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Below is a sample of Facebook comments for a FB community group  called Musicians Unite. They posed the question above, “Why do you play music??” These are some of the hundreds of answers they received. It all pretty much boils down to the same thing.

Was there ever any doubt? tuka

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‪Tracy A. Gaynor‪ It’s inside of me. A force of its own. I started playing piano at the age of five. It’s its own entity within me. Just as I breathe, need water and sustenance, I need music. I play music because it is my very soul.

‪Russell M Price‪ We musicians have a need to do it as well as a love for it. We don’t think  regular people. Our outlook on the world is definitely different. Plus we look cool when we’re on stage. lol

‪John Payne‪ I do it because the constant melodies in my head have to get out somehow . Players know what I am talking about, so do their wives or girlfriends. besides what else could I do with four sets of drums.

‪Robert Bryant‪ Because I have to. ‪Not for money or applause or recognition or anything  that. Just for the pure enjoyment I get out of playing and singing. If i couldn’t sing and play I don’t know what I would do.

‪Corey Shockey‪ I have to create. Music, my woodshop, or whatever. I just love the process of making something out of nothing. If others enjoy my work, great. If not, at least I enjoyed the process of making it happen.

‪Eric Hachey‪ I started loving music when i was 4 i then got a guitar and learned to play sing and write i found out that it brang people together and they danced sang and were happy i still play and I’m 60 next month music is magical life force

‪Graham Byrne‪ it keeps me sane,focused,gives me confidence,stops the bouts of depression,makes me smile,blanks out all the negative people/things in this world,and because my granddad and all the beautiful music that’s inspired me .. oh and because I’m not a great cook or cleaner ‪:)

‪Stanley E. Supranowicz Jr.‪ At first, I had a burning desire to just rock, honestly. Had no illusions of being a rock star. After a while, it became second nature, and I honestly feel I have something to say, and a unique perspective on some things.

‪Steve Barlow‪ My whole life I’ve loved music more than anything, it is the most powerfull force on Earth, and it subconsciously unites strangers.

‪Jonathan Baker‪ Often times I am able to shut out all my problems and escape into a world of sound waves where I can reflect on my life from another perspective. When I write a song it just comes out and I don’t understand it’s meaning until some time later when I play it back and I learn the meaning of my own song.

‪Ron Reed‪ Because I love to play. Started playing at eleven, in school. Trombone, tuba, baritone. After school I learned guitar, then drums. Now I play bass, have been for nearly thirty years. I couldn’t imagine life without playing.

‪Glenn Basil II‪ Becuz it was meant to be, long before I picked up an instrument I’d sing and write lyrics, it just evolved naturally, but then being able to play well enuff to entertain ppl is the real reward, its such a great feeling being able to help ppl forget about their problems and life and just Groove! With or without an audience I’ll always play, I have to. But I was born to play AND entertain!

‪Scott Cardone‪ So many reasons. Pure enjoyment, the once every ten years or so, I give myself the goosebumps , but most of all, it’s the great escape from the reality’s of Life…‪plus it’s an addiction

‪Mark Bertini‪ The story goes I was dancing in the crib before so could walk, whistling before I could talk. Music chose me I didn’t choose music. We have a symbiotic relationship and it runs in my blood and family history.

‪Gary Edmisten‪ Because I can. Plus it helps a great deal that I was born with it in my blood. I am a third generation musician and have always been so grateful to have come from a musically inclined family. Without music I probably would have never amounted to much of anything.

‪Theo Sanders‪ Because it brings joy to others (maybe some pain also when I play as I’m still learning) but it makes me happy also and you get to meet some awesome people. Most of my best friends were made through music. Also it reduces the risks of dementia as it is in my family history. It’s the only activity that requires you to use both sides of your brain.

‪Travis-John Wingert‪ Music is my attempt to externalize representations of my contradictionary life. Music is tactile, but also ephemeral, or abstract, and this allows it to tap straight into the paradox of our minds, foregoing cognitive dissonance. Music is the most influ…See More

‪Bryan Ferguson‪ I’ve asked myself this question so many times, but it’s a passion, if you get paid what you should, it’s great, but an appreciative audience gives you lots back as well, when you can connect with people through music, it is a beautiful thing….I’ve h…See More

‪Emilie Scanlon‪ Because at this point, I can’t live without it. It’s been the core of my life for so long. If I lost my ability to play and to sing, I would lose all reason to live.

‪Brian Lehnert‪ So I don’t kill myself also when your band clicks  that shiver down your spine can’t help but smile  and idiot kind of shit that’s the actual best feeling in the world I’ve never been happier than in those moments

‪Steve Bloom‪ This is why we use a subtle mantra in meditation. Sound is our deepest more easy path to the universal Unified Field of pure energy and consciousness.

‪Isaiah Scott‪ When I see everyone’s shining eyes and joy when I perform, whether classical or rock music, it gives me meaning (especially when I see little kids get sooo excited and sing and dance). I live to play music.

