I spent a lot of time reading and thinking about the evolution of the web and its impact on economy and society, and I quite often came across the same 2 major topics that I believe to be the 2 biggest challenges and next steps in the evolution of the web:

1. Convenient payment mechanism for information and knowledge: The web lacks of a mechanism that enables information workers to get compensated for creating and sharing information and knowledge on the web
2. From social media platforms towards the social web: Social media platforms are increasingly building up a parallel web of content and applications built on top of their online identities, social graphs and activity streams. Instead of moving everything into those more or less closed silos, the whole web should benefit from this new social component but in an open and standardized way

I will focus on the 1st challenge in this blog post and elaborate the 2nd topic in my next article. As you will see, the 2 topics are of course interlinked when it comes to payment mechanisms currently developing inside social media platforms like Facebook. The social media platforms possess a login and online identity for an increasing number of persons which in the end can be the key success factor for enabling business on the web.

Convenient Payment Mechanism for Information and Knowledge

The development of the internet has changed our world quite substantially. Today, everyone on our planet who has access to the internet can publish content, collaborate and share knowledge on a global level. I recently read the book Wikinomics where this evolution process and its huge potential and impact on economy is elaborated in great detail. Wikipedia or great open source software have been collaboratively developed by hundreds of skilled people who each have their own motivation contributing those large projects.

This collaborative process all works very well if..

• the contributors work for non-monetary incentives (e.g. recognition within their peer group) or
• share their knowledge to attract potential clients (for consulting services etc) or
• the portion and value of the information contributed is big enough to justify the effort of settig up a traditional compensation model and live with the transaction costs (e.g. crowdsourcing projects or Ideaagoras where an orderer is offering substantial compensation for those solving their problems, or the knowledge is packaged into an ebook – a portion of information big enough to justify the transaction costs)

But there are millions of people who create valuable information by contributing a small portion of code to an open source software project or share their knowledge on their blogs, who still have no means of directly getting a small compensation from those who eventually benefit from their work.

I believe that one of the two next big evolutionary steps is that the web, accessible through the web browser, should offer basic and convenient mechanisms that enable business based on information and knowledge.

Unfortunately the book Wikinomics only briefly mentions the need for such a compensation mechanism but leaves the question unanswered.

I’m not telling that content producers should be compensated for their work in a direct monetary way, but I believe that as long as money is necessary in our world to survive and pay for food and rent, the web should natively offer a mechanism that at least allows information workers to earn money from sharing their little but valuable bits of knowledge.

App Stores are Evil, the Business-Enabled Browser is Good

The huge rise of online stores like iTunes, the iPhone/iPad App Store or the Android Market are the best evidence of the need for a compensation mechanism that the web doesn’t offer today. Even content providers (like media companies, newspapers) are increasingly starting to “wrap” content in small applications to deliver and sell it this way.

I believe those stores are popular because they..

• offer a way to conveniently monetize information and services
• still provide greater possibilities and convenience than a browser based application can offer (e.g. access to camera, contacts in the address book)

The HTML standard and web browsers were once created to enable content to be published on the web, linked to each other (hyperlinks) and made available through search engines for the benefit of all. I strongly believe that the current app stores are a big step backwards because they have the following disadvantages:

• After having elaborated a standard for the web (HTML) that whatever browser on whatever platform are supposed to interpret the same way, developers again have to implement and maintain native apps for every platform, and this time even including different mobile operating systems, not only Windows, Mac OS and Linux. This leads to higher development and maintenance costs
• The current stores are proprietary systems where the owner has full control over the content or service that is offered. Apple has repeatedly demonstrated this over the last few months
• Information inside apps cannot be indexed by search engines
• Information inside different apps can’t be linked easily like content on the web

If you look at iTunes, it’s basically (and also technologically) a “business-enabled” web browser. While the current app stores or iTunes finally offer a way to monetize content and services, I strongly believe that everything can and has to move back into the browsers once they offer a standardized way to monetize content.

Browsers and the HTML 5 standard are developing in the right direction in regards to overcome limitations a browser-based application has over a native application in terms of functionality and convenience. HTML 5 offers access to local storage for offline usage of a web application, offers better design features, a richer user experience  and access to geolocation. So apart from a few design restrictions (which get less and less) and access to hardware like the built-in camera of a mobile phone or PC and to contacts stored in the address book, the web browser can almost do everything, except enabling business through a bult-in payment mechanism.

While I did some research on existing initiatives, I came across an article about Micropayments on Wikipedia where it mentions the existence of an Electronic Commerce Interest Group of the W3C :

During the late 1990s, there was a movement to create microtransactionstandards, and the World Wide Web Consortium (W3C) worked on incorporating micropayments into HTML, even going as far as to suggest the embedding of payment-request information in HTTP error codes. The W3C has since stopped its efforts in this area, and micropayments have not become a widely used method of selling content over the internet.

Ok, interesting… Unfortunately I wasn’t able to find out why this initiative had stopped its work, but I guess it was just too early in 1996. While I haven’t figured out the exact way of integrating micropayments for content in existing standards yet, I feel that the integration has to be somewhere on the level of protocols like HTTP, and a standard needs to be established by W3C that all browsers are willing to support. That ideas that the group at the W3C was discussing still makes sense to me.

How should a business-enabled browser look like? What additional functionality should it offer to be able to mostly replace native apps sold via app stores?

• Connection to the preferred online identity of the user (authentication, profile). This is the point where I see a big connection to the topic why the browser should become a “Social Agent” to surf the social web. Chris Messina has recently published his concept and detailed mockups on how such a social agent could look like. I have followed his posts with great interest. You will be able to log in to the browser like you do on iTunes, but with the online identity provider of your choice, and in the standard browser (of your choice)
• Standardized interface to payment providers (of the user’s choice) with authentication, credibility check and authorization of the payment. Again, making the payment should be as easy as in iTunes, a 1-click-buy where you are just asked by the browser for the authorization of the payment through your preferred channel. The payment providers take care of clearing the transactions in an efficient way that lowers the transaction costs (commissions)
• Native integration of a copyright system like Creative Commons that allows the author/creator to choose how to license and share his creation
• Display and storage of paid content after authorization of the payment. Content could be transferred in an encrypted way (like over https) which the browser (and authorized search engines) is able to decrypt with the authorization of the payment provider. Of course mixed content (free and paid) must be possible to display free previews for paid content.

To wrap it up, we should learn why app stores are so popular, and implement all those necessary components into the browser.

The next evolutionary step of the web is a combination of the open, connected and collaborative web with mechanisms that enable business with content and services.

Economics of Information

I’d like to point out that I’m not specifically talking about paid content, that you will have to pay to access content on the web or which mechanisms or platforms will be established to compensate an author/creator of valuable information for his effort. This is a very interesting discussion as well and has to do a lot with the fact that information is an experience good, which means that you can only tell the personal value of the information after having consumed/read it.

There are interesting concepts being proposed, like Kachingle or Flattr, which use mechanisms similar to voluntary payments / donations. And maybe they point into the right direction. Or platforms which implement crowd funding mechanisms in a convenient way could be another option to bring together supply and demand.

But whatever mechanism or platform will be established for the compensation of knowledge workers that offer valuable information or services over the web, a convenient micropayment functionality integrated into the browser is necessary to enable business with content on the web at all.

Discussion

What’s your opinion about this topic? Are you aware of initiatives that already exist? Do you see a way how knowledge workers can make a living from sharing their knowledge online and not only though consulting and keynote speeches? Feel free to leave your comment or get in touch with me.