Jason Calcanis runs the new Netscape-as-Digg-clone. It hasn't been doing very well - Mike Arrington commented recently that it "has absolutely failed to impact Digg growth at all". Quite. A few days ago, Jason therefore offered to pay the top sixty-or-so people (Enfact) who actually post all the Diggs to defect to Netscape $1,000 a month, each, to defect to Netscape.
This has created some controversy (Blaugh), which Jason addresses today at his blog. Possibly he misrepresented the initial criticisms of his innovation - it doesn't really matter. His idea is sound - it's good for Netscape, good for the social web and good for anyone who wants to find relevant news. Markets evolve; entrepreneurs assess the value of resources and make competing bids for those resources. The entrepreneur who thinks they can get the greatest benefit from that resource gets the use of that resource. The owner of that resource maximises their benefit. That's just how markets work.
Until Jason made his offer, the market rate for the 60-odd Diggers who powered the site appeared to be £0. This palpably failed to reflect the value of their input - Digg's value is a function of the editing these people contribute, and Digg makes money. Add competition to the news-tagging field, in the shape of Netscape, and suddenly you have a market and people competing for the valuable services of this handful of most prolific taggers. It's a Good Thing, on two levels. First, more and better news taggers should emerge now that there's money to be made from the skill, which benefits everyone (except the owners of Digg, of course). Second, now there's a commercial value attached to Digging, the market should naturally evolve so that the Netscape Diggers who find the most popular stories enjoy the greatest rewards. This means that rather than Digging whatever happens to suit their interests and agenda (and who knows what possibly sinister motives or obsessions drove 60 people to submit hundreds of stories a week for nothing?) the main Diggers will enjoy a clear incentive to find, and relevantly tag, stories of the greatest use to the greatest number.
So...good news all round. Let's hope that even if the top Diggers don't take up Jason's offer he'll still get take-up from other competent and motivated news editors. We'll all benefit. Because that's just how markets work.
Update: more on the subject from Jason (who is understandably unimpressed at Kevin Rose's retreat into ad hominem) here, and a thorough examination of the implications of creating a market for bookmarkers from Mark Glaser here.
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