Category: Collaborative Age value production system

How the GameStop Stock Event Ushers a New Era of Collective Resistance

The Gamestock event a few weeks ago where individual investors banding together drove the stock price up to create havoc in hedge funds and institutional investors is an interesting illustration of the power of the collective mobilized by social networks against institutions. This happened in a context of a brand loved by passionate geeks being under attack by finance hedge funds. I believe it is only the start of such situations and regulators in all industries will have to develop guidelines to deal with such collective mobilisations.

It is today very easy if there an online community with similar passions to create a movement, and this movement can have real-life effects. It happens on the political scene (various revolutions, not to mention the infamous US Capitol invasion) and will also increasingly happen on the economical scene (various boycotts, or joint action against certain companies deemed nefarious).

In the case of Gamestop, some wonder if it is a manipulation (i.e. a movement started by some people who had a vested interest to win heaps of money) but that will be hard to prove because it does not fall under the traditional stock manipulation definition (see for example this Forbes article “Reddit And GameStop Lessons: Former SEC Enforcement Chief Explains Stock Manipulation And How To Avoid Trouble“). At most an intent may be proven, but individuals that played along can’t get indicted.

Now that it is obvious how online communities can create substantial change in the way markets and regulated activities happen, regulators should develop strong guidelines about how to deal with such events: early detection, preventive actions and also a raft of corrective actions (mostly of the cool-off type) if effects are visible. At the same time collective action has always been part of political and trade-unions freedom and can’t be banned. It is a thin thread and it is essential to develop the right approaches and methods to deal with those events.

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How the Data-Industrial Complex Analogy Has Limits

Lately Tim Cook the CEO of Apple has been using the term ‘data-industial complex’ such as in this article ‘Tim Cook on Why It’s Time to Fight the “Data-Industrial Complex”‘. This is of course a parallel to the ‘military-industrial complex’ and calls up all sorts of influence and lobbyist games, not necessarily for the greater good.

While Tim Cook is using this term in a way to market Apple’s privacy initiatives, it is useful to comment how relevant this parallel with the ‘military-industrial complex’ really is. Wikipedia defines the latter as “an informal alliance between a nation’s military and the defense industry that supplies it, seen together as a vested interest which influences public policy“.

While the data industry certainly creates much value and not necessarily in the best interest of citizens, the alliance with government is more uncertain in particular in view the recent attempts to try to limit the power of major players and anti-trust cases. However, there is certainly an alliance with some powerful political forces and much lobbying to defend data-centric company positions.

In a way this terminology is quite adequate to name a powerful social and political force, in another the analogy has its limits in particular when it is used by Apple CEO, a company that also greatly benefits from user data. Still it reminds us that data management is indeed an industry, with powerful and well resourced players that may use all possible means to defend their power.

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How Dense Cities Get Rewarded in the Collaborative Age

In the book ‘Hedge‘ Nicolas Colin makes the point that dense cities are rewarded in the Collaborative Age. “The Entrepreneurial Age seems to reward large cities and nothing else , and old jobs have been radically displaced as a result . As factories are now empty , the occupied working class is now employed primarily in services — services that are more and more concentrated in cities. Hence , as Richard Florida puts it, the city has become the “ new factory floor”“

There are conflicting movements at stake here: increased possibilities for remote work (enhanced by the Covid crisis), making it possible to live in the countryside at the condition of having a strong and reliable internet connection; and the network effect of cities that allow the deployment of more effective logistics and services. It seems however for Nicolas Colin that metropolis have a future, in particular because “workers are being redeployed from the suburban industrial class of the twentieth century to the urban service class of the twenty – first century“, and because networked services are orders of magnitude more efficient there.

There could possibly even be an argument on the fact that the creative class would tend to move to the countryside or small towns whereas the working class would tend to concentrate in cities, creating further inequality (and being an opposite trend than the one observed in the 20th century).

In any case, dense cities and metropolis seem to have a future as places of creativity, encounters, and network efficiency. How much concentration on a limited number of cities will happen remains to be seen.

On the same topics, previous posts include

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How to Overcome Both Science Reproducibility and Innovation Crisis

Stuart Buck’s post ‘Escaping science’s paradox‘ addresses the current science reproducibility crisis, and in particular if the current context of replication issues and suspicions could diminish innovation. His view is that “I do not think there’s a contradiction between reproducibility and innovation. Contrary to common belief, we can improve both at once“.

