The Future Will Soon Be Here

November 2, 2022November 2, 2022 tukaglobal

I repost Ted Gioia’s Substack post here because I couldn’t have said it all better myself. As he outlines it, this has been tuka‘s approach all along. The one thing he doesn’t address is the winner-take-all aspect of creative markets – why all these YT revenues end up going to a few mass influencers or curators. Blockchain and tokenization are necessary tools to decentralize and distribute rewards for value created.

A Creator-Driven Culture is Coming—and Nobody Can Stop It

By Ted Gioia

“Victory is assured!”

I’m talking about victory for creative professionals—musicians, writers, visual artists, and others who have been squeezed by the digital economy.

You’re probably surprised. Some people think I’m the Dr. Doom of the music scene. And it’s true, I’ve made a lot of depressing predictions over the last few years, Even more depressing, many of these predictions have already come true.

I’ve told horror stories about musicians who lost their gigs during the pandemic, and also saw their music royalties collapse as the audience shifted to streaming. I’ve talked about journalists fired from downsizing newspapers. And filmmakers who can’t get funded to make a movie unless a Marvel superhero is named in the title .

But now I want to tell you the rest of the story. Because the next phase in the cycle is filled with good news.

Victory is assured.

Let’s start by looking at the music business, where the squeeze has been the worst.

Whenever I do a forecast, my first step is to follow the money. And the adage that money talks has never been truer than right now. Those dollars are telling an amazing and unexpected story. Word on the street is that record labels are offering far more attractive terms to musicians than ever before.

“Here’s my craziest prediction. In the future, single individuals will have more impact in launching new artists than major record labels or streaming platforms.”

In the old days, musicians were lucky to get 15% of revenues, but I’m now hearing increasingly about deals that give artists a 50% cut, and in some instances allow them to regain ownership of their master recordings at a future date. The music moguls are positively generous—and (as we shall see) for structural reasons in the business that aren’t going away.

And it’s not just major labels giving more money to musicians. Take a look at Bandcamp, which lets musicians collect almost 90% of revenues from vinyl sales. And I’m hearing constantly from techies and entrepreneurs who are working on similar artist-centric business models. We are only in the early innings of this new game, but the shift is already enough to force huge concessions from legacy music companies.

Artist-friendly platforms are the future of music. And other creative pursuits as well—my own platform, Substack, is also allowing creators to keep close to 90% of revenues. This has spurred a huge talent migration from old media, and not merely for writers—you can find almost every kind of creative professional on Substack, from cartoonists to photographers.

For 25 long, hard years, creative professionals have been told that you must give things away for free on the Internet. But not anymore. Alternative economic models are not only emerging, but are propelling the fastest-growing platforms in arts and entertainment.

This is not only shaking up highbrow and popular culture, but capturing the attention of the next generation of tech visionaries—which is why, in the last year or so, I’ve been constantly approached by startups asking me to evaluate their business plans. This is unprecedented. It simply didn’t happen before the pandemic. But not only are these entrepreneurs trying to figure out what artists want, but they’re actually relying on creator wealth maximization as the focal point for their businesses.

In general, these young techies are smarter than the folks running the music business right now. (That’s a subject I want to discuss at a later date—I call it my ‘idiot nephew theory’ of the music business. But it has to wait.) Of course, many of these entrepreneurs are dreamers who will never go anywhere. That’s always the case with entrepreneurs. But some will succeed, and in a meaningful way.

In fact, it’s inevitable—and for the simple reason that the old institutions have stopped investing in the future. The new guard will take over because the old guard got weak and lazy.

Why is all this happening? Let’s go back to look at the music situation, because this helps us understand the larger picture.

Record labels are getting more generous because they don’t have a choice. They destroyed their own power base and source of influence. They stopped investing in R&D and new consumer technologies back in the 1980s. Twenty years later, they stopped manufacturing and distributing physical albums—and even when vinyl took off, they were asleep at the wheel. Over the same time period, they lost their marketing skills, trusting more in payola and influence peddling of various sorts.

But that’s just a start. Over a fifty-year period, record labels relentlessly dumbed-down their A&R departments. They shut down their recording studios, and let musicians handle that themselves—often even encouraging artists to record entire albums at home. Then they let huge streaming platforms control the relationship with consumers. At every juncture, they opted to do less and less, until they were left doing almost nothing at all.

The music industry’s unstated dream was to exit every part of the business, except cashing the checks. But reality doesn’t work that way. If you don’t add value, those checks eventually start shrinking.

The simple fact is that the legacy music business is living off the past—and will continue to do so until the copyrights expire. For a few more years, they will collect royalties on old songs, and make money on reissues and archival material. They know themselves that they have lost control of the future of music. That’s why, if they have spare cash, they use it to buy up catalogs and publishing rights of music from back in the day. Their favorite artists are dead artists.

But this is not a long-term game. It’s a death wish.

The major labels would like to own the music stars of the future, but they won’t. They would like to act greedy and put the squeeze on the next generation, but they can’t. They simply don’t have the leverage. And never will again.

And who will win if record labels lose? You think it might be the streaming platforms? Think again—because that’s not going to happen. Spotify and Apple Music are even less interested than the major labels in nurturing talent and building the careers of young artists.

Here’s my craziest prediction. In the future, single individuals will have more impact in launching new artists than major record labels or streaming platforms.

Just consider this: There are now 36 different YouTube channels with 50 million or more subscribers—and they’re often run by a single ambitious person, maybe with a little bit of support help. In fact, there are now seven YouTube channels with more than 100 million subscribers. By comparison, the New York Times only has nine million subscribers.

“How could a Substack column outbid major media outlets for new talent? But not only can it happen, it will inevitably happen.”

Most people don’t stop and think about the implications of this. But just ponder what it means when some dude sitting in a basement has ten times as much reach and influence as the New York Times.

If you run one of these channels and have any skill in identifying talent, you can launch the next generation of stars.

And not just in music. This works for everything—comedy, dance, animation, you name it.

