Protocol Pricing for Product People

Prices Without Platforms

Why does Twitter get to charge for something I can do myself?

Writing 280 characters is nearly free. Storing them is nearly free. Serving them from my own domain is nearly free. A photograph costs somewhat more to store and transmit, but hardly enough to explain the enormous economic machinery surrounding social media. Yet Twitter can charge users for subscriptions, sell advertisers access to their attention, privilege certain forms of distribution, and mediate who encounters whom.

The answer is that Twitter does not really sell publication. It sells coordination.

This distinction becomes clearer through Friedrich Hayek’s The Use of Knowledge in Society. Hayek’s central problem was not allocation under conditions where everything is known. The interesting economic problem exists precisely because knowledge is dispersed: different people know their own circumstances, desires, capacities and opportunities, and this knowledge cannot all be gathered into one mind.

Prices are powerful because they compress some of this dispersed knowledge. When the price of a material rises, I need not know whether a mine collapsed, demand surged or shipping capacity disappeared. I only need to know that my use has become more costly. At the same time, someone capable of supplying more receives an incentive to do so. This is the intuition behind Alex Tabarrok’s formulation that a price is a “signal wrapped in an incentive.”

But that does not mean that everything should have a price. The useful question is more demanding:

Where does a system contain dispersed knowledge about scarcity that needs to be communicated, and where would an incentive help participants respond to it?

That question produces an interesting way of looking at Blygger.

Blygger strips social publication unusually close to its physical minimum. A blyg consists primarily of static files on an origin controlled by the publisher. RSS provides notification. Subscriptions belong to readers rather than to a central social graph. Public blogrolls are optional. Cross-site responses can be communicated through Webmention, but the response itself remains a published object at the responder’s origin.

This eliminates much of what Twitter owns.

Twitter combines publishing, identity, discovery, recommendation, social graphs, moderation and attention allocation inside one institution. It can therefore meter the passage between them. The valuable commodity is not the tweet but the route from the tweet to other human beings. Advertising works because Twitter controls those routes.

Blygger makes the text abundant again. Anyone can publish; nobody owns the global feed.

What remains scarce?

Primarily: attention, computation, durable storage, verification, curation and human effort.

This suggests a principle for a protocol economy:

Do not price the artifact. Price the scarce commitment made around the artifact.

Consider Webmentions. Blygger already imposes a non-monetary cost on responding. A sender cannot cheaply manufacture a platform-native “reply.” A meaningful response exists publicly under the sender’s own origin, and Blygger’s Webmention layer verifies that the published source actually contains the claimed relationship.

That friction may be sufficient.

But suppose a writer becomes popular enough to receive fifty thousand legitimate-looking mentions every day. Their attention has become congested. The relevant scarce commodity is not permission to link to them—linking should remain free—but their willingness to inspect an unsolicited signal.

Their endpoint might then advertise a refundable $0.05 bond for an unsolicited notification. Known correspondents pay nothing. A useful unknown correspondent gets the bond returned. Spam loses it.

Now the five cents does two things.

It tells outsiders that this person’s incoming attention is congested. And it gives senders a reason to decide whether their interruption is worth imposing.

This is recognizably Hayekian. Nobody needs a Blygger Central Authority to determine whose inbox is overloaded. The local node knows its own circumstances and changes its terms accordingly.

But mechanism design forces a second question: is money actually the best mechanism?

Perhaps a rate limit works better. Perhaps requiring a published response already creates enough friction. Perhaps proof-of-work can throttle automated abuse without introducing payments, as Hashcash was explicitly designed to do for unmetered Internet resources. A monetary bond is justified only if it coordinates the scarce resource better than these alternatives.

The direction of payment can also reverse.

Suppose I publish a question:

What historical evidence would falsify my argument?

I attach a $50 bounty.

The price is now communicating private knowledge that would otherwise remain largely invisible: how much I care about getting this particular problem solved. Other writers face thousands of things they could investigate. The bounty makes my demand legible and gives someone an incentive to redirect effort toward it.

This could generalize. A publisher could request translation, fact-checking, archival replication, expert criticism or computation. An archivist could advertise a changing price for guaranteeing ten years of replication. A compute provider could quote a price for synthesizing a thousand blyg items. Prices rise when resources become scarce and attract supply.

Here the protocol becomes something more interesting than a payment system. It acquires an economic surface.

An item or manifest might be able to express:

I offer $20 for a serious counterargument.

I require a refundable bond for unsolicited notification.

I will pay for three independent archival copies.

I offer this much compute at this price.

Crucially, Blygger need not collect the money, determine the currency or operate the marketplace. It would standardize the grammar of the offer—bid, ask, bond, bounty, guarantee—just as HTTP standardizes requests without owning the websites using them.

Mechanism design tells us why this distinction matters. The field begins not with “what price should we charge?” but with rules under which participants possess private information and act strategically. A good mechanism gives people incentives to reveal useful information through their behavior.

And it also tells us where pricing becomes dangerous.

Imagine paying for visibility in Blygger readers. Wealth immediately becomes attention. Soon authors optimize for payments, clients rank by monetary volume, wealthy actors manufacture apparent importance, and financial capital becomes social reputation. We have recreated the platform’s attention market without the platform.

Or imagine charging for ordinary reading and quotation. These activities have tiny marginal costs and large positive spillovers. Pricing them creates artificial scarcity instead of revealing real scarcity.

Coase supplies the missing corrective to an overly enthusiastic reading of Hayek. Institutions themselves have transaction costs. A theoretically perfect market may be worse than a crude convention if negotiating, paying, verifying and disputing every interaction costs more than the resource being allocated. And Ostrom’s work on durable commons provides a further warning: communities can coordinate scarce shared resources using varied combinations of rules, norms and local governance rather than one universal market mechanism.

So an economic Blygger should probably contain fewer prices than one initially imagines.

Publication should remain free. Reading should remain free. Linking should remain free. Quotation should remain free. Reputation should not have a dollar denominator.

Prices should appear only where someone is making a scarce commitment.

That gives us a way to distinguish a protocol economy from a platform economy.

A platform first creates or captures a chokepoint and then charges for passage through it.

A protocol should do nearly the opposite: remove artificial chokepoints, expose genuine scarcity, and allow participants at the edges to negotiate around it.

The empirical test is straightforward. Add a mechanism and compare the network with and without it. Does an attention bond reduce spam without excluding valuable strangers? Does an archival bounty produce additional durable copies? Does a research bounty elicit better answers rather than bounty spam? If not, remove the price.

The goal, then, is not to find Blygger’s business model.

It is to let the network discover its own scarcities.

That may be the deepest application of Hayek here. A self-sovereign network does not need one actor to decide what attention, storage, knowledge or effort are worth. It needs a language through which thousands of independent actors can reveal what they know about their own circumstances and alter their behavior accordingly.

The protocol supplies the grammar.

The participants supply the knowledge.

And, only where necessary, the price carries that knowledge through the network.