The Inevitable

by Kevin Kelly

  Each of these tiny niches is micro-small, but there are tens of millions of niches. And even though each of those myriad niche interests might attract only a couple of hundred fans, a potential new fan merely has to google to find them. In other words, it becomes as easy to find a particular niche interest as to find a bestseller. Today we are not surprised by a microcommunity sharing an unlikely passion; we are surprised if there is not one. We can head out in the wilds of Amazon, Netflix, Spotify, or Google with pretty good confidence that we will uncover someone who has anticipated our most remote interests with a finished work or forum. Each niche is just one step away from a bestselling niche.

  Today the audience is king. But what about the creators? Who will pay them in this sharing economy? How will their creative acts be financed if the middle is gone? The surprising answer is: another new sharing technology. No method has been as beneficial to creators as crowdfunding. In crowdfunding the audience funds the work. The fans collectively finance their favorites. The technology of sharing enables the power of one fan who is willing to prepay an artist or author to be aggregated (with little effort) together with hundreds of other fans into a significant pool of money.

  The most renowned crowdfunder is Kickstarter, which in the seven years since it was launched has enabled 9 million fans to fund 88,000 projects. Kickstarter is one of about 450 crowdfunding platforms worldwide; others, such as Indiegogo, are almost as prolific. Altogether, crowdfunding platforms raise more than $34 billion each year for projects that would not have been funded in any other way.

  In 2013, I was one of about 20,000 people who raised money from fans on Kickstarter. A few friends and I created a full-color graphic novel—or what used to be called a comic book for grown-ups. We calculated we needed $40,000 to pay writers and artists to create and print the second volume of our story, called The Silver Cord. So we went onto Kickstarter and made a short video pitch for what we wanted the money for.

  Kickstarter runs an ingenious escrow service so that the full grant (in our case $40,000) is not handed over to the creators until and unless the total amount is raised. If the drive is even a dollar short at the end of 30 days, the money is returned immediately to the funders and the fund-raisers (us) get nothing. This protects the fans, since an insufficiently funded project is doomed to fail; it also employs the classic network economics of turning your fans into your chief marketers, since once they contribute they become motivated to make sure you reach your goal by recruiting their friends to your campaign.

  Occasionally, unexpectedly popular fan-financed Kickstarter projects may pile on an additional $1 million above the goal. The highest grossing Kickstarter campaign raised $20 million for a digital watch from its future fans. Approximately 40 percent of all projects succeed in reaching their funding goal.

  Each of the 450 or so fan-funding platforms tweak their rules to cater to different groups of creatives or to emphasize different results. Crowdfunding sites can optimize for musicians (PledgeMusic, SellaBand), nonprofits (Fundly, FundRazr), medical emergencies (GoFundMe, Rally), and even science (Petridish, Experiment). A few sites (Patreon, Subbable) are engineered to supply continuous support to an ongoing project like a magazine or video channel. A couple platforms (Flattr, Unglue) use fans to fund work that has already been released.

  But by far the most potent future role for crowdsharing is in fan base equity. Rather than invest into a product, supporters invest into a company. The idea is to allow fans of a company to purchase shares in the company. This is exactly what you do when you buy shares of stock on the stock market. You are part of a crowdsourced ownership. Each of your shares is some tiny fraction of the whole enterprise, and the collected money raised by public shares is used to grow the business. Ideally, the company is raising money from its own customers, although in reality big pension and hedge funds are the bulk buyers. Heavy regulation and intense government oversight of public companies offer some guarantee to the average stock buyer, making it so anyone with a bank account can buy stock. But risky startups, solo creators, crazy artists, or a duo in their garage would not withstand the kind of paperwork and layers of financial bureaucracy ordinarily applied to public companies. Every year a precious few well-funded companies will attempt an initial public offering (IPO), but only after highly paid lawyers and accountants scour the business in an expensive due diligence scrub. An open peer-to-peer scheme that enabled anyone to offer to the public ownership shares in their company (with some regulation) would revolutionize business. Just as we have seen tens of thousands of new products that would not have existed except by crowdfunding techniques, the new methods of equity sharing would unleash tens of thousands of innovative businesses that could not be born otherwise. The sharing economy would now include ownership sharing.

  The advantages are obvious. If you have an idea, you can seek investment from anyone else who sees the same potential as you do. You don’t need the permission of bankers, or the rich. If you work hard and succeed, your backers will prosper with you. An artist might use fans’ investments to build a company that sold her works over the long term. Or two guys in a garage with an amazing gizmo might be able to leverage that into an ongoing enterprise process that makes more gizmos instead of having to Kickstart each one. The disadvantages are obvious as well. Without some kind of vetting, policing, and enforcement, peer-to-peer investing would be a magnet for huskers and scams. The con artists would offer some kind of glorious returns, take your money, and plead failure. Grannies might lose their life savings. But just as eBay used new innovative technology to solve the old problem of fraud between invisible strangers selling to invisible strangers, the dangers of equity crowdsharing can be minimized with technical innovations such as insurance pools, escrow accounts, and other types of technologically induced trust. Two early attempts at equity crowdfunding in the U.S., SeedInvest and FundersClub, still rely on rich “qualified investors” and are awaiting a change in U.S. law that would legalize equity crowdfunding for ordinary citizens in early 2016.