Consider the case of MrBeast. Many of you have no idea what I’m talking about, but you need to find out—because MrBeast (or people like him) are going to change popular culture, whether we like it or not. MrBeast, for a start, runs 18 YouTube channels with more than 200 million total subscribers. He now has his videos translated into four languages: Spanish, Portuguese, Hindi, and Russian.

What does he do? I’m no expert on MrBeast, but I’m told he’s a good dude, and gives away a lot of money—huge sums, to be blunt. And he can afford to do it, because YouTube channels are low-overhead operations with enormous cash generation potential.

Oh, I forgot to mention that MrBeast is looking to raise capital from financial investors. He claims that his business is worth $1.5 billion, and may sell 10% to get $150 million to fund his future plans.

I’m not even beginning to pretend that MrBeast will use this money to get into the music business. But he might. And if he doesn’t, someone else like him will.

MrBeast has got the cash to shake up the music business—and if he doesn’t, someone like him will
I note that MrBeast only ranks number five in YouTube channel subscriptions. There are other people like him, or will be soon, and they are much better equipped to launch a new music act than any of the major labels.

That’s why musicians can make more money when the distribution model shifts from bloated record labels with huge overhead to alternative web-based platforms. I expect that deals for artists on these web channels will be more like 50/50. MrBeast is known for his generosity, but even if he wasn’t, his business model is much more flexible than anything Sony or Universal Music could ever dream of. These new platforms can afford to offer better terms to creators, and almost certainly will—because if they don’t someone else will.

This didn’t take place during the first wave of YouTube channels, because these influencers (I hate the term, but it’s appropriate in this setting) were focused on making themselves into money-making stars. But the next phase of growth for these people is brand extension, and that’s going to turn them into talent scouts.

I’m focusing on YouTube channels here, but the same story could be told about podcasters—or any other individual with a lock on an audience in the tens of millions. Consider them as the equivalent of the Ed Sullivan Show in the old days. The host of this long-running TV show didn’t have much talent himself, but it hardly mattered—Ed Sullivan was the curator who introduced America to Elvis Presley, the Beatles, and other rising stars. That kind of thing will happen again, but via a web channel or alternative platform.

These individuals can do absolutely everything a record label currently does, and do it better—they can launch new stars, get them instant visibility and gigs, generate millions of views for new songs, attract endorsement deals, etc. The few things they can’t do in-house (for example, press vinyl records) can be easily outsourced.

The same thing will happen in publishing. I’m already seeing a few of the more popular Substack writers using their huge subscriber base to launch the careers of other writers. By my calculations, this can be even more profitable and impactful than a book contract with a New York publisher—benefiting both the sponsoring writer and the new talent.

In fact, I might move in this direction myself. It’s too early, but 2-3 years from now I might start scouting out talented young writers or podcasters and feature them here in The Honest Broker. Everything depends on subscription numbers, but it’s possible that I could pay better than the New York Times or the Wall Street Journal.

At first blush, this seems impossible. How could a Substack column outbid major media outlets for new talent? But not only can it happen, it will inevitably happen. It’s the same story as in music. The old guard has stopped defending its base business, and everything is either up for grabs now—or will be very soon.

Newspapers have lost enormous power over the last twenty years. They have lost subscribers. They have lost ad revenues. They have even, in many instances, lost credibility and respect. Up until now, this has hurt writers—who depended on the newspapers for assignments and pay checks. But we are now arriving at the point where the trend reverses.

And this reversal opens up huge opportunities and income potential for smarter, nimbler operators.

I could give many other examples. What I’m describing is also true for Hollywood movie studios, book publishing, and every other field where the old guard has become arteriosclerotic and inflexible.

Okay, let me summarize the whole thing in a diagram.

[Note: tuka is in the blue circle here.]

There’s an elegant irony here. The very same forces putting the squeeze on creators actually serve to accelerate the happy next phase.

This is one reason why I believe karma is at work in the universe. If you run a business that depends on creativity, you can’t punish the creators without consequences. Sometimes it takes a while for the cycle to play out, but it always plays out the same way.

There are many aspects of this story I haven’t covered here. There are all sorts of Web3 angles, and there’s also a story to be told about how platforms such as Spotify will pay a price for squeezing musicians to subsidize their entry into podcasting and other ancillary businesses. But we can look at those on another occasion.

For the time being, I just want you to keep your eyes on the prize. And remember—Victory is Assured!

Why We’re Jaded with Facebook

December 26, 2018 tukaglobal749 Comments

Facebook has been under constant fire for more than a year now and seems unable to answer its critics. Under such criticism the company’s executive team has promised to make user privacy its primary concern, until the next revelation exposes its duplicity. Now it seems every other week another article is written demanding that Facebook be broken up or regulated by government oversight.

We might wonder what exactly is wrong with Facebook and why can’t they fix it?

The answers are in the faulty logic of Facebook as a social network that connects the world and the financial business model required to fund that mission. Both efforts are fighting a natural contradiction when it comes to real reasons people use Facebook.

Let’s address the social aspect first. Facebook started as a on-campus online gossip network at Harvard University. This is the secret of its appeal – people like to gossip about others within their network of peers. The behavior went viral and expanded from Harvard to Yale and Princeton and other Ivys. Then it spread to universities across the country. Nobody really is as concerned with social status as young people between the ages of 13 and 21.

But then Facebook decided its gossip model should go public and proudly marked its rapid growth of the social network across the globe – to the tune of more than 2 billion users. We even got a movie out of it. But let’s consider the logic of such a global gossip network because, frankly, it makes no sense.

Gossip serves a very useful social and evolutionary purpose, despite it being popularly dismissed as “small talk” or “idle talk,” or even malicious or “nosy.” Robin Dunbar (he of Dunbar’s Number = 150) explains how gossip helps us maintain social relationships in groups and also helps community members sanction free riders or those who break established social norms (“Gossip in Evolutionary Perspective”). In this way, gossip provides a means of gaining information about individuals, cementing social bonds, and engaging in indirect aggression; helping people learn about how to live in their cultural society. Gossip anecdotes communicate rules in narrative form, such as by describing how someone else came to grief by violating social norms.

