Ross Mayfield’s recent article on the rise of the Commons-based peer production business model came with a quote that about 50% of US GDP consists of transaction costs. These are the costs of getting a product or service from the seller to the purchaser. The contention is that the commons model, used by open source software developers as well as others, reduces these transaction costs.
There appears to be a huge opportunity for nimble small companies (without huge marketing & sales overhead) to significantly reduce transaction costs and pass these on to purchasers. This is what Mancomm Performance did on our last project by using open source software and underbidding a Fortune 500 company by ~$2M.
Looking at this situation through McLuhan’s tetrad for the laws of media, here is how this could be explained.
Commons-based peer production:
- Extends each individual’s reach worldwide
- Obsolesces the middle men (accountants, lawyers, traders, brokers)
- Retrieves the barter system or the bazaar – (I can set my own rules for buying & selling)
- and Flips, when extended to its limits, the Commons into a whuffie economy