Will Work for Praise: The Web's Free-Labor Economy

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The company invites targeted people to join hundreds of social networks organized around certain products and services, from airlines to weight-loss medications. These are virtual focus groups. The volunteers provide insights on advertising campaigns and suggestions for new products. Manila Austin, a psychologist who heads up research at Communispace, says that 86% of the participants contribute to discussions and nearly 1 in 3 adds a fresh post each week.

When Austin and her team experimented with financial incentives, they discovered that volunteers appreciated the gesture, but didn't want payment. Participation rose when volunteers received a token $10 gift certificate as a thank-you. But raising the value of the certificates made no difference. "People want the validation that they are being heard," Austin says.

Sharing the Winnings

Financial payments can, in fact, create tensions. For centuries humans have learned to distinguish between two different economies—the social and the market. Dinner guests, for example, satisfy social obligations by offering their hosts a bottle of wine. But, says Dan Ariely, professor of behavioral economics at Duke University and author of Predictably Irrational: The Hidden Forces That Shape Our Decisions, it would be a jolting intrusion of the market economy if guests instead handed their hosts a check. "It's a very delicate line," Ariely says, "and the modern workplace is right in the middle."

Bo Peabody, founder of Tripod, one of the earliest networking sites, and now a venture capitalist at Village Ventures in New York, points to a constant tension between free-labor entrepreneurs and their volunteer workers. Initially, users are "driven by a desire to express themselves," he says. "But there's a limit to how much they'll do for free." At some point, businesses have to figure out how to share their winnings with the volunteers. One of his portfolio companies, a software startup called Kluster, assembles people to brainstorm on everything from new inventions to corporate logos. Those with winning ideas claim a share of earnings if the project ever makes money. Devising ways to reward free workers "is a very difficult jump," Peabody says. "This is a theme running through our entire portfolio."

In the summer of 2006, Gordon Gould didn't spend much time worrying about how to split ThisNext's winnings with volunteer workers. Far more pressing was the need to lure thousands of volunteer workers to his new site. Here, like most free-labor entrepreneurs, he faced a chicken-or-egg dilemma: how to entice people to perform for a crowd that doesn't yet exist? His answer was to create one. He and his team went out and interviewed a few hundred people—fashion designers, athletes, and activists—and then seeded ThisNext with their thoughts and recommendations. "When the first visitors came, there was a there there," Gould says. The content on the site, he adds, had to be good. "If people come and see it's lowbrow and ghetto, it's going to stay that way."

Goal: No. 1 Maven at ThisNext

Laura Sweet was an ideal candidate for the site. She had been laboring for free before she discovered it two years ago. Friends would long come to her house, point to things, and ask, "Where did you find that?" Sweet—who double-majored in fine arts and art history at University of California, Berkeley—wound up creating and lending out binders with details about her finds. Later, when she began locating strange and lovely things on the Internet, she showcased them in long lists of Web links and sent them out in bulk e-mails. She loved to share her discoveries, no matter how much work it took. Her blog's motto, which could have been custom-crafted for Gould: "All the money in the world can't buy taste."

Sweet's first hit on ThisNext was a $400 fishbowl from Red Dot Design. When she posted it on the site, it quickly became one of the most popular items. She hunted for more finds to post.