However we slice it, digital selling platforms exacerbate the extremes between superstars and those who sell nothing. This is because of a phenomenon called power-law dynamics. Normally, the popularity of everything from people to products is fairly evenly distributed along a bell curve (shaped like an upside-down U). That means just a few members of the population are extremely popular, most are moderately popular, and a few are utterly unpopular. Just like high school or a bookstore, most kids and books are in the hump in the middle of the bell curve.
Internet business experts expected digital platforms to flatten out that curve, giving less popular members the opportunity to connect with new friends, audiences, or consumers while also taking away some of the advantages enjoyed by the entrenched stars of radio and television. But instead of a new fatter, longer tail for formerly obscure products to thrive, we got an extraordinarily “hit heavy, skinny tail.”9 Instead of a flatter bell curve with a big “middle class” of participants, it maps out like a steep slope upward, from losers with nothing at the bottom to winners with everything at the top. This is what’s meant by a power-law distribution—basically, a winner-takes-all disparity, like the infamous 1 percent.
For some reason, the original industrial-age mandate for extractive, monopolized growth was not only still in force but getting worse. Net economists were quick to defend these market dynamics as natural phenomena. “This has nothing to do with moral weakness, selling out, or any other psychological explanation,” explained Clay Shirky in 2003. “The very act of choosing, spread widely enough and freely enough, creates a power-law distribution.”10 Others went on to use these naturally occurring power-law dynamics to rationalize the injustices of capitalism and increasing wealth inequality. It’s just a function of increased choice—a product of human freedom itself.
What we were missing is that once again, and in spite of how social they may appear, these platforms remove living human beings from the process of selection. We are looking at numerical ratings, online reviews, and top sellers. We chat to customer service “bots” that are programmed to stoke our purchases, or people reading from automated scripts, who may as well be bots. Like most online platforms, selling sites remove the sort of human buffers and intervention that often slow things down and replace them with frictionless digital cycles that push toward extreme outcomes.
For instance, when a brick-and-mortar CD store plays a particular song on its audio system, the tune will sell more copies. But that’s just one store. What happens when a subtle cue takes the form of an online recommendation on a Web site? The recommendation leads to increased sales, which then becomes a new data point that is fed back into the automated system through which more recommendations of the same or a similar sort are made. This is called positive reinforcement, but in the digital realm it’s more of a feedback loop, instantaneously reinforcing itself again and again, growing and spreading. The overwhelming variety of possibilities leads us to gravitate to machine-winnowed lists, if for no other reason than to make the selection process more manageable. In turn, the more we depend on an item’s popularity for discovery and selection, the more we reinforce that item’s popularity and the more of a winner-takes-all landscape we create. As Harvard University researcher Anita Elberse observed,11 the knowledge that even a single person has streamed a movie makes it more desirable than the one nobody watched yet. Two streams makes it even more popular. The outcome is inevitably winner-takes-all.
So these extreme divides between winners and losers are not simply an expression of human nature. They are an expression of one aspect of human nature, amplified by machines at the expense of all the others. In fact, it’s by trying to imitate human, social reality that the biggest distribution platforms, from Amazon to Netflix, create and promote the distortions that lead to power-law distributions.
But the biggest and most unacknowledged factor contributing to the net’s winner-takes-all effect is that these platforms are highly centralized. iTunes sells the music, Netflix sells the movies, and Amazon sells the books (and almost everything else). Everyone passes through the same digital turnstiles, sees the same lists and recommendations, and is subjected to the same algorithms. These monopolistic commerce platforms are not true peer-to-peer systems, and they are anything but freeing. They are growth machines—digital department stores, where the many purchase items from the few. We are all buying from the same few places and people. Continuing to do so only reinforces their position at the top, leading to more of that same centralized growth invented by the aristocracy to disempower everyone else.
Compare an Amazon, Netflix, or iTunes to a peer-to-peer platform such as eBay. Whatever one might think of eBay’s corporate ambitions, its basic business model is anti-industrial, at least in that it connects buyers directly to sellers. Most sellers are real human beings with used items to unload. Although ratings matter, they are less about driving consumers to particular product choices than reassuring them of the integrity of the amateur seller whose product they have already found. The platform does take its cut—which adds up to something tremendous—but it creates a new opportunity in return. Instead of removing humans from the marketplace, eBay enhances their capacity to create and exchange value. Instead of monopolizing value, or limiting value creation to just a few players, peer-to-peer platforms distribute the ability to create and exchange it.
These principles can be applied intentionally by any online marketplace. For instance, Bandcamp, a music streaming and download service much like iTunes or Spotify, distinguishes itself by intentionally working against power-law dynamics. It caters to less-established underground and alternative artists, charging less than half the sales commission of its competitors. Unlike the “Top 40” emphasis of most music sites, Bandcamp eschews download counts and leaderboards in favor of a “discover” button. Users wade through their favorite genres the way they might have once flipped through the stacks at a record store.12
Current digital marketing dogma dictates that by promoting aimless surfing and sampling of music, a site like Bandcamp will only generate a “tyranny of choice,” overwhelming users with so many options that they won’t be able to pick anything at all.13 But were people overwhelmed back in the day when they had to walk into a big record store and browse through the bins? I’m not so sure. And even if the net has trained people to accept the two or three choices at the top of popularity lists, I’m fairly confident we can regain the ability to shop. The real panic about such sites is that they emphasize human unpredictability and work against the industrial-age logic of removing people from every link in the value chain. They distribute the ability to grow.
