Consider the similarities between piracy and do not track. They’re greater than you think, for both reduce value for content creators. And both are excuses for internet regulation.
In piracy, a content company sets business rules: You must pay for my product; if you take it without paying for it, you are robbing me of value.
With do not track, an advertising-supported content company sets business rules: You will get my content for free because I will serve you ads and I will increase their efficiency, performance, and value by targeting them to your interests and behavior; if you block the cookies that make that possible, you are robbing me of value.
The difference between the two is that there is a furor over piracy as theft but, quite to the contrary, there is a rush to enable the blocking of ad tracking as a virtue.
If you listen to The Wall Street Journal, Apple was a good guy for blocking by default third-party cookies (ask what Apple gets out of that). And it’s good news that technology companies just agreed to implement a do-not-track button on browsers.
There is nothing sinister about third-party ad tracking cookies. They’ve been used since very early in the history of the web when General Motors, for example, insisted in serving its own ads on content sites so it could verify what was bought and optimize its targeting. Without that ability, many large advertisers will refuse to buy ads and the value of ad-supported media could plummet — just at a time when we are concerned about how we will support news media.
Odd that a media company wouldn’t be crying foul. The Journal’s owner, Rupert Murdoch, cries bloody murder over piracy — going so far as to accuse Google of theft — but his paper crusades for blocking tracking, claiming it is a violation of privacy (though in most cases, the cookies have no personally identifiable information and so it’s hard to justify a moral panic based on their use).
Murdoch’s News Corp is, at its core, an entertainment company, thus a paid-content company. The ad-supported portion of his P&L is not only small but is causing him much agita as his journalists in the U.K. are accused of violating laws of the nation and the profession.
I’m not building a conspiracy theory. I’m just pointing to the priorities that emerge when one follows the money.
So what about the rest of the industry — the media, advertising, and technology industries, that is? Oh, they blew it. They were never transparent enough about what technology they were using, what data they were gathering, and why — not to mention the benefits that accrued to their users (i.e., free content). That opened the door for other parties — privacy scare-mongers, competitors for our media attention, and government regulators — to demonize the mysterious cookie and stir up this moral panic and paranoia. The M.A.T. industries have only themselves to blame.
In the EU, government regulators have decreed that sites must obtain opt-in permission to set cookies. In the US, the industry agreement today announced is an attempt to forestall government regulation with self-regulation.
But don’t be too quick to celebrate as if these are consumer victories. I believe the EU dictum could lead to (a) a much poorer web experience as we are bombarded with boxes to tick and (b) poorer media companies and thus (c) the possibility of less free media and more pay walls. And in the U.S., it has been shown that one can whip up an anti-net hysteria and bring even giant technology companies to expose their soft underbellies. Each leads to more threats of regulation of the net. That’s what I fear.
It is time for technology companies especially to adopt radical transparency of how they operate so they can’t find themselves in gotcha moments when the hysterical “discover” something they’ve been doing all along. Under such openness, it is also time for them to learn that doing sneaky things will not benefit them. And it is also time for the media, advertising, and technology companies to start fighting back against accusers’ misinformation and explain the truth of what they are doing and how we benefit. That is transparency’s dividend.
LATER: By the way, this post was inspired and informed by a discussion last night on This Week in Google, in which Leo Laporte said he was grateful that I was going so far that I was making him look moderate.
One more point from that discussion: We all practice blocking ads when we fast-forward through commercials on our DVRs. And the industry adapted and still prospers (for now). That’s what may happen here. But one should still recognize the impact of one’s actions — whether skipping or blocking — on the economics of what is provided. And one difference is that we have to skip each commercial manually (especially since, as Leo pointed out, a company that provided easy 30-second skipping was hounded out of business as a result). In the case of do not track, especially government-mandated opt-in — that is wholesale devaluing of advertising in a medium.
Zeit Online is having some of us write letters to a child just born, to be read in the year 2040. After reviewing David Weinberger’s Too Big to Know, they asked me to write about wisdom. I wrote about media. It being a letter to a German child, I of course wrote about Gutenberg, too. Here’s the German translation. Here’s the English text:
I’ll bet that 2040 will prove to be a pivotal year in the future of knowledge. But you’ll have to collect on that bet for me.
It so happens that 2040 is the year when—according to projections of the downward trajectory of the American news industry—it is believed that the last newspaper could come off the last press.
Yes, the last press. Already, what we call printers do more than press ink on paper. They use jets to precisely place matter on matter, producing not just text but also manufactured parts, chocolate, even concrete buildings and perhaps soon human organs.
2040 also comes about 50 years after Sir Tim Berners-Lee’s invention of the World Wide Web. That is an important milestone. Elizabeth Eisenstein, the leading scholar on Gutenberg, said it took 50 years for the book to leave behind its scribal roots–it was first considered just “automated writing”–and take on its form. As I write this, the products of the press—books, magazines, newspapers—have not broken out of their past to take full advantage of their digital fate. I hope they soon will. Could you be wondering now, “What’s a book?”
By the time you read this, I hope that knowledge will have broken free of its imprisonment in media to explode in new forms. An author and friend of mine named David Weinberger wrote a book called Too Big to Know in 2012 in which he argued that our very understanding of wisdom will transform.
Before Gutenberg, people revered and sought to preserve the knowledge of the ancients of Greece and Rome. After the invention of the press—during what a group of Danish academics call the Gutenberg Parenthesis—we came to honor the work of authors and experts, the people who had access to the press and the authority in conferred. Then, after the passing of the age of the press and the advent of the internet we began to value the knowledge of the network.
