How the Facebook economy is costing us big

Tech companies are increasingly hooking consumers with the promise of free service. But everything comes at a price

Published February 21, 2014 12:44PM (EST)

Facebook CEO Mark Zuckerberg                (Reuters/Robert Galbraith)
Facebook CEO Mark Zuckerberg (Reuters/Robert Galbraith)

On Feb. 12, San Francisco's Yerdle, a start-up whose mission is to help you unload the unused goods gathering dust in your closet, announced it was going national. A proud member of the sharing economy -- "Why shop when you can share?" inquires its slogan -- Yerdle imagines itself as something more intimate and less transactional than competitors like eBay. Now, to celebrate its nationwide expansion, the company is sharing its wealth in the form of low-cost shipping for members who want to exchange goods across the country.

Early coverage of Yerdle has focused on Adam Werbach, the company's "head of product." (Werbach first gained press attention by becoming the youngest ever president of the Sierra Club, and then later by decamping to Wal-Mart, to the alarm of many of his environmentalist colleagues.) But Yerdle should be even more famous for its brazen sales pitch, a credo so hucksterish that it stands out even in Silicon Valley, the land of a thousand-and-one digital P.T. Barnums.

"Yerdle is a marketplace where everything is free."

For years, Silicon Valley has been on  a relentless mission to convince consumers that just about anything can be had for free. We've got free email from Google, free social networking from Facebook, free entertainment from YouTube and BitTorrent.  There are even entire movements around the ideas of "free culture" and free software. But Yerdle's self-description pushes this free-and-easy ethos so far that it collapses in a puddle of contradictions.

For starters, a "marketplace" is -- by definition -- a place where things of value (i.e., not free) are exchanged for other things of value. (The word "market" comes to us from the Latin "mercari" -- "to buy.") To define yourself as a marketplace where everything is free is to define yourself as self-negating nonsense. On its face, the notion is ridiculous.

So how does Yerdle -- a company that, according to VentureBeat, aspires to be "the eBay of the sharing economy" -- even work?

Signing up is as easy as logging into Facebook. I became a member, and was immediately informed that just for joining, Yerdle had granted me 250 "credits." So far, so good.

I was then presented with a page of available goods:

  • A 35mm camera -- 4000 credits
  • Oakley Sunglasses -- 300 credits
  • The Kabbalah Book of Sex -- 35 credits.

Huh? Was this some kind of joke? Absolutely nothing here was "free." Every item had a price tag. To "earn" enough credits to be able to afford the more expensive items, I would have to post items of my own and successfully auction them off. (I could also earn 25 credits for every friend I referred to Yerdle.)

Yerdle's FAQ calls the credit system a "currency of reciprocity." But a currency is a currency is a currency. On Yerdle, you have to give something up to get something, and that's basically the opposite of sharing or free. Yerdle has done nothing more than create a slick app for facilitating a barter economy. And to top it all off, Yerdle even comes straight out and says that its business model will eventually involve selling credits to users. P.T. Barnum would be slackjawed. The "marketplace where everything is free" plans to generate revenue by selling money!

Yerdle is just the latest, and perhaps silliest, demonstration of what should be a maxim for any consumer of a Silicon Valley service. When you hear the word "free," check your wallet. Because something, somewhere, is getting sold. That free search engine is selling you to advertisers. The social media network is buying up your network of friends and associations. That free-to-download app is aggregating all kinds of demographic data about you. The clink of cold hard cash may not accompany every transaction, but we're still paying through the nose.

* * *

In multiple interviews, Adam Werbach has described Yerdle as imbued with a socially uplifting, environmental mission: Basically, he thinks people buy too much brand-new shit, which ends up generating excess waste and resource consumption. By more efficiently distributing goods that have already been manufactured and sold, society can reduce its overall footprint.

If it's true, as Yerdel asserts, that there is around $5 trillion worth of usable goods in closets around the world, then there's potential for dramatic change. Werbach told VentureBeat that the goal “is to displace 25 percent of what people are buying now.” When the site first launched in San Francisco in 2012, he described his mission in near messianic terms to's Neal Gorenflo.

We need to radically change the way we acquire the things we want. The model where everyone owns one of everything is badly broken. I’ve spent the last eight years of my life helping companies make better, more-efficient, less-polluting products. Now we need to start getting more utility out of those products once they’re produced. Renting can work for strangers, but sharing is the way friends make efficient use of the things they own. The moment now is to use software, technology, and good old-fashioned community organizing to make sharing ubiquitous.

These are noble sentiments, if we can put aside the irony of this critique of runaway capitalist commodification emerging from a company backed by venture capitalists. More efficient allocation of resources is a great thing, and the Internet and smartphones are dandy tools for achieving that. Why, just the other day I posted a picture of an old bureau that I didn't want any more in the "free stuff" category on Craigslist. Before the week was out, a young couple with a pickup truck dropped by to take it off my hands.

Of course that was an instance of someone -- me -- actually giving something away for free. That is not what Yerdle is facilitating; it's not what most of the other big name "sharing economy" companies are doing either. For that matter, it's not what any online company that offers a "free" service is doing. Airbnb facilitates the subletting of apartments or rooms in a house. Lyft is an app that lets you hire someone to drive you somewhere. Neither of these products is in any way offering anything for free. The same goes for Yerdle: I am most certainly not sharing my old blender when I auction it off for credits. I'm selling it for currency that will enable me to buy something else that I want.

Furthermore, the rhetoric of "radically" reducing our retail habits utterly collapses when one learns of Yerdle's plan to sell currency: In order for the company to make the kind of money to deliver acceptable returns to its investors, there will need to be a lot of these currency purchases by Yerdle members. It's the Candy Crush model of capitalism. Get the sucker in the door, and then they'll pay anything to keep going.

There's something very odd about dressing up routine marketplace behavior under the semiotics of sharing and free. It's as if Silicon Valley has decided that all they need to do now to "disrupt" an existing industry is simply redefine black as white. But there's also something pure about Yerdle's description of itself as a "marketplace where everything is free." The concept is so obviously wrong that it contains its own truth about how Silicon Valley does business. When we're whiling away our hours on Gmail or YouTube or Facebook, we can fool ourselves into believing that we are not paying anything for access to our email or videos or the pictures of our cousin's baby. The implicit price, the monetization of our data and the sale of our attention to advertisers, is mostly out of sight and out of mind.

But Yerdle exposes this hypocrisy by telling you that everything is free and then slapping price tags on everything. Could there be a more blatant way to help people realize that nothing is free, ever?

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Related Topics ------------------------------------------

Adam Werbach Airbnb Candy Crush Lyft Sharing Economy Silicon Valley Start-ups Yerdle