Jaron Lanier Why Facebook Isn't Free

Summary

The transcript discusses the impact of information technology on the economy, highlighting how technological advancements create wealth concentration for those at the top, such as those who develop self-driving cars or efficient digital networks. The speaker uses Walmart as an example of how digital efficiency can reduce job prospects for its customer base. They argue that platforms like Facebook, by offering free services, inadvertently shrink the economy by monetizing less. The solution proposed is to shift Facebook toward a commerce platform where users can monetize their participation, boosting both the platform's value and the overall economy.

Takeaways

• 😀 The advent of better information tools is making the economy more efficient, but this efficiency is leading to a concentration of wealth among those who own these tools.
• 😀 Automation, like self-driving cars, may eliminate jobs for many, especially in industries like taxi services, leading to a wealth concentration in those who own the technology.
• 😀 As information technology continues to be integrated into society, large companies like Facebook will see rising valuations due to their role in making the economy more efficient.
• 😀 The primary issue with Facebook's valuation and success is that it should increase value for everyone, rather than benefiting only a select few.
• 😀 Walmart is cited as an example of a company that used digital networking to make the retail industry more efficient but ended up impoverishing its own customer base in the process.
• 😀 Walmart’s rapid growth hurt its customers, leaving them with fewer job opportunities and less disposable income, leading to a stagnation in Walmart's own business model.
• 😀 Facebook has a similar problem to Walmart in that while it offers 'free' services, it is contributing to the reduction of job prospects for a large portion of the population.
• 😀 To preserve capitalism in an information-based economy, it's essential to monetize more of the world rather than less, ensuring that the market continues to grow rather than shrink.
• 😀 Facebook’s model of offering free services limits its monetization opportunities and doesn't create real financial rewards for users, which limits the potential for economic growth.
• 😀 The suggested solution is for Facebook to become a commerce platform, allowing users to make money through services like art sales, crowdfunding, or app store-like models, thereby stimulating the economy.

Q & A

What is the main concern discussed in the script regarding the impact of information technology on the economy?

The script discusses how advancements in information technology are leading to greater economic efficiency but also concentrating wealth among those who own the technology, such as the creators of self-driving cars, leading to potential job losses for many people.

What example is given to illustrate the concentration of wealth due to technological advancements?

The example of self-driving cars is given, where cab drivers may lose their jobs as a result of automation, while the creators of the self-driving technology become very wealthy.

How does the speaker view the valuation of Facebook in the context of its impact on the economy?

The speaker views Facebook's valuation as normal, given the integration of information technology into society. However, they express concern that the company's value should be used to benefit everyone, rather than just a select few.

What company is used as a comparison to Facebook, and why?

Walmart is used as a comparison because it was a pioneer in using digital networking in the 1980s and 1990s to create efficiencies in the retail market. However, the speaker suggests that Walmart's success led to the impoverishment of its own customer base, a parallel to the potential negative effects of Facebook's approach.

What was the unintended consequence of Walmart's rapid growth through digital networking?

Walmart's growth led to a situation where its customer base became poorer, as the efficiencies it created in retailing resulted in fewer job prospects for the very people who relied on the company.

What is the core issue with Facebook's model, according to the speaker?

The core issue with Facebook's model is that it monetizes less and less of its platform, offering free services without allowing users to directly profit from their activities. This limits the overall economic growth and job opportunities for users.

What solution does the speaker propose to address the problems with Facebook's current model?

The speaker proposes that Facebook should transition into a commerce platform, allowing users to monetize their activities more directly, such as by selling art or using crowdfunding models like Kickstarter. This would help expand the economy instead of contracting it.

How would monetizing more aspects of Facebook benefit the overall economy?

Monetizing more aspects of Facebook would create new opportunities for people to earn money, helping to prevent the economy from shrinking and promoting overall economic growth by turning online activity into a source of income.

Why does the speaker believe Facebook's investors would benefit from this approach?

The speaker believes that by transitioning Facebook into a platform that generates more income for its users, the overall value of the platform would increase, leading to better returns for Facebook's investors in both the short and long term.

What is the broader implication of the speaker's argument for the future of capitalism?

The broader implication is that for capitalism to thrive in an information-based economy, more of the world must be monetized, ensuring that wealth and economic opportunities are not overly concentrated in the hands of a few, but are more widely distributed.