Data is King

The following is a reprint of an article in this week’s Economist magazine. Of course, we’ve been waving this flag for quite some time as the data servers expand to take over the world. As we’ve written previously (here and here), in the digital information economy your data is value. Are you getting paid for it?

In a departure from the article, we believe technology disruption will manage much of this as barriers to entry are not impossible to break, at least for most of the network models like Amazon, Apple, and Facebook. Google is a case unto itself and my perspective as an economist tells me at some point it will become a regulated public utility. Of course, all data transparency, subject to personal privacy issues, is an excellent idea. There’s no reason these network servers should have proprietary rights to your data.

Regulating the internet giants

The world’s most valuable resource is no longer oil, but data

The data economy demands a new approach to antitrust rules

A NEW commodity spawns a lucrative, fast-growing industry, prompting antitrust regulators to step in to restrain those who control its flow. A century ago, the resource in question was oil. Now similar concerns are being raised by the giants that deal in data, the oil of the digital era. These titans—Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft—look unstoppable. They are the five most valuable listed firms in the world. Their profits are surging: they collectively racked up over $25bn in net profit in the first quarter of 2017. Amazon captures half of all dollars spent online in America. Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year.

Such dominance has prompted calls for the tech giants to be broken up, as Standard Oil was in the early 20th century. This newspaper has argued against such drastic action in the past. Size alone is not a crime. The giants’ success has benefited consumers. Few want to live without Google’s search engine, Amazon’s one-day delivery or Facebook’s newsfeed. Nor do these firms raise the alarm when standard antitrust tests are applied. Far from gouging consumers, many of their services are free (users pay, in effect, by handing over yet more data). Take account of offline rivals, and their market shares look less worrying. And the emergence of upstarts like Snapchat suggests that new entrants can still make waves.

But there is cause for concern. Internet companies’ control of data gives them enormous power. Old ways of thinking about competition, devised in the era of oil, look outdated in what has come to be called the “data economy” (see Briefing). A new approach is needed.

Quantity has a quality all its own

What has changed? Smartphones and the internet have made data abundant, ubiquitous and far more valuable. Whether you are going for a run, watching TV or even just sitting in traffic, virtually every activity creates a digital trace—more raw material for the data distilleries. As devices from watches to cars connect to the internet, the volume is increasing: some estimate that a self-driving car will generate 100 gigabytes per second. Meanwhile, artificial-intelligence (AI) techniques such as machine learning extract more value from data. Algorithms can predict when a customer is ready to buy, a jet-engine needs servicing or a person is at risk of a disease. Industrial giants such as GE and Siemens now sell themselves as data firms.

This abundance of data changes the nature of competition. Technology giants have always benefited from network effects: the more users Facebook signs up, the more attractive signing up becomes for others. With data there are extra network effects. By collecting more data, a firm has more scope to improve its products, which attracts more users, generating even more data, and so on. The more data Tesla gathers from its self-driving cars, the better it can make them at driving themselves—part of the reason the firm, which sold only 25,000 cars in the first quarter, is now worth more than GM, which sold 2.3m. Vast pools of data can thus act as protective moats.

Access to data also protects companies from rivals in another way. The case for being sanguine about competition in the tech industry rests on the potential for incumbents to be blindsided by a startup in a garage or an unexpected technological shift. But both are less likely in the data age. The giants’ surveillance systems span the entire economy: Google can see what people search for, Facebook what they share, Amazon what they buy. They own app stores and operating systems, and rent out computing power to startups. They have a “God’s eye view” of activities in their own markets and beyond. They can see when a new product or service gains traction, allowing them to copy it or simply buy the upstart before it becomes too great a threat. Many think Facebook’s $22bn purchase in 2014 of WhatsApp, a messaging app with fewer than 60 employees, falls into this category of “shoot-out acquisitions” that eliminate potential rivals. By providing barriers to entry and early-warning systems, data can stifle competition.

Who ya gonna call, trustbusters?

The nature of data makes the antitrust remedies of the past less useful. Breaking up a firm like Google into five Googlets would not stop network effects from reasserting themselves: in time, one of them would become dominant again. A radical rethink is required—and as the outlines of a new approach start to become apparent, two ideas stand out.