  Why stop there? Who would have believed that poor farmers could secure $100 loans shared from perfect strangers on the other side of the planet—and pay them back? That is what Kiva does with peer-to-peer lending. Several decades ago international banks discovered they had better repayment rates when they lent small amounts to the poor than when they lent big amounts to rich state governments. It was safer to lend money to the peasants in Bolivia than to the government of Bolivia. This microfinancing of a few hundred dollars applied many tens of thousands of times would also jump-start a developing economy from the bottom. Loan a poor woman $95 to buy supplies to launch a street food cart and the benefits of her stable income would ripple up through her children, the local economy, and quickly build a base for more complex startups. It was the most efficient development strategy invented yet. Kiva took the next step in sharing and turned microfinancing into peer-to-peer lending by enabling anyone, anywhere to make a microfinance loan. So you, sitting at Starbucks, could now lend $120 to a specific individual Bolivian woman who plans to buy wool to start a weaving business. You could follow her progress until she paid you back, at which time you could relend the money to someone else. Since Kiva’s launch in 2005, over 2 million people have lent more than $725 million in microfinance loans via its sharing platform. The payback rate is about 99 percent. That is a strong encouragement to lend again.

  If that works in developing countries with Kiva, why not install peer-to-peer lending in developed countries? Two web-based companies, Prosper and Lending Club, do that. They match up ordinary middle-class citizen borrowers with ordinary citizen lenders willing to loan their scheme at a decent interest rate. As of 2015, these two largest peer-to-peer lending companies have facilitated more than 200,000 loans worth more than $10 billion.

  Innovation itself can be crowdsourced. The Fortune 500 company General Electric was concerned that its own engineers could not keep up with the rapid pace of inve
ntion around them, so it launched the platform Quirky. Anyone could submit online an idea for a great new GE product. Once a week, the GE staff voted on the best idea that week and would set to work making it real. If an idea became a product, it would earn money for the idea maker. To date GE has launched over 400 new products from this crowdsourced method. One example is the Egg Minder, an egg holder in your refrigerator that sends you a text when it’s time to reorder your eggs.

  Another popular version of crowdsourcing appears, at first, to be less about collaboration and more about competition. A commercial need prompts a contest for the best solution. A company offers a payment prize to the best solution selected among a crowd of entrants. For instance, Netflix announced an award of $1 million to the programmers who could invent an algorithm that recommended movies 10 percent better than the algorithm they had. Forty thousand groups submitted very good solutions that improved the performance, but only one team achieved the goal and won the prize. The others had worked for free. Sites such as 99Designs, TopCoder, or Threadless will run a contest for you. Say you need a logo. You offer a fee for the best design. The higher your fee, the more designers will participate. Out of the hundred design sketches submitted, you pick the one you like best and pay its designer. But the open platform means that everyone’s work is on view, so each contestant is building upon the creativity of others and trying to outperform them. From the client’s point of view, the crowd has generated a design that is probably way better than the one they could have got from just one designer in that price category.

  Can a crowd make a car? Yep. Local Motors, based in Phoenix, employs an open source method to design and manufacture low-volume customized performance (fast) cars. A community of 150,000 car fanatics submitted plans for each of the thousands of parts needed for a rally car. Some were new off-the-shelf parts hijacked from other existing cars, some were custom-designed parts made in several microfactories around the U.S., and some were parts designed to be 3-D printed in any shop. The newest car from Local Motors is a fully 3-D-printed electric car, also designed and manufactured by the community.

  Of course, there are many things that are too complex, too unfamiliar, too long term, or too risky to be financed or created by the potential customers. For example, a passenger rocket to Mars, a bridge spanning Alaska and Russia, or a Twitter-based novel are probably out of reach of crowdfunding in the foreseeable future.

  But to repeat the lesson from social media: Harnessing the sharing of the crowd will often take you further than you think, and it is almost always the best place to start.

  We have barely begun to explore what kinds of amazing things a crowd can do. There must be two million different ways to crowdfund an idea, or to crowdorganize it, or to crowdmake it. There must be a million more new ways to share unexpected things in unexpected ways.

  In the next three decades the greatest wealth—and most interesting cultural innovations—lie in this direction. The largest, fastest growing, most profitable companies in 2050 will be companies that will have figured out how to harness aspects of sharing that are invisible and unappreciated today. Anything that can be shared—thoughts, emotions, money, health, time—will be shared in the right conditions, with the right benefits. Anything that can be shared can be shared better, faster, easier, longer, and in a million more ways than we currently realize. At this point in our history, sharing something that has not been shared before, or in a new way, is the surest way to increase its value.

