On Wednesday, November 6, Twitter, the so-called microblogging
service, went public, in the private sense. Shares initially offered at
$26 were by the end of the day trading near $45, giving a company with
fewer than 900 employees a market value of more than $31 billion, and
meaning that each of the service’s 230 million users—who are also, in a
real sense, its
producers—could be considered to be
contributing $135 to the company’s value. That value is almost certain
to fall, since Twitter shares appear ludicrously overpriced. As John
Cassidy of the
New Yorker calculated, “Investors were paying
forty-nine dollars per dollar of revenues, and five hundred and
forty-one dollars per dollar of cash flow . . . Apple, the most valuable
technology company in the world, trades at less than three times its
revenue and eight times its cash flow.” But large for-profit
social-media services are contradictory entities at any price, because
they attempt to profit from activity that,
precisely because it is social, is basically non-economic and non-productive. Social media can either be profitable or it can be social. In the end, it can’t be both.
The
IPOs of Facebook and Twitter should
therefore be reversed, through the socialization of both companies and
other social-media services that attain a similar scale. The time has
come, in other words, to
socialize social media. Keynes long
ago called for “a somewhat comprehensive socialization of investment” in
modern economies, while leaving room for the skill and inventiveness of
entrepreneurs “(who are certainly so fond of their craft that their
labor could be obtained much cheaper than at present), to be harnessed
to the service of the community on reasonable terms of reward.” The
broader question can await another day. But large social media companies
particularly invite socialization—that is, going public in the sense of
public ownership—for the reasons that follow.
1.
Social media should be socialized because services tend to be or become monopolies.
Most private enterprises, whatever their business, have at least a few
competitors. Large social media companies—Facebook, Twitter—tend to lack
competitors, for the simple reason that their platforms are not
compatible. I can’t create a profile on a non-Facebook site that then
appears on Facebook, and no microblogging service could emerge to
challenge Twitter unless it were capable of inducing mass defections.
Social media services or
social utilities, as they would better
be called, are thus more like highways or railroads than like car
manufacturers or freight companies. Trade in my Ford for a Toyota, and I
can still drive on the same roads that lead to my friends’ doors. But
even if there were another all-purpose social networking site like
Facebook, I couldn’t switch to it without losing contact with my
Facebook friends. This presents the familiar problems of monopoly.
Twitter may not abuse its captive audience yet—by overcharging us, or by
data-mining users in the way that has bred so much resentment among
Facebook users—but it easily could, because we have nowhere else to go
for an equivalent service. And the company’s executives may soon feel
they have no choice but to abuse their monopoly position. The
optimistic, not to say delusional, stock market valuations of Facebook
and Twitter are premised on the unstated idea that these companies,
having so far provided a public service at a loss, will in the future
find a way to heavily exploit their cornered users. The rational way to
treat natural monopolies is to make them into utilities provided to the
public—either directly by the government, or indirectly through
contracting and regulation—at cost.
2.
Social media should be socialized because attaining
profitability (through ads or fees) is impossible without degrading the
service. So far executives hope to turn a profit by providing ad
space and/or by data-mining users so that information can be sold to
advertisers to use more broadly. The more social-media services are
infiltrated by ads, the less the user enjoys the fundamental social
right of choosing her own company. On Twitter I follow who I want and
don’t follow the others. On Facebook, as
IRL, I
choose my friends as well as those people I find it socially convenient
to call “friends.” And as with social life generally, there are no
directly assessed fees for participation, any more than I have to pay a
toll to walk down the street with a friend (or follower). Advertising
degrades this freedom. I don’t get to choose whose ads I see, or whether
I want to see any. Some people may enjoy corporate advertisements—and
they should be able, accordingly, to follow Burger King or Pfizer. But I
have something to advertise as well: my opinions, the articles I write,
the books by other people I think you should buy, et cetera. That is my
freedom, just as it’s yours to follow or block or unfriend me. We only
lack this freedom when it comes to corporate entities with the budgets
to override our choices. And everything suggests that as Facebook and
Twitter try to increase revenues and share value, they will pollute
social media with ever more ads. The alternative profit-making strategy
would be to attempt to charge fees far in excess of operating costs.
(Twitter’s operating budget is about $200 million a year, or less than a
dollar per user.) The social character of these services would then
swiftly erode, since access would be rationed by ability to pay. Better
to socialize these utilities and cover operating costs out of public
taxation.
3.
Social media should be socialized because the fraternization of people is a democratic good, which for-profit operation impairs.
In democratic societies, social media should also be democratic.
Digital speech acts (tweets, posts, likes, photos, links, whatever)
should be promoted to the extent that other speakers promote them,
rather than according to the amount of money the speaker commands.
