual action

The networked information economy improves the practical capacities of individuals along three dimensions: (1) it improves their capacity to do more for and by themselves; (2) it enhances their capacity to do more in loose commonality with others, without being constrained to organize their relationship through a price system or in traditional hierarchical models of social and economic organization; and (3) it improves the capacity of individuals to do more in formal organizations that operate outside the market sphere.

Empowering individuals. The networked information economy fundamentally alters the capacity for individuals to be active participants in the public sphere. This shift is enabled by:

• Widespread access to the basic tools of information production and dissemination
• Dramatically reduced costs of communication and coordination
• Ability to reach and collaborate with others sharing similar interests globally

Breaking traditional constraints. This new environment allows people to:

• Create and share information without relying on traditional gatekeepers
• Form flexible, ad-hoc collaborations around shared goals
• Participate in large-scale projects without formal organizational structures

Expanding nonmarket action. The networked economy creates space for:

• Volunteer-driven projects like Wikipedia and open-source software
• Citizen journalism and grassroots media production
• Peer-to-peer file sharing and collaborative filtering systems

2. Nonmarket and nonproprietary production gain importance in the digital age

We are seeing the emergence of a new stage in the information economy—the networked information economy. It is displacing the industrial information economy that typified information production from about the second half of the nineteenth century and throughout the twentieth century.

Shift in production models. The networked information economy represents a fundamental change in how information, knowledge, and culture are produced:

• From centralized, proprietary models to distributed, collaborative ones
• From passive consumption to active participation and creation
• From scarcity-based economics to abundance-based information sharing

Emergence of commons-based peer production. This new mode of production is characterized by:

• Voluntary contributions from widely distributed individuals
• Coordination through social cues rather than market signals or managerial commands
• Shared resources and outputs, often governed by open licensing schemes

Challenges to traditional industries. Nonmarket production is disrupting established sectors:

• Media and entertainment (e.g., user-generated content, indie productions)
• Software development (e.g., open-source projects)
• Knowledge creation (e.g., wikis, open educational resources)

3. Peer production emerges as a significant new mode of information production

The most advanced economies in the world today have made two parallel shifts that, paradoxically, make possible a significant attenuation of the limitations that market-based production places on the pursuit of the political values central to liberal societies.

Defining peer production. Peer production is a model of creating goods and services that relies on self-organizing communities of individuals who come together to produce a shared outcome. Key features include:

• Decentralized conception and execution of problems and solutions
• Diverse motivations of participants, beyond just monetary rewards
• Modularity of contributions, allowing for flexible levels of participation

Examples of successful peer production. This model has proven effective in various domains:

• Software: Linux, Apache, Mozilla Firefox
• Content: Wikipedia, OpenStreetMap
• Scientific research: Galaxy Zoo, Foldit

Advantages of peer production. This approach offers several benefits over traditional models:

• Harnesses diverse knowledge and skills from a global pool of contributors
• Adapts quickly to changing needs and circumstances
• Produces robust, high-quality outputs through peer review and iterative improvement

4. The Internet democratizes and diversifies information production and distribution

The Internet allows individuals to abandon the idea of the public sphere as primarily constructed of finished statements uttered by a small set of actors socially understood to be "the media" (whether state owned or commercial) and separated from society, and to move toward a set of social practices that see individuals as participating in a debate.

Lowering barriers to entry. The Internet dramatically reduces the costs of producing and distributing information:

• Anyone with internet access can potentially reach a global audience
• Low-cost tools enable creation of professional-quality content
• Social media platforms provide ready-made distribution channels

Diversifying voices and perspectives. This democratization leads to:

• Greater representation of marginalized groups and niche interests
• Challenges to mainstream narratives and power structures
• Emergence of new forms of citizen journalism and commentary

Shifting from consumption to participation. The networked public sphere encourages:

• Active engagement in discussions and debates
• Collaborative fact-checking and information verification
• Creation and sharing of user-generated content

5. Commons-based approaches challenge traditional proprietary models

We are beginning to see a shift from the highly constrained roles of employee and consumer in the industrial economy, to more flexible, self-authored roles of user and peer participant in cooperative ventures, at least for some part of life.