‪Mark Johns‪ You might as well ask why do I breathe because I have to music is ever much a part of my life as eating and breathing

‪Nosforotu Poet‪ No simple answer. The music is a driving force to compliment my poetry and art all are which come from the core of my soul. I need it just  breathing in physical the arts are breathing for my soul.

‪Matthew Downey‪ There isn’t anything else worth doing. And if i didn’t i would probably perish. When i don’t play at least a little i feel physically ill.

‪Al Urezzio‪ At the age of 8 yrs old it created a feeling inside my heart & soul .. so now after 59 yrs , its a way of life .. never to change ..

‪Ernest McDaniel‪ That’s  asking my why I breathe. Music is life. Without music there would be no life. Music is what connects you to your soul and gives you an outlet to express it. Music is the best therapy of all time.

‪Tom Maillie‪ My grandfather had a band and I have memories being mesmerized by watching them play as early as 5 or 6 years old. I knew then that playing music was something I wanted to do.

‪David Kaminester‪ Because I have a burning need to. It’s as simple as that. I have melodies in my head all the time. It would drive me crazy not to dispel that energy.

‪Chet Santia III‪ As a quasi introverted person playing music and performing are what helped me to connect the music became my voice, literally and figuratively! It gave me a voice!

‪Chris Williams‪ I do it because it’s a great way to express feelings and I’m just driven to the art of it and most recently I use it to express praise for God.

‪Ronnie Houston‪ It’s my drug of choice, my medicine. Thanking the creator endowing me with musical skills and creativity, and the ability to use them.

‪Devin Kimmel‪ Because it has become a part of me. It’s the most personal language to speak, and without it, I would have died a long time ago.

‪Claudine Langille‪ Music has always been the center of my universe, and I was really surprised when I got older and learned not everyone is wired that way!

‪André Cruz Glennhammar‪ I know it’s a very typical thing to say, but I didn’t choose to, music just opened my eyes to everything this world has to offer.

‪Ed McCoy‪ Because it’s fun! When you improve to the point where you can play most anything you hear, it’s really a blast!

‪Mark Alaniz‪ If you are given a gift,it should be shared.A song can take you places you might not otherwise be able to go to.

‪Jim Wilbanks‪ I play at church .it is my way of saying thank you to god for my life .family and so on .giving back to him .

‪Tammy Mitchell-Woods‪ I dont have a choice..i cant and wouldnt wnt to be able to separate from it…its a part of me…i HAVE to play

‪Ken Medlock‪ I guess God made me that way. Must be, because I have been involved for 40 + yrs. w/o any former music education ever.

‪Rob Gregson‪ For extra income but if i was doing it full time I’d be homeless an starving lol it’s fun tho an for my on needs

‪Jo Douglass‪ Play. = enjoyment/pleasure derived from a certain activity..why doesn’t everyone music the same way? we are all different notes on the same page? we could wank on for days! **guitarists joke

‪Jerome Blaha‪ …for fun and mental health–

‪Mike Dattilo‪ If I didn’t, I would be dead inside…

‪Isaiah Kavanamur‪ Anyone play music to lose themselves just for a bit

‪James Salisbury‪ Because I love it and because it’s my therapy lol

‪John Billigen‪ For life and to thank the Almighty for blessing me with this TALENT

‪Katie Kayhaos‪ That’s  someone asking me why I breathe..

‪Courtney Daisey‪ Music is who I am. Without music, my soul would be an empty shell, a mere shadow of my true self.

‪Tim Starace‪ I do it for the free pitchers of diet coke…

‪Adam Jago‪ To Escape this cold cold world. And the monster inside me won’t let me think about anything else!

‪Marion Shepherd‪ Music is apart of me I can’t help myself.

‪Steven Militare‪ It is a large part of my soul.

‪Gary Fairbanks‪ It’s a part of who you are!

‪Don Kumpula‪ It’s who I am. To not play isnt even an option.

‪Josh Murrow‪ Simple. So I don’t hit people. I hit the skins. The best release. Both physically and mentally. Just the best release.

‪Jimmy Paul‪ I quote the great Tobiah Hale

‪“I’m just too dumb to quit!!”

‪Larry Johnson‪ Because one day I’ll be a rock star

‪Randall Wilson‪ Because it was bred in my blood !!!!!!

‪Dellwood Washington‪ Music is a part of my life that came with me when I came in this world

‪Jesse Smith‪ Because God gave me the talent to do so.

‪Alberto Pabon‪ Cause the Lord blessed me to do so. I owe it all to him.

‪Hideaki Yamakado‪ Because When I play music, I feel happy. Music makes my life better.

‪Kearon Andrew O’Brien‪ Love the sound of guitar. When l play it makes me feel famous. lol ‪Music is fun

‪Mike Ceely‪ music soothes the savage beast in me .it is the beat a my life

‪DScott Lloyd‪ It’s when I feel the most…. myself. …if that makes sense.

‪Rick Williamson‪ It’s instant gratification and allows me to leave the ground behind.

‪Dalton Mitchell‪ To let out the mean shit talking , anti-establishment but positive empath within.

