Wednesday, November 05, 2008

Business Value from SOA - Sharecropping

This post starts by talking about the value proposition of Web 2.0, and then makes some more general points about the distribution of value in a layered system-of-systems.

A couple of years ago, Nick Carr suggested that a lot of Web 2.0 business was akin to sharecropping. The platform (MyFace or FlickTube or whatever) owns the space, and the users grow the content.

I think the most interesting aspect of this metaphor is the idea of a stratification of value, with different value proposition in each stratum. As Nick puts it "sharecroppers operate happily in an attention economy while their overseers operate happily in a cash economy".

Some people interpreted this as implying some kind of exploitation, and there have been vigorously defensive rebuttals of Carr's suggestion.

Ed and Mike both insist that there is a connection between the attention economy and the cash economy. And this connection is evident from the success of Second Life as well, where there is a reasonable stable rate of exchange between virtual money and real money. For that matter, there is even a rate of exchange between virtual crime and real crime [Woman in Jail Over Virtual Murder].

But Nick isn't denying a connection between the platform provider's value proposition and the platform user's value proposition: indeed he too insists they are connected, but also points out that they are different.

Tim Bray had previously used the sharecropping metaphor to refer to independent developers building applications on major platforms. Here too we have a complex layered ecosystem, in which different stakeholders build value in a positive-sum game, but with some significant trust issues arising from the asymmetric relationships.

Let me end my making a more general point, which I think is applicable to all kinds of layered systems-of-systems and not just Web 2.0. In a stratified ecosystem, there is at least the possibility that value is created by a platform provider, and that another kind of value is provided by the platform user, and that these two kinds of value interact in a complex way. Clearly we would like to know what kinds of stratification are most conducive to value creation, and this is a fascinating architectural question with no easy answers.

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