The connected economy does have aspects that can be concerning:
* Many see bartering as a grey business. Profiting from a disparity in pricing between buyers and sellers is always a touchy subject. The usual justification is the service of connecting sellers and buyers. One can honestly wonders if buyers and sellers really would not have found each other otherwise.
* How much is the match-making worth. One person does the actual work, one is doing the referal. How much is referal worth? 1%, 5%, 20%, 50%? Most people value referral pretty low, right or not.
* Driving prices down. By making markets more efficient, it creates a race to the bottom. It's almost inevitable. What starts as a nice service connecting sellers to buyers becomes a force that impoverishes the workers. The wal-martisation of the work-force only profits the few. It's unfortunate that to collectively save pennies on disparate items, we transform once-confortable workers to lower and lower standard of living. The author admits this on HN when he comments that artists asks for higher prices on Etsy than they get on his site.
* The automation makes all this less palatable. Now the profit seems to be un-earned. What is the ethic of making X00k$ per years for what is admitted as requiring little actual labor? This is even more explicit when he claims that SEO is the driving factor. How does SEO prvides a service to the artists? It doesn't. It only profits instapainting. So most of his work is now spent on labor that is solely profits him.
* SEO is itself a touchy subject.
* How does writing a game that is a clone of a ripoff (2048 being a ripoff of threes) helps artists?
The interesting thing is that all of these are white sins. The author, the provider of the service is not doing it out of malice and is providing, at least initially, a great service to some the workers who had trouble acquiring buyers. But as the service grows, becomes more efficient and dominant, the adverse effect of this very efficency drives the quality of life of the workers down. The more success instapainting gets, the more artist are tied to it, the more the closed competition drives prices down. The theory is that it leads to an equilibrium, and economically it does, but nothing, nothing prevents that equilibrium from being low. Economic efficiency drives quality of life right out.
Middlemen exist because it is not obvious to middle-class Americans that they need to know what the relevance of Dafen is to getting a painting done and because most middle-class Americans do not speak excellent Chinese, and most Chinese painters presumably do not dream at night of putting down their brushes and opening up an SEO consultancy.
Instapainting captures customer demand and transforms it into a servicable and fully-paid series of work orders, to painters (and firms employing them), for the thing they want to sell. This has value. Media depictions to the contrary, artists do not enjoy starving.
If you feel strongly that this model is exploitative, you can apply corrective capitalism by making your own website, doing your own SEO, selling your own paintings with fulfillment by your own outsourced team of painters, and compressing the margins. I wish you the best of luck and skill in this endeavor, but if you model your business as being viable at 1% or 5% above COGS [+], I will warn you that your first year in business is going to be a very educational experience.
[ + ] Cost of Goods Sold; an accounting term for the expenses of the business which directly represent fulfillment as opposed to e.g. marketing, engineering (this company sells paintings, not software, so software isn't COGS for them even thought it might conceivably be for SaaS), or business overhead.
Cost over COGS is exactly my point and why this is exploitation. What do you think the cost over COGS are for the artists actually doing the work? I'll give you a hint, it's often in the negative.
The ability to make profit off of investment is fundamental to capitalism. Do you think that it's unethical for your 401k to accumulate compound interest? Should you have to do some work for the companies your 401k holds shares in, in order for your fund to make a trade?
So far Chris Chen has put in a ton of work and only now is realizing the gains from it. His risk and work are only now paying off. This is equally as egregious as your employer hiring you to write C++ code, and reaping the benefits of your code long after you have written it.
I don't see how competition is closed. The only competition I see suppressed is that of the "order a painting from a website" category, because Instapainting has the superior network. In time, this could potentially get so huge as to be a violation of anti-trust laws, but I don't see that happening. Competition between painters is untouched. Other applications remain. If one wants a higher or lower quality painting, the buyer would want to use existing networks instead of this service. If someone wants an abstract painting, or a sculpture, they have to use a service that is less commoditized, such as word-of-mouth or an art company (interesting aside, North Korea fulfills many sculpture orders for national monuments internationally).
Within the realm of medium-quality portraits, if Instapainting secures a monopoly, then yes, competition will be closed. However, this applies to almost anything that can be commoditized. In American/Canadian history, 19th century painters decried a commoditization of their work; they couldn't get commissions for impressionist or surreal work. Just portraits.
I wrote this blob of text because I naturally want to defend developers who expose details about their businesses to HN. I don't want stories of how they built their businesses to be suppressed or discouraged. Especially since I see nothing unethical in this product; on the contrary, Chris Chen is giving these artists opportunity. They don't have to spend unpaid hours on Etsy or eBay, they can just focus on their work. Customers also get the opportunity to get a hand-painted portrait.
THIS
"I wrote this blob of text because I naturally want to defend developers who expose details about their businesses to HN. I don't want stories of how they built their businesses to be suppressed or discouraged. Especially since I see nothing unethical in this product; on the contrary, Chris Chen is giving these artists opportunity. They don't have to spend unpaid hours on Etsy or eBay, they can just focus on their work. Customers also get the opportunity to get a hand-painted portrait."
It seems like the main beef you have with the guys startup is that its automated, so he doesn't have to continuously work on the same thing, it attempts to "game" google's algorithm, and that in your eyes it extracts too much money for providing too little of value (connecting the consumer and the producer). I don't see it this way at all, I see it a business that helps both sides and takes a cut. If the cut is too large, eventually it will fail.
We'll probably see if thats the case in around ... 3 to 6 months when somebody who reads this thread and has the skills and the drive to improve on it will make an attempt at a clone.
* Many see bartering as a grey business. Profiting from a disparity in pricing between buyers and sellers is always a touchy subject. The usual justification is the service of connecting sellers and buyers. One can honestly wonders if buyers and sellers really would not have found each other otherwise.
* How much is the match-making worth. One person does the actual work, one is doing the referal. How much is referal worth? 1%, 5%, 20%, 50%? Most people value referral pretty low, right or not.
* Driving prices down. By making markets more efficient, it creates a race to the bottom. It's almost inevitable. What starts as a nice service connecting sellers to buyers becomes a force that impoverishes the workers. The wal-martisation of the work-force only profits the few. It's unfortunate that to collectively save pennies on disparate items, we transform once-confortable workers to lower and lower standard of living. The author admits this on HN when he comments that artists asks for higher prices on Etsy than they get on his site.
* The automation makes all this less palatable. Now the profit seems to be un-earned. What is the ethic of making X00k$ per years for what is admitted as requiring little actual labor? This is even more explicit when he claims that SEO is the driving factor. How does SEO prvides a service to the artists? It doesn't. It only profits instapainting. So most of his work is now spent on labor that is solely profits him.
* SEO is itself a touchy subject.
* How does writing a game that is a clone of a ripoff (2048 being a ripoff of threes) helps artists?
The interesting thing is that all of these are white sins. The author, the provider of the service is not doing it out of malice and is providing, at least initially, a great service to some the workers who had trouble acquiring buyers. But as the service grows, becomes more efficient and dominant, the adverse effect of this very efficency drives the quality of life of the workers down. The more success instapainting gets, the more artist are tied to it, the more the closed competition drives prices down. The theory is that it leads to an equilibrium, and economically it does, but nothing, nothing prevents that equilibrium from being low. Economic efficiency drives quality of life right out.