FW: Super Bowl Ads and the Rise of the Prize Economy

February 9, 2009, 4:30 am

Super Bowl Ads and the Rise of the Prize Economy

http://bits.blogs.nytimes.com/2009/02/09/super-bowl-ads-and-the-rise-of-the-prize-economy/

By Steve Lohr

Mark Walsh, chief executive of the start-up Genius Rocket, loved this year’s Super Bowl — not so much the game, but the hit Doritos ad, the $1 million prize it won for the two brothers from Indiana and what their triumph represents. “The match lit the fuse with that Doritos ad,” Mr. Walsh said.

Mr. Walsh is truly an Internet commerce veteran. His online credentials go back more than two decades to Compucard and then through General Electric’s GEnie, America Online and VerticalNet.

His current venture, Genius Rocket, runs an online marketplace where people compete to get paid for their work, ranging from 90-second video ads for the Web to product logos and book covers.

Genius Rocket had nothing to do with the Doritos Super Bowl ad contest. But the site aims to be the kind of place where people like Joe and Dave Herbert, whose “Free Doritos” spot won the competition, can find customers for their creative work.

The buyers, mainly consumer marketers, issue a request for work, describing what they want. Then, far-flung creators submit their work and the buying company picks one or a few winners. The prizes typically range from $5,000 to $500, Mr. Walsh said.

By now, Genius Rocket, founded in 2007, has 8,000 registered “creative collaborators,” as Mr. Walsh calls the prize contest entrants, spread across 100 nations. To date, Genius Rocket has conducted contests for 50 projects for 40 companies.

His stable of enterprising amateurs and freelancers possess “incredible talent,” Mr. Walsh said, and they can do advertising and marketing projects for a tenth the cost of traditional ad agencies.

Genius Rocket is another proof point in a larger trend that may just be getting underway — the rise of the prize economy. It is already well established in science, as a more efficient way of eliciting breakthroughs than traditional federal funding or grant-making.

The Pentagon’s DARPA research agency awarded $1 million in 2007 to the winner of its Urban Challenge for the best and fastest unmanned vehicle. The X Prize Foundation is offering multimillion-dollar prizes for path-breaking advances in genomics, alternative-energy cars and private space exploration.

Economists have suggested federally sponsored prizes as the most promising path to deliver breakthrough technologies to combat climate change, and the Obama science team likes the prize model.

In big science, the prize model has great appeal. The participants in those contests are mainly tenured professors and graduate students supported by scholarship funding — categories of laborers utterly insulated from the rigors of the market economy.

If the prize model of buying work takes off, it would mean a huge transfer in the balance of power to the buyers — corporations — and from most workers. Maybe that’s inevitable, efficient and another byproduct of the Internet (which greatly reduces the transaction costs of running contests as Genius Rocket does). “The Internet disintermediates everything it hits,” Mr. Walsh observed.

Still, Mr. Walsh is no Dickensian capitalist. He is a lifelong liberal who handed out bumper stickers for Hubert Humphrey as a kid, served as a technology adviser for the Democratic National Committee, and was a former chief executive of liberal radio network Air America (where he still sits on the board). He is a big Obama backer. Another Genius Rocket founder is Joe Trippi, the grassroots strategist and Internet mastermind behind former Vermont Gov. Howard Dean’s 2004 presidential campaign.

“Like you, I am concerned about how we all make a buck in this world,” Mr. Walsh said. “But the free-agent nation is going to happen.”