If there is one push-and-pull balancing act that defines news in the age of Web 2.0, it’s the question of how much power to give the audience, the masses, the collective mind, and how much control remains centralized. That balancing act has played a crucial role in the development of community-generated sites such as Wikipedia, Slashdot and even Google, where search results and PageRank depend on people linking to the most authoritative sources on a subject.

This is the so-called Wisdom of Crowds as described by James Surowiecki in his book by that name, but how do you motivate people to join these crowds online and spend countless hours working on the sites without pay? That question has come into sharp focus, after entrepreneur-provocateur Jason Calacanis made his indecent proposal to users of rival crowdsourced news sites such as Digg and Reddit: “We will pay you $1,000 a month for your social bookmarking” work, he wrote on his blog.

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Calacanis (pictured here), who started the Silicon Alley Reporter magazine and blog publisher Weblogs Inc. (later sold to AOL), was very publicly offering to pay volunteer bookmarkers on these sites to leave the sites and come to work for him — for pay — at Netscape. Calacanis is now general manager of Netscape.com, the old home page for the old browser that’s trying on a new life as a group-edited news site a la Digg, but with an editorial layer. The idea behind these sites is that the users pick out news stories or blog posts from around the Net and submit them. People then vote on them — or “Digg” them — pushing the hottest ones onto the home page for the most exposure. If a particular news story gets enough Diggs, and gets promoted, it’s likely to get an avalanche of web traffic.

Digg is already in Version 3, is ranked at #100 in web traffic by Alexa, and is trying to move beyond its roots as a technology news site. Digg CEO and co-founder Jay Adelson (pictured below) was unmoved by the Calacanis offer to steal away Top Diggers by paying them. Adelson told me the offer would not affect Digg — though it might help spark the new Netscape.

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“It’s not something where there’s a short list of characters, like a team, that if you buy them, you’ll win the World Series,” Adelson said. “It doesn’t quite work that way, but it could help with the submission quality at Netscape. It doesn’t affect us in any way.”

When I brought up the possibility of Digg compensating its top users monetarily, Adelson drew a sharp line in the sand.

“Oh no, that would be a complete destruction of what we consider to be the principles of Digg,” he said. “There will be recognition for the people who do a lot of work on the site, not just for being ranked a Top Digger. In the future, you’ll see other forms of recognition that are purely, you know, things that exist within the community. Certainly no monetary compensation or things like that, because what we don’t want to do is create this artificial hierarchy.

“I’ve thought about what to do with the real power Diggers, the ones who spend their whole day on Digg and really work hard, is there a way that I could show my appreciation. The way I would show my appreciation would be to never give them more power, more features than another user has. It might be something like a T-shirt, it might be a rating that they can show other users, but it has to be a level playing field.”

Hmmmm, $1,000 of cold, hard cash from Netscape per month… or a Digg T-shirt? Doesn’t sound like a level playing field to me. But Digg power users were split over the monetary offer. While many loyal Digg users were put off by the offer, some of them were still considering the money.

Derek van Vliet, a Toronto-based programmer who goes by the moniker BloodJunkie on Digg (and was ranked #2 among users recently), told me how he has wavered over the offer — ultimately deciding to take up Calacanis on it. Here’s part of van Vliet’s email to me, describing his thought process:

I love Digg. I believe Digg has the potential to change the way all media is aggregated. Through Digg I have met a large number of kind, bright people. I can’t put a price on those contacts. That being said, after taking a day to let it sink in, I am at the point where I am considering pursuing the offer. I really appreciate that someone is recognizing the value we Diggers, Flickrers and Redditers add to the online world. And that potential for more networking opportunities is very appealing to me.

I must admit, until now I haven’t given that much credit to myself for what I am doing on Digg. I give all credit to the authors of the content I link to. Obviously whatever value I have added to the online world would be nothing without them.

I have been aware for a while that sites like Digg and Flickr are making millions off of users like me, so I have been considering possible ways to share that wealth among contributors. I think of all the ways you could go (pay per post, ad revenue share, etc.), Jason may have the best idea with the monthly flat rate. If he is convinced that he will get a return on that investment, then it is a win-win.