“The smartest person in the room isn’t the person standing at the front lecturing us, and isn’t the collective wisdom of those in the room,” Weinberger wrote. “The smartest person in the room is the room itself: the network that joins the people and ideas in the room, and connects to those outside of it.”
So I hope you live in the age of networked knowledge, when information and the analysis and understanding of it can flow freely among many people and their machines, building worth as it spreads and gains speed. I hope you live in an age that values these new connections over the old notion of nations and institutions and their artificial boundaries. I hope you will define wisdom as the fruit of connections.
2040 is roughly the 600th anniversary of Gutenberg’s invention. By then his magnificent technological disruption may live on mostly as a memory and an exhibit in the Gutenberg Museum in Mainz. I hope you will visit it there to see where the idea of manufacturing knowledge began and how far it has come.
One of the most controversial things I have said (you’re welcome for that straight line) is that I insist my entrepreneurial journalism students at CUNY build only for-profit businesses. When I said that at a recent symposium for teachers of entrepreneurial journalism, I thought some of the gasping participants would tar-and-feather me.
I’m not against not-for-profit, charitably supported journalism any more than I’m against pay walls. I, too, crunch granola (and sellbooks). But I do not believe that begging for money from foundations, the public, or especially government is the solution to journalism’s problems. And I am certain that there is not enough charity in the nation to support the journalism it needs. Lately we are seeing too much evidence that the siren call of not-for-profit journalism seduces news organizations away from sustainability, survival, and success (more on the Chicago News Cooperative and Bay Citizen in a moment).
I insist on teaching our students the higher discipline and the greater rigor of seeking to create profitable enterprises. I also believe they are more likely to build better journalistic products, services, and platforms if they are accountable to the marketplace. When class starts, many students invariably talk about what they want to do. In my best imitation of a gruff old-timer, I tell them nobody gives a shit what they want to do, save perhaps their mothers. They should care about what the public — their customers — want and need them to do. They need to care about the market if they have any hope of the market sustaining them. That is why they start every term talking with the public they hope to serve. They always come back with surprises.
Of course, the market, too, can be corrupting. I’m tempted to use Rupert Murdoch as the best exhibit of the argument, though in that case, it’s hard to tell which came first, the rabid chicken or the rotten egg. In the long run, cynically giving the public only what it thinks it wants will not deliver value and will fade like the fad it must be. I have that much faith in the market.
And, of course, we can point to many valuable and well-sustained not-for-profit news enterprises: NPR is the best we have, but as its former CEO Vivian Schiller has said, it is very much run like a business, complete with advertisers (pardon me, [cough] underwriters). Texas Tribune is doing a brilliant job of bringing in the support needed to continue its brilliant work (though I argued with its founder and funder, John Thornton, a venture capitalist, that he’d serve the news industry better by demonstrating profitable models). Pro Publica is already a national treasure (though let’s note that it had to get a grant from the Knight Foundation just to figure out how to diversify its funding beyond its original patron, mortgage man Herb Sandler).
But there are other less shining examples. Now we turn to the Chicago News Cooperative, which just announced its closing. It found itself too dependent on a foundation (MacArthur), a customer/benefactor (The New York Times), not to mention the IRS (which needs to clarify the rules for not-for-profit news). Dan Sinker argues that it never met is promise of building news with the community.
Then there’s the Bay Citizen, which ran through $11.4 million in 2010 [see this comment for a correction] before collapsing last year; it will merge in still-uncertain terms with the better-run, more penurious Center for Investigative Reporting. When the Bay Citizen started with a pot of cash from investor Warren Hellman, I remember the San Francisco Chronicle complaining that this non-market player could unfairly compete with the paper and hasten its demise, an unintended consequence that didn’t come to pass mainly because the Bay Citizen was to terribly run. Non-market entities often are.
I recently judged a contest for an international journalism organization that received a large grant from a very large corporation to fund journalism startups and — here’s why I’m naming neither — I was appalled at the complete lack of thought that went into sustainability and responsible fiscal management in every one of the proposals. I urged the organization to not give away one penny and to start over. It didn’t quite do that.
The problem is that journalists don’t know shit about business. Culturally, they don’t want to. I often hear from journalists who are downright hostile to corporations and even capitalism not because they’re commies but because they believe they’re above it all (there is the root, I believe, of much of their cynicism about Google and other large technology companies). As I’ve said here before, when I came up through journalism’s academy, I was taught that mere contact with business was corrupting. I’ve had bosses scold me for considering the business of journalism. When I started Entertainment Weekly, I could not protect my baby from the expensive idiocy of my business-side colleagues because I didn’t have the biz cred. I vowed that would not happen again. That’s why I insisted on learning the business of journalism.
That is why I insisted on teaching the business of journalism. For we journalists have proven to be terrible, irresponsible stewards of the craft and its value to the nation. Feeding at the teat of monopolies, we grew fat and complacent and snotty about the markets we were to serve. We wasted so much money on duplicative, commodity coverage for the sake of our egos. We were willfully ignorant of how our industry operated and thus how it is dying, making us complicit in its death. We have only ourselves to hold responsible.
And that is why I so respect my friend John Paton, a newsman’s newsman who learned the business of journalism and is taking responsibility for its fate, as head of Digital First Media (where I am an advisor), which now runs the second-largest newspaper group in the U.S. John does not have the answers but he does have the questions and he’s not afraid to challenge executives in our industry with them. He’s willing to disrupt and experiment and learn. And he’s willing to teach what he learns. “Crappy newspaper executives,” he just said, “are a bigger threat to journalism’s future than any changes wrought by the Internet.”
Yes, it’s not just not-for-profit thinking that’s dangerous to journalism. It’s the unprofitable thinking of for-profit news companies. That is why, again, I insist on holding students and the industry they’ll lead to the more diligent standard of true sustainability. That means profitability. There’s nothing wrong with that.
