Prosumption as an Improvement in Market Intelligence

Frankfurt.
The next speaker at Prosumer Revisited is Patrick Linnebach, whose interest is in trust in prosumption activities. In the first place, however, it is necessary to define markets: they can be described as a group of producers closely observing each other (though not the consumers directly) - this is a form of interaction-free sociality (as competitors do not directly interact, even though they're keenly aware of each other. This is distinguished from direct interactions, for example in cooperation or in financial transactions.

While prosuming has been seen to describe the increasingly close involvement of consumers in the production process, then, Patrick defines it here as a form of interaction-free sociality between consumers and producers; indeed, there is a triadic social form here which describes a three-way interaction-free sociality in the market.

The quality of a service is always determined by the perception the consumer; producers are necessarily uncertain of the quality of their services until such services are actually brought to market. This is addressed by producers by drawing on past market experience (both their own and their competitors), and so consumers play only a passive, indirect role in the organisation of markets.

But how do consumers assess the quality of a service? In the first place perhaps by examining pricing; the quality of a service, in this view, is determined by its price - but there are also indications that price as an indicator of quality is no longer very effective: there is a move towards a more bazaar-based model where prices are determined on the fly and have only limited quality prediction potential for customers. This is a problem of trust.

It is a problem which is common in markets for used cars, for example - an information asymmetry, where the buyer has more limited information about the quality of a car than the buyer. Prices should therefore orient themselves on the price of poor-quality cars ('lemons'), and the market should fail, but in practice this is not true; good-quality cars ('plums') are sold at higher prices by offering additional guarantees to the buyer which would come into effect if the plum should turn out to be a lemon. Additionally, the established reputation of a seller also affects pricing possibilities.

This is a process of observing the past track records of actors in this market, then, before it comes to the concrete interaction between a specific buyer and seller; online, of course, such reputation tracking systems are ubiquitous and sophisticated. We can observe such processes also in the political realm, where public opinion as transmitted through the mass media provides a way of tracking the actions of public actors. The mass media, therefore, provide the space for a second-order reality which represents the overly complex first-order reality of citizens and the political class, and the easy observability of this second-order reality generally acts as a powerful incentive for politicians to act properly and in tune with public opinion.

Participation in prosumption activities, then, addresses this problem of uncertain quality, which is both a problem of quality and a problem of trust: specifically, it addresses the problem of trust by providing a symbolic representation of markets in which reputation can be established, and public interest can be identified. This makes consumers directly observable at least in the second order by producers, and enables consumers to communicate their needs and wants more directly to one another and to producers.

Producers in this model are the third party benefitting from consumer self-organisation by gaining much better-quality market intelligence and being able to cater more directly and effectively to consumer needs. This, then, also addresses the producer's problem of being uncertain about their consumers' assessment of the quality of their products.

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