Certainly there appears to be something about gossip that is innate: our entertainment world is pretty much driven commercially by celebrity gossip. But we don’t know these people!

Dunbar actually extended his research to online social networks, specifically using Facebook as a test case of whether network technology relaxes the constraints that limit the size of offline social relationships (link). What he found was that the 150 number still holds for any meaningful social networks. In other words, the human brain is developed enough to maintain 150 social connections, after which the connections fall to the level of casual acquaintances. According to surveys, this is the experience of most Facebook users. Facebook “friends” are not really friends in the vernacular meaning of the word.

So, a network that connects us to roughly 2 billion users across the globe doesn’t make a whole lot of sense for the benefits of gossip. Rather, a gossip network that extends to people we have no personal relationship with tends to reinforce the negative aspects of gossip, i.e., meanness and rudeness. We can observe that celebrity gossip tends to focus on caricatures that emphasize the extremes of hero worship and cruel pettiness. In similar fashion, Facebook is very useful for small friendship networks that cohere around common interests or personal relationships, and the limits on that tend to approximate around 150 people.

The second reason Facebook is failing as a social network relates to its ad-driven revenue model. If I am using Facebook as a way to connect to my friends, I certainly resent a third party advertiser trying to insert itself into the middle of that communication channel (just imagine advertisers interrupting in the middle of your phone call!). How many of us were turned away from Facebook about 2+ years ago when our feeds were suddenly flooded with advertisements for things we had no interest in? The network data Facebook is selling to advertisers is weak, not robust. We know what our friends like, if they are friends, and Facebook algorithms do a poor job of approximating that. “Like” clicks are not really likes and digital advertisers know it.

The problem here is that Facebook ad rates are a function of the number of users FB claims to reach and the flow of network information across those user nodes, even if it’s Candy Crush games or humorous cat tricks. Facebook cannot really evaluate the subjective value of the information flow, so it merely sells it all in targeted user bundles. This does not serve end users (or advertisers) very well and the attrition rate is evidence of general user dissatisfaction. I would guess that most users stick with Facebook for the positive value they receive from far-flung friend networks and the lack of a viable alternative. But then we end up ignoring most of the white noise on our feeds, threatening the financial viability of FB’s revenue model.

So where does this lead?

Frankly, I would argue Facebook’s longevity under its current business model is challenging. Gossip makes sense and can be tolerated in small community groups, while wider social networks make sense if they are somewhat limited to common interests. Facebook “Groups” seem to exhibit some of these qualities, so perhaps that is a direction FB can move towards. But the problem then is that it is a much less valuable Facebook under its ad revenue model. Market competitions and alternative OSNs may eat into FB’s global network, forcing FB to adapt to a smaller footprint. That is likely to be a difficult financial adjustment for a company of FB’s size and reach. But technology cuts both ways and today’s Facebook may just be tomorrow’s obsolescence. Personally, I would prefer a social network that delivers more meaningful connections to other people and allows me to filter out a lot of the white noise. That can’t happen as long as the network servers make money off white noise.

Madmen and the Godless Algorithm

May 22, 2018 tukaglobal672 Comments

This article from The New Yorker.

Good overview history of the advertising model that has dominated our commercialism for decades. It’s now gone on digital steroids. The disruption of ad technology has interesting implications.

How the Math Men Overthrew the Mad Men

By Ken Auletta

Once, Mad Men ruled advertising. They’ve now been eclipsed by Math Men—the engineers and data scientists whose province is machines, algorithms, pureed data, and artificial intelligence. Yet Math Men are beleaguered, as Mark Zuckerberg demonstrated when he humbled himself before Congress, in April. Math Men’s adoration of data—coupled with their truculence and an arrogant conviction that their “science” is nearly flawless—has aroused government anger, much as Microsoft did two decades ago.

The power of Math Men is awesome. Google and Facebook each has a market value exceeding the combined value of the six largest advertising and marketing holding companies. Together, they claim six out of every ten dollars spent on digital advertising, and nine out of ten new digital ad dollars. They have become more dominant in what is estimated to be an up to two-trillion-dollar annual global advertising and marketing business. Facebook alone generates more ad dollars than all of America’s newspapers, and Google has twice the ad revenues of Facebook.

In the advertising world, Big Data is the Holy Grail, because it enables marketers to target messages to individuals rather than general groups, creating what’s called addressable advertising. And only the digital giants possess state-of-the-art Big Data. “The game is no longer about sending you a mail order catalogue or even about targeting online advertising,” Shoshana Zuboff, a professor of business administration at the Harvard Business School, wrote on faz.net, in 2016. “The game is selling access to the real-time flow of your daily life—your reality—in order to directly influence and modify your behavior for profit.” Success at this “game” flows to those with the “ability to predict the future—specifically the future of behavior,” Zuboff writes. She dubs this “surveillance capitalism.” [I question whether this will really work as anticipated once everybody is hip to the game.]

However, to thrash just Facebook and Google is to miss the larger truth: everyone in advertising strives to eliminate risk by perfecting targeting data.[This is the essence of what we’re doing here – reducing the risk of uncertainty.] Protecting privacy is not foremost among the concerns of marketers; protecting and expanding their business is. The business model adopted by ad agencies and their clients parallels Facebook and Google’s. Each aims to massage data to better identify potential customers. Each aims to influence consumer behavior. To appreciate how alike their aims are, sit in an agency or client marketing meeting and you will hear wails about Facebook and Google’s “walled garden,” their unwillingness to share data on their users. When Facebook or Google counter that they must protect “the privacy” of their users, advertisers cry foul: You’re using the data to target ads we paid for—why won’t you share it, so that we can use it in other ad campaigns? [But who really owns your data? Even if you choose to give it away?]