At the very least, Bandcamp and eBay (as well as Maker’s Row, Etsy, Indiegogo, and many other consciously programmed sites) prove that digital platforms don’t have to lead to power-law distributions. They only end up that way because we’re programming them to support our inherited strategies for mass production. We optimize for more directed consumer choice, less human intervention, volume sales, and monopoly control of a given marketplace. Moreover, we devalue the contributions of people, going so far as to ask them to spend their time and energy providing reviews, comments, and content—real value—to the corporations who own these platforms, for nothing in return.
When the expectation of free labor from consumers dovetails with the winner-takes-all lottery of the new mass marketplace, we end up with a whole lot of people working for nothing. After all, the power-law distribution writ large is really just another way of saying income disparity.
THE ECONOMY OF LIKES
So in spite of its interactive patina, the digital economy continues the industrial practice of preventing real people from participating in the growth economy—at least as its beneficiaries. We still get to work, and we still end up living and socializing on a landscape that feels much more like business than pleasure. There’s just no money.
In fact, the digital landscape so effectively mo
nopolizes economic activity that most people have almost nothing left to be extracted. That’s why in order to maintain some semblance of growth, Internet companies had to find a way to monetize something other than cash from its users. Something measurable, countable, and attractive enough to shareholders to justify their real cash investment in the companies’ stock.
That’s right: “likes.”
Social media originally appeared to be an alternative to the marketplace ethos of the dot-com era. After the dot-com boom and bust, fledgling social platforms such as Friendster, Blogger, and Myspace seemed to be offering a return to the more peer-to-peer sensibility of the early Internet. But the alternative value systems they created—likes, views, reblogs, favorites, and so on—became a new kind of currency. It’s more than a mere trend in marketing styles away from broadcast advertising toward peer-to-peer social influence. It amounts to a shift in the way we value everything from entertainment and culture to consumer goods and the stock market. Likes are a new way to stoke the growth furnace.
Likes themselves are a metric of worth—and not just for teenagers gauging their social status. Real companies are valued in terms of the likes they can generate. Brands from soft drinks to automobiles check their social media traffic for upticks on a daily if not hourly basis. A multitude of sweepstakes ask consumers to do nothing more than like or retweet an ad for a chance to win cash and other prizes. According to research conducted mostly by social media companies, these “social” recommendations—particularly from trusted “friends”—mean a whole lot more than plain advertisements.
The economy of likes is most important to the social media companies themselves. At the time of its billion-dollar purchase by Facebook, Instagram had raised $57.5 million, was valued at $500 million, and had generated $0 in revenue.14 It did, however, boast 49.6 million likes per day,15 which has grown to 1.2 billion in the ensuing year and a half.16 Likewise, Tumblr netted negative $13 million the year it was purchased by Yahoo for $1.1 billion.17 What it lost in earnings it made up for in social traffic of 900 posts/second.18 Snapchat, a social media app with no revenue, turned down a $3 billion offer from Facebook—all for its users’ 400 million daily, dissolving pings.19
Whether or not all that social activity will someday generate true, sustainable profits is still left to be seen. What we do know is that the likes, follows, favorites, and reposts are not as immediately valuable to the people and things being liked as they are to the companies who mine these big data troves for trends. In fact, social media companies such as Facebook now occasionally surprise Wall Street analysts by reporting revenue vastly in excess of their expectations. That’s because the analysts are still thinking in terms of advertising dollars. The real revenue stream has much less to do with display ads than it does with the data that social media companies can glean from everyone’s friending and liking—information that social media companies sell to big data market research firms such as Acxiom, Claritas, and Datalogix.
But if social media companies are going to maintain their growth, they must continue to generate more and more likes out of us humans. Since they can’t take any more of our money, all these social media platforms must by their very nature harvest an increasingly large share of our attention, our time, and our data.
Users are only slowly coming to grips with the fact that they are not Facebook’s customers but its product. Many Americans reacted in horror to the news that Facebook was conducting psychological experiments on its users.20 But if they’d had any real awareness of how the company earns revenue, they shouldn’t have been surprised at all. Facebook was simply attempting to show that the kinds of emotional contagion that occur in real life also happen online. Their social scientists proved that if people see a bunch of happy posts, they are more likely to make happy posts themselves. The controversy over the invasion of privacy or psychological manipulation may really just be displaced anxiety: we are just scared to see human emotion and action so successfully simulated and stimulated by machines. For Facebook proved that it had re-created human relationships but in the completely controlled setting of an online platform.
