Although the origins of the Internet go back over 50 years to DARPA (Defense Advanced Research Projects Agency) the consumer internet that we know, the World Wide Web, is less than 25 years old and didn't enter the public consciousness until the advent of the web browser 20 years ago. This history is relevant to Jaron Lanier's surprising assertion that the Internet is unique among mass technological innovations in not producing immediate and measurable economic benefit to the general public.
In a recent interview Lanier told me, "when there’s some new big piece of incredible infrastructure that makes the world more efficient, what happens afterwards is an expansion of opportunity and well-being for ordinary people. That happened with electricity and drinking water and interstates.… So here we are, over a decade into this transformation [with the internet] and we’re seeing a different reality."
Lanier is not just talking about the Great Recession (although he sees hyper-networked finance as a direct cause), but about how the rise of top networks, or "siren servers," has gone hand-in-hand with the growth of global income disparity. Our digital networks, Lanier argues, have hardwired a winner-take-all economy.
The example that got Lanier thinking about this is the first place is the music industry. He is best known as the inventor of virtual reality and as a computer scientist, but Lanier is also a musician. The "liberation" of the distribution of music made possible by the internet has turned working musicians into an underpaid underclass who can no longer count on royalties as the basis of a sustainable middle-class life. Lanier sees this same effect at work in all corners of the economy.
To counter the invisible hand of free market proponents, like my colleague Tim Worstall of the Adam Smith Institute, Lanier says that today's creative destruction is more destructive than creative. "Efficiency looks like market shrinkage," Lanier told me, "you have an incredible new business that concentrates wealth… but at the same time, there’s a larger loss than the corresponding gain to the new venture. And that’s clearly market shrinkage. If the venture capitalists are saying that that’s what they’re looking for, that’s a pretty good indication that that’s what’s going on in successful ventures."
Silicon Valley VCs take great pleasure in not taking Lanier seriously. I think they are wrong. Although this countervailing "network effect" is still ambiguous (and the subject of Lanier's ongoing "research agenda") there are many indications that the shrinkage of the global middle class is related to the economic agenda of the large digital networks on the Internet. Lanier likens the situation to the emerging consensus about climate change. He has yet to prove causality, but quantitative evidence is pointing in that direction.
In Lanier's new book, Who Owns the Future, which I have referred to many times in recent posts, he argues that free content itself is to blame for this economic morass. The problem, he writes, is that too much of the underlying value of our digital networks (Google, Facebook, etc.) has been left off the books. Here is an example of an artist saying that the bean counters have not counted all of the beans!
What Lanier is recommending as a corrective is to monetize everything so that each individual creates material value through the use and contribution to these networks. This is a radical, and some might say unworkable, notion. But although the "how to get there from here" is far from clear (even to Lanier), the future he describes is one worth striving for. Lanier argues that two-way monetization will not only create more income parity, but will lead to a larger overall economy.
I will let the economists duke this one out quantitatively, but as a content person, there is a lot of appeal to Lanier's idea. My conversation with him was far reaching and attempted to get at where we go from here. That his answers are provisional and speculative points to the experimental nature of paradigm shifts. Lanier is both an artist and a scientist, but not a dogmatic theorist. He sees himself as taking the lead but not ultimately the one to figure this all out. Properly monetized, he shouldn't have any problem finding help.
This interview with Jaron Lanier was conducted on June 4, 2013. Below is a lightly edited transcript of the complete interview.
AK I was a big fan of [your last book] You Are Not A Gadget. It made sense of a whole lot of stuff for me. I’m pretty convinced by your argument in Who Owns The Future, but I do wonder what is the evidence that digital networks are actually contracting the economy?
JL As I say in the book, there’s a kind of a characteristic ambiguity about patterns that are perceived in a complex system, and the metaphor I draw is to global climate change and the debate about, first, whether it exists at all, and second, whether people are causing it. And I think there are some analogies to be made here.
We can start with the broad observation, which is what motivated me to go down this road at all, which is that normally, when there’s some new big piece of incredible infrastructure that makes the world more efficient, what happens afterwards is an expansion of opportunity and well-being for ordinary people. That happened with electricity and drinking water and interstates. Maybe not absolutely, not instantly, but it did happen in an observable way that was overwhelmingly clear within a few years, or even a decade. So here we are, over a decade into this transformation and we’re seeing a different reality.
Now, that doesn’t prove causality. As I say in the book, one could say that the internet’s helping, but not enough, or all sorts of things. At any rate, we’re not seeing the effects that I was certainly expecting for decades before, with tremendous anticipation. But then, if we want to look at it in more detail, there are a few different places we can look. One is just in the strategies explicitly laid out by the people who fund internet businesses. And I’ve really been struck by how many talk about shrinking markets as a criteria for investing in network-based business.