This preoccupation with Big Data is also revealed by the trend in the advertising-agency business to have the media agency, not the creative Mad Men team, occupy the prime seat in pitches to clients, because it’s the media agency that harvests the data to help advertising clients better aim at potential consumers. Agencies compete to proclaim their own Big Data horde. W.P.P.’s GroupM, the largest media agency, has quietly assembled what it calls its “secret sauce,” a collection of forty thousand personally identifiable attributes it plans to retain on two hundred million adult Americans. Unlike Facebook or Google, GroupM can’t track most of what we do online. To parade their sensitivity to privacy, agencies reassuringly boast that they don’t know the names of people in their data bank. But they do have your I.P. address, which yields abundant information, including where you live. For marketers, the advantage of being able to track online behavior, the former senior GroupM executive Brian Lesser said—a bit hyperbolically, one hopes—is that “we know what you want even before you know you want it.”[That sounds like adman hubris rather than reality.]

Worried that Brian Lesser’s dream will become a nightmare, ProPublica has ferociously chewed on the Big Data privacy menace like a dog with a bone: in its series “Breaking the Black Box,” it wrote, “Facebook has a particularly comprehensive set of dossiers on its more than two billion members. Every time a Facebook member likes a post, tags a photo, updates their favorite movies in their profile, posts a comment about a politician, or changes their relationship status, Facebook logs it . . . When they use Instagram or WhatsApp on their phone, which are both owned by Facebook, they contribute more data to Facebook’s dossier.” Facebook offers advertisers more than thirteen hundred categories for ad targeting, according to ProPublica.

Google, for its part, has merged all the data it collects from its search, YouTube, and other services, and has introduced an About Me page, which includes your date of birth, phone number, where you work, mailing address, education, where you’ve travelled, your nickname, photo, and e-mail address. Amazon knows even more about you. Since it is the world’s largest store and sees what you’ve actually purchased, its data are unrivalled. Amazon reaches beyond what interests you (revealed by a Google search) or what your friends are saying (on Facebook) to what you actually purchase. With Amazon’s Alexa, it has an agent in your home that not only knows what you bought but when you wake up, what you watch, read, listen to, ask for, and eat. And Amazon is aggressively building up its meager ad sales, which gives it an incentive to exploit its data.

Data excite advertisers. Prowling his London office in jeans, Keith Weed, who oversees marketing and communications for Unilever, one of the world’s largest advertisers, described how mobile phones have elevated data as a marketing tool. “When I started in marketing, we were using secondhand data which was three months old,” he said. “Now with the good old mobile, I have individualized data on people. You don’t need to know their names . . . You know their telephone number. You know where they live, because it’s the same location as their PC.” Weed knows what times of the day you usually browse, watch videos, answer e-mail, travel to the office—and what travel routes you take. “From your mobile, I know whether you stay in four-star or two-star hotels, whether you go to train stations or airports. I use these insights along with what you’re browsing on your PC. I know whether you’re interested in horses or holidays in the Caribbean.” By using programmatic computers to buy ads targeting these individuals, he says, Unilever can “create a hundred thousand permutations of the same ad,” as they recently did with a thirty-second TV ad for Axe toiletries aimed at young men in Brazil. The more Keith Weed knows about a consumer, the better he can aim to target a sale.

Engineers and data scientists vacuum data. They see data as virtuous, yielding clues to the mysteries of human behavior, suggesting efficiencies (including eliminating costly middlemen, like agency Mad Men), offering answers that they believe will better serve consumers, because the marketing message is individualized. The more cool things offered, the more clicks, the more page views, the more user engagement. Data yield facts and advance a quest to be more scientific—free of guesses. As Eric Schmidt, then the executive chairman of Google’s parent company, Alphabet, said at the company’s 2017 shareholder meeting, “We start from the principles of science at Google and Alphabet.”

They believe there is nobility in their quest. By offering individualized marketing messages, they are trading something of value in exchange for a consumer’s attention. They also start from the principle, as the TV networks did, that advertising allows their product to be “free.” But, of course, as their audience swells, so does their data. Sandy Parakilas, who was Facebook’s operations manager on its platform team from 2011 to 2012, put it this way in a scathing Op-Ed for the Times, last November: “The more data it has on offer, the more value it creates for advertisers. That means it has no incentive to police the collection or use of that data—except when negative press or regulators are involved.” For the engineers, the privacy issue—like “fake news” and even fraud—was relegated to the nosebleed bleachers. [This fact should be obvious to all of us.]

With a chorus of marketers and citizens and governments now roaring their concern, the limitations of Math Men loom large. Suddenly, governments in the U.S. are almost as alive to privacy dangers as those in Western Europe, confronting Facebook by asking how the political-data company Cambridge Analytica, employed by Donald Trump’s Presidential campaign, was able to snatch personal data from eighty-seven million individual Facebook profiles. Was Facebook blind—or deliberately mute? Why, they are really asking, should we believe in the infallibility of your machines and your willingness to protect our privacy?

Ad agencies and advertisers have long been uneasy not just with the “walled gardens” of Facebook and Google but with their unwillingness to allow an independent company to monitor their results, as Nielsen does for TV and comScore does online. This mistrust escalated in 2016, when it emerged that Facebook and Google charged advertisers for ads that tricked other machines to believe an ad message was seen by humans when it was not. Advertiser confidence in Facebook was further jolted later in 2016, when it was revealed that the Math Men at Facebook overestimated the average time viewers spent watching video by up to eighty per cent. And in 2017, Math Men took another beating when news broke that Google’s YouTube and Facebook’s machines were inserting friendly ads on unfriendly platforms, including racist sites and porn sites. These were ads targeted by keywords, like “Confederacy” or “race”; placing an ad on a history site might locate it on a Nazi-history site.

The credibility of these digital giants was further subverted when Russian trolls proved how easy it was to disseminate “fake news” on social networks. When told that Facebook’s mechanized defenses had failed to screen out disinformation planted on the social network to sabotage Hillary Clinton’s Presidential campaign, Mark Zuckerberg publicly dismissed the assertion as “pretty crazy,” a position he later conceded was wrong.

