Digital Economy Archives - Page 4 of 10

The Digital Planet

December 3, 2019December 3, 2019 tukaglobal618 Comments

The Information Age is different in many ways. This is why digital formats have roiled physical formats across all the creative industries. We need to think outside the box.

Interesting article from an academic expert (my annotations in red):

a digital platform is either large or dead.

Why economics must go digital

neweurope.eu

Diane Coyle

One of the biggest concerns about today’s tech giants is their market power. At least outside China, Google, Facebook, and Amazon dominate online search, social media, and online retail, respectively. And yet economists have largely failed to address these concerns in a coherent way. To help governments and regulators as they struggle to address this market concentration, we must make economics itself more relevant to the digital age.

Digital markets often become highly concentrated, with one dominant firm, because larger players enjoy significant returns to scale. For example, digital platforms incur large upfront development costs but benefit from low marginal costs once the software is written. They gain from network effects, whereby the more users a platform has, the more all users benefit. And data generation plays a self-reinforcing role: more data improves the service, which brings in more users, which generates more data. To put it bluntly, a digital platform is either large or dead.

As several recent reports (including one to which I contributed) have pointed out, the digital economy poses a problem for competition policy. Competition is vital for boosting productivity and long-term growth because it drives out inefficient producers and stimulates innovation. Yet how can this happen when there are such dominant players?

Today’s digital behemoths provide services that people want: one recent study estimated that consumers value online search alone at a level equivalent to about half of US median income. Economists, therefore, need to update their toolkit. Rather than assessing likely short-term trends in specific digital markets, they need to be able to estimate the potential long-term costs implied by the inability of a new rival with better technology or service to unseat the incumbent platform.

This is no easy task because there is no standard methodology for estimating uncertain, non-linear futures. Economists even disagree on how to measure static consumer valuations of free digital goods such as online search and social media. And although the idea that competition operates dynamically through firms entering and exiting the market dates back at least to Joseph Schumpeter, the standard approach is still to look at competition among similar companies producing similar goods at a point in time.

The characteristics of digital technology pose a fundamental challenge to the entire discipline. As I pointed out more than 20 years ago, the digital economy is “weightless.” Moreover, many digital goods are non-rival “public goods”: you can use software code without stopping others from doing so, whereas only one person can wear the same pair of shoes. And they require a substantial degree of trust to have any value: we need to experience them to know whether they work, and social influence is often crucial to their diffusion.

Yet standard economics generally assumes none of these things. Economists will bridle at this statement, rightly pointing to models that accommodate some features of the digital economy. But economists’ benchmark mental world – particularly their instinctive framework for thinking about public policy questions – is one where competition is static, preferences are fixed and individual, rival goods are the norm, and so on.

Starting from there leads inexorably to presuming the “free market” paradigm. As any applied economist knows, this paradigm is named for a mythical entity. But this knowledge somehow does not give rise to an alternative presumption, say, that governments should supply certain products.

This instinct may be changing. One straw in the wind is the call by Jim O’Neill, a former Goldman Sachs economist who now heads the Royal Institute of International Affairs (Chatham House), for public research and production of new antibiotics. Having led a review of the spread of anti-microbial resistance – which will kill millions of people if new drugs are not discovered – O’Neill is dismayed by the lack of progress made by private pharmaceutical companies.

Drug discovery is an information industry, and information is a non-rival public good which the private sector, not surprisingly, is under-supplying. [Yes – this is what intellectual property rights/copyrights/patents is all about. The problem is attributing the value created by the sharing of information. We may be able to solve that with blockchain ledgers.] That conclusion is not remotely outlandish in terms of economic analysis. And yet the idea of nationalizing part of the pharmaceutical industry is outlandish from the perspective of the prevailing economic-policy paradigm.

Or consider the issue of data, which has lately greatly exercised policymakers. Should data collection by digital firms be further regulated? Should individuals be paid for providing personal data? [Yes, they should. Personal data is as proprietary as personal labor and personal ideas. Making sure users get paid for their data changes the business models of these natural monopolies.] And if a sensor in smart-city environment records that I walk past it, is that my data, too? The standard economic framework of individual choices made independently of one another, with no externalities, and monetary exchange for the transfer of private property, offers no help in answering these questions. [Yes, because we don’t yet assign value to shared information. We rely on the property rights of tangible assets.]