The Guardian launches its new Media Network my essay asking whether we in media are really in the content business. Here’s the first half (in the rest, I catalog the methods I think are worth exploring to rethink our role…. I’ll be expanding on that later).
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What if we in media are not in the content business?
Oh, yes, we will produce content; that’s what we do. But perhaps our greatest value is not in what we produce but in what it produces: signals about people’s interests, about authority, about topics and trends.
That is how Facebook, Google, Twitter and company see content – as a signal generator. That is how they extract value from it, by using those signals to serve more relevant content, services, and advertising. But they are not in the content business. They are in the relationship business. Shouldn’t we also be?
A US TV news executive I know complained to me recently that Facebook and Google, in his words, use media’s steel to build their cars. “Mark Zuckerberg,” he said, “does not value content.”
No, I said, Zuckerberg values more content than we do. We think content is that which we make because we are content people – we see content as a scarcity we produce and control. Facebook and Google, on the other hand, see content everywhere – in the allegedly useless creations, chatter and links made by people in the course of their lives. They see content as an abundant resource to learn from, value and exploit.
The problem is, the media is not built for relationships because our industry was born in a time of factories, not services. We rarely know who our readers are (and we still call them just readers or at best commenters, not creators or collaborators). We do not have the means to gather, analyse and act on data about their activities and interests at an individual level. Thus we cannot serve them as individuals.
Our product, content, is not built for that. It is built for masses. That is what our means of production and distribution demanded. So now we try to adapt that content for new tools, impressed that we can add motion, sound or touch to what we have long done. But our online books, magazines, and newspapers are still recognisable as such. We haven’t gone nearly far enough yet to rethink and reinvent them….
You are free to live in a cave of your making, Andrew, and you can be assured that I shall neither drag nor entice you out of it. But it is difficult to believe that you would be content in that dark, quiet, and lonely space, considering how you do seem to adore the spotlight of publicity and crave open argument as a route to recognition (and book sales). Is this debate not evidence of that?
Here you pull me under your klieg light, calling my openness a “fetish,” granting me power I do not claim as “an engineer of the human soul” because I celebrate others’ freedom, and going so far as to lump me with Marx for harboring hope in technology’s power to advance the public’s potential.
But you see, Andrew, it’s not technology in which I have faith. It’s humanity. Technology merely enables us. It gives us the opportunity to connect and create the publics you appear to fear. If you do not trust the public, then I wonder how you can support democracy (why let us govern ourselves?), free markets (why allow us choice?), reform religion (how can you permit us to talk with God?), or for that matter, education, journalism, and the arts (why inform or attempt to enlighten the public if we are by nature doltish?).
I do not share your cynicism about us and our fate with your notion that stigmas are essential to the human condition — any more than I believe that bigotry, hate, fear, ignorance, stupidity, intolerance, or isolation are necessary products of society without the possibility that together, we can diminish them. I hope for progress.
Where we surely disagree is over your unwavering affection for legacy institutions left unchallenged — though you do pick and choose your loyalty, confessing that you share my “enthusiasm for the revolutionary impact of social media in authoritarian societies in the Middle East.” Yet you consistently defend the institutions of the West: the Establishment. Are you so sure you want to stand by them all? Do you believe the banks have served us as trustworthy guardians of our worth? Are you ready to defend governments that have hidden too much of the people’s business from the people? Do you think that Washington works? Do you truly believe that media — the industry you so doggedly defended in your last book — have used their monopoly over the tools of publicness well and generously?
I assume, since you mock Marx, that you celebrate capitalism and the competition on which it thrives. I do. So then I would think you would welcome the meritocratic contest we see developing to demand better of those institutions — or, yes, in some cases, to replace them. I celebrate the new governments we see rising in Tunisia, Egypt, and even Iceland, even as I worry about the hard work and uncertain future ahead of them. I welcome YouTube giving networks and studios a run for our attention. I am glad that Wikileaks exposed, above all, the banality of government’s secrets. I wonder at the humble hashtag that enabled a diverse lot of people to gather around an empty vessel of frustration — #occupywallstreet — not only to express their disappointment but also to voice their hope and expectations.
On a personal level, Andrew, you are free to share or not. If you choose not to, you can be confident, as I’m sure you know, that I would not seek to know that which you do not wish to say. I respect your privacy as I respect our friendship. Then I ask you to respect my publicness and the opportunity it brings us all to leave the cave and to join with others in an ever-more-connected, ever-more-social world. I ask you, Andrew — and all of you reading this — to respect and protect that choice and the tools that now make it possible.
Here’s the second of three rounds in the Economist debate on the benefits of sharing. This is my response to Andrew Keen’s opener.
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Being public, I shall rely on the public to respond for me:
In a discussion on Google+, Google News creator Krishna Bharat writes: “The thrust of Keen’s argument seems to be that connectedness induces peer pressure for conformity which kills diversity…. This is a specious argument because connectedness/proximity does not induce commonality. Never has and never will. Otherwise, Jerusalem would be one homogenous happy culture with Palestinians and Israelis living in proximity…. What connectedness does induce though is a heightened awareness of how other people are and think, and ultimately empathy. That is certainly not a bad thing.”
Commenter Kevin Bonham goes the next step: “I think the ability to share actually increases the ability of radicals and new thinkers to flourish. In a world where innovators are dependent on traditional power brokers to spread their ideas, many great ideas could be lost for lack of exposure….”
But in the debate here at The Economist, commenter czlee raises a challenge: “We are only ever protective of privacy when we fear that someone else will pass judgment…. In order for the proposer to hold his line, I believe that he must also advocate a less judgmental society.”