By the spring of 2018, Facebook had lost control of its narrative. Their original declared mission—to “connect people” and “build a global community”—had been replaced by an implicit new narrative: we connect advertisers to people.[Indeed, connecting people on a global basis for human interaction really doesn’t make a lot of sense. A global gossip network? Unless, of course, you’re trying to monetize it.] It took Facebook and Google about five years before they figured out how to generate revenue, and today roughly ninety-five percent of Facebook’s dollars and almost ninety percent of Google’s comes from advertising. They enjoy abundant riches because they tantalize advertisers with the promise that they can corral potential customers. This is how Facebook lured developers and app makers by offering them a permissive Graph A.P.I., granting them access to the daily habits and the interchange with friends of its users. This Graph A.P.I. is how Cambridge Analytica got its paws on the data of eighty-seven million Americans.

The humiliating furor this news provoked has not subverted the faith among Math Men that their “science” will prevail. They believe advertising will be further transformed by new scientific advances like artificial intelligence that will allow machines to customize ads, marginalizing human creativity. With algorithms creating profiles of individuals, Airbnb’s then chief marketing officer, Jonathan Mildenhall, told me, “brands can engineer without the need for human creativity.” Machines will craft ads, just as machines will drive cars. But the ad community is increasingly mistrustful of the machines, and of Facebook and Google.[As they should be – the value has been over-hyped.] During a presentation at Advertising Week in New York this past September, Keith Weed offered a report to Facebook and Google. He gave them a mere “C” for policing ad fraud, and a harsher “F” for cross-platform transparency, insisting, “We’ve got to see over the walled gardens.”

That mistrust has gone viral. A powerful case for more government regulation of the digital giants was made by The Economist, a classically conservative publication that also endorsed the government’s antitrust prosecution of Microsoft, in 1999. The magazine editorialized, in May, 2017, that governments must better police the five digital giants—Facebook, Google, Amazon, Apple, and Microsoft—because data were “the oil of the digital era”: “Old ways of thinking about competition, devised in the era of oil, look outdated in what has come to be called the ‘data economy.’ ” Inevitably, an abundance of data alters the nature of competition, allowing companies to benefit from network effects, with users multiplying and companies amassing wealth to swallow potential competitors.

The politics of Silicon Valley is left of center, but its disdain for government regulation has been right of center. This is changing. A Who’s Who of Silicon notables—Tim Berners-Lee, Tim Cook, Ev Williams, Sean Parker, and Tony Fadell, among others—have harshly criticized the social harm imposed by the digital giants. Marc Benioff, the C.E.O. of Salesforce.com—echoing similar sentiments expressed by Berners-Lee—has said, “The government is going to have to be involved. You do it exactly the same way you regulated the cigarette industry.”

Cries for regulating the digital giants are almost as loud today as they were to break up Microsoft in the late nineties. Congress insisted that Facebook’s Zuckerberg, not his minions, testify. The Federal Trade Commission is investigating Facebook’s manipulation of user data. Thirty-seven state attorneys general have joined a demand to learn how Facebook safeguards privacy. The European Union has imposed huge fines on Google and wants to inspect Google’s crown jewels—its search algorithms—claiming that Google’s search results are skewed to favor their own sites. The E.U.’s twenty-eight countries this May imposed a General Data Protection Regulation to protect the privacy of users, requiring that citizens must choose to opt in before companies can horde their data.

Here’s where advertisers and the digital giants lock arms: they speak with one voice in opposing opt-in legislation, which would deny access to data without the permission of users. If consumers wish to deny advertisers access to their cookies—their data—they agree: the consumer must voluntarily opt out, meaning they must endure a cumbersome and confusing series of online steps. Amid the furor about Facebook and Google, remember these twinned and rarely acknowledged truisms: more data probably equals less privacy, while more privacy equals less advertising revenue. Thus, those who rely on advertising have business reasons to remain tone-deaf to privacy concerns.

Those reliant on advertising know: the disruption that earlier slammed the music, newspaper, magazine, taxi, and retail industries now upends advertising. Agencies are being challenged by a host of competitive frenemies: by consulting and public-relations companies that have jumped into their business; by platform customers like Google and Facebook but also the Times, NBC, and Buzzfeed, that now double as ad agencies and talk directly to their clients; by clients that increasingly perform advertising functions in-house.

But the foremost frenemy is the public, which poses an existential threat not just to agencies but to Facebook and the ad revenues on which most media rely. Citizens protest annoying, interruptive advertising, particularly on their mobile phones—a device as personal as a purse or wallet. An estimated twenty per cent of Americans, and one-third of Western Europeans, employ ad-blocker software. More than half of those who record programs on their DVRs choose to skip the ads. Netflix and Amazon, among others, have accustomed viewers to watch what they want when they want, without commercial interruption.

Understandably, those dependent on ad dollars quake. The advertising and marketing world scrambles for new ways to reach consumers. Big Data, they believe, promises ways they might better communicate with annoyed consumers—maybe unlock ways that ads can be embraced as a useful individual service rather than as an interruption. If Big Data’s use is circumscribed to protect privacy, the advertising business will suffer. In this core conviction, at least, Mad Men and Math Men are alike.

This piece is partially adapted from Auletta’s forthcoming book, “Frenemies: The Epic Disruption of the Ad Business (and Everything Else).”

I would guess that the ad business will be disrupted further as we find new ways to connect consumers with what they want. This will reduce the power of the Math Men at centralized network servers.

I also suspect search will become a regulated public utility. A free society cannot tolerate one or two private corporations controlling all the information data that flows through its networks.

From Disruption to Dystopia

February 21, 2018 tukaglobal448 Comments

Very interesting article by Joel Kotkin, who researches the economics and politics of cities. It portrays a future that resembles feudalism more than free market democratic capitalism. I’d optimistically venture there will eventually be a more humanist backlash against the future dominance of technology.

From Disruption to Dystopia: Silicon Valley Envisions the City of the Future

The unaffordable Bay Area, Google’s new neighborhood ‘built from the internet up,’ and China’s police state each offer glimpses of what the tech giants plan to sell the rest of us.

by Joel Kotkin

The tech oligarchs who already dominate our culture and commerce, manipulate our moods, and shape the behaviors of our children while accumulating capital at a rate unprecedented in at least a century want to fashion our urban future in a way that dramatically extends the reach of the surveillance state already evident in airports and on our phones.