‪Tom Humpston‪ Because I can’t NOT play music. It’s as much a part of me as breathing.

‪Thomas Hopper‪ I have no idea, I just do.

‪Charles Buie‪ Can’t help it. It’s inside me and wants to come out.

‪Rick Huff‪ I was born with that stuff. Can’t explain it. Just came naturally

‪William Graham Harper‪ To pass on a little love to my fellow man !!!

‪Peter S. Sportino‪ I love it! That it in a nutshell. There is no complicated explaination. That’s it!

‪James Keith Webb‪ That easy I love music it moves my soul!!!!!

Read the book and harness the power!

Big Tech Gains at Our Expense?

Top5

Reprinted in part from The Financial Times:

Big Tech makes vast gains at our expense

Data-driven companies have a licence to print money, with few restrictions

SEPTEMBER 17, 2017 by Rana Foroohar

Pressure has been growing in the past few weeks for politicians and regulators to clamp down on the monopoly power of Big Tech. In a speech given in Washington DC on September 12, Maureen Ohlhausen, the acting chair of the Federal Trade Commission in the US, tried to pour cold water on the idea. “Given the clear consumer benefits of technology-driven innovation,” she said. “I am concerned about the push to adopt an approach that will disregard consumer benefits in the pursuit of other, perhaps even conflicting, goals.”

Her words echo US antitrust policy of the past 40 years: if companies bring down prices for consumers, they can be as big and as powerful, economically and politically, as they want to be. This hugely favours companies such as Google, Facebook and Amazon, which offer up services and products, from search results to self-publishing platforms, that are not just cheap, but free.

Yet Ms Ohlhausen is overlooking a key point: free is not free when you consider that we are not paying for these services in dollars, but in data, including everything from our credit card numbers to shopping records, to political choices and medical histories. How valuable is that personal data?

It is a question of growing interest to everyone from economists to artists. For example, at Datenmarkt, an art installation cum grocery store set up in Hamburg in 2014, a can of fruit sold for five Facebook photos; a pack of toast for eight “likes” and so on.

The bottom line is that it is almost impossible to put an exact price on personal data, in part because people have widely varying behaviours and ideas about how likely they are to part with it, depending on how offers are posed. In one recent study, when consumers were asked straight out whether they would consent to being tracked by a brand name digital media firm in exchange for being targeted with more “useful” advertising, four-fifths said no. Yet another study published this year by researchers from Massachusetts Institute of Technology and Stanford University shows how pathetically little incentive is required to convince people to give up their entire email contact list. Students in the study were far more likely to do it if offered a free pizza.

One might argue that this is simply the market working as it should. Consumers were given a choice, and they made it. And whether or not it was a bad one is not for us to judge.

But as the latter study also showed, companies can nudge users to part with data more freely by telling them it will be protected by technology designed to “keep the prying eyes of everyone from governments to internet service providers . . . from seeing the content of messages”. In fact, the encryption technology in question could not guarantee this.

The bottom line is that big data tilts the playing field decisively in favour of the largest digital players themselves. They can extract information and plant suggestions there that will lead us to entirely different decisions, which results in ever more profit for them.

Not only is that too much power for any one company to have, it is anti-competitive and market-distorting in the sense that the basic rules of capitalism as we know it are being overturned. There is no equal access to market information in this scenario. There is certainly no price transparency.

The personal data we give away so freely are being lavishly monetized by the richest companies on the planet (Facebook’s second-quarter operating margin, for example, was 47.2 per cent). They get their raw material (our data) more or less for free, then charge retailers and advertisers for it, who then pass those costs on to us in one form or another — a dollar more for that glass of wine at the bistro you found via a search, say. They have a licence to print money, without many of the restrictions, in terms of all sorts of corporate liability, that other industries have to grapple with.

These companies are not so much innovators as “attention merchants”

These companies are not so much innovators as “attention merchants”, to borrow a phrase from Columbia University law school professor Tim Wu. Economists have yet to put good figures on their net effect on productivity and gross domestic product growth. Surely it is high. Yet any tally would also have to include the competition costs as these firms devour competitors and reshape the 21st-century economy to suit themselves.

Whatever the FTC might say now, there are a growing number of legal cases that could change the ground rules for Big Tech. While American antitrust law has been based on very literal interpretations of the 1890 Sherman Act, lawmakers in Europe take a broader approach. They are trying to gauge how multiple players in the economic ecosystem are being affected by the digital giants.

I am beginning to wonder if we should not all have a more explicit right not only to control how our data are used, but to any economic value created from them.

When wealth lives mainly in intellectual property, it is hard to imagine how else the maths will work. We are living in a brave new world, with an entirely new currency. It will require creative thinking — economically, legally and politically — to ensure it does not become a winner-takes-all society.

Blogger Comment:
Data has become one of the primary economic resources of the Information Age. Data is analogous to land during the feudal age; energy, labor and natural resources in the industrial age, and human and financial capital in the post-industrial age. Giving away one’s data is akin to share-cropping and indentured servitude, when instead we should be homesteading and receiving the full value of our personal participation in the network. 