The first is that antitrust authorities need to move from the industrial era into the 21st century. When considering a merger, for example, they have traditionally used size to determine when to intervene. They now need to take into account the extent of firms’ data assets when assessing the impact of deals. The purchase price could also be a signal that an incumbent is buying a nascent threat. On these measures, Facebook’s willingness to pay so much for WhatsApp, which had no revenue to speak of, would have raised red flags. Trustbusters must also become more data-savvy in their analysis of market dynamics, for example by using simulations to hunt for algorithms colluding over prices or to determine how best to promote competition (see Free exchange).

The second principle is to loosen the grip that providers of online services have over data and give more control to those who supply them. More transparency would help: companies could be forced to reveal to consumers what information they hold and how much money they make from it. Governments could encourage the emergence of new services by opening up more of their own data vaults or managing crucial parts of the data economy as public infrastructure, as India does with its digital-identity system, Aadhaar. They could also mandate the sharing of certain kinds of data, with users’ consent—an approach Europe is taking in financial services by requiring banks to make customers’ data accessible to third parties.

Rebooting antitrust for the information age will not be easy. It will entail new risks: more data sharing, for instance, could threaten privacy. But if governments don’t want a data economy dominated by a few giants, they will need to act soon.

FAANGs = Public Utilities?

Could it be that these companies — and Google in particular — have become natural monopolies by supplying an entire market’s demand for a service, at a price lower than what would be offered by two competing firms? And if so, is it time to regulate them like public utilities?

Consider a historical analogy: the early days of telecommunications.

In 1895 a photograph of the business district of a large city might have shown 20 phone wires attached to most buildings. Each wire was owned by a different phone company, and none of them worked with the others. Without network effects, the networks themselves were almost useless.

The solution was for a single company, American Telephone and Telegraph, to consolidate the industry by buying up all the small operators and creating a single network — a natural monopoly. The government permitted it, but then regulated this monopoly through the Federal Communications Commission.

AT&T (also known as the Bell System) had its rates regulated, and was required to spend a fixed percentage of its profits on research and development. In 1925 AT&T set up Bell Labs as a separate subsidiary with the mandate to develop the next generation of communications technology, but also to do basic research in physics and other sciences. Over the next 50 years, the basics of the digital age — the transistor, the microchip, the solar cell, the microwave, the laser, cellular telephony — all came out of Bell Labs, along with eight Nobel Prizes.

In a 1956 consent decree in which the Justice Department allowed AT&T to maintain its phone monopoly, the government extracted a huge concession: All past patents were licensed (to any American company) royalty-free, and all future patents were to be licensed for a small fee. These licenses led to the creation of Texas Instruments, Motorola, Fairchild Semiconductor and many other start-ups.

True, the internet never had the same problems of interoperability. And Google’s route to dominance is different from the Bell System’s. Nevertheless it still has all of the characteristics of a public utility.

We are going to have to decide fairly soon whether Google, Facebook and Amazon are the kinds of natural monopolies that need to be regulated, or whether we allow the status quo to continue, pretending that unfettered monoliths don’t inflict damage on our privacy and democracy.

It is impossible to deny that Facebook, Google and Amazon have stymied innovation on a broad scale. To begin with, the platforms of Google and Facebook are the point of access to all media for the majority of Americans. While profits at Google, Facebook and Amazon have soared, revenues in media businesses like newspaper publishing or the music business have, since 2001, fallen by 70 percent.

According to the Bureau of Labor Statistics, newspaper publishers lost over half their employees between 2001 and 2016. Billions of dollars have been reallocated from creators of content to owners of monopoly platforms. All content creators dependent on advertising must negotiate with Google or Facebook as aggregator, the sole lifeline between themselves and the vast internet cloud.

It’s not just newspapers that are hurting. In 2015 two Obama economic advisers, Peter Orszag and Jason Furman, published a paper arguing that the rise in “supernormal returns on capital” at firms with limited competition is leading to a rise in economic inequality. The M.I.T. economists Scott Stern and Jorge Guzman explained that in the presence of these giant firms, “it has become increasingly advantageous to be an incumbent, and less advantageous to be a new entrant.”