…

The drive to redesign our cities, however, is not really the end of the agenda of those who Aldous Huxley described as the top of the “scientific caste system.” The oligarchy has also worked to make our homes, our personal space, “connected” to their monitoring and money machines. This may be a multibillion-dollar market soon, but many who have employed such devices at home—appliances that track our activities and speak to us like loyal servants—find them “creepy,” as they should, given that their daily activities are fed back to enrich the high-tech hive mind. Both the city and house the future may owe more to Brave New World than Better Homes and Gardens.

This is a vision of the urban future in which the tech companies’ own workers and whatever other people with skills the machines haven’t yet replaced are a new class of urban serfs living in small apartments, along with a much larger class of dependent persons living on “income maintenance” and housing or housing subsidies provided by the state. “Bees exist on Earth to pollinate flowers, and maybe humans are here to build the machines,” observes professor Andrew Hudson-Smith, from University College London’s Centre for Advanced Spatial Analysis. “The city will be one big joined-up urban machine, and humans’ role on Earth will be done.”

Vampire Squids?

September 12, 2017September 11, 2017 tukaglobal501 Comments

I would say this essay by Franklin Foer is a bit alarmist, though his book is worth reading and taking to heart. We are gradually becoming aware of the value of our personal data and I expect consumers will soon figure out how to demand a fair share of that value, else they will withdraw.

Technology is most often disrupted by newer technology that better serves the needs of users. For Web 2.0 business models, our free data is their lifeblood and soon we may be able to cut them off. Many hope that’s where Web 3.0 is going.

tuka is a technology model that seeks to do exactly that for creative content providers, their audiences, and promoter/fans.

How Silicon Valley is erasing your individuality

By Franklin Foer

Washington Post, September 8, 2017

Franklin Foer is author of “World Without Mind: The Existential Threat of Big Tech,” from which this essay is adapted.

Until recently, it was easy to define our most widely known corporations. Any third-grader could describe their essence. Exxon sells gas; McDonald’s makes hamburgers; Walmart is a place to buy stuff. This is no longer so. Today’s ascendant monopolies aspire to encompass all of existence. Google derives from googol, a number (1 followed by 100 zeros) that mathematicians use as shorthand for unimaginably large quantities. Larry Page and Sergey Brin founded Google with the mission of organizing all knowledge, but that proved too narrow. They now aim to build driverless cars, manufacture phones and conquer death. Amazon, which once called itself “the everything store,” now produces television shows, owns Whole Foods and powers the cloud. The architect of this firm, Jeff Bezos, even owns this newspaper.

Along with Facebook, Microsoft and Apple, these companies are in a race to become our “personal assistant.” They want to wake us in the morning, have their artificial intelligence software guide us through our days and never quite leave our sides. They aspire to become the repository for precious and private items, our calendars and contacts, our photos and documents. They intend for us to turn unthinkingly to them for information and entertainment while they catalogue our intentions and aversions. Google Glass and the Apple Watch prefigure the day when these companies implant their artificial intelligence in our bodies. Brin has mused, “Perhaps in the future, we can attach a little version of Google that you just plug into your brain.”

More than any previous coterie of corporations, the tech monopolies aspire to mold humanity into their desired image of it. They think they have the opportunity to complete the long merger between man and machine — to redirect the trajectory of human evolution. How do I know this? In annual addresses and town hall meetings, the founding fathers of these companies often make big, bold pronouncements about human nature — a view that they intend for the rest of us to adhere to. Page thinks the human body amounts to a basic piece of code: “Your program algorithms aren’t that complicated,” he says. And if humans function like computers, why not hasten the day we become fully cyborg?

To take another grand theory, Facebook chief Mark Zuckerberg has exclaimed his desire to liberate humanity from phoniness, to end the dishonesty of secrets. “The days of you having a different image for your work friends or co-workers and for the other people you know are probably coming to an end pretty quickly,” he has said. “Having two identities for yourself is an example of a lack of integrity.” Of course, that’s both an expression of idealism and an elaborate justification for Facebook’s business model.

There’s an oft-used shorthand for the technologist’s view of the world. It is assumed that libertarianism dominates Silicon Valley, and that isn’t wholly wrong. High-profile devotees of Ayn Rand can be found there. But if you listen hard to the titans of tech, it’s clear that their worldview is something much closer to the opposite of a libertarian’s veneration of the heroic, solitary individual. The big tech companies think we’re fundamentally social beings, born to collective existence. They invest their faith in the network, the wisdom of crowds, collaboration. They harbor a deep desire for the atomistic world to be made whole. (“Facebook stands for bringing us closer together and building a global community,” Zuckerberg wrote in one of his many manifestos.) By stitching the world together, they can cure its ills.

Rhetorically, the tech companies gesture toward individuality — to the empowerment of the “user” — but their worldview rolls over it. Even the ubiquitous invocation of users is telling: a passive, bureaucratic description of us. The big tech companies (the Europeans have lumped them together as GAFA: Google, Apple, Facebook, Amazon) are shredding the principles that protect individuality. Their devices and sites have collapsed privacy; they disrespect the value of authorship, with their hostility toward intellectual property. In the realm of economics, they justify monopoly by suggesting that competition merely distracts from the important problems like erasing language barriers and building artificial brains. Companies should “transcend the daily brute struggle for survival,” as Facebook investor Peter Thiel has put it.

When it comes to the most central tenet of individualism — free will — the tech companies have a different way. They hope to automate the choices, both large and small, we make as we float through the day. It’s their algorithms that suggest the news we read, the goods we buy, the paths we travel, the friends we invite into our circles. [Blogger Note: As computers can’t write music like humans, algorithms cannot really define tastes. Our sensibilities are excited by serendipity, innovation, and surprise.]

