The Madness of E-Crowds

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Professor Thomas Hazlett wrote an interesting piece in the Financial Times about the madness of e-crowds. The crux of the article is that in an era of open source, community driven products, proprietary content becomes even more valuable. Searching costs are still high, and as the masses create more and more junk, the good stuff becomes more difficult to find. Professor Hazlett uses cell phones vs. Wifi as one example.

Our buzz-coloured shades block out key drivers of innovation. Take wireless. While 2.5bn people were subscribing to mobile networks, the tech spotlight was on … WiFi. While a handy way to make a DSL connection cordless, the disruptive technology claims – that the exclusive rights used for wide area cellular networks were now eclipsed by unlicensed spectrum governed by power limits and regulatory standards – were wrong. Not many folks dropping their mobile subscription to talk from their "hotspot."

He also points to the success of iTunes another proprietary standard.

Yes, he does recognize Linux, the prototypical example of a successful open source project. But it is the exception, not the rule. If you don't believe me, just visit SourceForge and see how many open source products really make it.

Community and collaboration are real trends that are changing the way things work, but they have become overhyped and receive a disproportionate amount of focus from the web media. There is an old saying that the man with a hammer sees every problem as a nail. Community and collaboration have become hammers for VCs and programmers.

Nick Carr has some good thoughts on the matter.