There are a few obvious regulations to start with. Monopoly is made by acquisition — Google buying AdMob and DoubleClick, Facebook buying Instagram and WhatsApp, Amazon buying, to name just a few, Audible, Twitch, Zappos and Alexa. At a minimum, these companies should not be allowed to acquire other major firms, like Spotify or Snapchat.

The second alternative is to regulate a company like Google as a public utility, requiring it to license out patents, for a nominal fee, for its search algorithms, advertising exchanges and other key innovations.

The third alternative is to remove the “safe harbor” clause in the 1998 Digital Millennium Copyright Act, which allows companies like Facebook and Google’s YouTube to free ride on the content produced by others. The reason there are 40,000 Islamic State videos on YouTube, many with ads that yield revenue for those who posted them, is that YouTube does not have to take responsibility for the content on its network. Facebook, Google and Twitter claim that policing their networks would be too onerous. But that’s preposterous: They already police their networks for pornography, and quite well.

Removing the safe harbor provision would also force social networks to pay for the content posted on their sites. A simple example: One million downloads of a song on iTunes would yield the performer and his record label about $900,000. One million streams of that same song on YouTube would earn them about $900.

I’m under no delusion that, with libertarian tech moguls like Peter Thiel in President Trump’s inner circle, antitrust regulation of the internet monopolies will be a priority. Ultimately we may have to wait four years, at which time the monopolies will be so dominant that the only remedy will be to break them up. Force Google to sell DoubleClick. Force Facebook to sell WhatsApp and Instagram.

Woodrow Wilson was right when he said in 1913, “If monopoly persists, monopoly will always sit at the helm of the government.” We ignore his words at our peril.

The New Digital Economy

“Everything is connected to everything else.”

  • – Leonardo da Vinci, Notebooks

We live in the physical economy. We go to a store to buy things, we hand over our money, and walk out with our physical goods. Or we pay somebody to render a service, such as cutting our hair or repairing our automobile. All of this is readily apparent to our senses, so we think of the market economy in terms of a network of tangible transactions.

The information age digital economy adds a layer of abstraction to this conception. Let us take the graphic above that shows an interconnected “network” of people. Each person individually is a node – the distinct platform they are standing or sitting on. They are connected to the nodes of people around them. Each connection represents a “transaction” in the physical meaning of the word. Thus we focus on the costs and prices of each transaction in order to value that transaction. The sum of all transactions (profits and losses) equals the product of the economy.

But we can see the value of the information economy is reflected in the fact that everybody on the grid is connected to everyone else and they are exchanging information and data as well as transacting. This is a two-dimensional representation of an information network, just try imagine an infinite number of dimensions. (You can’t “see” this in your mind, so don’t really try. You have to conceive of it in the abstract or theoretical sense, but it’s real.)

So, what’s the value of the digital information economy? All the transactions value plus the added value created by the data network. The value of the data network is a function of the number of nodes, the volume of data or information that flows between the nodes, and the qualitative value of that data. So posting photos of your cat playing with yarn is value for Facebook that they can sell to advertisers, which is why they want you to post as much nonsense as possible. But it’s nowhere near as valuable as a post that drives thousands of sales to some retailer.

Understanding the network data value is crucial, especially if you can control the portal that links information data to transactions in the real goods economy. This is what Google, Facebook, etc. do and why they are some of the richest entities in the world today.

What is notable today is that consumers don’t seem to appreciate the value they are giving away with their personal data. In exchange for that data they get a free browser or a free social media site, but their data is worth considerably more than that. In fact, the value of personal data in the Information Age rivals the profits and rents associated with previous ages of feudalism and industrial capitalism.

tuka is an attempt to create and mine that data to distribute primarily to its users, who actually generate it by creating, sharing, and connecting on the tuka network. Sounds like a cool idea, no?

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Siren Servers and the Data Age

Siren Servers and the Data Age

Two relevant excerpts from this article:

Google’s commodification of content knowingly, willfully undermined provenance for profit. That was followed by the Facebook stream, with its journalistic jetsam and fake flotsam. Together, the two most powerful news publishers in human history have created an ecosystem that is dysfunctional and socially destructive.