 

Streaming Content and Trickling $$$

 

How Much Does YouTube Pay? We Asked Nicki Jaine of Revue Noir.

Nicki Jaine of Revue Noir

My Song Got 1.254 Million Views on YouTube. I Got Paid $42.56  [Link]

How much does YouTube really pay?  A top executive at the company claims a $3 CPM.  But most of the royalty payments shared with Digital Music News are a tiny fraction of that.

We want to believe YouTube executive Lyor Cohen when he says YouTube pays a $3 CPM to artists.  The only problem is that there’s zero evidence to support his claims.

And lots of evidence that artists are earning an infinitesimal fraction of that amount.

The latest proof comes from Nicki Jaine, one half of the duo Revue Noir.  That group is signed to Projekt, who shared the royalty breakdown with Digital Music News.

(Quick aside: in online advertising land, ‘CPM’ stands for ‘cost per thousand’.  It’s a calculation of how much gets paid for every 1,000 views.  So, a ‘$3 CPM’ means you get paid $3 every 1,000 plays.  That is, assuming those 1,000 plays had ads on them, which is another story entirely.)

Here’s a quick snapshot of those royalty payments from various streaming services.  Keep in mind that these copyrights are 100% controlled, meaning that all publishing and all recording royalties are reflected in this breakdown.

As you can see, a lion’s share of Revue Noir’s payments are coming from free, ad-supported YouTube plays.

Despite 1,254,626 streams on the free platform, Revue Noir only earned $42.56.

Other streaming platforms are clearly paying better, but this group’s largest audience is on YouTube.  Strangely, YouTube Red’s payments are far higher, but barely anyone is paying for Red.  (The premium service was initially called ‘Music Key,’ and apparently not updated in this royalty statement).

Other platforms like Rhapsody, Tidal, and Spotify pay far better.  But the group hasn’t been able to secure favorable playlist inclusion or amass a serious audience on those platforms.  At least not yet.  So it basically sucks to be them right now.

As a result, the group earned about $130 in total from nearly 1.3 million streaming plays.

In terms of the YouTube CPM calculation, that boils down to a 3.34 cent CPM.  Which is about 1/88th the $3 CPM claimed by executives like Lyor Cohen.

Projekt CEO Sam Rosenthal is obviously disappointed with this result.  “Spotify has 1.3% of the plays of YouTube, and yet it generates 40% more money,” Rosenthal told DMN.

“Well — that’s shitty!”

Rosenthal was also careful to clarify that this is a 100% copyright-owned composition.  Meaning, all the revenues are reflected in this statement.

“And because somebody will say, ‘Oh, that’s because the label is screwing the artist out of their fair share’:

(1) I am the label
(2) The numbers above are the raw data from my digital distributor, before anyone takes their cut!”

The sad payout is even worse than a detailed breakdown we received in August.  That YouTube statement showed an artist making 1/50th the rate claimed by YouTube and Cohen.

All of which is seriously eroding the credibility of executives like Cohen, and YouTube more broadly.

Unsurprisingly, the music industry is strategizing ways to minimize YouTube’s power over artists.

Just recently, Republic Records-signed rapper Post Malone decided to withhold his latest single from the video platform.  Instead, Malone uploaded a looping chorus of his track ‘rockstar,’ while directing fans to check out the full song on other platforms.

Malone’s little idea worked.  So far, the song has more than 50 million plays on YouTube — and more than 150 million on Spotify.  Other platforms like Apple Music were also prominently featured as redirect options, leading to millions in diverted royalties.

Post Malone is easily one of the biggest rappers in the world right now.  That makes this a noteworthy experiment, and one that could start a trend among other artists eager to divert fans to better-paying platforms.

Separately, a number of companies are also assisting artists to realize revenues elsewhere.  That includes upstarts like Flattr, Songtradr, and Patreon, all of whom are focusing on dramatically improving artist incomes.

[Blogger’s Note: The exact same thing is happening with Kindle authors on Amazon who enroll their ebooks in the Kindle Online Lending Library. Subscriptions accumulate to Amazon, royalties trickle to authors.]

Breaking Up Big Tech

An interesting piece reprinted from this week’s Barron’s. I think what we discover in reviewing the history of technology is that old technology gets disrupted by newer, better technology. I suspect this is what will disrupt the tech oligarchies built up over the past two decades. Not too long ago, the sector was dominated by IBM, HP, and AOL.

Breaking Up Tech

Regulators increasingly are challenging Facebook, Amazon, and Google on how they’re managing their dominant market positions.

October 21, 2017
FacebookAmazon.com, and Alphabet deserve a lot of the credit for last week’s record stock market highs. The three tech titans are among the biggest overall contributors, kicking in two percentage points of the Standard & Poor’s 500 index’s 16% gain in 2017 and nearly five points of its 44% gain over the past three years. As they go, so goes the market: It’s estimated that the S&P moves a half a point for every $10 move in Amazon’s $1,000 share price.