That is indeed my hope and, back at Google+, Mr. Bonham presents the best exhibition for optimism: “For hundreds of years, gay people were in the closet, isolated and alone. As soon as they started being public, other gay people realized they weren’t alone, and that they had allies, and a movement got started.” No one should be forced out of a closet, but those who had the courage to stand out and challenge bigots and bullies used their power of publicness to disarm stigmas.
At Google+ Daniel McCully responds to the question I raised about regulating technology, arguing that doing so would “just hold back progress…. The cost benefit comes once the world has changed and people have discovered new ways to work in that world. Even the radio was once seen as a bad thing and a form of piracy. You don’t stop change, you adapt to it.”
Agreed. What we’re experiencing now is an effort to negotiate new norms for our new reality. It’s hardly the first time. The first serious discussion of a legal right to privacy in the United States did not come until 1890. The reason: the invention of the Kodak camera, which led to a similar moral panic about privacy, with The New York Times decrying “fiendish kodakers,” President Teddy Roosevelt outlawing kodaking in Washington parks, and legislators ready to require opt-in permission from anyone photographed in public. We negotiated our norms and cameras don’t scare us anymore. But now a new technology does.
“We are all in uncharted territory of openness,” Brit Koehnig writes, asking us to note that where “there is no Facebook, there is no freedom.” That’s not causation, of course, but it is correlation, revealing that fear of openness is a trait of tyranny.
Economist commenter Voice of Pragmatism points out that “this paper itself recently ran an article about the effect of blogging in the field of Economics, partially crediting the recent rise of heterodox views such as the Austrian School and Chartalism to increased usage of social media…. [T]o argue that unconventional thought is stifled, when it is far easier than ever before to connect with people who share your atypical viewpoint, is absurd.” Couldn’t have said it better myself.
As for the unscientific and thus quite meaningless voting here, my opponent attempted to marshal his meager Twitter forces to stuff the ballot box. I responded by asking my followers on the podcast This Week in Google and in Google+ and Facebook to vote their conscience–and my side. In minutes, a 37% vote in favor turned into 70%. There’s another benefit of being public and having a public.
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Oh, and if you’d like to vote — for my side, please — you can do it here.
Two notable decisions in Europe reflect the tension between privacy and free speech.
The European Court of Human Rights came down on the side of press freedom — thus speech — when it ruled in favor of media reporting on public figures. And a Dutch German court ruled that journalists had a right to interview a Nazi murderer with hidden cameras.
This tension is addressed but only glancingly in the EU’s proposed rules on privacy, which create vague carve-outs for journalism, history, and scientific research.
What none of this acknowledges at a more fundamental level the right we have to talk about someone else (with carve-outs for libel and slander already in the law) — not just the press and not just public figures. If you tell me I must forget you and erase what I have said about you, then you affect my speech. If you reveal something to me and I interact with that information and then you claim the right to pull back your information, then we must debate about who has rights to the results of our interaction (whether that is a conversation or a transaction).
Privacy isn’t as simple as some of its advocates would lead us to believe. It is interweaved with other rights and interactions.
I’ve been studying the full proposed EU privacy regulations and now I’m going through ancillary documents. I’ll be writing more about this soon.
A stat I heard repeated all over Davos: that the average lifespan of a Fortune 500 company is now 15 years, according to Cisco’s John Chambers. Trying to confirm that figure, I found others saying the number is less than 50.
Whatever. It’s far from forever.
So what if corporations more and more become short-lived enterprises? What would that mean?
Consider that Kodak just announced that 124 years after it started, it will stop making cameras. GM and Chrysler a mess of banks would have died, if they weren’t too big to fail. Borders and and Circuit City and Blockbuster and giant retailers are dead. Whole industries are dying.
Now consider that Kickstarter just passed a key milestone: two projects garnering more than $1 million in … what do we call it? … contributions? purchases? investments? We don’t have the right name yet for orders received before a company starts and a product is made. We don’t have a name for a company founded on its customers’ capital.
I have been arguing that vertical industries will be replaced by horizontal ecosystems made up of three layers: (1) platforms that enable (2) entrepreneurial ventures to be created at low cost and risk and (3) networks (e.g., ad networks) that, when needed, bring these ventures together to reach the critical mass that firms used to provide.
Of course, enterprises today can start with no need to build factories (use someone else’s) or distribution (plenty of that, for now) or technology (use the cloud) or marketing (let your customers do it for you) or design (let your customers help) or retail outlets (they’re dying anyway) or capital (see above). We know that this new architecture of the economy means enterprises can be launched with less investment, risk, and effort.
But consider that it also means that enterprises can disappear without leaving much of a hole. The guy who made the Kickstarter-backed iPod Nano watchband, who raised almost $1 million and guaranteed himself success (so long as he priced the product right), can keep making it until it isn’t hot anymore and then just do something else. No need to worry about long-term return on investment; no need to fret over feeding a factory-full of workers. Bermuda, here he comes.
But that’s not how our economy is built. How often do you hear that the wise person invests for the long term? Well, what’s long-term now? A generation? A decade? A few months?
If this is the case, then the platforms that make this temporary economy possible — Amazon and its web services, eBay and its retail chain, FedEx and its distribution chain, Google and Facebook and their marketing power — will be the best long-term plays. That’s why VCs keep saying they want to invest in platforms. But there’s only so many of those.
Of course, the problem for VCs in the last decade has been that start-ups just don’t need them as much as they used to. That will be ever more the case. Now the rest of us will know how the VCs feel. Where can you put our money if you’re an investment fund or a pension fund or a plain investor? Where will equity grow? Will it? I wish to hell I knew.
