Great piece in today's FT by Patti Waldmeir on what she calls "the death of self-rule on the internet." Waldmeir is referring to the decision by Ebay to rewrite its constitution so that buyers and sellers will no longer be democratic equals on the site. Because of widespread corruption, Ebay is ending its policy of allowing sellers to rate buyers on the auction site. As Waldmeir says:
Now the company has basically admitted that the cybersouk model doesnot work: buyers did not tell the truth about sellers, and sellers did not tell the truth about buyers. And in a market where traders lie, the trust that is so central to online commerce cannot flourish.
It's a simple message. The Ebay experiment has failed. Pure self-government doesn't work. Self-policing is great in theory, but problematic in practice. The system intimidated both buyers and sellers and actually created an atmosphere of dishonesty and denial. So a radically democratic Ebay made us less rather than more knowledgeable about each other. But, as Waldmeir suggests, the latest Ebay reform is actually making the problem even worse. The auction site is doing away with the right of the seller to rate the buyer, but not the right of the buyer to rate the seller -- thus creating what she calls "a dictatorship of the consumer":
From now on, Ebayers will not be democratic equals and they will lose a lot of their autonomy: buyers will still be able to rate sellers, raising a red flag to warn others away from merchants who are fraudsters or just plain bad at their business. But sellers will no longer be able to leave negative feedback on buyers - including those who do not pay. Instead, Ebay will step in to help protect honest sellers from dishonest buyers. But most sellers see this as a dramatic shift in the balance of power within Ebay society, and they are right. In future, the Ebay consumer will be king: buyers will easily be able to threaten sellers with negative feedback and sellers will find it much harder to strike back. Many sellers fear the new dictatorship of the consumer.
Unfortunately, Waldmeir's dictatorship of the consumer extends way beyond Ebay. This is the populist, libertarian tsunami that is sweeping over the Web 2.0 economy. The consumer is king, we are told, and is always right. The consumer has the right to vilify merchants, the right to free music, the right to pick political candidates as if they were toothpaste, the right to express themselves on whatever catches their fancy.
But what happens when the Internet consumer has driven the Internet merchant out of existence? What happens when the dictatorship of the consumer is turned upon itself?