Whether the three can continue to have such a positive effect on the stock market will depend on how they respond to U.S. and European regulators, who are starting to swing a heavier hammer to challenge their dominance. Alphabet’s (ticker: GOOGL) Google, for instance, holds 90% of Europe’s search and mobile operating systems markets, which has drawn the scrutiny of the European Commission. This and inquiries from the U.S.’s Federal Trade Commission have prompted speculation about the breakup of these companies. Former Google Ventures CEO Bill Maris, who now runs venture-capital firm Section 32, told a Wall Street Journal tech conference last week: “It wouldn’t surprise me if the sun is setting on the golden age of Silicon Valley.” He added that he also wouldn’t be shocked if regulators tried to break up companies like Google or Facebook because they have more command of their markets than AT&T (T) did in its heyday.

More than antitrust issues are in play. The huge amounts of personal data that Google, Facebook (FB), and Amazon (AMZN) are amassing is just as troubling to some. Facebook, for one, has been sued in Europe over its transfer of information about users from Europe to the U.S. A case heading for the U.S. Supreme Court could also have significant ramifications. Microsoft (MSFT) is being sued by the U.S. government for refusing to honor a warrant served to it to reveal a customer’s emails. At issue is whether a U.S. company must turn over data even when that data, as in Microsoft’s case, are stored on servers abroad.

Last week Sen. John McCain (R., Ariz.) joined two Democratic senators to co-sponsor a bill that would force Facebook, Google, and other internet providers to disclose who’s buying political ads on their sites, following the recent disclosures that Russians had purchased ads to influence the 2016 presidential election.

Of course, Facebook, Amazon, and Google owe most of their stock-market leadership to their ability to create and supply digital gadgets and services—everything from Amazon’s Alexa virtual assistant to Google’s Android software, the top choice in mobile phones. But the shifts in political and government sentiment have stirred memories of not just AT&T, but IBM (IBM) and Microsoft. Both went through years of antitrust lawsuits that dragged down their stock prices and distracted management. Neither the companies nor their shares recovered quickly, as the nearby charts suggest.

All this has started to catch Wall Street’s attention. The European Commission, under competition watchdog Margrethe Vestager, fined Google 2.4 billion euros ($2.8 billion) on allegations that it gives more prominent placement in search results to its own “comparison shopping” listings versus listings from rival services. The commission alleged Google was manipulating the algorithms used to construct search results. More worrying was an EC case brought against Google in 2015, with formal charges lodged against it in spring 2016. The EC asserted that the company has abused its near-monopoly in both search and mobile operating systems by requiring gadget makers who license Android to install Google’s search bar as their default search mechanism on their devices.

“Of all the cases being brought, this is the one that most stands out as a concern, and it has made us less constructive on Alphabet” as a stock, says RBC Capital internet analyst Mark Mahaney, using Wall Street’s euphemism for being worried.

TAKEN TOGETHER, THESE challenges threaten the stock valuations of the group. To get an idea of the worst-case scenario, take a look at two of tech’s dominant players from previous eras: IBM and Microsoft.

The Department of Justice sued IBM in 1969 under the Sherman Antitrust Act, accusing the company of trying to monopolize the computer business, specifically by abusing its control of disk drives for mainframes. That action ended with the DoJ withdrawing its claims, but it tied up IBM and its management for years. From the time of the suit in January 1969, when the company boasted the largest market value in the S&P 500, till the day it announced it was backing off in January 1982, IBM stock declined 9.3%, versus a 14% gain in the S&P 500. Worse, IBM emerged from the suit in a weakened state to try to lead the personal computer revolution. Ultimately, it lost its dominant tech position to Microsoft, Compaq, and Apple (AAPL). A winning government case isn’t necessary to affect a stock’s price.

Microsoft’s collision with the government occurred in 1998, when the DOJ sued it on antitrust grounds, accusing Microsoft of abusing its monopoly in PC operating systems by “tying” its Internet Explorer browser to Windows. Massachusetts Institute of Technology professor Franklin Fisher, the chief economic witness for the government, showed that Microsoft was giving away its Web browser to destroy a competitor, Netscape, which threatened Windows’ dominance. In Microsoft CEO Bill Gates’ famous phrase, the software giant was “cutting off [Netscape’s] oxygen.”

The judge, Thomas Penfield Jackson, ordered a breakup of Microsoft, but that was rejected by an appeals court, in part because it decided Jackson had violated ethics rules by meeting with reporters to discuss the case. The FTC settled with Microsoft in November 2001. Even though the company avoided the worst fate—a breakup—in the subsequent nearly 13 years, until the appointment of Satya Nadella as CEO, the stock rose a meager 18%, versus 62% for the S&P 500. Microsoft competitors Oracle (ORCL) and SAP (SAP) saw their shares nearly triple in the same period.

Like IBM, Microsoft emerged from the government suit just as the tech world was changing. Google was founded the year of the suit, and its Gmail and Android would, along with Apple’s iPhone—which debuted six years after the settlement—demolish the importance of the PC and the Windows operating system.