They [the FAANGs] devoutly believe they are connecting people and informing them, which is true, even though some of the connections become conspiracies and much of the information is skimmed without concern to intellectual property rights.

Blockchain’s New World

blockchain-business-1
What is the BlockChain?

Why it’s disruptive: Blockchain promises to make firms’ back-end operations more efficient and cheaper. Eventually, it could replace companies altogether.

Interesting article on the broad business/economic implications of blockchain technology with a wealth of relevant links to additional resources:

Executive’s guide to implementing blockchain technology

The technology behind bitcoin is one of the internet’s most promising new developments. Here’s how businesses can use it to streamline operations and create new opportunities.

 

Blockchains are one of the most important technologies to emerge in recent years, with many experts believing they will change our world in the next two decades as much as the internet has over the last two.

Although it is early in its development, firms pursuing blockchain technology include IBM, Microsoft, Walmart, JPMorgan Chase, Nasdaq, Foxconn, Visa, and shipping giant Maersk. Venture capitalists have so far poured $1.5 billion into the space, with storied firms such as Andreessen Horowitz, Kleiner Perkins Caufield and Byers, and Khosla Ventures making bets on startups.

A blockchain is a golden record of the truth that creates trust among multiple parties.

The applications for blockchain technology seem endless. While the first obvious ones are financial — international payments, remittances, complex financial products — it can also solve problems and create new opportunities in healthcare, defense, supply chain management, luxury goods, government, and other industries. In more advanced stages, the technology could give rise to what Gartner calls “the programmable economy,” powered by entirely new business models that eliminate all kinds of middlemen, machine networks in which devices engage in economic activity, and “smart assets” in which some form of property such as shares in a company can be traded according to programmable or artificial intelligence-based rules rather than the control of a centralized entity.

EXECUTIVE SUMMARY

What is blockchain: A blockchain is a single version of the truth made possible by an immutable and secure time-stamped ledger, copies of which are held by multiple parties.

Why it matters: It shifts trust in business from an institution or entity to software and could someday spell the demise of many traditional companies. It also promises to make trade-able many assets that are illiquid today, enable our devices and gadgets to become consumers, and bring trust to many areas of business, eliminating fraud and counterfeiting.

How it works: Cryptography secures the data and new transactions are linked to previous ones, making it near-impossible to change older records without having to change subsequent ones. And because multiple “nodes” (computers) run the network, one would need to gain control of more than half of them in order to make changes.

Why it’s disruptive: At the least it promises to make firms’ back-end operations more efficient and cheaper, but down the line, it could replace companies altogether.

Business opportunities: New services and products will pop up in areas such as creating and trading assets, tracking provenance, managing supply chain, managing identity, and in providing ancillary services to the software itself.

Main vendors: More than a dozen platform vendors have sprung up, and several dozen consulting and implementation providers assist in adopting blockchain projects.

Career options: The main blockchain specialists include developers and business and technical architects. But roles are also needed in risk management, security, cryptography, business process management, product strategy, and analytics.

WHAT IS BLOCKCHAIN

A blockchain is a golden record of the truth that creates trust among multiple parties. Specifically, it’s a secure, tamper-proof ledger with time-stamped transactions, distributed amongst a number of entities.

This means a blockchain — a piece of technology — can replace an intermediary in situations where a trusted third party is required. So, for instance, while we now need a bank (or several) in order to make a payment to a foreign country, a piece of software — the program running bitcoin — can now send money to someone across the world for us. And the latter is much cheaper and faster — and, in the case of bitcoin, transparent so you can see when the money arrives, whereas with a bank wire, you have to find out from the recipient. (Blockchains can be made private as well, to protect data.) Overall, blockchain technology promises greater security and lower costs than traditional databases.

“The problem in the market is that blockchain is being used as a collective noun for the bitcoin blockchain and everything else in between, and that’s not exactly true,” says David Furlonger, Gartner vice president and fellow. Blockchain has become the catch-all phrase for a larger group of technologies called “distributed ledger technology” or DLT. Technically speaking, it is possible to have a distributed ledger that is not constructed as a blockchain (as described below), however, when people refer to blockchain technology, they are often speaking about DLT.