I’ve also been arguinglately that technology is leading to efficiency over growth. That, too, means that it will be difficult to find new jobs and equity growth.
Oh, there will be wealth. Witness Facebook’s IPO. But consider that Facebook serves soon a billion people with a staff the size of a metro newspaper company and they will end up with much greater wealth in fewer hands. Technology will not solve the economic imbalance of the 1 percent but make it worse, unless you’re one of those 3,000 employees of the platform or you manage to start a new company — likely a temporary, pop-up company — on top of it.
The Economist has just launched a debate between me and Andrew Keen — and you — on the proposition that society benefits when we share information online.” Here is my opening statement; follow the link for Andrew’s and the discussion:
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We are sharing for good reason—not because we are insane, exhibitionistic, or drunk. We are sharing because, at last, we can, and we find benefit in it. Sharing is a social and generous act: it connects us, it establishes and improves relationships, it builds trust, it disarms strangers and stigmas, it fosters the wisdom of the crowd, it enables collaboration, and it empowers us to find, form and act as publics of our own making.
For individuals, sharing is a choice; that is the essence of privacy. Facebook’s founder, Mark Zuckerberg, told me that before the net, we had “privacy through obscurity”. We had little chance to be public because we had little access to the tools of publicness: the press, the stage, the broadcast tower (their proprietors were last century’s 1%). Today, we have the opportunity to create, share and connect, and 845m people choose to do so on Facebook alone. Mr Zuckerberg says he is not changing their nature; he is enabling it.
I shared my prostate cancer—and, thus, my malfunctioning penis—online. Nothing bad came of this, only good: information, support from friends (who could not have known had I not been public) and the opportunity to inspire other men to be tested. Let me emphasise: that was my choice; no one should be forced to publicise their life.
But imagine if we did feel free to share our health data. Think of the correlations and possibly causes and cures we could find. Why don’t we? We fear losing insurance (though insurers already demand our data) or jobs (that is a matter of discrimination to handle legislatively).
Most of all, we fear stigma—though in this day and age why should anyone be ashamed of being sick? In the tension between secrecy and openness, these are the kinds of benefits we should be considering, balancing them with the risks as we adapt society’s norms to new realities and new opportunities.
Our institutions should share for different reasons. The wise company is opening up to build direct relationships with customers, to inoculate itself against the dreaded viral meme, and even to collaborate on the creation of products (see Local Motors’ cars, designed with customers).
Government must learn to share its work and knowledge with its citizens. It must become open by default and secret by necessity (and there are necessary secrets in relation to security, diplomacy, criminal investigations and citizens’ privacy). Today, government is instead secret by default and open by force (that of the journalist or the leaker).
If WikiLeaks has taught us nothing else, it is that no secret is safe and that too much government information has been classified as secret (consider the role of leaks in the Tunisian uprising and the subsequent Arab spring).
Openness is proving to be profoundly disruptive. When we share what we pay for goods, we ruin price opacity and retailers’ margins. When we share our frustration with government, we can start revolutions. This is why institutions—news, media, corporate, government, academic—often resist the draw of openness and fear its impact. And that is why we are seeing a sudden rise in efforts to regulate our greatest tool of publicness, the net, under the guises of piracy, privacy, security and decency.
Too much of the conversation about sharing today revolves around risks—risks to privacy (which does need protection, and it has many new protectors) and risks to intellectual property (though media companies need to learn that controlling scarcity will become an increasingly difficult business model to execute). We also need to have a discussion about the benefits of sharing and the tools that enable it, so we can protect their potential.
Oh, no, the “original sin” meme of newspapers not charging for content is rising again. Sigh.
Dick Tofel, general manager of Pro Publica and former assistant publisher and assistant managing editor of The Wall Street Journal, is a very smart and reasonable man and he has written a smart and reasonable Kindle Single (enabling him to charge as a matter of metaphor) about “why newspapers gave away the future.” But his case is not exactly what it appears, for this is more of a history than a reverse-Reagan (that is, “Mr. Gorbachev, build this wall!”). Tofel writes (his emphasis):
[T]o say that a monumental mistake was made in 1995-1996 is not a prescription for business models in 2012. Consumers have been accustomed to a cornucopia of free content for nearly a generation now. And the newspaper industry is, in many places, a shadow of what it was in 1995…. This has been a meditation on one of those hinge points in history, not an exercise in nostalgia or a call to somehow repeal the past.
In the end, he is asking us to value journalism for the future. On that, we agree. But on history, not so much.
After setting out a well-written review of newspapers’ entry onto the net, Tofel argues (my emphasis) that “it must follow that the decision to give away newspaper content was a mistake, that an alternative future in which nearly all newspapers sought to charge for content on the web, just as they had charged for it in print and on the online proprietary services, would quite likely have produced a happier outcome.”
I could argue that newspapers were doomed to lose their monopolies and thus their pricing power over both content and advertising and that continuing to execute a business model based on controlling a scarcity would lose to those able to exploit the economics of abundance created by the net — read: Google. But I won’t argue that now because this has been argued so much before.
I could argue that all newspapers pricing in concert would have been antitrust and that it would have taken only one to ruin the game. But I needn’t argue that because that’s just what happened (I lived through the industry’s disastrous attempt at conspiratorial collusion, the New Century Network).
I will argue in a piece in the Guardian on Monday that it might also prove to be a mistake to see ourselves in the content business when others use content, including our content, as a tool to generate signals about people so they can extract much greater value out of that knowledge — read: Facebook. But I’ll save that argument for next week.
