From: szabo@netcom.com (Nick Szabo)
Date: Sun, 10 Oct 93 20:56:23 PDT
To: cypherpunks@toad.com
Subject: Virtual City (tm) and Virtual Capitalism (fwd)
Message-ID: <9310110354.AA10813@netcom.netcom.com>
MIME-Version: 1.0
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Arthur Chandler:
>   Any system of monetary exchange that would involve manipulating quotas,
> or translating them into a kind of tradeable commodity would, I think, be
> vigorously resisted by most MOO wizards.

Great!  One of the main strengths of Virtual City seems
to be to that its gets rid of the fascist heirarchy of "wizards",
the virtual equivalent of factory managers in the old Soviet
Union.  (Caveat: these are just my impressions of the V.C. project,
I'm not personally involved in it).  Also the quote is "information 
_wants to_ be free", not "should be".  Alas, it is easy to bottle up 
information by restricting it to small cliques of wizards.  

On the other hand, many of the world-wiser wizards may be able
to use their MUD building skills to become Virtual City tycoons.  There
are probably plenty of wizards pissed off by politically-dominated MUDs,
where access to resources has increasingly become a function of
sharing beers with the "god" and less a function of contribution
to the MUD.  Wizards who are better MUD builders than beer buddies
have incentive to jump ship and carve themselves out nice niches in a 
free-enterprise MUD.

I suspect Virtual City, and net commerce in general,
will evolve to where people buy and sell some information as
services, and exchange other information freely.  The distinguishing 
feature between valuable services and free information will likely be
that services will be hard to copy, the end result of obscure, logically 
deep computations, providing information unique to each customer order or 
dependent on hard-to-duplicate phyiscal hardware.  Freely copyable 
information typically will be sellable only a few times, and even then 
the sale price will depend on it being hot/unique news, uniquely valuable 
to a specific customer or temporary situation, or conveniently located.
Old news, educational material, etc. will be free, barring fascist
patent/copyright enforcement, but the customers will often pay for more
convenient methods of distribution (eg smart filter services).

Content _per se_ will want to be free, so one will not be able
to generate revenue simply based on popularity of content.
Content generation will not pay and will not dominate the economy.  
A good example is the distinction between the freely copyable GNU 
and X-Windows, and the for-pay consultation, customization, porting, 
help desks, etc. that have sprung up around them.   Most of the effort 
goes into the latter: since people like to make a living, most of the
economic effort will go into services rather than the exchange of 
free information.  

As bandwidth becomes cheaper the free info exchange will expand, but
the incentive for creation is limited to self-sacrificing 
efforts or side-effects of government or consulting businesses 
or corporate charity (eg GNU, X, PGP).  I look forward to
something like Virtual City providing a free-market alternative 
to the heirarchical control of information (crypto key authorities, 
Unix file permissions model, MUD Wizard model, ad nauseum); I do not see
it replacing the GNU free software model.

Nick Szabo				szabo@netcom.com