Economic researchers are not blameless when it comes to inadequate policy decisions. We teach economics to people who go out into the world of policy and business, and our research shapes the broader intellectual climate. The onus now is on academics to establish a benchmark approach to the digital economy and to create a set of applied methods and tools that legislators, competition authorities, and other regulators can use.

Mainstream economics has largely failed to keep up with the rapid pace of digital transformation, and it is struggling to find practical ways to address the growing power of dominant tech companies. If the discipline wants to remain relevant, then it must rethink some of its basic assumptions.

Creativity, Society, and Mental Health

October 23, 2019October 23, 2019 tukaglobal613 Comments

The following article caught my attention. It seems to suggest that millennials and Gen Zers have just become more willing than earlier generations to seek out therapy for mental health issues. But 50-75% quit their jobs due to mental health? That seems more like an epidemic than social enlightenment and the fact that it strikes deepest among certain age cohorts is a red flag. I would suggest that other research studies into happiness, fulfillment, and health have come up with different factors. (My book The Ultimate Killer App: How Technology Succeeds presents most of this research with citation references.)

First, most normal (i.e, non-medical) psychological depressive states can be traced to a disconnect between expectations and reality. We all experience this as disappointment, but an over-emphasis on relative status with our peers can be a strong catalyst for psychological distress. Certainly social media has made this relative status more salient in our daily lives: “Gee, our friends on Facebook seem to be living much more exciting and rewarding lives!!!” We’ve even coined this distress as FOMO (fear of missing out). In pre-mass media days few people knew they were missing out on the Vanderbilt or Rockefeller lifestyle; these were more like Hollywood fantasies. But social media has brought such status comparisons into our daily lives with real people we know. How can a young worker flipping burgers as a career job stepping stone last more than a month of this humiliation when his friends are playing ping-pong at Google? Apparently not many.

An older generation would reply that work is not supposed to be fun, that’s why it’s called work. But I think the future offers us better solutions if we are cognizant enough of the problem to seek them out. First, healthy humans at some point realize that relative status matters not a whit; nobody really cares about how great your life is, except you and perhaps your mom.

The second point that psychological research reveals is that money and wealth offer a very poor representation of true status and self-actualization. Instead we should be looking to our creative and social instincts. This is the major thesis of The Ultimate Killer App: what we truly desire to be happy and fulfilled is to explore our creativity and share it with like-minded others to establish robust social connections. Having a child and a family helps satisfy these most primal needs. It really comes down to Maslow’s Hierarchy of Needs and this is the foundational idea of tuka, a creativity sharing social network platform.

Young people are quitting their jobs in droves. Here’s why.

by Megan Henney

Young people are spearheading mental health awareness at the workplace.

About half of millennials and 75 percent of Gen Zers have quit their jobs for mental health reasons, according to a new study conducted by Mind Shares Partners, SAP and Quatrics. It was published in Harvard Business Review.

That’s compared to just 20 percent of respondents overall who said they’ve voluntarily left a job in order to prioritize their mental health — emblematic of a “shift in generational awareness,” the authors of the report, Kelly Greenwood, Vivek Bapat and Mike Maughan, wrote. For baby boomers, the number was the lowest, with less than 10 percent quitting a job for mental-health purposes.

It should come as no surprise that younger generations are paving the way for the de-stigmatization of mental health. A Wall Street Journal article published in March labeled millennials the “therapy generation,” as todays 20- and 30-somethings are more likely to turn to therapy, and with fewer reservations, than young people in previous eras did.

A 2017 report from the Center for Collegiate Mental Health at Penn State University found that, based on data from 147 colleges and universities, the number of students seeking mental-health help increased at five times the rate of new students starting college from 2011 to 2016. And a Blue Cross Blue Shield study published in 2018 revealed that major depression diagnoses surged by 44 percent among millennials from 2013 to 2016.

Increasingly, employees (about 86 percent) want their company to prioritize mental health. Despite that — and the fact that mental health conditions result in a $16.8 billion loss in employee productivity — the report found that companies are still not doing enough to break down the stigma, resulting in a lack of identification in workers who may have a mental health condition. Up to 80 percent of individuals will manage a mental health condition at one point in their lifetime, according to the study.