Instead what interests me about Tofel’s thesis is his cultural contention that newspapers fell victim to West Coast vs. East Coast thinking — a variant of the SOPA/PIPA worldview of Northern California vs. Southern California. Read: Silicon Valley vs. Hollywood; Silicon Valley vs. Sixth Avenue; technology vs. intellectual property; platform vs. content.
I hear this argument in other, more emotional and less reasonable terms often. I hear it when my ilk and I are accused of being internet utopians or technological trimphalists. I hear it even back to arguments over Gutenberg and technological determinism.
There was indeed a meeting of the Future of News conspirators only a week ago. But at any such gathering, I never hear anyone predicting or even longing for a utopia. I never hear them say that the outcome of this change is certain, only that change itself is certain. The real difference I hear is between those who welcome the change and fret over it, those who see opportunity and those who see destruction. Read: the disruptors vs. the disrupted.
“[T]he insecure management teams of the newspaper companies chose to follow the supremely confident leaders of technology in making some of the key strategic choices posed by the rise of the web,” Tofel writes (my emphasis). There he is blaming the technology cult for leading the newspaper institutions astray. Oh, he gives much blame to the institutions’ proprietors, especially for killing their own efforts at innovation and collaboration.
But he’s really blaming the newspapers for answering the siren call of the geeks. “Simply put, the notion that ‘information wants to be free’ had become Hip [his capitalization], and the idea that readers should pay for content online as they long had in print had become Square. Publishers, never the most self-confident bunch even in the most stable of times [ed: oh, how I disagree with that, having rarely witnessed such hubris as I witnessed among newspaper executives], desperately sought to be regarded as Hip as the new technologies roared across the landscape of their business, threatening to upend everything.”
In the end, Tofel reduces the economics of the net to the level of a fad. There’s where we fundamentally disagree. He tries to impose the industrial economics of scarcity and print and local monopolies upon the net’s economics of abundance and bits and openness. That’s what didn’t compute.
Oh, yes, we can debate the hypothetical of what would have happened if…. We can debate whether The New York Times pay meter works — but please first define “works” for me, as the company is still shrinking. Once I agree that I want the Times plan to work and tell you that I subscribe to the paper, then we can debate whether the walls will work or are working elsewhere. But none of that leads to a sustainable business strategy for news in a new reality. I believe we are in a new reality and that old models and old rules need not apply.
Tofel ends by imploring us: “In short, this time we need to do better” for journalism. He has done very well for journalism, helping to found Pro Publica, which is doing great work both in investigative reporting and in new models of collaborative reporting. Except it’s not economically sustainable. That is, it’s not a business. It has to beg for charity. Though that charity is well-deserved, there’s only so much foundation money to go around and that, I think we’d agree, is not how journalism will survive or prosper in the future.
This is why I started the Tow-Knight Center for Entrepreneurial Journalism, to help students and entrepreneurs find new and sustainable models. I’ll have you know that just yesterday, I had a meeting with an entrepreneur about charging for content and I’m about to commission a study on best practices in paid and free newsletters to help. I’m not opposed to charging for content. I just don’t think it’s the solution that got away.
I also am not sure that concentrating on the past is where we are going to find those solutions. Oh, yes, there are lessons there (that’s why I’ve gone farther back and become obsessed with Gutenberg and his disruption). But the risk — the siren’s seduction of the recent past — is that we’ll still think we can maintain the old ways in a time of disruption. I think we have to be willing to throw out old assumptions so we see new opportunities.
And that’s what I think the newspaper industry failed to do because it still thinks its job is to make and sell content when I think its job should be to serve and enable their communities — read: Facebook and Google, which were able to find new value in content.
I do recommend reading Tofel’s essay (it’s only $1.99) as, again, it is well-written and researched and smart and reasonable. But then I also urge you to take the assumptions made by the industry and reflected in it and question them.
Relevant to the expected Facebook IPO announcement, here are excerpts from my interview with Mark Zuckerberg for Public Parts.
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“I’m in the first generation of people who really grew up with the internet,” Zuckerberg tells me. “Google came out when I was in middle school. Then there was Amazon and Wikipedia and iTunes and Napster. Each year, there were new ways to access information. Now you can look up anything you want. Now you can get cool reference material. Now you can download any song you want. Now you can get directions to anything. The world kept on getting better and better.”
In his words, we hear the inherent optimism that fuels the likes of him: that with the right tools and power in the right hands, the world will keep getting better. “On balance, making the world more open is good,” Zuckerberg says. “Our mission is to make the world more open and connected.” The optimist has to believe in his fellow man, in empowering him more than protecting against him. Zuckerberg believes he is helping us share, which will make the world more public and lead to greater transparency and trust, accountability and integrity. That, he says, is why he started Facebook—not, as The Social Network would have us believe, to get a girlfriend (he already had one, the same woman he still dates, Priscilla Chan) and not, as others say, because he is trying to force us into the public. He contends he is creating the tools that help people do what they naturally want to do but couldn’t do before. In his view, he’s not changing human nature. He’s enabling it.
“In the world before the internet and things like Facebook,” he says, “there was a huge amount of privacy through obscurity.” We didn’t have the choice and power we have now: “We had this culture where you were either a producer or a consumer.?.?.?.??It was a very bifurcated society—kind of unnatural.” That is, the tools of publicness, including the media, had been in the hands of the few; now they are in the hands of all. “So now the question isn’t, ‘Are you completely private?’ It’s, ‘Which things do you want to share and which things do you not?’?”