And if you want to get really technical, “DLT falls short because it assumes information gets distributed when in many cases it doesn’t,” says Javier Paz, senior analyst at financial services research firm Aite Group. But “blockchain,” “distributed ledger,” or “DLT” should suffice for all but the most technical discussions.

Additional resources

WHY IT MATTERS

“The key differentiator between a database and blockchain is that a database is managed and controlled by someone,” says Eric Piscini, principal of financial services technology at Deloitte. “A blockchain doesn’t need to be managed by someone, so you don’t have to trust someone to run the platform. It’s run by everyone at the same time. That’s a shift in business models.”

Eventually, blockchains could give rise to a number of peer-to-peer networks not run by any centralized parties that enable the creation and transfer of money or other assets. For instance, the technology could be used to create an Airbnb-like network without the company Airbnb. When combined with the Internet of Things (IoT), it could create an Uber-like program without Uber. Such peer-to-peer networks are often referred to as distributed autonomous organizations (DAOs), and someday, they could transform our whole conception of companies.

Gartner projects that blockchain will result in $176 billion in added business value by 2025, and $3.1 trillion by 2030.

Additional resources

HOW IT WORKS

Not every blockchain works the same way. For example, they can differ in their consensus mechanisms, which are the rules by which the technology will update the ledger. But broadly, a blockchain is a ledger on which new transactions are recorded in blocks, with each block identified by a cryptographic hash of that data. The same hash will always result from that data, but it is impossible to re-create the data from the hash. Similarly, if even the smallest detail of that transaction data is changed, it will create a wildly different hash, and since the hash of each block is included as a data point in the next block, subsequent blocks would also end up with different hashes. This is what makes the ledger tamper-proof. Finally, security also comes from the fact that multiple computers called nodes store the blockchain, and so to change the ledger, one would need to gain control of at least 50 percent of the computing power in order to change the record — a difficult feat especially for a public blockchain such as bitcoin’s.

Additional resources

WHY IT’S DISRUPTIVE

A common saying is that blockchain technology will do what the internet did to media — disrupt — but to sectors such as financial services, law, and other industries offering trust as a service.

“The industry has lived and breathed off the back of intermediation,” Furlonger says. Noting that banks typically control financial activity and governments usually control the economic assets we use, he adds, “If you think about the way authentication and identification is done, the way you onboard customers, the way you share records, all of this is done through siloed, decades-old channels and processes. And here you have a technology that basically says you no longer need a middleman, you have one golden copy of a record that no one can change … anyone can join any time because it’s open source … it’s kind of free, anyone can create any asset and distribute it to anyone else on the planet. You’re basically saying, we’re going to change the way the economic models that have grown up for the last several centuries operate. As a result, we’re going to change the way society operates as well.”

He believes the outcome will be what Gartner calls “the programmable economy,” which it defines as a global market powered by algorithmic businesses and DAOs running on blockchain-based networks whose assets engage in economic activity by rules coded in software or artificial intelligence. The two most commonly used public networks so far are bitcoin and Ethereum, a public blockchain like bitcoin’s that is focused on smart contracts, which are software programs that execute transactions when certain conditions are met.

But that’s at least a decade off. To start, the technology will make the back-end operations of many companies more efficient because, now, firms that work with each other and even different departments within one organization often maintain their own ledgers, duplicating work. “At least we will see it impacting the back and middle office, eradicating the problems and cost associated with sustaining multiple versions of the truth,” Paz says.

A recent report by Bain and Company estimated that the savings from implementation of blockchain technology would amount to $15 to $35 billion annually. As services at certain companies become more efficient and cheaper, marketshare among incumbents is likely to change. And because the technology is open source, “You can build that platform for a fraction of what it would cost you with traditional technologies,” Piscini says. That gives both startups as well as the software itself an opening. For instance, people could use the bitcoin network, which is not run by any one company, to make payments cheaply, quickly, and efficiently. “If you just enable transactions for others, you’re in big trouble,” he says, “because the blockchain can replace you as an entity without the need for a legal entity to run it.”