Of course, sometimes employees are unaware of the different resources offered at their organizations, or are afraid of retribution if they elect to use them. In the study, millennials, ages 23 to 38, were 63 percent more likely than baby boomers, 55 to 73, to know the proper procedure for seeking mental health support from the company.

The study was based on responses collected from 1,500 U.S. adults.

The Dismal Future of Culture?

February 14, 2019 tukaglobal309 Comments

I reprint this article in full because this is exactly what we’ve been arguing at tuka all along. Serious dedicated writers can no longer write, as so it goes with the development of other creative professions such as music, photography, and video. So collapsing creative incomes means the dominance of mediocrity and purely commercial values for artistic expression. A good example is the proliferation of reality TV. It all becomes rather tired and boring and audiences turn to better options. It’s a vicious downward spiral.

Crashing author earnings ‘threaten future of American literature’

theguardian.com/books/2019/jan/08/crashing-author-earnings-threaten-future-of-american-literature

Alison Flood

January 8, 2019

A major survey of American authors has uncovered a crash in author earnings described as “a crisis of epic proportions” – particularly for full-time literary writers, who are “on the verge of extinction”.

Surveying its membership and that of 14 other writers’ organisations in what it said was the largest survey of US authors’ earnings ever conducted, the Authors Guild reported that the median income from writing-related work fell to a historic low in 2017 at $6,080 (£4,760), down 42% from 2009. [Yeah, who survives on $6K a year?]

Writers of literary fiction are particularly affected, said the Authors Guild, with those authors experiencing the biggest recent decline in writing-related earnings – down 43% since 2013. Isolating book-related income, the decline was even steeper, down to $3,100 in 2017 – more than 50% down on 2009’s median of $6,250. In total, 5,027 authors provided detailed responses to the survey.

The Authors Guild said the reduction in earnings for literary writers “raises serious concerns about the future of American literature – books that not only teach, inspire and elicit empathy in readers, but help define who Americans are and how the US is perceived by the world”.

“When you impoverish a nation’s authors, you impoverish its readers,” said Authors Guild president James Gleick. Vice-president Richard Russo added that “there was a time in America, not so very long ago, that dedicated, talented fiction and non-fiction writers who put in the time and learned the craft could make a living doing what they did best, while contributing enormously to American knowledge, culture and the arts. That is no longer the case for most authors, especially those trying to start careers.”

Author TJ Stiles said: “Poverty is a form of censorship. That’s because creation costs. Writing requires resources, and it imposes opportunity costs. Limiting writing to the financially independent … punishes authors based on their lack of wealth and income.”

The survey found that even those who consider themselves to be full-time writers are forced to hold down multiple jobs to earn enough money to survive. Just 21% of full-time published authors derived 100% of their income from their books in 2017, with the need to focus on other avenues for income meaning that literary authors are writing and publishing books less often.

“It takes writers longer to research and write books, since they have to do it between other money-earning ventures,” said the Guild, describing the situation as “a crisis of epic proportions”.

“The quality of books written by authors holding down other jobs may be affected since their attention is divided and writing is often pushed to what spare free time is left,” it added.

The one bright point in the survey was for self-published writers, who were the only group to experience a significant increase in earnings – up 95% in book-related income between 2013 and 2017, with the number of authors self-publishing up by 72% since 2013. But the Guild pointed out that self-published authors still earned 58% less than traditionally published peers in 2017. [Self-publishing is the best financial strategy, but how do we separate hobbyists from serious writers in a sea of content?]

The Authors Guild blamed the crisis on the “growing dominance of Amazon”, which it said forced publishers to accept narrower margins and then pass their losses on to authors, as well as publishers’ focus on blockbuster writers at the expense of lesser-known names, as well as a 25% royalty rate for ebooks.

“Amazon, but also Google, Facebook and every other company getting into the content business, devalue what we produce to lower their costs for content distribution, and then take an unfair share of the profits from what remains for delivering that reduced product,” said Russo. “We get that they like to move fast and break things, but it’s no longer in their own interest to break us. If even the most talented of authors can no longer afford to write, to create, who’s going to provide the content?” [What we have discovered is that the big digital distributors like Amazon and Apple don’t really care about the intrinsic value of the content they distribute. More is better and cheaper.]