Zuckerberg says he wants to give his users control over what’s public and private. If that’s true, why does he keep getting in trouble regarding privacy? A few reasons: Some people complain that there aren’t enough privacy controls on Facebook. So the company adds controls. But then the complaint becomes that the controls are too complicated. When they are so complicated, users tend not to bother to adjust them and instead rely on Facebook’s default settings. Facebook has surprised its users with changes to those defaults, making them ever-more public—thus making its users more public, often whether they know it or not. And Facebook hasn’t been good at communicating with its users. When I tell Zuckerberg my thesis for this book about the benefits of sharing, he admits, “I hope you have better luck than we’ve had making that argument. I think we’re good at building products that hit the desire people have, not necessarily at expressing in English what the desire is.” Some would call that understatement. . . . .
In their efforts to motivate us to share, Facebook, Google, and other net services have a common, technohuman goal: to intuit our intent. They want to gather signals about us so they can tailor their content, services, and advertising to us. These services compete to find more ways to get us to generate signals—our locations, needs, tastes, relationships, histories—so they can recommend, say, the perfect restaurant for each of us, knowing where we are right now and what we like and who our friends are and what they like (and making money by giving us a well-targeted coupon for the establishment). These services come into conflict with privacy advocates because capturing and analyzing our signals to predict our desires can look to some like spying or mind reading. “How did you know I was going to France?” the skittish user wonders of Google. Likely because you searched for Paris, sir.
Zuckerberg believes that by giving you back information about your own life—your friends and what you and they like and do—you’ll get “a much clearer sense of what’s going on around you, allowing you to learn things you couldn’t otherwise—and just be better at being human.” The hubris is impressive: making better humans. Google merely wants to organize our information. Zuckerberg sees Facebook as a next step in the net’s evolutionary scale toward humanity. “They crawl the web,” he says. “But there’s nothing you can crawl to get information about people. It’s all in our minds. So in order to have that service, you need to build the tools that let people share.” He identifies what he contends is another difference between Facebook and its predecessors: “All the information that’s about you on Facebook, you chose to put there. The last wave of sites before that do not work that way.” Ad networks collect information about you from your behavior—in most cases anonymously—so they can target ads, but the process is opaque. “On Facebook, you get an ad about Green Day because you said you like Green Day.?.?.?.??I think these models where people have more control over stuff are going to be so much more powerful and expressive.” As he talks, I come to think of Google as the third-person web; it’s about others—them. Facebook endeavors to be the first-person web; it’s about me and us.
Zuckerberg has created an asset worth billions of dollars. Wall Street laughed—but the Valley didn’t—when Microsoft invested in Facebook in 2007 at a reported $15 billion valuation. By 2011, pundits pegged the value at $20 billion, $50 billion, even $100 billion. I believe he’s building something even bigger, with data as a new currency: We trade information about ourselves for information about what we want. Our reward is relevance. Zuckerberg disagrees with me, saying my thinking is not “the right frame.?.?.?.??I really think it’s more interaction-for-interaction than data-for-data.” Keeping users’ motives in mind is critical. Early location services—Google Latitude and Loopt—asked you to broadcast your location to the world without much reason to do so (and with some good reasons not to). Later services such as Foursquare and Facebook Places let you alert friends where you are so you can meet up. You interact with Facebook, telling it what you are up to, and in return you interact with friends. Interactions-for-interactions.
Zuckerberg contends that Facebook is not just a technology company but also a sociology company. I find that revealing. He’s not so much an engineer—he majored in both computer science and psychology—as he is a social engineer, building systems for humans, helping us do what we want to do?.?.?.??and what he wants us to do. Take Facebook friend lists. No one wants to sit down and make a list of friends. People say they want to—in Zuckerberg’s words—“subgroup their friends.” But in practice, who wants to bother? I have tried to subgroup contacts in my address book—fellow geeks here, journalism colleagues there, family here—but it’s tedious and I quickly give up. When you friend someone on Facebook and they friend you back, you end up with a list of your friends as a by?product. The reason you do it, Zuckerberg says, is because “it’s like a cool handshake. And then it’s the sum of 10 billion of those.” Once unlocked from their privacy, these small acts of publicness add up. “Some people just assume that being private is good,” Zuckerberg says, “whereas we’ve always come out saying no, no, people want to share some things and keep some things private and that’ll always be true. And as time goes on and more people find that it’s valuable to share things, they might share more things.” That is how he designs his systems, to make it fun and beneficial to share more and more.
Zuckerberg has his own, social version of Moore’s law—I call it Zuck’s law, though he doesn’t. It decrees: This year, people will share twice as much information as they did last year, and next year, they will share twice as much again. Facebook will expand to more users—from 750 million today to a billion soon?—and users will expand their sharing. Meanwhile, one Facebook investor, Yuri Milner, tells me that advances in artificial intelligence will get better and better at understanding and making use of all the service’s data. It has only just begun. “The default in society today still is, OK, I should not share it. The by?far default today is that everything’s anonymous,” Zuckerberg laments. “In the future, things should be tied to your identity, and they’ll be more valuable that way.” There is the master plan.
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And here is a snippet from What Would Google Do? about Zuckerberg:
I sat, dumbfounded, in an audience of executives at the annual meeting of the World Economic Forum International Media Council in Davos, Switzerland, as the head of a powerful news organization begged young Mark Zuckerberg, founder of Facebook, for his secret. Please, the publisher beseeched him, how can my publication start a community like yours? We should own a community, shouldn’t we? Tell us how.
Zuckerberg, 22 at the time, is a geek of few words. Some assume his laconicism is a sign of arrogance—that and his habit of wearing sandals at big business conferences. But it’s not. He’s shy. He’s direct. He’s a geek, and this is how geeks are. Better get used to it. When the geeks take over the world—and they will—a few blunt words and then a silent stare will become a societal norm. But Zuckerberg is brilliant and accomplished, and so his few words are worth waiting for.
