On the Net, there is such a thing as free labor

Some Internet companies lean heavily on volunteer labor, raising the question of whether they will pay more in the future.

A growing number of Internet companies, including Netscape, Lycos, and Deja.com, are using volunteers instead of salaried staff to build their content directories.

On its face, the practice makes perfect business sense because the companies get free content that otherwise would be expensive to build and manage. But some legal and labor experts warn that the use of volunteers comes with a price tag of its own.

America Online is one company that may pay the price: It faces a class-action suit and Department of Labor scrutiny over its use of volunteer "Community Leader" guides on its proprietary service. Former Community Leaders say they should be considered employees, given the amount of tasks they perform.

In addition, sites such as Yahoo that pay a staff of surfers and editors to build their directories criticize the practice, contending it leads to a lack of quality and consistency on directories.

Last November, Netscape jump-started the trend when it acquired a small user-generated Web directory called NewHoo. Similar to Yahoo's offering, the idea behind NewHoo--which Netscape renamed the Open Directory Project--was to create a Web search directory using human editorial judgment instead of technology.

Users who sign up to help build the directory submit links and write brief descriptions about their favorite Web sites and then categorize the sites by subject. But unlike Yahoo, Open Directory uses "contributors"--essentially volunteers--to build and edit its directory.

Other companies, including Infoseek, are launching similar initiatives.

In addition, a new wave of consumer review services, such as Deja.com and the soon-to-be-launched Epinions, also center their businesses on user-submitted content. Both companies depend on Netizens to fill in their content directories. In these cases, users write reviews about topics or products. The companies then organize the reviews by subject into a package of consumer reviews on which they sell advertising.

Eric Etheridge, vice president of programming for Deja.com, said using user reviews lets the company "achieve critical mass in more products and categories than in a conventional editorial model."

"Building it yourself doesn't scale economically," said Bill Rose, Infoseek's vice president of search and directory. "Having to build it more and keep it fresh is extremely difficult. You need more manpower to do that."

Toeing a tenuous line
But critics warn these businesses are profiting from unpaid labor. According to some labor attorneys, this violates the Fair Labor Standards Act, which requires for-profit corporations to pay at least a minimum wage to anyone who contributes labor.

According to labor attorney Victor Van Bourg, workers deemed "volunteers" contribute labor to government organizations, charities, and nonprofits--not to companies.

"There's no such thing as volunteers for other companies," Van Bourg said. "That's called slavery."

Although some projects, such as Open Directory, license their content for free, their selling of ads on the directories' search results has raised the ire of some labor groups.

"People who do work that corporations profit from should be paid for it," said Sharon Cornu, a spokeswoman for the California State chapter of the AFL-CIO.

Whether these practices violate the Fair Labor Standards Act remains under debate.

In response to labor criticism, Netscape said the use of volunteers illustrates the very nature of the Net.

"People contributing to sites, directories, and content areas on the Internet are the DNA of the Internet," a Netscape spokesman said. "Open Directory is an incredible project that illustrates the power of the Web and people taking control of their Internet experience."

Like Linux or Apache, two software movements that solicit outside software developers to improve the products, Netscape said its Open Directory Project is another example of using the Web to advance innovation. The Open Directory Project has grown from 100,000 sites with 4,500 contributing editors when Netscape acquired NewHoo to more than 900,000 Web sites and more than 15,000 editors, Netscape said.

"No professional group can keep up," said Chris Tolles, director of marketing for the Open Directory Project. "Our content entries are fresher than anyone else's on the Web."

Netscape also has decided to license its Open Directory to companies for free. This move caught the eye of other companies, including some of Netscape's competitors. In April, Web portal Lycos and its HotBot search engine subsidiary began using Open Directory on their front pages and in their search results.

According to Ron Sege, Lycos executive vice president, the company turned to Open Directory because of its size. "The Web is growing so fast that any other approach to generating content in a directory can't possibly keep up at the rate at which sites are added," he said. "Open Directory is growing faster than any other directory on the planet, including all the private ones."

Size vs. quality
Still, companies that employ their own editorial staff, such as portals Yahoo and LookSmart, argue that volunteer efforts lack quality and consistency. They say the idea behind building a Web directory is not quantity; rather, directories should focus on relevant information.

Yahoo does not plan to switch to user-generated editing, according to Srinija Srinivasan, vice president of Yahoo's directory. Employing a staff of editors allows her to interact on a face-to-face basis, giving her team more control over how to improve the directory, she said.

"We've never set out to get every page on the Web," she said.

LookSmart counts on its staff of paid editors as a selling point to license its directory. LookSmart chooses editors who have a strong background in the categories they edit, according to Carol Sexton, the company's director of marketing.

"To be a real media company, you need to have media people," Sexton said. "This is not something easily duplicated. It boggles my mind that a team of volunteers can put together a consistent, coherent directory."

But some observers say the recent spate of companies joining the Open Directory Project puts LookSmart at a disadvantage.

"If users are happy and don't have to pay for it, it would bring into question why they would use LookSmart," said Danny Sullivan, editor in chief of Searchenginewatch.com, an online industry newsletter.

A unique time
Although it remains to be decided whether companies should compensate their volunteers, Web users are volunteering their services in droves. Part of the appeal is the desire to make one's mark on a Web site.

Dan Westman, an employment attorney with law firm Cooley Godward, said Web companies today can afford to take advantage of the Net culture. Net users volunteer to help because many enjoy what they see as contributing to the development of a new medium. But Westman warned that any shift in culture could potentially come back to haunt many of these companies--as it has already for AOL.

"What's saving them from the problem is this culture of techies who want to work and do not want to get paid," said Westman. "If these programs become known as overreaching and abusing people, it may become a problem."

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