The survey follows similar research conducted in the UK in 2018, which found that median earnings for professional writers had fallen by 42% since 2005 to under £10,500 – well below the minimum wage of £15,269.

How Facebook has Changed Us – For the Worse.

January 31, 2019 tukaglobal791 Comments

This excerpt from an article in Guardian…

…Facebook is something that too often spoils things.

This is particularly true of the way we enjoy other people’s creativity. A recent article on the music website the Quietus by the writer Jazz Monroe nails the essential point. “When we submit to a profound experience of art, it’s a rare reprieve from the everyday torrent of triviality and distraction,” he wrote. “Likewise, when you finish a great book, there’s supposed to be a moment when you reflect on it. But it’s so easy to just check your phone, or tweet some earnest statement about it.”

read more…

How Facebook Robbed Us of Our Sense of Self.

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.

Data Land Grab

December 6, 2018 tukaglobal635 Comments

‘Good for the world’? Facebook emails reveal what really drives the site

As we can read from this article and Facebook’s internal management debates, Web 2.0 (of which the GAFA companies are the archetypes) is built on a data land grab. It’s rather similar to the actual land grab that the European powers battled over for the New World, then with the colonization of Africa and Asia.

Data is now a valuable resource that has been priced up there with land and capital. Naturally, the tech oligopolies and their startup wannabes all want to grab as much as possible. And who are they grabbing it from? The network users of course.

Web 3.0 is all about democratizing the value and monetization of personal networked data. It’s about decentralized ownership and control, much like the desire to own and control the fruits of one’s labor that ended slavery. Web 3.0 is the future, because Web 2.0 is unsustainable.

Data Privacy

August 16, 2018August 16, 2018 tukaglobal366 Comments

Good, thorough, and l-o-o-o-o-ng article on data privacy issues, legislation, and network value. From the NYT Magazine. Read about what’s being done to you behind closed doors…

The Unlikely Activists Who Took On Silicon Valley — and Won

Some excerpts:

Almost by accident, though, Mactaggart had thrust himself into the greatest resource grab of the 21st century. To Silicon Valley, personal information had become a kind of limitless natural deposit, formed in the digital ether by ordinary people as they browsed, used apps and messaged their friends. Like the oil barons before them, they had collected and refined that resource to build some of the most valuable companies in the world, including Facebook and Google, an emerging duopoly that today controls more than half of the worldwide market in online advertising. But the entire business model — what the philosopher and business theorist Shoshana Zuboff calls “surveillance capitalism” — rests on untrammeled access to your personal data. The tech industry didn’t want to give up its powers of surveillance. It wanted to entrench them. And as Mactaggart would soon learn, Silicon Valley almost always got what it wanted.

…

Through the Obama years, the tech industry enjoyed extraordinary cachet in Washington, not only among Republicans but also among Democrats. Partnering with Silicon Valley allowed Democrats to position themselves as pro-business and forward-thinking. The tech industry was both an American economic success story and a political ally to Democrats on issues like immigration. Google enjoyed particularly close ties to the Obama administration: Dozens of Google alumni would serve in the White House or elsewhere in the administration, and by one estimate Google representatives visited the White House an average of about once a week.

…

Mactaggart … faced an American political establishment that saw the key to its future in companies like Google and Facebook — not because of whom they supported but because of what they did. The surveillance capitalists didn’t just sell more deodorant; they had built one of the most powerful tools ever invented for winning elections. Roughly the same suite of technologies helped elect Obama, a pragmatic liberal who promised racial progress and a benevolent globalism, and Trump, a strident nationalist who adeptly employs social media to stoke racial panic and has set out to demolish the American-led world order.

…

In the end, not a single lawmaker in either chamber voted against the compromise.

Political power is a malleable thing, … an elaborate calculation of artifice and argument, votes and money. People and institutions — in politics, in Silicon Valley — can seem all-powerful right up to the moment they are not. And sometimes, … a thing that can’t possibly happen suddenly becomes a thing that cannot be stopped.

The promise of blockchain is to disrupt this Monopoly game.