Amazon, Facebook, and Google all benefit from the same sort of network effects that snagged Microsoft. The more people use Facebook, the more others feel they must use it, in a self-perpetuating fashion. Ditto for advertising on Google or selling goods on Amazon. Wall Street and investors may love this virtuous cycle, or, as it’s commonly known, the “flywheel” that keeps expanding their businesses.

But others, citing Fisher’s work, see exploitation and unfair leverage. They can argue that Amazon sells its Echo home speaker at roughly break-even prices to bring in more shoppers. It’s conceivable such leverage could be interpreted by regulators as predatory. Another example is Amazon’s bundling of its Amazon Prime membership, which offers free shipping and streaming videos, below Amazon’s cost to provide it. Google’s use of Android to maintain its search engine as pre-eminent on mobile devices has been likened to the kind of “tying” that Microsoft tried with Internet Explorer.

FOR NOW, THE BIGGEST TECH companies don’t face an immediate threat of being broken up. But just the possibility creates a risk factor in the stocks. “We expect increased regulatory scrutiny in the U.S. and EU, which could create an overhang which hinders prospects for further multiple expansion for these companies,” wrote Michael Nathanson, an analyst at MoffettNathanson who covers Alphabet and Facebook.

A regulatory quagmire lasting several years would not just hold back the stocks’ multiple expansion but could substantially contract them, as previous challenges did to Microsoft and IBM. Microsoft’s forward price/earnings multiple declined from 27 to 14 times between late 2001 and 2014, while IBM’s trailing P/E declined from 53 to 10 times from 1969 to 1982.

The current tech giants already sport expensive prices. At 124 times next year’s projected earnings, Amazon’s stock has plenty of room for multiple compression, as they say. But even Alphabet and Facebook, trading at 25 and 27 times, respectively, are up slightly from their year-ago multiples of 20 times and 26 times.

Like IBM and Microsoft, the latest titans run the risk of missing the next big thing. Tim O’Reilly, chief executive of O’Reilly Media, an influential publisher and futurist who has had many conversations with Amazon CEO Jeff Bezos and Google founders Larry Page and Sergey Brin, thinks that will be the symbiosis of human and machine. Human abilities will be amplified by machines as society comes to better understand how data affect the real world. From browsers, it’s already progressed to ride-sharing services from Uber Technologies and Lyft, which in the future will pilot people anywhere without a driver. Likewise, agribusiness giant Monsanto (MON) is looking at how weather data can be used to control robotic farm equipment, putting it on a collision course with its traditional partner, Deere (DE). Will Facebook, Amazon, and Google, possibly preoccupied by government inquiries, miss the boat?

Given tech’s enormous clout in the markets, even a relatively small decline would affect millions of investors. The stocks dominate both active portfolios and passive ones like exchange-traded funds Techology Select Sector SPDR (XLK), which includes Facebook and Google, or Consumer Discretionary Select Sector SPDR (XLY), which includes Amazon. Howard Silverblatt of S&P Dow Jones Indices notes that Apple, which hasn’t been a focus of the government inquiries, is the biggest component of the market-weighted S&P 500, at 7.8%. Facebook is No. 2, at 4.7%, Amazon is fourth at 3.4%, and Alphabet’s A and C classes of stock combined rank as fifth and sixth, with a combined 4%.

CAN FACEBOOK, GOOGLE, and Amazon avoid much tighter regulation or a breakup? Yes, but they’re going to need to change their ways. For every mea culpa from Facebook Chief Operating Officer Sheryl Sandberg about Russian advertising in the 2016 presidential election, there seems to be at least one utterly tone-deaf incident. That would include her boss Mark Zuckerberg’s recent demonstration of his firm’s new virtual-reality gadget by pretending to tour the devastation of Puerto Rico, a move that seemed especially insensitive. Other public-relations low points include Uber founder Travis Kalanick’s parties in Las Vegas and sexist emails circulating at Google about female engineers.

The companies, instead, could be helping the public understand the complexity of their businesses and why things like leveraging a logistics business to lure third-party sellers is justifiable.

“We are at this moment in time, this Facebook moment, when everybody’s talking about these things, and it could be a teachable moment,” says O’Reilly. He thinks the companies need to communicate the economic inputs and outputs of the internet business model, things such as stock options that are a super-currency with which they have financial leverage, but also how many ancillary jobs they create by enabling commerce. [Blogger’s note: I seriously doubt they are going to successfully PR their way to public acceptance of monopoly economic power.]

The internet giants could help in shaping enlightened reforms, suggests O’Reilly. New financial statements could be formulated with the help of the Financial Accounting Standards Board, he says, and stock compensation, one of the worst aspects of Silicon Valley, could be reformed. “They’re aware, but they just don’t get” the need for dialogue with the public, O’Reilly says. “It’s like someone who knows they should quit smoking, but they just don’t.”

The stakes are large, says O’Reilly. “I think there’s huge risk in America that we are going to create a regulatory burden that is going to mean that our companies are less competitive in many markets,” he says.