It’s hard not to marvel at these companies and their inventions, which often make life infinitely easier. But we’ve spent too long marveling. The time has arrived to consider the consequences of these monopolies, to reassert our role in determining the human path. Once we cross certain thresholds — once we remake institutions such as media and publishing, once we abandon privacy — there’s no turning back, no restoring our lost individuality.

***

Over the generations, we’ve been through revolutions like this before. Many years ago, we delighted in the wonders of TV dinners and the other newfangled foods that suddenly filled our kitchens: slices of cheese encased in plastic, oozing pizzas that emerged from a crust of ice, bags of crunchy tater tots. In the history of man, these seemed like breakthrough innovations. Time-consuming tasks — shopping for ingredients, tediously preparing a recipe and tackling a trail of pots and pans — were suddenly and miraculously consigned to history.

The revolution in cuisine wasn’t just enthralling. It was transformational. New products embedded themselves deeply in everyday life, so much so that it took decades for us to understand the price we paid for their convenience, efficiency and abundance. Processed foods were feats of engineering, all right — but they were engineered to make us fat. Their delectable taste required massive quantities of sodium and sizable stockpiles of sugar, which happened to reset our palates and made it harder to satehunger. It took vast quantities of meat and corn to fabricate these dishes, and a spike in demand remade American agriculture at a terrible environmental cost. A whole new system of industrial farming emerged, with penny-conscious conglomerates cramming chickens into feces-covered pens and stuffing them full of antibiotics. By the time we came to understand the consequences of our revised patterns of consumption, the damage had been done to our waistlines, longevity, souls and planet.

Something like the midcentury food revolution is now reordering the production and consumption of knowledge. Our intellectual habits are being scrambled by the dominant firms. Giant tech companies have become the most powerful gatekeepers the world has ever known. Google helps us sort the Internet, by providing a sense of hierarchy to information; Facebook uses its algorithms and its intricate understanding of our social circles to filter the news we encounter; Amazon bestrides book publishing with its overwhelming hold on that market.

Such dominance endows these companies with the ability to remake the markets they control. As with the food giants, the big tech companies have given rise to a new science that aims to construct products that pander to their consumers. Unlike the market research and television ratings of the past, the tech companies have a bottomless collection of data, acquired as they track our travels across the Web, storing every shard about our habits in the hope that they may prove useful. They have compiled an intimate portrait of the psyche of each user — a portrait that they hope to exploit to seduce us into a compulsive spree of binge clicking and watching. And it works: On average, each Facebook user spends one-sixteenth of their day on the site.

In the realm of knowledge, monopoly and conformism are inseparable perils. The danger is that these firms will inadvertently use their dominance to squash diversity of opinion and taste. Concentration is followed by homogenization. As news media outlets have come to depend heavily on Facebook and Google for traffic — and therefore revenue — they have rushed to produce articles that will flourish on those platforms. This leads to a duplication of the news like never before, with scores of sites across the Internet piling onto the same daily outrage. It’s why a picture of a mysteriously colored dress generated endless articles, why seemingly every site recaps “Game of Thrones.” Each contribution to the genre adds little, except clicks. Old media had a pack mentality, too, but the Internet promised something much different. And the prevalence of so much data makes the temptation to pander even greater.

This is true of politics. Our era is defined by polarization, warring ideological gangs that yield no ground. Division, however, isn’t the root cause of our unworkable system. There are many causes, but a primary problem is conformism. Facebook has nurtured two hive minds, each residing in an informational ecosystem that yields head-nodding agreement and penalizes dissenting views. This is the phenomenon that the entrepreneur and author Eli Pariser famously termed the “Filter Bubble” — how Facebook mines our data to keep giving us the news and information we crave, creating a feedback loop that pushes us deeper and deeper into our own amen corners.

As the 2016 presidential election so graphically illustrated, a hive mind is an intellectually incapacitated one, with diminishing ability to tell fact from fiction, with an unshakable bias toward party line. The Russians understood this, which is why they invested so successfully in spreading dubious agitprop via Facebook. And it’s why a raft of companies sprouted — Occupy Democrats, the Angry Patriot, Being Liberal — to get rich off the Filter Bubble and to exploit our susceptibility to the lowest-quality news, if you can call it that.

Facebook represents a dangerous deviation in media history. Once upon a time, elites proudly viewed themselves as gatekeepers. They could be sycophantic to power and snobbish, but they also felt duty-bound to elevate the standards of society and readers. Executives of Silicon Valley regard gatekeeping as the stodgy enemy of innovation — they see themselves as more neutral, scientific and responsive to the market than the elites they replaced — a perspective that obscures their own power and responsibilities. So instead of shaping public opinion, they exploit the public’s worst tendencies, its tribalism and paranoia.

***

During this century, we largely have treated Silicon Valley as a force beyond our control. A broad consensus held that lead-footed government could never keep pace with the dynamism of technology. By the time government acted against a tech monopoly, a kid in a garage would have already concocted some innovation to upend the market. Or, as Google’s Eric Schmidt, put it, “Competition is one click away.” A nostrum that suggested that the very structure of the Internet defied our historic concern for monopoly.

As individuals, we have similarly accepted the omnipresence of the big tech companies as a fait accompli. We’ve enjoyed their free products and next-day delivery with only a nagging sense that we may be surrendering something important. Such blitheness can no longer be sustained. Privacy won’t survive the present trajectory of technology — and with the sense of being perpetually watched, humans will behave more cautiously, less subversively. Our ideas about the competitive marketplace are at risk. With a decreasing prospect of toppling the giants, entrepreneurs won’t bother to risk starting new firms, a primary source of jobs and innovation. And the proliferation of falsehoods and conspiracies through social media, the dissipation of our common basis for fact, is creating conditions ripe for authoritarianism. Over time, the long merger of man and machine has worked out pretty well for man. But we’re drifting into a new era, when that merger threatens the individual. We’re drifting toward monopoly, conformism, their machines. Perhaps it’s time we steer our course.

Google This.

