Spare cycles and the bailout

Chris Anderson at his Wired blog, The Long Tail, has a post up about titled "What recession means for free" I'm going to quote the post in whole because I think it's worth the read:

I get asked this all the time these days, so before I crash after a speaking tour of Latin America (eight cities in four days!), here are my thoughts on what a recession will mean for free-based business models.

First, let's confine this to online, which is where the most interesting free models are. There are three main forms of "real" free: Ad-supported, "Freemium", and the Gift Economy. Here how I think each will be affected:

• Ad-supported: In the offline world, advertising is going to go down. Online, where it's easier to make the case for clear ROIs, I suspect advertising growth will continue to be positive, but will slow considerably. That means that many of the companies that were counting on a rising tide lifting their boats will be disappointed, and more than usual will go bust. Result: Negative
• Freemium: This should become the favored model, since it's connected to direct revenues. But companies that have only worked out the free part but not the premium part are going to have to figure out what they can add to their products to make them compelling enough to pay for. If they don't, they will find their investors' patience with them is very limited, and many will fold. Those that get the freemium balance right should be fine: free is a good price to have when people don't want to spend, and freemium models can work well when just 5% of users convert to premium, thanks to the near-zero marginal costs of serving the other 95%. Result: Modest positive
• Gift economy: This is driven primarily by people's "spare cycles" (AKA cognitive surplus) and rising unemployment means more spare cycles, sadly. Obviously people still need to pay the rent, so many of these shared contributions are really just advertisements for the contributor's skills. But other contributions will be idle hands finding work while they look for their next job. As a result I think you'll see a boom in creativity and sharing online as people take matters into their own hands. Today, if you're in-between jobs you can still be productive, and the reputational currency you earn may pay dividends in the form of a better job when the economy recovers. Result: Positive

Agree? Disagree? The comments are open."

If you're unfamiliar with the concept of spare cycles and cognitive surplus, I really do encourage clicking on the links in Chris' post. The second link, to Clay Shirky's post entitled "Gin, Television, and Social Surplus" has particular relevance to this blog.

What does this mean for New York City?
In the recent months the Wall Street housing bubble has collapsed with much of the blame resting on the intensely complicated IT financial modeling tools and the failure of their risk assessment models to quantify actual risk (a policy decision). All of those techies who created complicated risk assessment models may soon be out of a job.

We need to have a way to harness their excess cognitive surplus with a platform to accept their contributions and some ready made projects for them to immediately participate in. We also need to ask for their help. I wouldn't want to see their skills go to waste watching tv.