Logo Eli’s Blog
Diffuse Value Capture
index

Diffuse Value Capture

Incentivizing post-authorship commons-based peer production.

Published May 6th, 2025

“Blockchain is a naturalistic technology, it would have been developed in a thousand timelines, just as the CPU would have, just as double book accounting or abstracted money would have—or AI will—but copyright law was a confusing and awkward historical aberration.”

—Charlotte Fang, NFT’s and Free Information, 2022.

“We have already greatly reduced the amount of work that the whole society must do for its actual productivity, but only a little of this has translated itself into leisure for workers because much nonproductive activity is required to accompany productive activity. The main causes of this are bureaucracy and isometric struggles against competition. Free software will greatly reduce these drains in the area of software production. We must do this, in order for technical gains in productivity to translate into less work for us.”

—Richard Stallman, The GNU Manifesto, 1985.

Imagine two people, Alice and Bob. They both work 40 hours per week at a similar task creating some kind of digital good. They are both trying to capture value from this activity in various forms like money and/or social capital. Alice and Bob each have diffrent staregies for distribution, intelectual property licensing, and production, as well as differnt cultural views around originality and authorship in their craft.

Folowing these unique strategies, Alice creates 10 units of value, and captures 9, almost all the value. Bob creates 100 units of value, but only captures 10. Alice captures 90% of the value created, and Bob captures 10%, but Bob still captures slightly more value than Alice—one whole unit—with the same amount of work.

Alice and Bob are both working at different ends of a spectrum between diffuse and direct value capture. Direct value capture is a one-to-many model. Diffuse value capture is a many-to-many model.

For the most part, IP law, corporate culture, and traditional finance are skewed towards direct value capture, but recent advancments in AI are starting to exacerbate longstanding flaws in the current mainstream IP system and direct value capture stragegies. LLMs are diffuse in nature, direct value capture does not map well onto them. It didn’t even map well to the complexity and diffuse nature of cultural production on the internet before the current AI hype cycle, but now these flaws have been pushed to the point where they are becoming undeniable.

Listen to conversations about AI and intelectual property and you will see there is very little consensus on how to contine the current IP system in this new AI era. Calls for radical reforms to the current IP system that used to be relegated to the lunatic fringe are gaining traction is mainstream tech circles.

Diffuse value capture is likley to increase in relevance in the future because it’s a direct consequence of technological trends:

  1. Increased dominance of decentralized content distribution networks over traditional media.

  2. Massively accelerated AI content production built on a remix paradigm.

  3. Hyperfinancialization blurring leisure/consumption and labor/creation online.

This isn’t about political will or preferences; information “wants” to be free like water wants to flow down, it’s a constant unerring unidirectional force that never gets reversed with each barrier it breaches. Attempts to restrict the internet—global networking, open content distribution, digital free association, runaway self-organizing culture—may slow it down, but never succeed in stopping it in any timeline.

For most of human history, value capture for cultural production was largely diffuse. People wrote stories based on other stories. They sang songs that were variations of other songs. They built on what came before without an arbitrary system of IP law.

Before the invention of the printing press, A poet would write a poem and share it with a small group of people. If someone liked it, they would share it with their friends and so on. A scribe would make a copy as a manuscript and sell it to someone else without permission of the author. This would help the scribe capture value from their craft and the poet would capture value in other ways such as patronage, teaching jobs, or talks and lectures.

The scribe copying the manuscript would help the poet because copying was so difficult and time consuming that every new copy made would significantly increase the liklyhood of patronage, social capital, and other forms of value capture for the poet. The ideas and norms around intelectual property at the time were directly influcenced by the current level to technology and automation for copying information.

Since the invention of the printing press, value capture for cultural production has mostly become more direct. Culminating in the pre-internet era of hollywood, the music industry, and publishing, and the army of bureaucrats and lawyers requiered to keep those industries running.

At the crest of this wave of direct value capture, the personal computer was developed, and planted the seeds for a cultural shift back towards diffuse value capture. Not as a return to the pre-industrial models of diffuse value capture, but as new internet-native ways to capture value that are only possible with decentralized global many-to-many computer networks.

Remember that culture lags behind technology, there was a 250 year gap between the invention of the printing press and what we now recognize as contemporary IP law and ideas about authorship and originality. So while timelines for cultural shifts are getting shorter, there is still a lag and we are only one quarter of the way through the 21st century.

Critics of capitalism often see direct value capture as inherant to capitalism, but I suspect it is more tied to the curent level of technology and automation, and today due to the aforementioned cultural lag behind technology. In a free market your margin is someone else’s opportunity, and there is an endless supply of people that are willing to let some value go uncaptured in order to chanlange a stagnant incumbant in the market, if technology and automation allow for enough value capture to survive.

Things like S&P 500 ETFs and the Bogglehead investing strategy can be seen as primative forms of diffuse value capture aligned fully aligned with mainstream capitalism. It’s a way to diffusely capture value from the economy with minimal bureaucracy and middlemen.

The Hacker Ethic & Free Information

The precepts of this revolutionary (early) Hacker Ethic were not so much debated and discusses as silently agreed upon. No manifestos were issused. No missionaries tried to gather converts. The computer did the converting.

—Steven Levy, Hackers, 1984.

Much of the success of computing has been due to the hacker ethic and the culture of sharing and remixing information. Like Steven Levy suggests, the technology of computing has this imperative encoded in its architecture at the lowest level. 0’s and 1’s are hard to own and copying is free. Aftificial scarcity created by legal means in the digital realm is an awkward simulacrum of real world scarcity. Forcing ideas around property from the physical world was never going to work.