The paper first gives a raft of useful references about the issues of reproducibility and the apparent decrease of innovation (compared to the budgets spent) in science today. One particular issue is the capability of institutions to fund ‘out of the box’ innovative research.

The author proposes to achieve a consistent high rate of innovation “by incentivizing failed results, and by funding “Red Teams” that would aim to refute existing dogma or would be entirely outside it.” He first proposes to make sure there is less bias towards positive results in publications by enticing publication of null result experiments or even negative results experiments. And then he proposes to make sure there is always an independent challenge to avoid groupthink, and that systematic replication of important results should be funded.

It is quite interesting to observe how improving the outcome of scientific research ends up being a psychological balance exercise, making sure to erase biases towards positive results and providing means to foster innovation. This demonstrates how the shaping of the institutional framework is important to achieve the results we need for scientific research.

On the same topic – read our previous post ‘How to Overcome the Science Reproducibility Crisis‘

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How Media Advertising Got Upended by Internet

In this excellent summary paper ‘Did Google and Facebook kill the media revenue model?‘ Frederic Filloux takes a deep insight on the evolution of media advertising evolution in last decades. It benefitted initially paper media and it got completely upended by Internet. The interesting part is that its actual value has also plummeted – making it cheaper for people to advertise but also diminishing the possible revenue stream for media.

“The inefficiency of advertising in print, radio, and TV has always been its historical flaw.” By providing a far more targeted solution, internet advertising suddenly increased dramatically advertising efficiency. In addition, it was suddenly possible to much better measure the effectiveness of a campaign to improve it.

In addition, availability of advertising channels created a major deflation of advertising expenditure and the post contains staggering graphs (out of which the illustration of the post is extracted) showing how total advertising value plummeted in the last decade, with total media adverting expenditure diminishing by more than 25% in most developed countries (after an historical increase that was much more than inflation, so it is also sort of a correction).

Could printed media have reacted earlier? Maybe, but as Frederic Filloux concludes, the changes were so systemic and overwhelming that some exceptions may have transformed sufficiently, but certainly not the entire industry. “Most of the legacy media were in denial. They acted too late and too little. But they were not in a position to do otherwise.”

At the end, media advertising is another area where internet has upended the value chain, and at the same provided more value to advertisers. It should be seen as a quite positive shift for the overall value chain and consumers, were it not for the overwhelming position of Google and Facebook.

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How Social Media Could Be Adjusted to Make a Positive Contribution

Quite opposed to our previous post ‘How Social Media Currently Rewards Bad Behavior‘, Seth Godin post ‘Amplify possibility‘ provides a much more positive view on the adjustments that would be required to make social media more positive.

His analysis of the current situation echoes the analysis of many: “The social media companies optimized their algorithms for profit. And profit, they figured, would come from engagement. And engagement, they figured, would come from confounding our instincts and rewarding outrage.”

He uses a metaphor that I find powerful. Many people slow down to watch when there is an accident on the road, but we are almost in social media today at the stage where we create accidents to engage and get the attention of people!

However, according to him, “That’s not how the world actually works” Actual influencers, he argues, behave differently. It is more a long term engagement, a commitment over time, the development of deep relationships and expertise.

Thus it should not be too difficult to tweak the engagement rules of social media to reward those behaviors instead of the ones we see. “Amplify possibility. Dial down the spread of disinformation, trolling and division. Make it almost impossible to get famous at the expense of civilization. Embrace the fact that breaking news doesn’t have to be the rhythm of our days. Reward thoughtfulness and consistency and responsibility.”

I find this approach enticing, although obviously that would require quite a focus change from the major social medias of today, and less seeking of profit and market share. Maybe that could be an idea for a social network competitor?

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How Social Media Currently Rewards Bad Behavior

This article explains the position of Ellen Pao (ex CEO of Reddit and now quite opposed to Silicon Valley giants for a number or reasons including accusations of gender discrimination) ‘Social Media Reward Bad Behavior’ or another similar interview in Inc.com ‘Why the Trolls Are Winning the Internet‘. Her point is that she observes that social media today rewards bad behaviors because it is not managed in the interest of the people, and because possibly the teams managing the current tools are not sufficiently diverse.

