When Charles Koch founded the Cato Institute in 1974, his mission (in words from Cato’s journal) was “protecting capitalism from government.” That meant the end of public education, Social Security, Medicare, Medicaid, the Environmental Protection Agency, as well as cutting taxes on the rich and government regulations on business. It was a tall order—but now, for the first time in 44 years, Koch and his billionaire libertarian friends like Robert Mercer and Peter Thiel are within sight of their goal of building a true oligarchy (Aristotle’s “rule by the rich”). The current Trump tax cut will deliver billions of dollars into the pockets of the Kochs, the Mercers, the Trumps, and their heirs. Creating a political economy in which the wealthy minority rule over the middle and lower class majority is a hard task. It requires mechanisms that suppress voting and mechanisms for propaganda that convince middle class voters that cultural divisions are more important than economic equality. In both these tasks, Google and Facebook have been a key to the success of the 1 percent.
The role of the internet in propaganda and voter suppression is a two-pronged attack. Aldous Huxley’s Brave New World foresaw our current dilemma—Huxley’s assertion was that technology would lead to passivity. The ease with which we could consume mind-numbing entertainment and distractions would ultimately rot our democracy. And this is exactly what may be happening. In the 2016 presidential election, 94 million citizens who were eligible to vote declined to exercise that privilege (compared to the 136 million who voted), according to the United States Election Project. And a much larger percentage of millennials are nonvoters. As Kevin Drum reported in Mother Jones, “In 1967 there was very little difference between the youngest and oldest voters. By 1987 a gap had opened up, and by 2014 that gap had become a chasm.” Beyond the extreme apathy, Republican legislatures in many states have instituted far more restrictive voter ID laws, which have also contributed to lower voting rates. But Steve Bannon wasn’t content to leave voter suppression to chance. One of his brilliant moves was to circulate memes on Facebook targeting only African American voters with the text: “Hillary Thinks African Americans are Super Predators.” By all accounts it was a successful voter suppression strategy….
We have been here before. But not since the days at the turn of the 20th century, when Teddy Roosevelt took on the monopolies of John D. Rockefeller and J.P. Morgan, has the country faced such concentration of wealth and power.
[Editor Charlie sez: royalty deadbeat Facebook is making friends all over.]
When Facebook Inc. wants to try something new, one of its first calls is to CNN. It was a key partner when Facebook introduced its news-reading app, Paper, in 2014. When the social network shuttered Paper soon after, transmogrifying it into a series of fast-loading News Feed stories called Instant Articles, CNN remained on board. And last year, when Facebook began focusing on hosting live video, CNN was one of the few parties to which it paid a nominal fee to produce clips of, say, election results being projected on the Empire State Building.
But strain is showing in the relationship. Facebook’s latest pitch to publishers such as CNN is for them to provide a regular stream of TV-quality, edited, original videos that will give Mark Zuckerberg’s company a chance to compete with YouTube to siphon some of the $70 billion pouring into TV ads each year. In exchange, the publishers can share some of the revenue for ads that roll in the middle of the videos. Facebook will control all the ad sales.
It’s getting tougher for CNN and others to view these arrangements as mutually beneficial. “Facebook is about Facebook,” says Andrew Morse, general manager of CNN’s digital operations. “For them, these are experiments, but for the media companies looking to partner with significant commitments, it gets to be a bit of whiplash.” Morse says the financial compensation Facebook offers isn’t enough to convince him that working directly with the social network will be worthwhile in the long term.
Jason Kint, chief executive officer of the industry trade group Digital Content Next, was more blunt. “Media companies are like serfs working Facebook’s land,” he says. [Editor Charlie sez, “Aren’t we all?”]
The European Union imposed a 2.4 billion euro ($2.7 billion) fine on Google last Tuesday for manipulating its search engine results to favor its own comparison shopping service. It is just the latest institution to recognize the increasing monopolization of the technology industry.
Google has about a 90 percent market share in searches, while Facebook has a penetration of about 89 percent of internet users. Economists have a fancy name for this phenomenon: “network externalities.” In traditional product markets, one customer’s choice (for example, a particular car tire) does not directly affect other individuals’ preferences for that product, and competition generally ensures that consumers enjoy the best products at the lowest possible price.
In the market for social media, by contrast, when one customer uses Facebook over Myspace, it has a direct (and positive) impact on other customers’ preferences for the same social network: I want to be in the social network where my friends are. These markets naturally tend toward a monopoly.
[Editor Charlie sez: Insightful must-read artist rights interview with Mike Huppe, the CEO of SoundExchange.]
During the following interview, held at the Omni Hotel in Nashville, we covered a variety of topics such as what Huppe calls the AM/FM Artist Loophole, the DMCA Safe “Ocean,” internet enabled auto dashboards and the organization’s new ISRC online searchable database. Read On…
NEKST: Do you expect SoundExchange’s distribution growth will continue?
Mike Huppe: We’ve had unbelievable double digit growth for the past 7 or 8 years which won’t continue forever, but we are on track to have another up year in 2016. We paid out about $803 million last year and should be in the mid-$800s this year. It will naturally level out as we get bigger and the market matures.
After reading Ari Herstand’s tirade against Universal Music Publishing Group (and other rights owners by association) several thoughts came to mind. In fact, many of those same thoughts have been voiced by several others in the comment threads following that article.
While Ari is typically a great advocate for artists, he has this one wrong and just plain backwards.
Two vastly wealthy multinational media companies are exploiting a copyright law loophole to sell the world’s music without paying royalties to the world’s songwriters. Why? Because Google and Amazon–purveyors of Big Data–claim they “can’t” find contact information for song owners in a Google search. So these two companies are exploiting songs without paying royalties by […]
Facebook’s inflate-gate put a spotlight on the problem with a platform being a walled garden. But while Facebook may get more attention because of its size, other platforms also have their measurement issues. While Facebook’s overcounting of its video viewing was “a massive error,” said Benjamin Arnold, business director at We Are Social, “the other platforms are still behind in advertising offerings and integrations.”
Until they catch up, the holy grail of having one yardstick that lets marketers measure how their ads are performing from one platform to another is far off. Here’s a platform-by-platform assessment: