41 posts categorized "Ad-Free Commercial Web"

The light goes off: social network business models could use some imagination

A huge problem for innovative social media companies has been that they turn out not to have been innovative at all, not where it matters.

Sure, they are (a) innovative technically, and they (b) know something about marketing (either that, or they recognize what is energizing users to grow the network, and they do smart things to nurture and enable those patterns of use).

400428874_e087aa720d_zTo date, however, all the big players have failed miserably when it comes to innovating a new business model.

As Jaron Lanier is quoted as saying in a Joe Nocera column in the NY Times this week, "If Google and Facebook were smart, they would want to enrich their own customers.”

So it's really satisfying, and inspiring, to see Fred Wilson's post today, and the comment thread, Mutual Companies.

I don't know if a mutual company form of organization and ownership is the right solution for the problem, but to float the idea at all is to break the automatic assumption that innovative social media startups should be shoehorned into tired, duplicitous and, for the digitial age, regressive business models of the 20th Century.

Here are some earlier posts that reflect my thinking on the topic, and the insights that my friend Mark Byrnes shared with us:

 Photo: grendelkhan / Flickr.

Five initial thoughts about the Twitter S-1

I've read only the prospectus summary and merely skimmed the risk factors, so the following comments are preliminary.

  1. Respect for users. The drafting in the Twitter S-1 is careful to distinguish between content, which is always contributed by users, newsmakers or advertisers, and products and services, which are the contributions of Twitter, the company. This is important. It may reflect an embedded corporate culture that will save Twitter from Facebook's regressive indifference to user autonomy.
  2. G564001g06x44Asymmetry and mass-reach. That said, products and services impact or potentially even drive what content is presented. The document is tense with conflict between respect for the originating asymmetrical nature of user interaction on Twitter, and an inorganic imperative to make Twitter an effective broadcast channel for brand marketers, political spin doctors, journalists and advertisers.
  3. Spam and advertising. The tension is especially evident in a risk factor about spam. The drafter provides a generic definition of spam that fairly and without irony encompasses promoted tweets.
  4. The revenue model overlooks two of three constituents. The prospectus summary speaks of three key categories of constituents: users, platform partners, and advertisers. The disclosure very nearly apologizes for not generating revenue directly from users or platform partners, but does point out that increased activity by the latter two constituents makes the system more valuable for advertisers.
  5. A hedge against advertising's decline. Question for Twitter: why not monetize directly from users and platform partners? If the fear is, many users and platform partners will not pay, then let those thrifty constituents continue to use Twitter for free, and advertise to them. Consider this move as extending to advertisers, too, Twitter's originating efficiencies of asymmetry: promoters will never have to pay for reaching people who have low tolerance for spam. This move would also be a hedge against the declining value of targeted advertising; and users and platform partners who pay can be charged at least the value they remove from the advertising network.

Subliminal advertising

Many kids are back to school today, so let's go ahead and give ourselves a structured, in-class assignment in writing and critical thinking.

6233339000_c0f227c5cd_z

Here's the assignment: write 150-250 words, comparing and contrasting the two quotes below (the first from an article in the Washington Post yesterday about Jeff Bezos's plan on improving the business-viability of the publication, and the second from Facebook's terms of service).

Bezos: "I’m skeptical of any mission that has advertisers at its centerpiece."

Facebook legal: "You understand that we may not always identify paid services and communications as such."

Extra points given for any witty snarkism that fits in 140 characters without resorting to non-standard abbreviations.

Photo: woodleywonderworks / Flickr.

Mark Byrnes on Jaron Lanier's "Who Owns the Future?"

Note from Bill: this post is a Q&A between two college roommates, yours truly, and Professor Mark Byrnes, a historian who teaches at Wofford College in South Carolina and blogs at The Past Isn't Past. Mark visited me and my wife in Seattle this month, and while he was here, read my copy of Jaron Lanier's critique of the direction of the digital economy, Who Owns the Future. Mark's take on the book is more informed, politically and historically, than mine, so I asked him to entertain some questions.

Mark_1Lanier's argument, that the internet is being used to shrink the economy and destroy the middle class, you said in conversation that this was essentially a Marxist critique. Can you expound on that?

MB: It seems to me that Lanier's analysis echoes much of what Marx had to say about the dynamics of early industrial capitalism, in particular when Lanier focuses on the tendency for the market to produce "winner take all" results. Marx believed that market forces would eventually lead to greater and greater concentrations of wealth, leading to a very small ownership class, a virtually non-existent middle class, and a massive working class that would then rise up and overthrow the system.

Lanier applies that same insight to the modern information economy--in his formulation, the "means of production" have become the "Siren Servers."

Is Lanier a communist, then?

MB: No, not at all. He makes that very clear. His goal is not to overthrow capitalism, but to save it from itself--the position of most American progressive reformers since Theodore Roosevelt.

One of the few unfortunate consequences of the fall of the Soviet bloc and the collapse of communism as a governing philosophy is that it has, for most people, discredited *every* aspect of Marx's thought. I'd argue that Marx was (inadvertently) one of the best friends capitalism ever had. By diagnosing the self-destructive tendencies of capitalism, he alerted capitalists to them. The most enlightened capitalists recognized the validity of Marx's diagnosis and then worked to mitigate the worst aspects of the system. They thereby helped it survive, reforming the system in ways Marx never believed it could be. He scared capitalists into saving capitalism.

That's the role I see Lanier playing. He sees his fellow technologists pursuing what will eventually be a self-destructive path, and is warning them (and the rest of us) of the pitfalls that lie ahead, ones that are for the moment obscured by the hype, the messianic vision, and especially the short-term profits.

Marx was misled by his economic determinism. Lanier, by contrast, applies a humanistic belief in our agency as individuals and groups in society, and believes we can choose a different path. That puts him in the category of enlightened reformer.