After this publishing titan pleaded for advice about how to build his own community, Zuckerberg’s reply was, in full: “You can’t.”
Full stop. Hard stare.
He later offered more advice. He told the assembled media moguls that they were asking the wrong question. You don’t start communities, he said. Communities already exist. They’re already doing what they want to do. The question you should ask is how you can help them do that better.
His prescription: Bring them “elegant organization.”
Let that sip of rhetorical cabernet roll around on the palate for a minute. Elegant organization. When you think about it, that is precisely what Zuckerberg brought to Harvard—then other universities, then the rest of the world—with his social platform. Harvard’s community had been doing what it wanted to do for more than three centuries before Zuckerberg came along. He just helped them do it better. Facebook enabled people to organize their social networks—the social graph, he calls it: who they are, what they do, who they know, and, not unimportantly, what they look like. It was an instant hit because it met a need. It organized social life at Harvard.
The hook to every song sung at Davos is “jobs, jobs, jobs.” The chorus of machers on stages here operate under an article of faith that growth can come back, that they can stimulate it, that that will create jobs, and then that all will be eventually well.
What if that’s not the case? I am coming to believe, more and more, that technology is leading to efficiency over growth. I’ve written about that here.This notion is obviously true in some sectors of society: see news and media, retail, travel sales, and other arenas. But how many more sectors will this rule strike: universities? government? banking? delivery? even manufacturing?
As I write this, I’m watching a WEF panel moderated by Reuters’ editor, Steve Adler, with Larry Summers and government and business leaders. They’re discussing growth strategies and so far we’re hearing the same notions we hear elsewhere in Davos, the complete trick bag: spend money on infrastructure, be nice to business, regulate less, reform taxes, reform immigration. OK and OK.
“The problems of job creation are more complicated than that. They are more complicated than wealth creation,” says one of the panelists (operating under Chatham House Rule, so I won’t attribute*). “This is a group that understands wealth creation better than job creation.” He says “there are inherent limits” to the number of people employed in various sectors.
I haven’t heard any strategy yet that reverses the trends underway in the transition from the industrial economy to the digital economy. What will offset the shrinking of vast industries? New industries? Well, we have new, digital industries, but they are even more efficient than restructured old industries. Compare Google’s staff size to GM’s, even now. Facebook serves almost a billion people with the staff the size of a large newspaper. Amazon employes far fewer people than the bookstores it put out of business did. So those new industries will bring growth, profit, and wealth, but not many jobs.
“There are fewer jobs for regular people because those innovations happened than there would have been if those innovations hadn’t happened,” the panelist says. It would be “a delusion” to think that encouraging this innovation will increase jobs.
So what if the key business strategy of the near-term future becomes efficiency over growth? Productivity will improve. Companies will be more profitable. Wealth will be created. But employment will suffer.
I’m hearing no strategies focused on this larger transition in a gathering about the transition. I think that’s because the institutions’ trick bags are empty. They ran an industrial society. That’s over. And the entrepreneurs who will create new companies but also new efficiency aren’t yet in power to solve the problem they create.
I ask the panel whether all this talk of jobs, jobs, jobs is so much empty rhetoric. I ask whether there are other tricks in the bag.
The panelist I’ve been quoting says that there are two sets of economic issues: In the short term, for the next five years, we are dealing with demand and macroeconomic policy. “Employment today has nothing to do with the Kindle,” he says. “It has everything to do with the financial system, deleveraging, and macroeconomic policy.”
It’s in the long term that the issues I’m addressing here come to bear. “For the longer term, we don’t have nearly as good answers as we would like to,” he says. “We are going to have to embrace the idea that we are going to have growing numbers of people involved in the provision of fundamental services to other people, services like health care and education. We’re going to need to make that work for society.”
That is to say, health and education don’t directly create wealth; they are services funded in great measure by taxes of one sort or another. Employing people in those sectors amounts to a redistribution of wealth with the fringe benefit of providing helpful services. Is a service-sector economy the secret to growth? Who pays for that when fewer people have jobs in the productive economy? I still don’t see an answer. This is not an economic policy so much as it is a social policy.
Another panelist says that we will have fewer people and we will need to retrain people throughout their lives for new jobs. I agree. But that doesn’t create jobs (except in schools); it just helps fill the ones we have.
One more panelist, from Europe, suggests that nations here will end up making stuff for the growing economies and consuming middle classes of China, India, Brazil, etc. In a globalized world with maximum price competition, I’m not so sure that’s a strategy for growth, only survival. I’d hate to place my strategic bets on continuing — or returning to — the industrial economy. And at some point, that strategy bumps up against the question of sustainability: is there enough stuff to go around?
Indeed, in a globalized society, we need to look at total jobs, the sum of work and productivity and demand, not country-by-country. The question is: Will jobs on the whole increase in this digital economy?
If instead efficiency increases — and with it, again, productivity and profit — then great wealth can be created: see Google, and the technology economy. But that means the disparity of income and capital will only widen yet more. And it’s just wide enough today to cause unrest around the world. That’s much of what #Occupy_WEF et al is about. That’s what is causing such tsuris and uncertainty on the stages of the world (Economic Forum). That’s what is causing the institutions represented here to fear, resist, and regulate technology in the hopes of forestalling the change it is bringing. There is the root of the disruption we’re witnessing now even in Davos.
* I saw Summers later and he gave me permission to quote him by name. He is the quotable panelist.
If you listen to The Wall Street Journal, Apple was a good guy for blocking by default third-party cookies (ask what Apple gets out of that). And it’s good news that technology companies just agreed to implement a do-not-track button on browsers. 