It’s back to the medieval bazaar, except without the unpredictability of real human contact. It’s a race for likes—a value system rigged from the beginning to reward one’s volume of friendships over their quality. The more we depend on these numbers, the less truly social we become. While industrial-age processes simply removed human beings from the equation, these digital processes seek to simulate humanity through artificial social media. As digital consumers, we are no longer engaging with humans but with metrics. Life becomes one big power-law distribution.
This is just where the winners of the digital industrial economy want to keep things. Trust your “friends” and trust the numbers. Experts be damned. Reviews by Consumer Reports, where real scientists in expensive laboratories conduct meticulous experiments on products, are to be ignored in favor of free “peer” recommendations from strangers. Professional is just another way of saying elitist, anyway. Who needs a real review when you can just see how many people “like” something, instead? Market extremes otherwise dampened by expertise instead spin wildly out of control, while real-world professional experts, journalists, editors, and reviewers lose their jobs. An increasing number of job categories are challenged by the Internet ethos of free and open exchange among all those people on the skinny, profitless expanse of the power-law curve.
Social media companies grow at the expense of their users.
As if responding to this obvious critique of his Long Tail theory, Chris Anderson followed up with a book called Free, arguing that we should all give away our labor and products. In his view, creative professionals in particular should welcome the opportunity to give away their books, music, and other products because they build up demand for other services such as live performances and lectures. “Those $20k speaker fees soon add up,”21 he explains. Of course, the only venues capable of paying those fees are corporations looking for speakers to validate their practices and reinforce the cycle of dehumanization—not schools and communities seeking help in resisting those forces.
Musicians, meanwhile, are supposed to sign “360 deals,” named for the idea that they are agreeing to let a single corporation manage all their recordings, performances, merchandise, product placements, and residuals. Albums may not generate much income, but a sold-out concert can. Only now, that concert needs to be supported by a steady flow of online media and new releases.22 According to industry expert Bob Lefsetz, musicians have to give up the quaint notion of sitting around in a studio for a year developing an album.23 The album won’t make money, anyway. Musicians’ new job is to develop a constant flow of fresh content to an audience that will forget them in a few months if they don’t. It’s all singles, and all designed to get and stay on the iTunes list and Pandora rotation—which themselves don’t generate even a fraction of the revenue musicians used to collect off album sales. That money comes only from going on the road, and only if you are a superstar.
For the rest of us, the math of “free” doesn’t quite add up, unless we happen to own the platform. Those of us who wrote for the Huffington Post for years did so because we felt we were contributing to a progressive community platform. No, we were not paid in dollars, but there was a sense of solidarity in supporting a new kind of journalism, and a mutually reinforcing credibility when we all participated. When Arianna Huffington went on to sell the entire enterprise to AOL for $315 million, she did not cut her nine thousand unpaid writers in on the winnings.24 It was as if by receiving exposure on the Web site’s pages, we were already the beneficiaries of Arianna’s largesse.
In reality, Arianna wasn’t selling a profitable business in the traditional sense. The Huffington Post was poor in cash but rich in likes and follows. That’s what she was selling. And that’s what many of us are learning to sell, too. For it’s not the people or their work that matter but the data
their activities generate. This stuff—these likes—are not an entirely phantom metric used to fool shareholders. They are worth real money, either to brands that want to become “friends” with the fans of a particular celebrity or, better, to market researchers who want to gather data about a particular demographic.
In a landscape dominated by social media, everything begins to matter less for what it is than for how many likes it can generate—because more likes means more data to sell. The music, movies, and TV shows that entertainers create matter less to their careers than the volume of social media activity they can drum up around them. Rock videos and TV series are cast based on the number of followers a star can bring along with her. Artists and entertainers are no longer performing for human audiences so much as for the big data computers. Nursing one’s Twitter or Instagram following is compulsory. Instead of taking acting lessons, the aspiring star must stir up social media attention and keep feeding users more content in order to draw out more likes from them. Given the way attention works online, this means resorting to the least-common-denominator antics: wardrobe malfunctions, sex tapes, and other usually degrading sensationalism.
Cultural judgments aside, this online social climbing leads to a strangely circular career path: creators must develop social media networks in order to “make it.” But then once they’ve made it, the main thing they have to sell is not whatever talent they’ve come with but the social media network they have amassed. Yes, a famous rock star can still make money on a tour, just as a TV star gets paid for appearing on a sitcom. But these jobs are really just fodder for the bigger prize of becoming a media property oneself. Just as Arianna did.
There is a certain, if limited, empowerment in all this. A large factor in making it as a performer or even a journalist was always the ability to generate advertising revenue. In traditional media, the advertiser could dictate to TV networks and newspaper editors. If a show didn’t somehow serve the advertiser, it was pulled. Likewise, the entire notion of “unbiased” journalism emerged only after national brands demanded neutral backdrops for their advertisements, so they wouldn’t be accused of backing one side. By working their own social networks, creators no longer have “the man” looking over their shoulder. The new solution is to become “the man.”
Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity Page 4