IF THESE GIANTS GET SIDESWIPED, it could be because of the fatal flaw in large tech companies that’s often drawn social ire and regulation—the will to exploit their dominance. “The biggest thing they’re vulnerable to is that they work too hard to protect their existing businesses,” says O’Reilly. [It’s the capitalist survival instinct, and no company willingly falls on their sword for principles of fairness.]

“That’s always where companies get it wrong—Microsoft got it wrong, IBM before them got it wrong—they basically did things to extract money from customers rather than benefit customers,” he says. How the current tech titans meet this challenge likely will determine how shareholders fare as well. [That would be the far-sighted strategy. Web 3.0 will probably force it upon them. The Golden Rule stated: “Technology disrupts technology.”]

The Logic of tuka

Many people, introduced to the concept developed here under the tuka ecosystem model, have asked, “So, what makes tuka different?”

Cribbing from Socrates, we would answer that question by posing two of our own:

  1. Why do people use the Internet?

I believe we can come up with a lot of different reasons people have embraced the Internet, despite the fact that sitting in front of a computer screen or thumbing a smartphone for hours is bad for the eyes, the hands, the posture and the back! But, one gains access to the world’s information at one’s finger-tips. We can be much more efficient and productive by having access to more information at much lower cost than in the past.

But those reasons just beg the question as to why having access to more and more information is important. Well, yes, information can be valuable, especially if it makes us more productive with our scarce resources of time and energy. In other words, information is valuable because informed knowledge empowers us to do more of the things we want to do, at less cost.

So, what is it we want to do? [That’s really a rhetorical question because there are literarily billions of valid answers.]

Let’s move on to question #2 and maybe it will become clear what we’re getting at.

2. Why do so many people use Facebook?

I think the answers to this question are quite different from the answers to the previous question. I doubt Facebook makes anybody more productive, unless one is running viral ad campaigns. Facebook and its fellow social media platforms actually seem to be the biggest time-wasters since the advent of the Internet! But apparently users are not only attracted to social media, they become addicted to it. How and why?

I believe the answer is found in psychology and the human need to be connected to others. As Aristotle wrote, “Man is a social animal,” (and woman perhaps even more so?). And we connect by sharing information with each other that ranges from silly gossip to important and relevant knowledge (like how to survive a natural disaster).

And the connection is as, if not more, important as the information being shared. This is a key insight into information technology because it tells us what’s really going on behind all this BIG DATA.

If we work backward from this goal of connection we see that connection is driven by the human instinct to connect by sharing, which is rooted in some initial step to create whatever it is we wish to share. Connection <- Sharing <- Creating. Here we have reverse engineered the internal logic of the tuka creative social media ecosystem: Create -> Share -> Connect, which repeats in an endless feedback loop.

So, the point of this post is to show that tuka is not really about what a new technology tool can do for us, but about what we can do with technology to be more like who we really are.

Reining in Technology

From Simon Jenkins in The Guardian:

I assume that nations will one day revolt against the commercial banditry of the internet companies. Governments will find the guts to expel, jam or fine them when they misbehave. I assume that the curse of online anonymity will end, and users of the internet will have to register their identities. Search engines still pretend to be “platforms not publishers” – or, as others put it, sewers not sewage.

But just as the idea of Uber and Airbnb not being “real” service providers is crumbling, so is the idea of Google and Facebook as not “real” publishers, and thus not responsible for any damage done by their content. We await the first class action suit for a Facebook-induced suicide.

The worms are turning. Schools in Silicon Valley have taken to banning digital devices from their premises. Hi-tech parents know what harm too much screen time can do to their children. In addition, David Sax’s Revenge of Analog declares that the revolt of “real” is at hand. As we pass “peak stuff”, the post-digital economy will be about “play”, not objects.

 

This is the trend tuka anticipates and hopes to serve. Technology is a tool to serve human needs, not the other way around. Create-Share-Connect!

Facebook in da Nile.

One should see this as the general problem with Facebook (and Twitter) as an information/news medium – it’s generated by subjective opinions rather than verifiable facts with verifiable sources. Verifiable identity (non-anonymity) has the virtue of incentivizing reputational capital and building trust across information exchanges. But Facebook then has to make a Sophie’s Choice: lose the traffic that raw emotionalism feeds or lose the trust of its user base. Facebook’s day of reckoning is coming.