“It makes me really sad, because the internet is such a powerful tool, and it introduced this idea that you could connect with anyone. And it’s been turned into this weapon used to hurt and harass people.” She is quite strong in her words about the impact of social media on the users today.

One of the reasons she mentions is that “One of the big problems is that these platforms were built by homogeneous teams, who didn’t experience the harassment themselves, and who don’t have friends who were harassed. Some of them still don’t understand what other people are experiencing and why change is so important.”

An important point is that she does not believe that this problem can be addressed at the scale of the current social networks. “I don’t think it’s possible anymore except at very small scale, because the nature of interactions at scale has become very attention-focused: “The angrier and meaner I am online, the more attention I get.” This has created a high-energy, high-emotion, conflict-oriented set of interactions. And there’s no clear delineation around what’s a good or a bad engagement. People just want engagement.“

All in all, her view is quite negative on the possibility for social media to change quickly because of its interest to engage people to spend more time on their platform. Still she provides an interesting path for improvement, which is to make sure there is an increased diversity in the social media teams.

Refer also to our previous post ‘How Facebook Model is Addiction and Growth – and Why It Can’t Change‘

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How Social Network Legal Protection for Content Should be Reviewed

Since their inception, all social networks have been protected under US Law by a disposition called Section 230. Quartz’s update Section 230 provides quite a comprehensive coverage of the issue. Basically, social networks operate under a status of content distributors, not publishers thus not taking any responsibility in the content itself – thus preventing any lawsuit based on content. While this contributed immensely to their development, as they have grown we can observe that this cannot apply any longer, and social networks have had to take measures by themselves to monitor and regulate their content.

There are many voices now to reconsider whether this section should continue to apply to the major internet content providers. Section 230 states that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” In reality, social networks are not just distributing, they also produce some content, and decide routinely which content to put first and visible, which in itself is a gesture almost akin to producing a meta-content. Because of their ubiquity, they need to regulate the content they show. De facto, the amount of content regulation they enforce nowadays proves they can’t be satisfied to be just distributors, they are inching closer to being publishers, that have to have an eye on the content they broadcast.

It won’t be easy to change it: “Curiously, some Big Tech companies have come around to support efforts to weaken Section 230. Facebook and Google, for example, were early supporters of the bill that eventually became FOSTA and Facebook CEO Mark Zuckerberg has called for more reform. These small concessions could head off more onerous regulation down the road. But the more cynical read is that the biggest Big Tech companies would gain an advantage over smaller competitors who lack the resources to navigate the legal morass that would follow the repeal of Section 230.“

It will be quite interesting to watch this change unfold in the next few months, and what impact this will have on social network content and governance. At least the legislator understands large social networks cannot be considered as neutral distributors, and some liability will be enforced on the content in the near future.

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How Venture Capital Can Destroy Sustainable Innovation

This excellent NewYorker article ‘How Venture Capitalists Are Deforming Capitalism‘ reinforces the fact that Venture Capitalism can have some really bad sides. The point made here is that they can pour so much money in a specific venture that it inflates it, dominating the market, while not being sustainable, crushing other more sustainable alternatives in the process.

The article develops particularly the case of WeWork and how it crushed the market of co-working spaces thanks to an almost unlimited access to capital, therefore allowing the company to buy premium space and rent it out very cheaply. Competitors could not follow suit: “No one could make money at these prices. But they kept lowering them so that they were cheaper than everyone else. It was like they had a bottomless bank account that made it impossible for anyone else to survive“.

The problem here is that there is an assumption that if you capture quickly the entire market, then you can become very profitable. The public promise is that you will generate sufficient scale- and network-efficiency to create extreme value that will benefit everyone; the nasty and less publicized side of it is that if you crush competition you can exploit a monopoly situation and increase prices in the future. There is a fine line between both situations and it is not always obvious which side is really sought by large, well funded start-ups.

The article is quite pessimistic: “The V.C. industry has grown exponentially since Perkins’s heyday, but it has also become increasingly avaricious and cynical. It is now dominated by a few dozen firms, which, collectively, control hundreds of billions of dollars.” Bets have increased on certain ventures, with overall limited return on capital invested. There is less personal commitment.

