Priceonomics

In the mid 1990s, when America Online was synonymous with the web, the Internet had not yet achieved its destiny as a place where people gather to share memes, troll articles written by members of an opposing political party, and pursue the Sisyphean goal of inbox zero. 

Even earlier, the world wide web’s roots as a tool for scientists held sway. Every September until 1993, the Internet underwent a transition as college freshman first came online and adjusted to the rules and customs of the fledgling web’s message boards. In September of 1993, however, America Online (Aol) rolled out an accessible web service that introduced the web to a mass audience. The influx of new users overwhelmed the community, ending the reign of a civil, relatively singular Internet culture. 

This author is only 25 years old, yet he finds himself dated by the prospect of explaining to young people the excitement of entering a chat room operating under the title “Sports.” Aol’s chat rooms were new, intriguing, and a draw. But people had not yet accepted that the Internet was a Wild West, always a bit out of control, so Aol worried about how to keep chat rooms safe. How could the company keep parents from barring their children from chat rooms like the sketchy park down the street? 

The company did so by following the model high schools use to police prom: employees recruited large numbers of volunteer monitors to supervise its chat rooms and act as “community leaders.” The only problem was that unlike a high school, Aol was a massive Internet company. And for-profit companies don’t have volunteers; they have lawsuits waiting to happen.

Chat Room Monitors of the World, Unite!

By 1999, ten thousand volunteers monitored Aol chat rooms that ranged in topic from sports to gardening. Then, two chat room monitors, Kelly Hallisey and Brian Williams, charged that they had worked as undercompensated employees and launched a class action lawsuit against Aol to seek back wages. “What community leaders did was very essential to the service in terms of what [Aol was] selling to the public,” their lawyer, Leon Greenberg, told the New York Times. “The minimum-wage laws require people get paid a minimum wage. When AOL says, 'These people were volunteers so we didn't have to pay them,' I don't see it.''

American labor laws are not friendly to the idea of companies using volunteers. Laws are motivated by a desire for an equal playing field -- no company should be able to outcompete another by using unpaid volunteers -- but more importantly by the worry that volunteerism can all too easily become a facade for coercing workers into laboring for free. (Just ask the legions of American “interns” who work for peanuts in the hope that it will lead to a real job offer.)

The workers had a strong case. Not only is the law skeptical of volunteers at for-profit companies, but Aol management often treated the monitors like employees. Aol required community leaders to apply for the position, sign the company’s terms of service agreement, make a minimum 3-4 hours a week time commitment, and follow a shift schedule enforced with timecards. Brian Williams, who reported working 3,000 hours over two years, complained to the Times:

"They're making thousands and thousands of dollars off your slave labor, off each and every member. I'm tired of seeing all these community leaders, remote staff being treated that way and not being paid."

When Aol first started the program, however, it was not such a bum deal. In return for acting as community leaders and helpful Virgils to the virgin Internet, monitors received free Internet service. At the time, Aol charged by the hour, so monitors who were heavy Internet users saved hundreds of dollars each month. This actually hurt Aol when the lawsuit began, however, as the reception of benefits (along with whether the work is full-time and displaces regular employees) is a factor that helps the Department of Labor determine if a volunteer should actually be paid. 

As happens to many growing Internet companies, Aol’s users turned against the company when its behavior took on a decidedly corporate feel. In 1999, during an online meeting with all community leaders, Aol management announced that volunteers would no longer receive free Internet service; instead they would receive a discounted rate. At the same time, Aol began to monetize its chat rooms and message boards by introducing advertisements. 

Suddenly Aol felt like the for-profit it had always been, not the community that had relied on volunteers since its early days. Monitor Brian Williams tried to organize a strike in response to the reduction in their compensation. When Aol responded by firing him, he got a lawyer. Kelly Hallisey, the first to join the lawsuit with Williams, explained to the press, “AOL used to have a real sense of community… now I see people being taken advantage of." Williams added, “Before, you didn't have advertising everywhere, and it was a much richer community where people got together to get together, and now it's not like that."

In many ways, it was the same dilemma that faced Jimmy Wales, the founder of Wikipedia. Wales started the site as a “grow first, worry about revenues later” piece of his for-profit search engine and web portal Bomis. (A search engine that, according to Wikipedia, “became successful after focusing on X-rated media.”) But as Wikipedia grew, Wales had a popular site maintained by an army of unpaid volunteers who wrote and edited articles, acted as moderators, and would revolt if banner ads one day appeared. So Wales turned Wikipedia into a nonprofit, rebranded himself (earnestly, one hopes) as an activist trying to democratize access to the world’s knowledge, and began joking about his missing millions.

Aol’s chat rooms and message boards had the same community/pioneering feel, but they were hitched to a company whose main business was Internet connectivity and looked poised to dominate the Internet age. So Aol monetized and the monitors revolted. Aol finally ended its volunteer program in 2005 and settled the lawsuit in 2010 for $15 million. One third went to the community leaders, one third to the lawyers, and one third to charity.

The Rise of Digital Sharecropping?

In some ways, the Aol chat room monitor program seems very quaint. During its early years, people debated whether it could really keep chat rooms “kid friendly”; today everyone knows that using the Internet means risking exposure to profane, rude, or ignorant language and content. Further, one factor that may have lengthened the settlement of the lawsuit was, as the New York Times put it, “the thorny issue of how to define work in an age when people can work from home using their own personal computers and online connections.” No one has any doubt now as to whether working odd hours remotely counts as work.

