As part of our marketing efforts at BountyUp, I’ve been combing the net looking for ongoing discussions of Social Commerce, Crowdsourcing, Crowdfunding, etc. But it wasn’t until yesterday, when I rewrote the wikipedia article on the topic, that I finally accepted the fact that it’s just not happening yet. So I’m going to kick it off with my own (obviously subjective) ‘Ontology of Social Commerce’. But first, a random metaphor:

Imagine any market transaction, as a ride across a stony field, on the back of a donkey.

The donkey is the seller, and, as every buyer will tell you, he needs to be motivated. So we’ve got a carrot, on a stick. The carrot represents our buyer (or his motivation), and the distance across the field, the product itself.

Crowdfunding, is using more than one carrot.

Crowdsourcing, is taking your carrots and walking through a barn full of donkeys, waiting for a promising donkey to come forward.

And the Community (or Crowdcasting, if you like) is everything else in the story - how the donkeys got into the barn in the first place, whether the carrots are all the same size and shape, who gets the leftover carrots if there ARE any leftovers, etc. You get the picture.

BACKGROUND:

As I have pointed out elsewhere, one of the only basic human interactions still performed in a Stone Age fashion within our “Digital Economy”, is simple commerce. Ninety-nine percent of it is executed as “one buyer, one seller” - and repeated through a series of middlemen if necessary. These middlemen have various names, such as “wholesaler”, “retailer”, “broker”, “importer”, “distributor”, etc.

Any time we begin to discuss combining commerce (which is defined, for our purposes, as cash-based transactions where goods and/or services are rendered to one or more parties), with social behavior, there are obviously a lot of possible intersections:

• Reviews (general) and Recommendations (personalized)
• Collaborative purchasing (crowdfunding, mob finance, “neo-dutch auction”)
• Crowdsourced delivery (reverse auction or prize-driven development)

Crowdsourcing, in the context of Social Commerce, is usually broken down further, based on whether the crowd is providing “wisdom” (e.g. idea-generation, social voting on idea value, community-based discussion and so-called co-intelligence or collective IQ), or actual “product” (eLance, iStockPhoto, government reverse-auctions, etc).

Jaison Morgan, Director of Prize Development at X-Prize Foundation, illustrates this as a matrix, with an X-axis of what’s developed (ranging from “Ideas” to “Breakthroughs”), and a Y-axis of the timing of the money (from “Incentives”, like XPF, to “Awards” like the Nobel Prize).

Now, it seems obvious that these sorts of behaviors have been happening forever - folks (teenagers especially) will tend to match the brand preferences of their friends, most have “gone-halfers” on a gift for a sibling or parent at least once, and any office betting-pool or rink-side 50/50 draw is, at least on the surface, the same behaviour as prize-driven development of space travel. But the two key differences are scale, and platform.

The “Crowd” in crowdsourcing properly refers to unwashed and unrelated MASSES of humanity. Yet at the edges of social commerce, most so-called crowdsourcing is actually mobsourcing, groupsourcing, or something even more localized. Mind you, this has its own advantages.

So let’s look at the various players in this space, and who’s doing what.

RECOMMENDATION and REVIEW:

You’ll notice that I’m including widget-based shopping in this category. I think that’s fair - if I put a widget-based store up on this blog, it’s at least an implicit recommendation to my readers.

• ShopIt
• ToldYa
• Yahoo’s Shoposphere
• Favorite Thingz

Arguably, however, any affiliate-based system is a type of social commerce - at least when the affiliate is an individual. What’s particularly interesting to me about these, is that they’re general marketplaces - which gives them the power to address the long tail. At least in theory.

CROWDFUNDING:

• “Causes” by Project Agape
• ChipIn
• Crowdfunder.com
• MicroPledge
• Cambrian House
• DropCash
• Pledgie
• PledgeBank

CROWDSOURCING:

There are a LOT of players going after this space. But for our purposes, let’s limit the scope to companies that are pursuing a reasonably GENERAL marketplace - this culls out, for instance, the two or three companies doing crowdsourced T-shirt designs, all the various xLance-type companies, and a bunch of news and/or search sites. Remember, we’re talking about Social Commerce, here.

• Ideation
  • Innocentive
  • Idea Crossing
  • Cambrian House
  • Spigit
• Delivery
  • Amazon Mechanical Turk (and spinoffs)
  • Craigslist (?)

Now, I’ll stave off the inevitable criticism by pointing out that, obviously, the idea of tapping into pooled human intelligence is nothing new. (Twitter is just a web-based IM client with no features, right?) And for a robust discussion of its shortcomings, you can look here.

SOME NOTES ON PRIZE-DRIVEN DEVELOPMENT [PDD]:

When a business or organization stages a “contest” to produce the desired innovation or design, it’s technically referred to a “prize-driven development”. While this used to be as simple as T-shirt or book-cover design contests, it has scaled up to $25- and $30-Million prizes, for saving the planet and landing on the moon, respectively.

Prize-driven development is a key ingredient of our recipe at BountyUp, but there’s nothing inherently “social” about it. In fact, given the limited field of competitors for most X-Prize Bounties, I’ve left them out of the crowdsourcing category altogether (with a special mention for what they’ve accomplished in bringing validity to contesting innovation, of course).

Perhaps the key differentiators are these: PDD encourages several (many?) contenders to complete 100% of the work with no guarantee of any reward, whereas typical crowdsourcing limits itself to vendor selection, and then rolls into a more traditional contract.

WHAT ABOUT CROWDCASTING?

According to wikipedia, crowdcasting has some magical relationship to PDD that makes it different and better than crowdsourcing. I don’t buy it, particularly because the article is the author’s only contribution to wikipedia, and seems particularly biased towards Idea Crossing. Instead, let’s apply the semantics of the term (crowdsourcing and broadcasting) to our notion of “Community”, and decouple it from any details of who gets paid, and when. It becomes a useful way to talk about about the sphere of social activity AROUND the transaction, that does not necessarily contribute directly to either funding, or delivery.

WHY BOUNTYUP, THEN:

With all the various and sundry (not to mention funded) companies mentioned above, do I still see a reason to build BountyUp? Yes… and here’s why:

1. The simple part - no one is doing all three pieces. (With the possible exception of Cambrian House, but I believe the friction caused by using Cambros instead of real dollars, and encouraging barter for Revenue Points, reduces the effective crowdfunding component drastically).
2. The second part - the general marketplace. It’s like online auctions before eBay - it’s impossible for people to even IMAGINE what sort of things they could work together to buy, since they’ve never had a way to do that before. Not only will a general marketplace make new things possible, but it will make the existing markets (software, charity, government and big business procurement, and digital photography) actually work - by the law of large numbers. (The network effect of the general marketplace benefits all sub-markets within it, even though the sub-markets themselves are not that large).
3. The final part - funds in escrow. It removes risks for both the buyer(s) and seller(s) - if the project is not completed, the buyer gets their money back. And buyers can collaborate, knowing that the other buyers are actually good for their share.

In a future post I’ll explore each of these companies in greater detail, and, if possible, arrange some interviews. (Okay, I’m fibbing a bit - I’ll arrange permission to publish my notes from the conversations we’ve already had.)