What is a "levee," in political terms?

MB: I find this to be one of Lanier's more useful ideas. To doctrinaire free-market ideologues, these "levees" (such as labor unions) are unjustifiable and artificial impediments that distort the market and reduce its efficiency. Lanier understands that an apparent short-run inefficiency can in fact produce greater long-term efficiencies. That has been the underlying premise of the regulatory checks on capitalism that have emerged over the last 150 or so years.

You said during one of our conversations that Lanier's solutions are less important than his critique, his analysis of what is wrong. What do you think of his stated hope that some real smart, real powerful people can sit around a table and reverse the course that commerce is now on?

MB: My understanding of American political history tells me that it will never be that simple. Unfortunately, our political system seems to need periodic shocks to produce substantive change. It took the depression of the 1890s to give rise to the Progressive movement; it took the Great Depression to give rise to the New Deal. Ironically, the 2008 financial crisis may have been prevented from providing such a shock, because government intervention saved the economy from the worst potential consequences of the economic meltdown.

The current kerfuffle over the NSA surveillance has, I suspect, alerted many people for the first time to how pervasive big data is, but it is an open question whether the unease many of us feel over that will bleed over into concern for the big data collected by private concerns.

Does Lanier lend you any new arguments in your crusade against popular infatuation with MOOCs?

MB: It certainly gave me a new way of understanding the driving force behind the MOOC movement. I had previously viewed MOOCs primarily from my perspective as a professor and educator, and bemoaned what I saw as the inevitable decline in education quality if MOOCs were to become widely used and accepted for academic credit in higher education.

What Lanier helped me see is the way the MOOC model fits the larger paradigm of the information economy: a business gains attention with the promise of providing an ostensibly "free" product to the public, while trying to monetize the data collected by their servers from those who avail themselves of the "free" product.

Quite coincidentally, you introduced me to Lanier's book just as I received from a colleague a link to the contract between the University of Michigan and Coursera. One of the ways in which the company foresees monetizing its MOOCs is to sell information about student performance to prospective employers. It had not occurred to me that a MOOC would also serve as a way of accumulating data on students which could then be converted into profit.

As with the trade-offs Lanier describes in his discussion of Facebook, the initial appeal is obvious: the student is offered "free" help with job placement, but at the price of ceding privacy about course performance. Imagine if a college or university offered to sell a prospective employer the right to not only see a student's grade in a particular course, but all the tests and papers submitted!

Will you still use Facebook after reading this book?

MB: Probably, in part because of the power of its "too big to quit" status. But Lanier has certainly made me more conscious of the trade-offs involved in continuing to use it, and I suspect I will approach it with a somewhat different mindset in the future.

Peer-to-peer commerce

I finished the Lanier book, or "thought collage."

Near the end, Lanier speculates as to who might take leadership and reform the broken economics digital value-compression.

One of his candidates is Facebook. This choice resonates with me, as, years ago, I thought that company could overthrow advertising. But at that time, at least, it lacked imagination and ambition.

Second-chance-image2

"What if," Lanier asks, Facebook "prioritized peer-to-peer commerce?" He goes on:

"If advertising is to be the dominant business that earns profits online, then our horizons are limited. As more and more activities become dominated by cloud software, there will be fewer pre-network products left to advertise. For the moment we advertise computers, phones, and tablets, for instance. Someday, however, these items might be spit out of 3D home printers running off of open designs coming from the cloud. Then there would be no company left in the loop to pay for the ads.

. . .

"Facebook ought to be well motivated to find ways to grow the economy [since advertising has limited revenue potential]. Only a single person controls the company, so the means is present to overcome resistance from scaredy-cats on the board or among shareholders."

If that happens, I might re-join.

Data trolls

What if the term "data troll" caught currency and captured public imagination?

The NSA would be a data troll, of course.

But, if and as it came to be believed that the government grossly under-exploits the wealth of data it collects, its trolling at the point of application might seem trivial compared to the uses to which players in the interactive advertising media complex (something Eisenhower did not foresee) put big data.

It's one thing to be surveilled; it's another to have your behavior tracked for the purpose of influencing your future behavior.

Big data in corporate hands could become the means to cycle through ever more effective ways to enforce compliance with ever more onerous commercial terms. Resistance is not futile; it's a breach of contract and grounds for denial of service. The Singularity achieved by sucking from each human all traces of personality.

Kellycol0906008Imagine if, back when the telephone was a more important means of communication than it is today, laws and norms had not trended toward a cultural expectation that phone calls might be private. Also suppose that software was applied to analyze the content of those calls (readers here are sophisticated enough to understand that "content" includes both what is said and where, when and how it is routed).

There would be "benefits" to such automated wiretapping, just as there are to mailtapping. You might be offered coupons for goods and services that are better tailored to your conversations. The price of goods sold to you via online stores might be optimized. Anything that might be done by analyzing the data inherent in your email, could be done with your phone calls equally well.

A person who grew up with different expectations for phone calls than for online communications, she or he might take to the term, "data troll."

How much to charge for your personal data

This is fun: an "interactive calculator" from the Financial Times that estimates how much an advertiser might pay to know how best to target you.

I have no idea how accurate it is, but it is is thought provoking, playing with the variables and seeing how much difference a given toggle makes in the calculator's estimate of the value of your data.

5349789922_476bca13c0_zFor instance, if you indicate that you are getting married soon, the value of your data jumps.

My personal data is worth $0.5816, or so the calculator said with respect to one profile I fed it earlier this week.

I guess I don't manipulate or make conscious choices about the data that the lords of the cloud are hoovering up as I click this way and that, day to day. It would be interesting to see it!

Image posted to Flickr by Crossett Library Bennington College.

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