Additional resources

BUSINESS OPPORTUNITIES

Though some executives might fear software replacing their role or their company’s, even email hasn’t killed snail mail. Though the technology does promise to change existing marketshare, Piscini says companies can avoid becoming obsolete by seizing upon new opportunities. “If companies provide incremental services, if they provide you the ability to dispute transactions, to do some analytics on top of that platform — incremental value that you don’t have today — that’s how they’re going to survive.” In fact, blockchain technology will enable companies to offer services that previously were impossible without it. Gartner predicts that by 2022, at least one new business based on blockchain technology will be worth $10 billion.

Blockchain technology makes possible new offerings in industries as diverse as financial services, healthcare, supply chain, oil and gas, retail, music, advertising, publishing, media, energy, government, and many others. In finance alone, it can be used for making international payments, trading stocks, bonds, and commodities, and providing an audit trail for regulators. It can create new forms of assets and make it possible to trade existing illiquid ones, such as mobile minutes, energy credits and frequent flyer miles. It can be used to track provenance, stamping out fraud and counterfeiting in areas such as luxury goods, fine art, pharmaceuticals, food, and government documents. It makes it possible for musicians, writers, and other artists to embed royalty payments into their MP3s, ebooks, and other creations to pay themselves every time their work is bought or resold. It can be used by publishers to run publications funded not by ads but by micropayments issued by readers’ browsers. It can enable people to manage their identity and the privacy of their data instead of having to rely on centralized entities such as Google, Facebook, or Twitter. It can show an individual voter that their vote was counted correctly and the entire electorate that no votes were fraudulent or counted more than once. And those are just some examples.

Gartner projects that devices or things using blockchains to transact will comprise 30 percent of the global customer base by 2030. One of the more popular futuristic scenarios is that we may someday tell our self-driving car that we’re in a rush and to send a micropayment to any car that is willing to be passed on the highway. The money will be transmitted via a combination of blockchain and IoT technologies.

Additional resources

VENDORS

A host of platform vendors to enterprise have already cropped up. Although the space has more than a dozen players, the most active groups (two are not companies), in alphabetical order, are:

  1. Chain, which, together with Nasdaq, created the first private blockchain in production (though on a small scale) — Nasdaq Linq, which is used in managing shares in private companies. It also has partnerships with Visa, Citi, and Capital One.
  2. Ethereum, a P2P network that’s public like bitcoin but focused on smart contracts, not payments, and that has an enterprise initiative, the Enterprise Ethereum Alliance (EEA).
  3. Hyperledger, the open-source effort run by the Linux Foundation and closely affiliated with IBM which counts companies as diverse as Airbus, American Express, Daimler, and Intel as members.
  4. R3, a consortium of financial institutions whose distributed ledger offering, Corda, is not structured as a blockchain, meaning that transaction data is not published to the ledger of every participant in the network. Instead transactions are published only on the ledgers of the relevant parties.

Others include Axoni, Digital Asset Holdings, Monax, Ripple, SETL, Symbiont, and T0 (T-zero, as in settlement in zero days).

Businesses helping firms implement blockchain solutions include Accenture, CapGemini, Chainsmiths, Deloitte, Ernst and Young, IBM Global Services, Infosys, KMPG, PwC, Polaris, Tata Consultancy Services, Wipro, and others. IBM and Microsoft are leaders in cloud blockchain services.

Additional Resources

READ MORE ABOUT BLOCKCHAIN

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Blockchain 101

Blockchain is a new buzzword in technology. It’s the basis of all the excitement about Bitcoin, cryptocurrencies, and Fintech. If you’re unfamiliar with blockchain technology, think of it is as a trustless decentralized general ledger. What that means is – everything written to this ledger is considered the “truth” only after consensus is supplied by a significant majority of participants hosting the blockchain. This makes the blockchain “trustless” because no party can manipulate the results without conspiring with that large majority. Imagine a card game where everybody had to show their hands. There would be no bluffing (though it wouldn’t be a very interesting card game).

