8 November 2013

Socialize Social Media!

A Manifesto

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 2300 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.1 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 2300 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).1 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.) 

1 An earlier version of this piece misstated the number of Twitter employees.

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