30 Dec

I have a big idea, and rather than present it with argument–a complicated task, given the myriad angles of potential attack–I’ll simply present it as future-fiction.

In the year 2007…

“The Panopticon” (casually called just “Panopticon”) is a website run by a non-profit organization, much in the spirit of Creative Commons,, the EFF, or the FSF. The organization is a mix of traditional non-profit organization and the shallow, open hierarchy typified by MediaWiki in that members of the general public are given a large stake. The project relies upon the expertise of its techies, lawyers, accountants, and tax specialists.

Panopticon is the leading website of “mass patronage” (abbreviated as ‘matronage’, by the obnoxiously clever); essentially, it is the Paypal of free culture and free software. Anyone can register an account and give money to registered creators: artists, writers, musicians, developers, etc.

Unlike Paypal, transfers on Panopticon are gifts, not quid pro quo: though users are encouraged to specify a specific work for which they are giving money, they are not buying any legal rights to these works or physical manifestations thereof. While Panopticon vets the registered creators for authenticity, not having to ensure users get what they pay for greatly simplifies Panopticon’s operations compared to Paypal’s, both legally and practically. (For some time in the beginning of the project, users could donate to just anyone whether that person or group was registered with the site, but various legal and practical issues–especially tax-related ones–led to this being discontinued.)

Because payment is all voluntary, users typically do not pay at the moment they decide to make a donation. Most user ‘transactions’ can be done with light-weight security because no funds are being guaranteed at the time: the user is simply making a note of intention in their account; at some user-specified interval, typically every few weeks, the user is sent a suggestion to review the donations they have queued up and make an actual payment.

By allowing the user to pay a periodic bill, Panopticon helps users account for their donations in their larger budget. Perhaps a user is feeling poorer this month, so they use a handy feature on the checkout page to scale down how much in total they want to give, e.g. a user might have originally made a note to give $10 dollars to Bob and $20 to Alice, but when it comes time to make an actual payment, the user might have decided they only want to spend $20, so a slider on the checkout page helps the user allot $20 in the same proportion they originally intended–1/3 to Bob and 2/3 to Alice. This is just one kind of change: all sums and donations are totally open to reconsideration, revision, or reneging until the user approves payment.

By delaying payments to a periodic interval, micropayments now make a lot more sense because many small transactions can all be payed together as one lump sum. Of course, this might end up as many tiny checks for Panopticon to send out every month, but this is mitigated by pooling of all the donations from various donators to one creator. Another mitigator is the policy that withholds payments to creators until their due payment exceeds some minimum amount.

Whereas Paypal and Amazon take a significant surcharge for each transaction, Panopticon takes a considerably smaller percentage meant to cover just some fixed costs. Most of the organization’s outlay is covered by volunteer labor and fund raisers wherein users are prodded to give a donation to the organization itself when reviewing their queued donations.

Like any good Web 2.0 service, Panopticon is something you use just as often without visiting the site as you do visiting it. Most users queue most of their donations by clicking on “donate to Panopticon” links put up by creators on their own sites. A popular Firefox plug-in let’s you view your account vitals in a handy sidebar and handle common account-management tasks (and yes, Slashdotters constantly complain about the plug-in’s inevitable memory leaks).

Some users are given the status of “expert”. Like creators, experts are vetted to ensure they are who they claim to be. The choice of term “expert” is a bit controversial as all it really means is that Panopticon has made sure the basic claims of the person’s stated bio check out; this is mainly useful to help people identify the accounts of notable persons. If a user wishes to treat a non-expert as a trusted source (something friends often do), all the same ‘expert features’ are available.

The intended role of expert varies depending upon the area of expertise, but typically they provide suggestions to users about how to donate their money. For example, a software expert might advise users how to distribute their money to a Free software project, e.g. ‘if you want to support such-and-such software project, be sure to support the creator’s of this so-and-so library which the project makes heavy use of’. A user might choose to subscribe to an expert’s feed, or might go as far as having an expert’s recommendations automatically included in their donation queues.

The choice of the name “Panopticon” was ironic. The term comes from philosopher Jeremy Bentham’s design for a mental institution in which all the inmates can be viewed in their cells from one central position. While the term connotes Orwellian oppression, the joke is that Panopticon’s users are not the ones in the cells but at the center vantage point, from which they can keep an eye on all the goings on in the madhouse that is the Internet.