Participants of the blockchain are often “anonymous” so understanding who you would potentially conspire with is also challenging and quite impractical. (On tuka the parties to an exchange would not be anonymous, so you would know exactly who you were dealing with.) Furthermore, the blockchain leaves an audit trail of all previous transactions for transparent traceability and the continual lengthening of the block structure makes it difficulty to create a forgery. On tuka this means a user can trace his or her own peer network that can yield significant value.

The blockchain is physically decentralized like a large distributed peer-to-peer database. The single source of truth information it holds is virtually centralized and all data is publicly accessible. Information written to that blockchain can be verified without understanding what the contents are because of how blockchain works in trustless mode.

In plain English, blockchain technology eliminates the need for a 3rd party middleman to insure trust in the system. This applies to banks and insurance companies as financial intermediaries, lawyers and politicians as legal intermediaries, and, in the creative industries, online middlemen like centralized retailers and distributors (Apple, Amazon, Google). This has broad and deep implications for the business models of these industries. Such 3rd parties are quite costly to transactions and in the case of digital content, often take the lion’s share of the value.

We’re learning here as we go, but this should provide some food for thought…(to be continued)

Links:

What is the Blockchain?

 

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Creative Disruption!

Disrupted by technology!

What happened to the music industry?  The publishing industry? The television and film industry? The stock photography industry?

Simple: Disrupted by digital technology!

The digitization of creative content that transformed media like music, imagery, text and video has had broad economic consequences:

  1. The production costs of creating such media in digital formats plunged.
  2. The distribution costs associated with sharing that media also plunged.
  3. The combined effect of 1. & 2. has led to an explosion of new content.

Simple economics shows that when the supply of a good rises sharply but the demand does not keep pace, the price falls precipitously. So the price of digital content like music mp3s, video files, images, and eBooks has plunged as well.

Because the duplication and distribution costs are close to zero, consumers of such content assume that the price should be close to zero. [See Chris Anderson’s book, Free.] Unfortunately, while the out-of-pocket production costs of creative media have gone down, the time, energy and skill required to create have not. Thus, the revenue streams and income accruing to creative artists has been hollowed out.

Two of the most disrupted professions has been musicians and writers. A few graphic slides illustrate the problem:

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This might seem discouraging, spelling the end of these professions, but we would suggest a more circumspect analysis of the challenges and opportunities presented by the digital age. After all, being an artist has always been a challenge in our commercial world. With tuka we propose that as technology has disrupted the past, it will also disrupt the present and help shape an unanticipated future. Stay tuned…

Hello world.

Hi and WELCOME!

This is our first post on the tuka blog, where we hope to get into the weeds on this idea of a creative media ecosystem. We understand the question “what is tuka?” at this point invites more questions than answers and we hope to balance that out through an on-going discussion.

Just to establish a frame for future reference, there are a few values that we at tuka support as a community. These values are infused in our chosen Mission:

  1. We believe that personal creativity and social sharing is essential to the human experience and the search for life’s meaning. We choose not to artificially categorize creativity by creating walled gardens between various media and genres. Thus, we do not try to impose any separation between musicians, photographers, authors, poets, videographers, etc. Nor do we attempt to divide content creators from their creatively-minded audiences and consumers. Through the media platform, you choose what to plant in your personal garden, thereby enabling creativity to cross-pollinate.
  2. We believe the future of data network technology must necessarily move toward more participatory exchange and management of information data, with greater individual ownership and control. In other words, it’s your data and it’s your personal asset to exchange, monetize, etc., as you see fit. This is about more than just privacy. To allow someone else to exploit that value without your expressed permission is akin to sharecropping rather than homesteading. Personal information is an asset as important as your labor, skills, and capital.
  3. Decentralization, as opposed to centralization, is fundamental to this new world.
  4. Many of us willingly share our creative output for free, so the primary focus on monetization is misguided in our view. Yes, we’d all like to make more money, but more important is the intrinsic value of what we do to make that money. From a purely economic point of view, in the world of FREE, data value has become more valuable than transaction value. In other words, connections are more important than sales.

So, as we build awareness, these values are our touchstones. So please comment at will and join our creative community.

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