An Uphill Battle for Netscape

While these 12 lucky people Calacanis and Netscape pluck out and pay might now have income where they were previously doing bookmarking work for free, the Netscape site itself won’t necessarily become a slam-dunk proposition for web visitors. So far, stories on Netscape’s home page have a scant number of “votes,” with some in the single digits; on Digg’s home page, the top stories have hundreds, and in some cases 1,000-plus Diggs.

Calacanis has hit some bumps in trying to change Netscape from a general news portal, similar to Yahoo or MSN, into a social news aggregator. A group of users set up an online petition complaining about the change in format, and the New York Times even filed a story about “sour responses” to the New Netscape.

Calacanis told me he expected some rough sledding with a revamp of the old Netscape.

“A small percentage of users preferred the old version, which we expected since we are making a significant change,” he said. “However, the old Netscape site lost one third of its users over the past year, so we had to turn that around and this is the best way to do that…Right now this is an experiment and in three to six months we will figure it out. My guess is most of the services will wind up paying the top users — including MySpace and Wikipedia.”

In a nod to the problems users have had with the redesign, the Netscape site has plenty of disclaimers such as this: “If the new Netcape.com isn’t for you, make sure to check out the free AOL.com [portal].”

Reactions to Calacanis’ offer to pay community members from other sites has varied around the web and blogosphere. TechCrunch’s Michael Arrington called the offer a “sign of desperation more than anything” in a post titled “Huge Red Flag at Netscape.”

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Aaron Swartz (pictured here), a co-founder of community-edited news site Reddit, had a hard time taking the offer seriously.

“When we first all saw it at the office, the first reaction was laughter,” Swartz told me. “It was so funny to see this guy who just a couple weeks ago said his site was going to take off and do some great things, to see him begging for users and fighting for users. We thought that was pretty funny. We’ve gotten emails from users saying that Calacanis seems to be missing the point, saying to leave the sites just for cash.”

So what motivates the users of Reddit to put in so much work for the love of the site?

“Part of it is a selfish motivation, that it’s useful,” Swartz said. “You vote up the stories you like because other people do it, and you want the best stories on the top. It’s a fun thing to do. I got addicted to it, to find things on the Internet, submit it, vote on things and watch the impact to get something on the front page and have everyone read what you submitted. Plus there’s a whole community that’s built around it, they know each other’s names and get a sense of who each other are. It’s a group of friends you share links with.”

Vulnerabilities, Strengths of the ‘Hive Mind’

In the middle of wading through the debate on paying social bookmarkers, I came upon an essay from virtual-reality pioneer, composer, author and tech guru Jaron Lanier titled “Digital Maoism.” In it, Lanier argues that there is a fallacy to the wisdom of crowds on sites such as Wikipedia and Digg, because the collective can be stupid too. “Witness tulip crazes and stock bubbles,” Lanier writes. “Hysteria over fictitious satanic cult child abductions. Y2K mania.” Plus, the Wikipedia community had stubbornly referred to Lanier as a film director in its bio of him, despite his objections.

Lanier rants against news aggregation sites for trying to get “more meta” than each other, with Digg and Reddit and Popurls — an aggregator of the aggregators — all taking heat from him for burying original authorship without someone taking responsibility for what’s coming up to the top. His conclusion is that collectives can succeed online, but require the guidance of some individuals.

“Every authentic example of collective intelligence that I am aware of also shows how that collective was guided or inspired by well-meaning individuals,” Lanier writes. “These people focused the collective and in some cases also corrected for some of the common hive mind failure modes. The balancing of influence between people and collectives is the heart of the design of democracies, scientific communities, and many other long-standing projects. There’s a lot of experience out there to work with. A few of these old ideas provide interesting new ways to approach the question of how to best use the hive mind.”

While Lanier’s expertise and background is in computer systems and human interaction within those systems, I was impressed with his awareness of the changing media landscape as well. When I queried Lanier to expound on his thoughts vis a vis Digg and news aggregators, he told me via email that he wasn’t as concerned with the question of whether social automation filters or human editors were needed to best filter the news flow. Instead, he worried that sites such as Digg and Reddit were signs of a deeper problem surrounding newsgathering — that we have more news analysts than people on the ground doing hard-nosed reporting.

“It’s true we have a surplus of interpreters of news, as from bloggers, so in a sense we have a gigantic staff of volunteer public analysts, but we are starved for raw data,” he said. “We can read what a blogger on the ground in Israel or Lebanon is experiencing this week, and that is important, but there are almost no unbiased investigative reporters of consequence helping us understand what is going on from a perspective other than that of an ‘ordinary’ person on the ground. This lack is in part a failure of the Internet to serve humanity.”

