Note: I originally wrote this on my old blog, Iowa Voice, on the date listed. I liked it so much, and it got such a good reaction, that I’m bringing it over here to the new site.

I titled this post the way I did for a reason. I am going to use a blogger success story to illustrate something here.

But first, consider the following terms, and how I have applied them:

1] “Currency” in the blogosphere: Simply put, these are the links/trackbacks that are handed out, with or without the “tip of the hat”.

2] “Bonuses” in the blogosphere: When a blogger mentions you by name, and quotes what you wrote with an actual link to your post. This brings “profit” (see below).

3] “Incentives” in the blogosphere: Self-explanatory, or at least it should be. In order to get the “financial” perks of the blogosphere, you are given various incentives to do so, i.e., well written posts, funny pictures, cat blogging…in short, post something that make people want to come to your site to see and/or read about.

4] “Profit” in the blogosphere: Visitors. Traffic. Eyeballs. Call it whatever you like, but the fact is, the “payoff” is when someone actually comes to your site and reads what you have to say. Just like a regular business, if you don’t have “profit”, your reason for being there ceases to exist.

5] “Goods and Services” in the blogosphere: Collective term for all the above.

Now that we are clear on the “terms” I am going to be using, I am going to use a recent success story to illustrate how this all works.

I read yesterday across the blogosphere about how Michelle Malkin has climbed her way to the top of the ecosystem. Her success illustrates my point rather well, not just because of the obvious lesson (that hard work and dedication will help you achieve your goals), but because it is an inspiration and a blueprint for smaller bloggers.

Here’s how the blogosphere works (or should work):

You write a nice post about a subject. Blogger “X” decides he likes what he read, so he comments on it on his blog, and includes a link to your post about it. A trackback is generated on your site to his. You got a] currency (he included a link to your post), b] a bonus (he included a quote, or mentioned you and your blog), c] profit (he sent a few visitors to your site when they clicked said link).

He received: a] currency (the trackback generated on your site is a real link back to him), b] profit (readers of your site see his trackback and go check out his site), and c] an incentive (your post made him decide to write about something similar, thus bringing him the currency and the profit).

Now consider this: Blogger “Y” sees his link because she visited your site, clicks it, and decides to write about what you both said, including quotes and links from both sites. She was given a] incentives, b] profit, c] currency.

Both you and Blogger “X” received a] currency, b] profit, c] a bonus, and d] an incentive to comment on her comments.

This cycle could literally go on forever, but you get the idea. More people commenting and linking, means more “currency” being exchanged, more “profit” being made, more “bonuses” handed out, and more “incentives” to post.

All of these activities increases your ecosystem ranking. Where you rank in the ecosystem determines how valuable your “goods and services” are to other bloggers. In other words, if you are on top, your goods and services are worth more to me than if you are on the very bottom. Understand?

Say Michelle writes a great post (as usual). By being at the top of the ecosystem, she has automatically created an incentive for other bloggers to write about it on their blog and to exchange their goods and services with her. She receives a] currency, because you linked to her blog and, b] profit, because you sent traffic to her blog.

Because she is the top-ranked blog, you receive a] an incentive, b] currency (your link produced a trackback on her site), and c] profit, because people see your link and visit your site. And if you luck out and she comments, directly, on something you wrote, you get a massive “bonus”, which is even better.

Obviously, you are getting the better end of the deal, because you stand to gain more than she does by your linking to her. Her popularity will, inevitably, trickle down to you. Makes sense, right?

Now, let’s move into an area of “taxation”, and what happens when you stop passing goods and services around.

Using the Malkin parable again, I will illustrate what happens when restrictions are placed on the marketplace (in this case, the blogosphere).

First, let me address a potential question some would have, and that is why she would bother using trackbacks at all. She’s top of the heap, right? Why would she bother sending you her goods and services? Why would she allow you to send yours to her?

Simple. She can’t remain on top if the “currency” isn’t sent her way on a continuing basis. It goes both ways, really. She depends on all the little bloggers like you and me sending her “currency”, although not as much as we depend on her sending it right back.

Say, for example, a “Blog Tax” was imposed on every blogger. You must delete 50% of your links. What happens then? Well, a lot happens. The bigger blogger, to be sure, can withstand this a lot more than the little blogger, but in the long run it will hurt the little blogger more. It means, in effect, less currency being passed around, which leads to less profit for all, and certainly no bonuses. Incentives are effectively destroyed.

Some would say this is the perfect illustration of why the rich should pay more in taxes, because they can withstand it better. But that is simply not the case. Sure, a bigger blogger could survive such a tax, because they have more currency coming in. But that also means they have less going out, and that hurts the little guy more than it would hurt the larger blogger.

Even if such a “Blog Tax” were done progressively, it still hurts the little guy. Say the top 100 bloggers have to delete 50% of their links, the next 100 have to delete 40%, the next 100, 30%, and so on. Does that level the playing field? Nope. Because, inevitably, it still means the big bloggers cut back on their links to the little guy. Even if you reversed it, and told the top 100 to only delete 10%, it still hurts those affected by that deletion.

Taxes are a necessary evil in government, because a government must have money for defense and other functions. But when you start taxing too much, or taxing the wrong people too much, you inevitably hurt those who are least equipped to deal with it.

I welcome your comments and thoughts on this.

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