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Online Companies Like Facebook Have Created a Meaningless Economy, says Douglas Rushkoff| Big Think - YouTube
Channel: Big Think
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In the original .com era companies were measured
by how much money they made.
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The idea was that you sold a lot of stuff
and took in a lot of cash and that was the
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way you could get a valuation and then get
acquired or do an IPO.
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Now, consumers don't have money anymore.
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People are poor.
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So companies can't really use revenue as a
way of showing what they're worth, plus they
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have no real business plans.
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So what they do instead is use likes as a
metric of their worth.
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If a company can have a lot of people saying
I'd like it, I like it, I like it, then that
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more ethereal abstract metric, I've got a
million likes; I've got 20 million likes,
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that becomes marketable.
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So if I want to sell a record and make money
and go to a record company or a CD company,
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I can show look, my song on YouTube has 500,000
likes and the record company or the sponsor
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will then promote my music, not even because
they're going to make money with that music
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but because then I'm supposed to sell my likes,
my views, my followers to their sponsors.
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So, a guy like Jay Z comes out with an album
through Samsung that he gives away for free
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because what it really did was installed spyware
on people's android phones that could see
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what they were doing.
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So what Jay Z was doing was rather than selling
his music he was selling his likes.
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A company like Tumblr had no revenue but they
had lots of likes and users who all clicked
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on each other stuff, they had those phantom
metrics.
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And with that they were able to sell themselves
for a billion dollars.
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This year Yahoo is taking Tumblr, the billion
dollars, as a loss.
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They're writing the whole thing off because
they didn't buy a company, they bought likes.
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But this is the new economy that we're in.
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It's an abstracted absurd essentially meaningless
economy.
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All of these companies, Facebook, Twitter,
Google, they're all advertising based, they're
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all market researched based.
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The idea is that these companies will somehow
replace advertising and marketing and market
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research and consumer data.
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The problem is all those industries combined
never account for more than three or four
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percent of GDP.
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They can't because if advertising becomes
the majority of your marketplace who's left
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to advertise?
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If my talks are supposed to advertise my books
and my books are supposed to advertise my
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TV appearances and my TV appearances are supposed
to advertise my books, where is the revenue?
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That's the problem in our society now is that
every company now is a data play or an advertising
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play, but how can the whole NASDAQ stock exchange
be one big advertising play?
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It can't.
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You still need enough razor blades and bananas
and milk companies to support all of that
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stuff.
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So it won't support the entire economy.
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So that's why we don't really use revenue
anymore in playing this out.
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The bottom layer of the Ponzi scheme, which
is what we're in now, where these companies
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are still trying to get shareholder value
and IPOs on Wall Street, this bottom layer
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is made up completely of likes.
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It's made up not of the revenue that the companies
make but the amount of likes, the amount of
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traffic, the amount of data they can show.
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But if your company's endgame is what they
call a big data play that oh the data we collect
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is going to be so valuable, you've all ready
lost.
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Everybody is collecting data.
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The one thing that there is a glut of is data.
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So that's not what you want to be trying to
collect right now.
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The problem is most business people, whether
they're in investment baking or whether they're
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the hungry little startup people, they are
so oblivious to the operating system beneath
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their technologies that they end up really
driving their businesses off cliffs.
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And all I'm asking people to do, especially
if they're programmers, especially if they're
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developers, to look and say wait a minute,
what am I optimizing my business for?
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Am I optimizing it for the extraction of value
from people and places, which is a losing
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proposition?
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Or am I optimizing it to promote the circulation
of value between people and places, which
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is a winner's game?
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The whole point of a digitally distributed
economy is that it's networked; it's distributed.
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You don't redistribute the spoils after-the-fact.
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You don't say oh I've made too much money;
I'm going to give back 90 percent of it now
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before I die into all the schools and things
I think need it.
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No, that means you've had and extractive silly
sick business, which let you get hundreds
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of billions of dollars but killed your marketplaces,
destroyed public areas, destroyed the planet.
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There are three factors of production.
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Adam Smith, everyone's known this: land, labor
and capital.
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In the current VC driven technology startup
marketplace, the only one of those three that
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we value is capital.
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The VC makes all the decisions and land and
labor are left out of the equation.
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That's why we have zillions of unemployed
people and why we're destroying the planet.
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It's really simple.
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Where if we include land at labor the places
where we do our business and the people through
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whom we do our business.
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If we include them in the value equation all
of a sudden business is positive rather than
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a net negative on our society.
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