Eliminating ads would hardly ensure that democratic conditions produce
mutual enlightenment, and, to date, ads on social media are more an
aesthetic irritant than an obstacle to democracy. (For that, we have the
Constitution and the Supreme Court.) But the socialization of social
media would imply that it’s meant to serve
social ends, in all
their variety—pleasure, knowledge, amusement, organization, community,
and so on—rather than private gain. Whether social media is on the whole
good or bad for democracy is obviously debatable—but citizens possess
no wider forum for this debate than social media! And while it does take
access to a computer and a reliable internet connection to participate
in social media, these barriers are much lower than for any other form
of broadcast communication. Of course citizens who don’t use social
media might complain about the (minimal) taxes required to keep social
utilities up and running, but this makes for no difference with roads or
libraries, which everyone pays for regardless of personal use.
4.
Social media should be socialized not in spite of, but in service of, entrepreneurialism and innovation.
Against the proposal to socialize social media, it will be objected
that the prospect of enormous fortunes stimulated its development. This
is only a partial truth. The lure of getting rich may have been one
factor to goad Mark Zuckerberg into the creation of Facebook, but he had
no idea of how rich he might become nor, by all accounts, does he spend
lavishly on himself. Only Facebook and Twitter are yet so massive and
monopolistic as to be clear candidates for socialization, and it seems
likely that the government, acting on behalf of the public, could have
bought out the founders of these two companies, prior to an
IPO,
for what the founders would have regarded as an attractive price. The
government could even overpay for Twitter next week at $31 billion
(though Keynes might perhaps have considered founder Evan Williams $2.6
billion share value to exceed “reasonable terms of reward”). Still,
suppose that entrepreneurs, knowing in advance that a handful of
start-ups might one day become so eminent as to be socialized, also knew
that, in the unlikely event of socialization, no founder would be paid
more than $100 million for his interest in the enterprise: it’s hard to
believe that such a cap would deter anyone. Besides, much of an
innovator’s compensation is in renown or, failing that, a kind of
obscure glory: whether or not people know your name, everyone knows your
work. More than this, monopolistic privately-owned social media will
stifle useful innovation.
Grant that private companies often innovate to benefit their clients
(though they equally often seek monopolized stasis, and engineer
products to fall apart); even so, it’s not users of social media but
advertisers and investors who form the clientele. Public utilities, on
the other hand, can and should be continually improved from their users’
standpoint. Social-media services could also, crucially, be placed in
competition with one another, through the requirement that their
platforms be mutually compatible. Imagine a microblogging Twitter
competitor, public or private: if these rivals had to make available any
tweets posted to either service, users could simply choose whichever
service they liked on the basis of secondary features. This would
encourage attractive innovations which right now are discouraged, either
because changes primarily serve advertisers and investors—hence the
steady degradation of Facebook leading up to and ever since its
IPO—or because no rival services, faced with such invulnerable giants, dare challenge Facebook or Twitter.
5. Social media should be socialized because its content is
produced by society at large, and society is distinct from the economy. The
staff of social media companies (Twitter’s 900 or so) are indispensable
for their operations, but so are the vast numbers of users who produce
the content on display (Twitter’s 230 million). Yet it would be
perversely cumbersome to compensate these
consumers-who-are-also-producers for every tweet or post, or even with a
small annual salary. And to compensate “content providers” for their
popularity would be to reward the meretricious and shallowly outrageous
more than is already the case. Society is distinct from the economy in
that
no direct monetary rewards flow from participation. Being
popular may help you make money, and having money may in turn make you
popular, but no one is paid a fee for his personal popularity, nor can I
pay people to like me. The autonomy of society is limited but
nevertheless real. In the fact that neither Rupert Murdoch nor Kanye nor
you nor I made any money directly from Twitter (until yesterday, when
they may have scooped up shares) there was a kind of democracy, which
public ownership would safeguard. Access to various social venues—a
ballpark, a concert hall, a café, street, a park—clearly has to do with
costs, whether these are high or low or consist only of public taxation.
But it’s the venues, and any services provided there, that are cheap or
expensive, not the socializing, which is either free or is not
socializing. Rationing access, through fees, to infrequently attended
and restricted spaces (the ballpark) makes sense, as does subsidizing
expensive infrastructure (the concert hall) and performances (the
concert) through ad sales. But social media is by no means characterized
by restricted space, infrequent use, or expensive infrastructure or
performances; it can be by used everyone, whenever they want, at
exceedingly low cost, and it hosts performances, to call them that,
which cost nothing to produce. To treat such eminently social activity
as a form of economic production is either futile or grotesque. It’s
futile if no profits result. And it’s grotesque if profits
do
result, since these are only a form of social rent. Should social-media
ownership become profitable while users continue to produce content
unpaid, we are in a situation, more economically lurid than any imagined
by Marx, in which the owners of some very minimal means of
production—servers, office buildings, or the title thereto constituted
by their shares on the
NYSE—enjoy
all the revenue from the economic activity of people who receive
no wage whatever.
Social media services can ultimately be run as public utilities,
ad-free, at cost, in a democratic spirit and for social ends, in their
enormous variety—or else digital society can become ever more
subservient to the single end of the accumulation of private capital.
The choice is between social life as an advertising platform and
socialized social media.
Tweeps and Facebook friends, unite! You have nothing to lose but some ads! (Except all the time you’re wasting. But you were already doing that.)
Copyright 2013 n+1 Magazine
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