Reciprocity networks

Posted by: stak
Tags: reciprocity
Posted on: 2011-06-20 11:56:16

I was thinking more about my previous post on decentralization and I realized that I was overloading the term "decentralization" in a potentially confusing way. There are some things that are "decentralized" in that there is no single central authority, but do not fall into the category of things that I was thinking about. For example, hotel rooms. I linked to Airbnb as an example of decentralized room rentals. But rooms in hotels are also decentralized - in most countries, there is no one single company that does all hotel rooms; instead, there is a decentralized network of competing hotel chains, each offering hotel rooms of different kinds and for different prices.

So I decided to come up with a new term for the specific subset of decentralized networks that I was thinking about - reciprocity networks. The distinguishing principle of a reciprocity network is that each node in the network can act as both a producer and a consumer. This seems to be what separates a network like Airbnb from normal hotel chains - people that use hotel rooms don't really provide hotel services to other people; but all users of Airbnb can act as both providers of rooms and consumers of rooms. The same is true of EBay auctions (minus the companies that sell stuff there), Prosper.com loans, and Fon WiFi.

Now that I understand the distinguishing principle of these networks better, it's clear that many of the advantages of these networks come from how the power is evenly balanced between producer and consumer. Also important is that when the nodes in the network are people, they generally abide by the Golden Rule, resulting in higher levels of satisfaction for everybody involved.

What would be cool is building reciprocity networks in domains that do not yet have them. Airbnb does this beautifully, in a domain that I would not have thought possible. Letting some stranger live in your home seems like it has trouble written all over it, but they make it work. A similar system could be implemented for car-sharing, and I think, could successfully compete with existing networks like ZipCar, which are not based on reciprocity.

Coming back to the Internet arena, Diaspora is an attempt at building a reciprocity-network version of Facebook, and although I think the idea has great potential, I'm not so sure about this particular implementation. In fact, I think the idea is so powerful that it's just about the only thing that can now topple companies like Facebook and Google.

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