“A 2018 paper co-written by Martin Kenney, a professor at the University of California, Davis, argued that, thanks to the prodigious bets made by today’s V.C.s, “money-losing firms can continue operating and undercutting incumbents for far longer than previously.” In the traditional capitalist model, the most efficient and capable company succeeds; in the new model, the company with the most funding wins. Such firms are often “destroying economic value”—that is, undermining sound rivals—and creating “disruption without social benefit.””

In a world where funds are more and more readily available due to low interest rates, there may be a need to regulate excessive investments in new ventures that have poor governance and unrealistic expectations. In any case one should be wary of not finding oneself in an impossible competition with an excessively funded start-up.

For more thoughts about the limits of Venture Capital, read my previous post ‘How Venture Capitalists Don’t Really Play the Role We Believe‘

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How Modern Inequality is also Information Inequality

As the Fourth Revolution progresses, we can hear a lot about the rise of inequality mainly in the field of finances and income. But modern inequality is also very much – and increasingly- informational. We already discussed for example in the post ‘How the Transformation of the Press Business Model Makes Access to Quality Information More Difficult‘, but let’s take a wider view of the situation.

There are good quality news outlet out there, that try to stick to journalistic principles. They may be orientated one way or the other, and the editor may favor a certain view on things, but this is generally known as the editorial line of the media. The thing is, access to this media is increasingly paying. Be it traditional press, new news portals and edited aggregators, access increasingly requires subscription.

If you can’t afford subscriptions, or if that’s not culturally on your priority list, what does remain? Public news outlets that are free, some traditional outlets that still manage to be ad-funded, or social networks. And it is this reliance on social networks that is at the origin of quite a number of issues today such as the polarization of society and more extreme groups. Before, the newspaper was displayed to be available for all to read on crowded streets, but not any more.

Thus in the past few years, access to information inequality has grown drastically up to becoming a real societal concern. It certainly needs to be fixed more urgently than income inequality, because the situation may create substantial disruption with groups of citizens living increasingly in parallel worlds.

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How to Deal with the Upcoming Flood of AI-Generated Copywriting

Following up from our previous post about the transformation caused by AI in music, this excellent post addresses the issue of AI generated text content: ‘The internet is not ready for the flood of AI-generated text‘. As it is becoming easy for AI to generate copywriting that could pass for generated by humans, we can expect the internet to be flooded by far more text than humans can currently generate. And it is not ready to manage this flood of content!

One of the subtle ways AI generated text may take over the internet is the ability to quickly generate different versions of the text and find which is the most engaging, thus becoming increasingly better rated on platforms, and overtaking human-generated text. In a world where what matters is to grab attention, this could easily become a discriminating factor.

“Technologies such as GPT-3 may dramatically impact the world of misinformation and disinformation, creating an infinite supply of fake news” – and in the process creating more inequality between those that can pay to have access to quality-vetted information and the others.

What can be done? In addition to having machines that can detect machine-generated content, “One of the most obvious first steps forward, which should be put in place for every output of tools such as GPT-3 no matter or much or how little human editing was involved, is labeling of AI-generated content so that people know what they are reading.”

Welcome to a world where human-generated content will become a rarity for which we may need to pay a bit more!

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How Deepfake Music Is Changing the Music Industry

In this excellent Guardian post ‘It’s the screams of the damned!’ The eerie AI world of deepfake music‘, the implications of modern AI in the field of music are detailed. It seems quite possible nowadays to imitate the voice of any singer including those of the past. And copyright laws won’t generally apply.

This implies as well of course that it is quite possible to imitate perfectly the voice of anybody, which creates at once a potential for fakeness for all sorts of voice recordings nowadays.

It is also the start of an era where the position of the artist will change, with an onus for song- and musicwriters and potentially less for singers, unless they manage to unleash emotional impact. Actually as the economy of music is moving progressively towards live performance, recordings become more and more of a commodity and artists will need to be better performing live.

An interesting point is that copyright law is different in each country. It appears that in the US there is a law “against impersonating famous people for commercial purposes” but not in the UK or in many countries. We can expect some substantial law changes to protect the unwary, artists and their heirs against usage of its voice at least for commercial purpose. Another situation where the law will have to catchup soon!

In any case AI is also upending a large part of the music industry like it is upending many other industries, and that is made easier because at the end music is only a succession of bits, which can be taught to AI. Welcome to a new world of music!

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