Defining the commons. In the context of information and culture, commons refers to resources that are shared and managed by a community, rather than owned exclusively by individuals or corporations. Key aspects include:

• Open access to information and cultural works
• Collaborative governance and decision-making
• Emphasis on long-term sustainability over short-term profit

Examples of successful commons. Various domains have embraced commons-based approaches:

• Creative Commons licenses for artistic and literary works
• Open access scientific publishing
• Community-managed digital infrastructure (e.g., Internet protocols)

Benefits of commons-based production. This model offers several advantages:

• Promotes innovation by reducing barriers to building on existing work
• Encourages diverse participation and contributions
• Aligns with the non-rival nature of information goods

6. Network technologies enhance individual freedom and autonomy

What makes these new practices distinct from those that preceded them is that the technical conditions of communication and information processing are now sufficiently enabling to create new opportunities for how we can do things that we value.

Expanding choices and capabilities. Network technologies enhance individual autonomy by:

• Providing access to a vast array of information and knowledge
• Enabling new forms of self-expression and creativity
• Facilitating connections with like-minded individuals and communities

Reducing dependence on traditional institutions. The networked environment allows individuals to:

• Bypass traditional gatekeepers in media, education, and culture
• Access alternative sources of information and perspectives
• Create and distribute their own content without institutional backing

Empowering self-directed learning and growth. Network technologies support:

• Personalized education and skill development
• Participation in collaborative knowledge-building projects
• Exploration of diverse ideas and worldviews

7. The networked public sphere offers new possibilities for democratic discourse

The networked public sphere allows individuals to reorient themselves from passive readers and listeners to potential speakers and participants in a conversation.

Redefining public discourse. The networked public sphere differs from traditional media in several key ways:

• Multi-directional communication rather than one-to-many broadcasting
• Blurring of lines between producers and consumers of information
• Rapid dissemination and evolution of ideas through networks

Enhancing political participation. New technologies enable:

• Easier organization of grassroots movements and campaigns
• Direct engagement between citizens and political leaders
• Crowdsourcing of policy ideas and feedback

Challenges and opportunities. The networked public sphere presents:

• Information overload and echo chambers as potential downsides
• Need for new skills in digital literacy and critical thinking
• Possibilities for more inclusive and responsive democratic processes

8. Commercial mass media face disruption from networked alternatives

Throughout most of the twentieth century, the mass media have played a fundamental constitutive role in the construction of the public sphere in liberal democracies.

Shifting power dynamics. Traditional mass media's dominance is challenged by:

• Fragmentation of audiences across numerous online platforms
• Rise of user-generated content and citizen journalism
• Declining trust in institutional media sources

Adapting business models. Media companies are forced to:

• Explore new revenue streams beyond advertising and subscriptions
• Embrace digital platforms and interactive content
• Compete with free, abundant information online

Changing roles and practices. Journalists and media professionals must:

• Develop new skills for the digital age (e.g., data journalism, social media engagement)
• Navigate the blurred lines between objectivity and participation
• Find ways to add value in an environment of information abundance

9. Social production complements and competes with market-based production

Social production is reshaping the market conditions under which businesses operate.

Defining social production. This term refers to the creation of value through voluntary, often collaborative efforts outside traditional market structures. Key features include:

• Reliance on intrinsic motivations (e.g., passion, recognition) rather than monetary rewards
• Use of shared resources and open platforms
• Fluid boundaries between producers and consumers

Impact on traditional industries. Social production challenges established business models:

• Forces companies to compete with free, high-quality alternatives
• Creates pressure for greater openness and collaboration
• Shifts value creation from products to services and experiences

Hybrid models emerge. Many organizations are finding ways to combine elements of social and market-based production:

• Open innovation initiatives that engage external communities
• Freemium business models that monetize a subset of users
• Platform businesses that facilitate peer-to-peer exchanges

Last updated: January 25, 2025