For most of recent history, programmers have seemed to live in the future. You could look at what programmers are doing and see a version of what other industries will look like in the near future.

So it should not be a surprise that programming culture has understood and adapted to diffuse value capture better than other industries in recent history. While other similar and adjacent industries have struggled to escape the 20th century mindset of direct value capture, and the emphisis on authorship and originality that comes with it.

You stole my idea meme in ghibli-like style

Even among programmers, there is currently a misalignment between value creation and value capture. Bill Gates networth is many times greater than Linus Torvalds, Richard Stallman, etc, and at least in my opnion, the later have provided significantly more value to computing and the world.

Free and open-source software culture outside of crypto has been unable to develop effective value capture and coordination systems, and has largly been relegated to controled opposition and pawns in comoditize-your-compliment schemes. Despite anti-consumer behavior from big tech incumbants, free and open-source software mostly can’t compete with proprietary alternative, whith some exceptions like Blender. But even Blender feels masivly under resourced for the amout of value it creates.

A meme about open source without diffuse value capture

Crypto: Open Source Programable Internet-Native Money

Technology is deflationary, as technology improves and allows us to do things better and faster with less work, the prices of goods and services should fall, but they don’t for various reasons.

You could argue from an austrian economics perspective that the prices of goods and services should fall as technology improves, but they don’t because of the way money is created and controlled. Simply moving to something like a global Bitcoin monetary standard might be a major component of a diffuse value capture system.

Due to the internect and the personal computer, cultural production has moved from a read-only medium to a read-write medium.

Post-Authorship

The further you move in the direct value capture direction of the spectrum, the more you need to rely on your identity as a singular human to capture value. This is often at odds with how cultural production works in the real world.

In the transition from web 1.0 to web 2.0, there was a lot of hype about commons-based peer production. The idea was that with the rise of the personal computer and the internet, we would see a new wave of cultural production that was not centered around the traditional gatekeeper model of hollywood and the music industry. Anyone online could colaborate with others to create new works of art.

GNU/Linux, free and open source software, Wikipedia, meme culture, and other examples of commons based peer production from the web 2.0 era.

Identity

When direct value capture is your goal, your identity as a singualr human become extremly important. You are the center of the universe. You are the source of all value. You are the one who is entitled to capture the value created by others.

1. Remixing is the natural mode of artmaking online; introducing any friction to process materials damages the sum art output of the community,

2. Social mores of accreditation and permissioned remixing hinder a works ability to propagate (intact or remixed) reducing its memetic fitness; anonymizing work is often its liberation, and

3. Art comes from the beyond & not in isolation; as the artist serves only as handmaiden to higher consciousnesses, it’s hubris to be entitled to its bounties especially at the expense of its memetic fitness.

Accepting the death of authorship recognizes and rejects the social mores that hamper an ability to freely use, modify and propagate artist’s work. However, it should be clear it’s not necessarily a radical commitment to anti-authorship in all instances. It is true that artists imprint their personal interpretation of the divinity they channel (secular: zeitgeist, collective unconsciousness, so accreditation, especially in the context of canonization, is very often relevant, e.g. to trace a chronology of work to best understand it in reflection with an on-going practice.

—Charlotte Fang, Unpacking Post-Authorship, 2022.

Trying to capture as much value as possible usually dosn’t work well in the free market. An example I often use is that of font designers selling proprietary fonts with complicated and expensive licensing. This direct value capture strategy leads to extream belifes about authorship and originality, when in reality, the design of fonts is extremly memetic and every design is a remix of other designs. A truly unique font design that isn’t built on a mountan of prior work and free and open-source software is almost impossible to find.

The problem of monetizing digital content is reproducible information is effectively infinite in supply, marking it difficult to price, and easy to copy. Early attempts at digital monetization try to create an artificial scarcity through paywalls and DRM, technically ineffective against any piracy but backed by socialized pressure and threats of legal action. These models of course unethically restrict the free flow of information.

Distributed authorship is the future because it’s a direct consequence of technological trends, as all culture follows from: increased dominance of decentralized content distribution networks over traditional media, massively accelerated ai content production built on a remix paradigm, hyperfinancialization blurring leisure/consumption and labor/creation online, all work to erode the artificial attempts to extend the pre-digital one-to-many media paradigm surviving now only through the dubiously defensible and ethically incoherent distortions of IP/copyright law pushed by legacy media company and the vague pseudomarxist anti-AI youth political movement, both against the heavier political weight of the tech industry; not to mention rising chinese soft power and global financial multipolarity. I’ve argued this is the future of culture for a decade because these trends were all obvious a decade ago and it’s now so obvious today it feels trite to repeat, yet here we are. This isn’t about political will or preferences; information “wants” to be free like water wants to flow down, it’s a constant unerring unidirectional force that never gets reversed with each barrier it breaches. Attempts to restrict the internet—global networking, open content distribution, digital free association, runaway self-organizing culture—may slow it down, but it never succeed in stopping it in any timeline.

Incentivizing post-authorship commons-based peer production.

Working for your bags.

I naively still belive in the idea of commons based peer production.

AI systems are trained on everything. Books, articles, code, images. They digest the entire cultural legacy of humanity and produce new works based on statistical patterns. They don’t cite sources. They don’t pay royalties. They just remix on a massive scale.

This feels like a return to pre-industrial models of cultural production, but with new technological infrastructure. Reputation and attribution matter more than exclusive control. Value capture becomes diffuse rather than direct.

With AI and crypto, we’re moving toward systems where value capture aligns better with value creation. You contribute to the commons, and the commons finds ways to support you. Not through monopoly rights, but through attribution mechanisms, micropayments, reputation systems.