From The Wall Street Journal:

Facebook Is Still In Denial About Its Biggest Problem
In a world where social media is the pre-eminent news conduit, ‘If it’s outrageous, it’s contagious’ is the new ‘If it bleeds, it leads’
It’s a good time to re-examine our relationship with Facebook Inc.
In the past month, it has been revealed that Facebook hosted a Russian influence operation which may have reached between 3 million and 20 million people on the social network, and that Facebook could be used to micro-target users with hate speech. It took the company more than two weeks to agree to share what it knows with Congress.
Increased scrutiny of Facebook is healthy. What went mainstream as a friendly place for loved ones to swap baby pictures and cat videos has morphed into an opaque and poorly understood metropolis rife with influence peddlers determined to manipulate what we know and how we think. We have barely begun to understand how the massive social network shapes our world.
Unfortunately, Facebook itself seems just as mystified, providing a response to all of this that has left many unsatisfied.
What the company’s leaders seem unable to reckon with is that its troubles are inherent in the design of its flagship social network, which prioritizes thrilling posts and ads over dull ones, and rewards cunning provocateurs over hapless users. No tweak to algorithms or processes can hope to fix a problem that seems enmeshed in the very fabric of Facebook.
Outrageous ads
On a network where article and video posts can be sponsored and distributed like ads, and ads themselves can go as viral as a wedding-fail video, there is hardly a difference between the two. And we now know that if an ad from one of Facebook’s more than five million advertisers goes viral—by making us feel something, not just joy but also fear or outrage—it will cost less per impression to spread across Facebook.
In one example, described in a recent Wall Street Journal article, a “controversial” ad went viral, leading to a 30% drop in the cost to reach each user. Joe Yakuel, founder and chief executive of Agency Within, which manages $100 million in digital ad purchases, told our reporter, “Even inadvertent controversy can cause a lot of engagement.”
Keeping people sharing and clicking is essential to Facebook’s all-important metric, engagement, which is closely linked to how many ads the network can show us and how many of them we will interact with. Left unchecked, algorithms like Facebook’s News Feed tend toward content that is intended to arouse our passions, regardless of source—or even veracity.
An old newspaper catchphrase was, “If it bleeds, it leads”—that is, if someone got hurt or killed, that’s the top story. In the age when Facebook supplies us with a disproportionate amount of our daily news, a more-appropriate catchphrase would be, “If it’s outrageous, it’s contagious.”
Will Facebook solve this problem on its own? The company has no immediate economic incentive to do so, says Yochai Benkler, a professor at Harvard Law School and co-director of the Berkman Klein Center for Internet and Society.
“Facebook has become so central to how people communicate, and it has so much market power, that it’s essentially immune to market signals,” Dr. Benkler says. The only thing that will force the company to change, he adds, is the brewing threat to its reputation.
Facebook’s next steps
Facebook Chief Executive Mark Zuckerberg recently said his company will do more to combat illegal and abusive misuse of the Facebook platform. The primary mechanism for vetting political and other ads will be “an even higher standard of transparency,” he said, achieved by, among other things, making all ads on the site viewable by everyone, where in the past they could be seen only by their target audience.
“Beyond pushing back against threats, we will also create more services to protect our community while engaging in political discourse,” Mr. Zuckerberg wrote.
This move is a good start, but it excuses Facebook from its responsibility to be the primary reviewer of all advertising it is paid to run. Why are we, the users, responsible for vetting ads on Facebook?
By default, most media firms vet the ads they run and refuse ones that might be offensive or illegal, says Scott Galloway, entrepreneur, professor of marketing at NYU Stern School of Business and author of “The Four,” a book criticizing the outsize growth and influence of Amazon, Apple, Facebook and Google.
Mr. Zuckerberg acknowledged in a recent Facebook post that the majority of advertising purchased on Facebook will continue to be bought “without the advertiser ever speaking to anyone at Facebook.” His argument for this policy: “We don’t check what people say before they say it, and frankly, I don’t think our society should want us to.”
This is false equivalence. Society may not want Facebook to read over everything typed by our friends and family before they share it. But many people would feel it’s reasonable for Facebook to review all of the content it gets paid (tens of billions of dollars) to publish and promote.
“Facebook has embraced the healthy gross margins and influence of a media firm but is allergic to the responsibilities of a media firm,” Mr. Galloway says.
More is needed
Mr. Zuckerberg has said it will hire 250 more humans to review ads and content posted to Facebook. For Facebook, a company with more than $14 billion in free cash flow in the past year, to say it is adding 250 people to its safety and security efforts is “pissing in the ocean,” Mr. Galloway says. “They could add 25,000 people, spend $1 billion on AI technologies to help those 25,000 employees sort, filter and ID questionable content and advertisers, and their cash flow would decline 10% to 20%.”
Of course, mobilizing a massive team of ad monitors could subject Facebook to exponentially more accusations of bias from all sides. For every blatant instance of abuse, there are hundreds of cases that fall into gray areas.
The whole situation has Facebook between a rock and a hard place. But it needs to do more, or else risk further damaging its brand and reputation, two things of paramount importance to a service that depends on the trust of its users.

Can’t We All Just Be Friends?

This is the nefarious side of social media. A NY Times article on how Russian hackers used Facebook to try to influence the US and French elections.

Will Mark Zuckerberg ‘Like’ This Column?

tuka offers a bit of an alternative to uncontrolled social media. First, there is no anonymity. Second, the user feed is content only, not status or opinion or any other distracting things like cat and food photos. This means we know who is posting and what they post is tangible creative content. These two criteria ensure that the connections people make on tuka are meaningful and real.

The final caveat here is to remind ourselves not to be so easily manipulated by emotional triggers.