August 8, 2017August 8, 2017 tukaglobal315 Comments

AP FACEBOOK F A USA NY — (Photo: Mark Lennihan, AP)

Another argument that moves toward making these companies public utilities. (Google more than Facebook.) From USA Today:

I invested early in Google and Facebook and regret it. I helped create a monster.

Roger McNamee, Opinion contributor

Aug. 8, 2017

‘Brain hacking’ Internet monopolies menace public health, democracy, writes Roger McNamee.

Technology has transformed our lives in countless ways, mostly for the better. Thanks to the now ubiquitous smartphone, tech touches us from the moment we wake up until we go to sleep. While the convenience of smartphones has many benefits, the unintended consequences of well-intentioned product choices have become a menace to public health and to democracy.

Facebook and Google get their revenue from advertising, the effectiveness of which depends on gaining and maintaining consumer attention. Borrowing techniques from the gambling industry, Facebook, Google and others exploit human nature, creating addictive behaviors that compel consumers to check for new messages, respond to notifications, and seek validation from technologies whose only goal is to generate profits for their owners.

The people at Facebook and Google believe that giving consumers more of what they want and like is worthy of praise, not criticism. What they fail to recognize is that their products are not making consumers happier or more successful.

Like gambling, nicotine, alcohol or heroin, Facebook and Google — most importantly through its YouTube subsidiary — produce short-term happiness with serious negative consequences in the long term.

Users fail to recognize the warning signs of addiction until it is too late. There are only 24 hours in a day, and technology companies are making a play for all them. The CEO of Netflix recently noted that his company’s primary competitor is sleep.

How does this work? A 2013 study found that average consumers check their smartphones 150 times a day. And that number has probably grown. People spend 50 minutes a day on Facebook. Other social apps such as Snapchat, Instagram and Twitter combine to take up still more time. Those companies maintain a profile on every user, which grows every time you like, share, search, shop or post a photo. Google also is analyzing credit card records of millions of people.

As a result, the big Internet companies know more about you than you know about yourself, which gives them huge power to influence you, to persuade you to do things that serve their economic interests. Facebook, Google and others compete for each consumer’s attention, reinforcing biases and reducing the diversity of ideas to which each is exposed. The degree of harm grows over time.

Consider a recent story from Australia, where someone at Facebook told advertisers that they had the ability to target teens who were sad or depressed, which made them more susceptible to advertising. In the United States, Facebook once demonstrated its ability to make users happier or sadder by manipulating their news feed. While it did not turn either capability into a product, the fact remains that Facebook influences the emotional state of users every moment of every day. Former Google design ethicist Tristan Harris calls this “brain hacking.”

The fault here is not with search and social networking, per se. Those services have enormous value. The fault lies with advertising business models that drive companies to maximize attention at all costs, leading to ever more aggressive brain hacking.

The Facebook application has 2 billion active users around the world. Google’s YouTube has 1.5 billion. These numbers are comparable to Christianity and Islam, respectively, giving Facebook and Google influence greater than most First World countries. They are too big and too global to be held accountable. Other attention-based apps — including Instagram, WhatsApp, WeChat, SnapChat and Twitter — also have user bases between 100 million and 1.3 billion. Not all their users have had their brains hacked, but all are on that path. And there are no watchdogs.

Anyone who wants to pay for access to addicted users can work with Facebook and YouTube. Lots of bad people have done it. One firm was caught using Facebook tools to spy on law abiding citizens. A federal agency confronted Facebook about the use of its tools by financial firms to discriminate based on race in the housing market. America’s intelligence agencies have concluded that Russia interfered in our election and that Facebook was a key platform for spreading misinformation. For the price of a few fighter aircraft, Russia won an information war against us.

Incentives being what they are, we cannot expect Internet monopolies to police themselves. There is little government regulation and no appetite to change that. If we want to stop brain hacking, consumers will have to force changes at Facebook and Google.

Roger McNamee is the managing director and a co-founder of Elevation Partners, and investment partnership focused on media/entertainment content and consumer technology.

FAANGs = Public Utilities?

April 25, 2017April 26, 2017 tukaglobal683 Comments

Slide12*

This article (reprinted from the NY Times – read the comments to get an idea of public opinion), highlights the basic problem of the digital information economy with its economies of scale and network effects. (This is the dilemma we are trying to solve with tuka.)

I suspect eventually Google will end up as a public utility or heavily regulated, and Facebook will be disrupted by technology. Amazon will face competitive pressures, especially in digital, but at this point it’s unclear how long it can maintain a monopoly over physical goods through its distribution system. (Odd that this writer would think a libertarian would favor monopolies. Thiel just seems to accept that this is the state of the world today, but maybe not tomorrow.)

Is It Time to Break Up Google?

By JONATHAN TAPLIN

APRIL 22, 2017

In just 10 years, the world’s five largest companies by market capitalization have all changed, save for one: Microsoft. Exxon Mobil, General Electric, Citigroup and Shell Oil are out and Apple, Alphabet (the parent company of Google), Amazon and Facebook have taken their place.

They’re all tech companies, and each dominates its corner of the industry: Google has an 88 percent market share in search advertising, Facebook (and its subsidiaries Instagram, WhatsApp and Messenger) owns 77 percent of mobile social traffic and Amazon has a 74 percent share in the e-book market. In classic economic terms, all three are monopolies.

We have been transported back to the early 20th century, when arguments about “the curse of bigness” were advanced by President Woodrow Wilson’s counselor, Louis Brandeis, before Wilson appointed him to the Supreme Court. Brandeis wanted to eliminate monopolies, because (in the words of his biographer Melvin Urofsky) “in a democratic society the existence of large centers of private power is dangerous to the continuing vitality of a free people.” We need look no further than the conduct of the largest banks in the 2008 financial crisis or the role that Facebook and Google play in the “fake news” business to know that Brandeis was right.

While Brandeis generally opposed regulation — which, he worried, inevitably led to the corruption of the regulator — and instead advocated breaking up “bigness,” he made an exception for “natural” monopolies, like telephone, water and power companies and railroads, where it made sense to have one or a few companies in control of an industry.

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.