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  In the near future my day will follow a scenario like this: I work as an engineer in a co-op with other engineers from around the world. Our group is collectively owned and managed not by investors, nor by stockholders, but by 1,200 engineers. I earn money for my engineering tweaks. I recently designed a way to improve the efficiency of the flywheel for a regenerative brake on an electric car. If my design is used in the final manufacturing, I get a payment. In fact, anywhere my design is used, even if it is copied for a different car or another purpose, payments still flow back to me automatically. The better the car sells, the higher my micropayments. I’m happy if my work goes viral. The more it is shared, the better. It’s the same way photography now works. When I post a photo onto the net, my credentials are encrypted inside the photo image so that the web tracks it and the account of anyone who reposts the photos will pay me a very miniscule micropayment. No matter how many times the picture may be recopied, the credit comes back to me. Compared with last century, it’s really easy to make, say, an instructional video now because you can assemble the available parts (images, scenes, even layouts) from other excellent creators, and the micropayments for their work automatically flow back to them as a default. The electric car we are making will be crowdsourced, but unlike decades earlier, every engineer who contributes to the car, no matter how small her contribution, gets paid proportionally.

  I have a choice of 10,000 different co-ops I can contribute to. (Not many of my generation want to work for a corporation.) They offer different rates, varying benefits, but, most important, different sets of coworkers. I try to give my favorite co-ops a lot of time not because they pay more, but because I really enjoy working with the best folks—even though we’ve never met in real life. It is actually hard sometimes to get your work accepted into a high-quality co-op. Your previous contributions—all trackable on the web, of course—have to be really top-notch. They prefer active agents who are contributing to several projects over the years, with multiple streams of automatic payments, as a sign you work well in this sharing economy.

  When I am not contributing, I play in a maxed-out virtual world. This world is entirely built by the users—and controlled by them too. I’ve spent six years constructing this mountaintop village, making every stone wall, every mossy-tiled roof exactly right. I got a lot of cred points for the snow-covered corner, but more important to me is to have it fit perfectly in the greater virtual world we are making. Over 30,000 different games of all types (violent/nonviolent, strategy/shooter) are running on this world platform without interference. In surface area it’s almost as big as the moon. There are now 250 million people building the game, each one tending a particular block in this vast world, each one processing on his or her own connected chip. My village runs on my smarthouse monitor. In the past I’ve lost work to host companies that went out of business, so now I (like millions of others) work only on territory and chips I control. We all contribute our small CPU cycles and storage to the shared Greater World, linked up by a mesh network of rooftop relays. There is a solar-powered mini-relay on my roof that communicates with the other relays on nearby rooftops so that we—the Greater World builders—can’t be kicked off a company’s network. We collectively run the network, a network no one owns, or rather everyone owns. Our contributions can’t be sold, nor do we have to be marketed to while we make and play games within one extended interconnected space. The Greater World is the largest co-op in history, and for the first time we have a hint of a planetary-scale governance. The game world’s policies and budget are decided by electronic votes, line by line, facilitated with lots of explaining, tutorials, and even AI. Now over 250 million people want to know why they can’t vote on their national budgets that way too.

  In a weirdly recursive way, people create teams and co-ops within the Greater World to make stuff in the real world. They find that the tools for collaboration improve quicker in the virtual spaces. I’m contributing to a hackathon that is engineering a collaboratively designed and crowdfunded boomerang probe to Mars, with the goal to be the first to return a few Mars rocks to Earth. Everyone, from geologists to graphic artists, is involved. Just about every high-tech co-op is contributing resources, even man-hours, because they long ago realized the best and newest tools are invented during massively collaborative endeavors like these.

  For decades we have been sharing our outputs—our stream of photos, video clips, and well-crafted tw
eets. In essence, we have been sharing our successes. But only in the last decade did we realize that we learn faster and do better work when we share our failures as well. So in all the collabs I work with, we keep and share all the email, all the chat logs, all correspondence, all intermediate versions, all drafts of everything we do. The entire history is open. We share the process, not just the end product. All the half-baked ideas, dead ends, flops, and redos are actually valuable for both myself and for others hoping to do better. With the entire process out in the open it is harder to fool yourself and easier to see what went right, if it did. Even science has picked up on this idea. When an experiment does not work, scientists are required to share their negative results. I have learned that in collaborative work when you share earlier in the process, the learning and successes come earlier as well. These days I live constantly connected. The bulk of what I share, and what is shared with me, is incremental—constant microupdates, tiny improved versions, minor tweaks—but those steady steps forward feed me. There is no turning the sharing off for long. Even the silence will be shared.

  7

  FILTERING

  There has never been a better time to be a reader, a watcher, a listener, or a participant in human expression. An exhilarating avalanche of new stuff is created every year. Every 12 months we produce 8 million new songs, 2 million new books, 16,000 new films, 30 billion blog posts, 182 billion tweets, 400,000 new products. With little effort today, hardly more than a flick of the wrist, an average person can summon the Library of Everything. You could, if so inclined, read more Greek texts in the original Greek than the most prestigious Greek nobleman of classical times. The same regal ease applies to ancient Chinese scrolls; there are more available to you at home than to emperors of China past. Or Renaissance etchings, or live Mozart concertos, so rare to witness in their time, so accessible now. In every dimension, media today is at an all-time peak of glorious plentitude.