Grid Computing and Microcredits

The economic model for a lot of the Internet is to earn money through advertisement instead of directly from the consumer. This works great for online services like search engines, social networks, news and webgames where people come back to view the advertisements many times.

It's not a good model for one-time downloadable media like music, videos, and software where one consumer generates a tenth of a penny or less each from ad-revenue. What's worse, many experienced web users are becoming “ad-blind”. Either these users have software installed to block advertisements completely, or they simply ignore it. Each advertisement reduces the effect of other advertisement that consumer has seen recently. This leaves producers of content fighting for smaller and smaller shares of ad revenue.

What if your computer generated the revenue for you?

Consider how much of its CPU your computer is using as you read this. Is it running something intensive in the background? It probably isn't using more than a third of the computing capacity it's capable of unless you're running a grid computing project in the background like BOINC (Berkeley Open Infrastructure for Network Computing). This computing power is worth a lot. Sun Utility Computing charges $1 USD for one hour on one computer on their dual-processors with 4GB of RAM, so it should be a reasonable assumption that two-thirds of a typical desktop computer is worth at least 10 cents per hour.

A system could be built around this. Clients who need computing can submit their work in a format that can be done by many computers in parallel. Ordinary computer users download units of the work to be done, let their computers crunch it and upload the results. The work dispatching system then assigns credit to the users based on how many calculations the work took.

Users can spend those credits in exchange for digital goods and services such as software, music, videos, membership in online games and so on. Finally, the client is billed an amount based on the number of calculations required (ie. the number of credits given), after what an estimated 20% cut the remaining 80% of that money is then distributed to the suppliers of digital services based on how many credits were spent by users on those services.

This is a semi-closed online economy based on computer time. A computer user can earn and spend credit for those hours without giving a bank account or credit card number.

An online music store could offer major hits for 5-10 hours of CPU time (50 cents to a dollar) and lesser known artists for as little as half an hour of CPU time (5 cents). Such a store could even have logarithmic scheme to increase the price of a song as it is downloaded more. For example: 5 cents (of credit equivalent) for the first 10 downloads, 7.5 cents for the next 20, 10 cents for the next 40, and so on. Artists could submit their own songs without having to go through a medium except for the credit distributor and effectively earn an 80% royalty.

Donation boxes on websites would be for more efficient than the current PayPal ones which can take a significant portion of donations, especially small ones, because of the legal requirements of money transfer. The consumer isn't spending any actual money for the donations, and because these donations could come in increments as small as a penny's worth of credits, those would be given more freely.

This system is better than the current Internet economy for almost every group involved. People who need computing done win because they can get calculations done for less than through a server farm. Consumers get the media they want without having to pay through their back accounts for it. Authors of digital media win because they get previously untapped revenue and a much larger portion of the generated revenue than before. As long as limiting measures are in place to keep people from running computers all night for credit, even the environment wins out from the energy and material savings from all the servers that don't need to be built, run and maintained when our desktop PCs are doing all the work.

- Jack Davis.

****Edited by m61 to fix formatting and add links
****Edit: Part 2 and Part 3 are available if you liked this story.