Fourth Parties are agents. Third Parties aren’t necessarily.

Fourth Parties is a powerful, but sometimes confusing term. In fact, I think Doc recently mischaracterized it in a recent post to the ProjectVRM mailing list.

Normally, I wouldn’t nitpick about this, but there are two key domains where this is vital and I’m knee deep in both: contracts and platforms.

Doc said:

Like, is the customer always the first party and the vendor the second party?

Well, no. So, some clarification.

First and second parties are like the first and second person voices in speech. The person speaking is the first person, and uses the first person voice (I, me, mine, myself). The person being addressed is the second person, and is addressed in the second person voice (you, your, yourself).

And

To sum it up, third parties mostly assist vendors. That is, they show up as helpers to vendors.

The first point is great, and if you continue this further (and make the leap from parties to data providers), you get something like this:

The ownership of “your” and “my” data is usually clear. However, ownership of the different types of “our” data is a challenge at best.  To complicate matters further, every instance of “my data” is somebody else’s “your data”. In every case, there is this mutually reciprocal relationship between us and them. In the VRM case, we usually think of the individual as owning “my data” and the vendor as owning “your data”, but for the vendor, the reverse is true: to them their data is “my data” and the individual’s data is “your data”. Similar dynamics occur when the other party is an individual. I bring my data, you bring your data, and together we’ll engage with “our” data. We need an approach that respects and applies to everyone’s data, you, me, them, everybody..

Which is from my post on data ownership. The trick is that 1st party and 2nd party perspectives are symmetrical.  We are their 2nd party and they are their 1st party. Whatever solution we come up with in the VRM world needs to work for everyone as their own 1st party. Everyone. Including “them”. Including Vendors.

In fact, that’s the only way we can get out of the client-server, subservient mentality of the web. It’s also the only way to make sure that our solutions work even when the “vendor” is our neighbor, our friend, or our family.

This is particularly clear in the work we are doing at the Kantara Initiative’s Information Sharing Work Group. We are creating a legal framework for protecting information individuals share with service providers. As such, it’s vital that the potential ambiguities of language are anchored in rigorous definitions. And what has emerged is that every transaction is covered by a contract between two parties. Not three. Not four. Not one. Two. And to the extent that third (or fourth) parties are mentioned, they are outsiders and not party to the contract. Since we are building a Trust Framework, there is a suite of contracts covering the different relationships in the system, but the legal obligations assumed in each contract have clear and unambiguous commitments between the first and second parties only.

Platforms

But where I think where Doc’s framing most needs a bit of correction is that, in fact, historically, third parties are never presumed to be working for second party. Not in the vernacular and not in any legal context. This presumption only emerges once you add a Fourth Party claiming that it works on behalf of the user. That is, 3rd-party-as-ally-of-the-2nd-Party is a corollary to Fourth Party concept, not a foundation for explaining it.

Take Skype, which I have on my Verizon cell phone. In the contract with Verizon, Skype is a third party application and Skype, Inc. is the third party.  But Skype isn’t working on Verizon’s behalf.

This is not only true in the sense of 3rd party applications whose value proposition is clearly at odds with the 2nd party, it is even more true when it comes to platforms. And especially when you consider the relevance of VRM as a platform for innovation.

In every platform, there are third parties who create apps that run on the platform. Microsoft built Windows, but Adobe built Photoshop. Apple built the iPhone, but Skype built Skype.  For platforms to be successful, they necessarily bring in 3rd party developers to build on top of the platform. These developers aren’t necessarily working on behalf of the platform provider, and it would be a miscarriage of alignment to claim that they are. They are out for themselves, usually by providing unique value to the end user. Some new widget that makes live better.

This becomes even more true when you are dealing with open platforms, or what I called Level 4 Platforms (building on Marc Andreeson’s The 3 Platforms You Meet on the Internet). In open platforms, you actually have 3rd parties helping contribute to the code base of the platform itself.  Netscape adds tables to HTML. Microsoft adds the <marquee> tag.  But here, it is even crazier to imagine that these 3rd parties are acting on behalf of the platform party… because there really isn’t a platform party. Nobody owns the Internet.

I think the right way to think about 4th Parties is that they have a fiduciary responsibility to the 1st party and 3rd parties may or may not.

Fourth Parties answer to the 1st party.

3rd Parties may not answer to anyone.

2 responses to “Fourth Parties are agents. Third Parties aren’t necessarily.”

  1. Tom Wilson

    Joe’s correct about the transformational or symmetrical nature of 1st and 2nd parties – in other words, which is which is a matter of perspective. Third parties are defined as independent entities, but should be assumed to be aligned more closely – though not exclusively – with either the 1st or 2nd party. A good example is real estate transactions.

    The Seller and Buyer are interchangeably 1st and/or 2nd parties. The Listing Agent is a 3rd party, and is clearly aligned with the Seller. The Showing Agent, who is incented by actually selling a property and receiving a commission share, is also a 3rd party – but is actually more aligned with the Seller than the Buyer, even though they are ostensibly representing the Buyer’s interests. Hence the recent development of the strict Buyer’s Agent – someone who is compensated on retainer solely by the Buyer, and has no vested interest in the outcome of a sale or purchase other than the Buyer’s satisfaction. Does that make them a 4th party? A 5th party? It seems like unnecessary distinctions which fall prey to situational alignments.

    In contract law, 1st and 2nd parties – regardless of which side of the equation they sit on – are clearly delineated at the top of the agreement. By definition and fiat, any other interested party is a “3rd party”, with the understanding that they may align on either side of the agreement or transaction. The notion of “disinterested 3rd party” is naive and seldom true, and one should always expect that any 3rd party is, however slight it may be, aligned more closely with either 1st or 2nd parties. Understanding the leanings of any given 3rd party is important. Distinguishing them as “4th party” or “nth party” only serves to complicate and set expectations which may prove later to be incorrect.

  2. RealEstateCafe

    Tom, if you’re able to access my email from this post, I’d like to talk about your comment and my understanding of buyer agency.
    Bill Wendel

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