Let’s say you post a picture of your summer vacation to Facebook. A dozen of your friends stop by to comment on it, and a few more “like” it. We know what’s going on here socially. But in economic terms, what sort of transaction is this? Who is benefiting?
Facebook certainly is. They make money by observing the patterns of our activity and learning how best to target us with ads. It’s not a bad business model, either: Facebook’s revenues were about $5-billion last year, no small feat in an economy that has been shaky for the last few years.
Is it fair that they make money off your social activity? For some years, pundits have criticized what Nicholas Carr first called “digital sharecropping”: You do all the work and these companies reap the benefits. We’re handing them the raw material they use to make money.
And, as Jaron Lanier argues in his new book Who Owns the Future?, the economic ramifications of this are widespread and crippling. If we’re seeing persistent unemployment, he says, it’s because every time we give away our data we remove value from the economy. It is “de-monetizing” the economy, and is thus a key driver of our economic malaise. How do we fix such a huge problem?
Simple: Make these companies pay for your information.
Lanier is a longtime technologist; back in the eighties, he invented virtual reality, but he has since become a harsh critic of our modern digital lives. His book fits into a recent wave of thinkers worried about how technology is altering the fabric of our world. Douglas Rushkoff’s excellent Present Shock explores the way digital tools encourage us to focus narrowly on the present, ignoring the past and the future. The New Digital Age by Google’s Eric Schmidt and Jared Cohen analyzes how the future of civic life is being unsettled by everything from freelance online agitators to undeletable records of our utterances. Evgeny Morozov’s To Save Everything, Click Here decries the outsourcing of moral judgements to algorithms and gadgets.
In this context, though, Lanier stands out – because for him, the primary and scary effect of our increasingly digital lives is economic.
At the centre of his argument is the idea of the “siren servers.” These are firms that set up shop, offer a service, then hoover up all the data people create to make money off it. Siren servers aren’t merely in social media: He includes banks and insurance companies, and music sites like Spotify that serve music.
Each does a particular type of economic damage, as he sees it. Banks issue securities that intentionally hide risk, so they can push it off to other investors – such that it eventually crashes the economy.
Music-sharing sites encourage the idea that culture ought to be “free,” pushing the risk off onto musicians, who stop making money. And sites like Facebook encourage more free work yet.
It all adds up, in Lanier’s mind, to an explanation for today’s economic sinkhole. If we’re seeing persistent unemployment, it’s because siren servers systematically remove value from the economy. Musicians, he says, are the canary in the mine shaft. “There used to be a substantial middle-class population supported by the recording industry,” he says, “but no more.” As the economy robotizes ever more, humans will lose ever more value, and we will all share in the musicians’ fates.
The solution, Lanier argues, is nothing less than to re-engineer the entire Internet. In his plan, everything you do online – every tweet, every photo, every “like” – would have a stamp permanently showing that it came from you. If anyone wants to see something you’ve put online and make money off it, he would have to give you a nanopayment. Here’s a concrete example: Say you meet your spouse on a dating site. If knowing that your date led to a wedding helps the service optimize its date-sorting algorithm, you get paid for that. And you, too, would be issuing nanopayments constantly as you surfed information all day long. There’s no free lunch for anyone.
The upshot, he predicts, would be an explosion of new economic activity, as individuals begin maximizing the value of their utterances and data. This would eventually, he argues, recreate the middle class as the economy virtualizes. Better yet, it would curtail siren servers, because they can’t become as big – and spy so much – if they need to pay for your data.
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