Yet the case remains relevant. As indicated by the horribly racist remarks made on the message boards that have accompanied live feeds of protests in Ferguson, Missouri, over the past several days, the need for monitors and moderators has never been greater. Most companies and services employ staff or outsourced labor to scrub offensive comments and inappropriate material from their sites. Through its contractors, Facebook, for example, pays thousands of foreign, low wage employees to remove sexually explicit pictures, racist rants, and gory photos. Occasionally, controversy erupts as each company’s policy amounts to sweeping decisions about what speech and material is allowed and what is barred from some of the largest communication networks in the world. 

Aol’s community leaders also have a number of modern day counterparts. At Reddit, for example, each subreddit (a collection of links about a certain subject) has at least one moderator. Moderators are not Reddit employees; often they are the creator of the subreddit. As a moderator, he or she oversees which links make it onto the subreddit, creates the subreddit’s logo, and moderates discussions. Unlike the situation of the Aol monitors, however, Reddit does not mandate any time commitment, offer any compensation, require an application, or, with the exception of a few rules, provide anything more stringent than some moderator tips.

When separating valid volunteerism from illegal unpaid labor, one criterion considered by the Department of Labor is whether the work displaces a regular employee. But if you substitute user for volunteer, “displacing regular employees” pretty much defines the business model of a number of digital companies.

Twitter and Facebook are often considered media companies. This may seem odd, as neither has a newsroom full of writers. But just like the New York Times and Esquire, the two make money by selling ads that people see as they consume content. One reason Twitter and Facebook excite investors is that they rely on hundreds of millions of users -- rather than hundreds of paid journalists -- to fill their sites with content. We may think of Facebook and Twitter as nifty services, but to the companies, we are both the product (delivered to companies that pay for advertising) and its content providers. Each quarter, Facebook calculates the value each user provides Facebook; in the latest quarter, each American and Canadian user made Facebook an average of $6.44.

Nicholas Carr, author of the Internet-critiquing book The Shallows, refers to this phenomenon as “digital sharecropping.” Given that sharecropping is associated with the exploitation of farmers from feudal Europe to the Jim Crow South, the term is no compliment. The financial success of companies like Facebook and Tumblr, Carr writes, rests on “putting the means of production into the hands of the masses,” who get easy tools to blog, post pictures, and tweet, but “withholding from those same masses any ownership over the product of their work.” When a user posts on Facebook or moderates a subreddit, it is Facebook and Reddit, not the user, who profits off the advertisements that surround it. So, Carr notes, these sites provide “an incredibly efficient mechanism to harvest the economic value of the free labor provided by the very, very many and concentrate it into the hands of the very, very few.”

Carr critiques the system, but he does not accuse Facebook and co. of highway robbery. He also points out that at 6 bucks a user each quarter, the value Facebook harvests from each user looks nothing like traditional wages. Yet he does describe the economics as “unsettling.” 

Others question whether the phenomenon is really so novel. In Cognitive Surplus, Clay Shirky compares the way users provide value to Web 2.0 companies to a local bar. Every day, people pay $5 to drink a beer in a bar that they could drink at home for $1.50. The main reason why is that they want to drink in a convivial setting surrounded by other people. Yet even though all the other customers are the main justification for the bar owner charing a large markup, we customers never think to demand a cut. 

This author does not feel cheated out of compensation by Facebook for the drivel he posts, yet with many of these companies, there is a fine line between the status quo and the Aol lawsuit. Except in the cases where there is no fine line -- where companies are simply getting people to work for free.

As described, Reddit is an interesting example where people voluntarily fill the same community leader role that Aol’s volunteers did, although they do so with fewer restrictions and more agency. That said, while we don’t expect or believe that Reddit should be sued for back wages, it may suffer from the same problem as Aol: Reddit’s fanatical users may remain devoted only as long as the site still feels, as volunteers once described Aol, like a “community where people got together to get together.” Reddit has struggled to ratchet up revenues, likely because users would rebel against aggressive monetization. 

In contrast, Buzzfeed is a so far successful example of getting users to do the same work as employees. Anyone who signs up with BuzzFeed Community can suggest blog post ideas to editors and write posts themselves that editors will decide whether to feature. In exchange for doing the work of BuzzFeed writers, community members are not paid, but they can gain badges and “cat power,” which decides their BuzzFeed Community ranking -- a perfect example of Carr’s thesis that users work in the “attention economy” for companies that profit in the actual cash economy. This contrasts strikingly with YouTube, where users who post popular videos can earn a cut of the advertising dollars, allowing some YouTube celebrities to make a living on the platform.

An old adage goes that if you’re not the customer, you’re the product. It serves to remind people that there is no such thing as a free lunch. You can use Facebook for free, but while Facebook markets itself as bringing the world closer together, its business people are busy selling your attention to advertisers. But given the way that we all could be said, to varying degrees, to be laboring for these companies, maybe we should amend the saying. If you’re not the customer, you’re the product. And quite possibly the employee.

This post was written by Alex Mayyasi. Follow him on Twitter here or Google PlusTo get occasional notifications when we write blog posts, sign up for our email list.


Published Aug 21, 2014


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