Lanier then goes a step further, blaming these aggregators for shooting out traffic to silly stories and news of the weird, and ultimately hurting the funding of important, investigative reports.

“There’s also the problem that professional authors need financial sustenance,” he said. “So the overall ecosystem suggested by the popularity of approaches like Digg ultimately starves out the sources of content it is intended to help you find. You or I might post an item that will become an overnight sensation on Digg, but that won’t finance a dangerous reporting mission in the Middle East.”

Fair enough, but the aggregators also play a role by bringing up stories at smaller publications or blogs that might not have seen the light of day under traditional media oversight. As for the problems with the “hive mind” and its fallacies, the folks at Digg realize their non-hierarchical approach has its drawbacks.

“The people behind Digg, we definitely see the limitations of the wisdom of the crowds and mob mentality issues,” Digg CEO Adelson told me. “The thing we think we’ll do better than anyone else is provide the tools to counter those limitations. It’ll be an interesting experiment and we’re really excited about where it’s going to go.”

What do you think? Should social bookmarkers and other community volunteers around the web be paid if the site is making money? What’s a fair compensation for them? Which social news sites do you like and what motivates you to participate? Or do you prefer professionally edited news sites? Where would you draw the line between an open editing system and one with paid editors?

(Note that MediaShift readers have already answered the Your Take question about why you work for free online. The answer: A sense of community motivates many of you.)

UPDATE: The debate took a nastier turn when Digg co-founder Kevin Rose made some personal attacks on Netscape general manager Jason Calacanis on the Diggnation podcast and on his blog. From Rose’s blog post:

bq. Clever PR stunt, but man, in the end I believe it’s going to do more damage for Netscape than good. Ya see users like Digg, Del.icio.us, Reddit and Flickr because they are contributing to true, free, democratic social platforms devoid of monetary motivations… Jason, I know AOL has given you access to their war-chest, but honestly, take that money and invest it into site development.

Calacanis has tried to make the debate less personal and says many social bookmarking news sites can succeed — it’s not a winner-take-all situation. But still, Calacanis takes a stab right back at Rose and Digg:

Kevin Rose is going to make millions of dollars (perhaps tens of millions) when he sells Digg to Yahoo (my best guess). When he does sell Digg — and trust me it will be sold before in the next 12 months — he will have done it on the backs of those top 50 members. Those top 50 members will get exactly… ummm….. nothing. If I was running Netscape as a startup I would create a bonus pool for these users in case the site gets bought. I can’t do that given our structure, so we’re gonna just pay folks. Kevin should do something similar.

While Digg’s Adelson says that I took his quote about paying with T-shirts out of context, I believe I included the full context of the quote. Yes, Adelson does want to show he cares about the top users who spend all day on Digg — but how he would do that is unclear when he categorically dismisses paying them.

Aside from the personal attacks, I think this has been a healthy debate about a subject that has interested me for years — stemming from the old AOL chat room moderators, who eventually sued the company for back pay for all their volunteer work. I don’t think there is necessarily a “right answer” about paying or not paying, and as one commenter notes, we are in the early days of social bookmarking.

But perhaps there’s a middle ground or hybrid model that could work, some sort of payment mechanism similar to the South Korean citizen journalism site, Ohmynews, where submitters are paid a small fee if their story rises to the top. Rather than dismiss every new idea as a crock, let’s keep an open mind and see what transpires.

UPDATE 2: Derek van Vliet, who I interviewed for this story, did indeed get a job as a Netscape Navigator. Calacanis says the “experiment” in paying social bookmarkers has been so successful — doubling and tripling bookmarking output — that he’s decided to hire 20 Navigators, up from the initial 12.

He wrote in a recent blog post triumphantly:

Voting, comments, and a number of other factors have doubled (or tripled) over the past two weeks at Netscape since we hired our first 10 Navigators. These folks are doing an AMAZING job of not only putting in good stories, but they are building the community by teaching and showing folks how to be good citizens on a social bookmarking site. That is really what this is about, training folks on how to be members of the community and truth be told I’ve learned a lot from the Navigators…on that subject — it is the key.

So perhaps the paid bookmarkers are helping set an example for the non-paid bookmarkers, which is by extension helping the entire community.