While the project is mainly focused on patronage of creators of creative and technical works, it is currently exploring allowing users to make other kinds of donations, including using Panopticon as a way to give to traditional charities. By making it virtually cost-free for charities to receive donations on-line and increasing their visibility, Panopticon is fostering a healthier ‘market’ for smaller charities.

Another prospective direction is a kind of “mass commission” process: for instance, users might make agreements with a filmmaker to put up financing for a small film. The many details of this model are still sketchy.

Another hotly debated topic in the project is the question of whether to go beyond simply linking to content by actually hosting some content. On issue is that there is disagreement about whether to allow non-free licenses or not. Another issue is that, while some object on the grounds that hosting content is redundant with the work of other organizations (such as or, others complain that those organizations don’t fulfill their purposes well enough in the areas of ease-of-use and providing the full iTunes-like browsing experience.

In the end, Panopticon has become successful mainly for these reasons:

  1. Panopticon takes a significantly smaller fee for each dollar than either Paypal or Amazon. This is due mostly to the different tax and banking standards applied to donations and non-profits than those applied to commerce; to a lesser extend it is due to the lower operating costs of a mainly volunteer organization.
  2. Middle-tier bloggers in particular had nothing to lose from at least giving Panopticon a shot; such blogs have a small enough audience to not gain much from advertising, but many of them have dedicated regular readers willing to support them.
  3. A big psychological obstacle to parting with money voluntarily is the nagging feeling of opportunity cost. When buying things, this aversion is usually overcome by the fact that you don’t get anything if you don’t spend anything. When donating, on the other hand, this incentive is of course absent, but still, there’s a significant difference with Panopticon: by being able to weigh potential donations against each other before actually parting with any money, the Panopticon user is at least able to manage their donation opportunity costs. Consider that, before Panopticon, if I encountered something on the Internet I had an inclination to give money to, I’d always be nagged by the feeling that my limited donation budget might be better spent on something I encounter later. Now with Panopticon, I can defer such decisions, weighing candidates for my patronage against each other before settling on a compromise that is informed by time. (Of course, there still might always be something super fantastic around the corner, but the historical record of my intentions that Panopticon presents to me helps me get past that hang-up, at least temporarily.)
  4. People use Panopticon not just because they love to part with money and get nothing in return but because its social-network and recommendation-network aspects are actually uniquely useful. Much like Wikipedia is valuable because it works 90% of the time–despite the efforts of vandals, spammers, and crackpots–Panopticon too works for almost all people most of the time because of its transparency. Even if you never donate any money, Panopticon is useful as a way to track your own media consumption while maintaining privacy. Unlike other such attempts at a media-recommendation and sharing network, Panopticon, as a transparent non-profit, is trusted by its users to not abuse their privacy and precious attention by subverting them in the interests of advertisers and other “monetization” schemes. Users can set policy how their own data is made available.
  5. Panopticon is an open system tolerant of competing implementations of similar ideas. For instance, users and creators can retrieve all their account data off the site in an amenable format that allows them to take it elsewhere. Some aspects of Panopticon can be freely inter-operated with in ways that allow separate sites to build new features upon Panopticon resources; this openness helps diffuse tensions over differences of opinion in the project by allowing the disaffected often to actually try out their own ideas.

UPDATE: Just in case, I grabbed the closest domain I could find: ‘’. Spelt with a ‘k’ because it’s ‘kool’. Yeah, that’s the ticket. (BTW, GoDaddy has the worst payment process I’ve experienced on the web since 1996.)

2 Responses to “Panopticon”

  1. Reinier Zwitserloot May 8, 2007 at 6:46 am #

    You’ll be glad to know we’re on our way.

    NB: Can’t prove it with a blogpost but the idea of was my own, mid-2005, eating a sandwich at the local subway, having some doubts about the startup I was working on then, and thinking of alternatives. Got here from, where you replied to one of my comments.

Trackbacks and Pingbacks

  1. Four Starters - » Micropayments v2.0 - This time it’ll work! - May 8, 2007

    [...] Like a breath of fresh air, this post started off a fresh discussion about how to make things better. Nick highlights one form of micropayments that do work: iTunes. Brian Will pointed out his idea for what is essentially tipit, which he described in some detail here, and Nick reviewed the tipit concept! [...]

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