I think what’s happened is there’s been a realization that efficiency looks like market shrinkage, that you have an incredible new business that concentrates wealth (to use the language of the left) or is very profitable, but at the same time, there’s a larger loss than the corresponding gain to the new venture. And that’s clearly market shrinkage. If the venture capitalists are saying that that’s what they’re looking for, that’s a pretty good indication that that’s what’s going on in successful ventures.
But, at the end of the day, I have to acknowledge that there’s ambiguity on that point, and I acknowledge it explicitly. And I think it’s characteristic of complex situations. It’s a very modern kind of ambiguity that I don’t think we’ll ever get totally away from.
AK The analogy to climate change is a good one. Quantitatively minded people were fairly certain a long time before there was broad public consensus. It's interesting that there are two kinds of discourse coming out of San Francisco, and the one that the VC’s are involved in is very different than the one that the public is aware of. To the public it is all very rosy and positive.
JL I want to be very clear that I’m pro-business and pro-success. I love being an entrepreneur. I’ve enjoyed having startups. I’m proud of Silicon Valley’s success. The key thing, though, about markets is that people have to find their success by growing markets rather than shrinking them, and that’s the difference between a successful market system and one that’s destroying itself. We have to learn to be able to see that difference. Earlier generations of entrepreneurs understood that difference. One of the examples I give in the book is that Henry Ford recognized that he had to figure out a formula whereby he could price his cars so that his own factory workers could afford them, because that way, he could create a growing market of customers. If he failed to make that equation work out, he couldn’t. And that’s just recognition that you have to be growing a market to be a sustainable, large-scale entrepreneur. We just have to re-learn that lesson.
AK So, the second, related question is: What is the scale of the middle-class contribution to these data networks? If you look at it from where we are right now, it doesn’t seem like it could add up to much. But where you go with it through the course of the book, it ends up seeming like there’s a tremendous amount of labor that can only be done by humans involved in the system. Could you talk about that a little?
JL Sure. I want to say that, broadly speaking, I view the book as an initial stab that involves making hypotheses and broad observations, and now comes the more rigorous phase where I’m trying to turn it into a research agenda. And the question you just raised is one prong of that agenda. It’s certainly not the only one. So let me suggest one way that people can start to approach this question, which fascinates me. Let’s say that you have a shopping card: in other words, when you go to a particular chain, Safeway or something, you pay less for your groceries than you otherwise would. Let’s first disabuse ourselves of the idea of “getting a discount”, because there’s no such thing as a discount. There’s just a price. Discounts are a part of the psychological trickery that retail has employed since ancient times.
AK That’s what you call theatrics, right?
JL Right. So if you look at the differential between what you would pay with or without the frequent shopper card, that’s an evaluation of your personal information. You may say, “Oh great! I’m being paid for it by getting the discount!” But that’s not really true, because in a market economy, a discount is different from a payment. A payment means you decide where to spend it, which means that you’re a customer, which means it’s a real market. And so if all this value is being turned into “discounts”, you’re being removed from the marketplace as a first-class participant, and the system is moving away from a market system.
But at any rate, let’s go back to the calculation of the amount. I’m trying to gather hard data on this, and there are some available, but it’s hard to come by, so we have to use rough estimates. But most people these days are members of multiple institutions in which they give up data in exchange for a fair price (I’m not going to call it a discount). That total is often up in the thousands of dollars annually, and as far as I can tell from middle class families, it can get into the tens of thousands if you account for the differential you would pay if you were in Frequent-Flyer clubs or not, you used company credit cards or not, and all that sort of stuff.
And so, you can say that the motivation for these things is sticky, to get people to reuse the same service over and over again. But, from a pure information perspective, stickiness and behavioral modeling aren’t different. In either case, the point is to change the behavior of the person, using information. So I think we should be careful to keep our eye on the ball, and not get too caught up on the kinds of distinctions that don’t matter. If you look at this, we can already see that the information on an average person is being valued by the marketplace in a substantial way, even if they’re not market participants.
So what I would argue is that, as more and more forms of automation come online, as machines get better and better, there will be more and more instances of data coming from people being transformed through machines into new kinds of values, and that the value of personal information that’s being taken from people or given—once again, it doesn’t matter whether it’s voluntary or not—that value will only go up. The better technology gets, the more personal data is worth, essentially.
Now, one of the questions I’m often asked is, “How much is my Facebook data worth?” And, if you believe Facebook’s evaluation, if you believe their count of users, and I tend to think both of those are going to be modified over time, maybe it’s around $100. It’s not a lot. But for exceptional people it might be a lot. And so, for each particular person, there will be different forms of information that would be valuable for them, and the question is whether the average person will create enough value to create a middle class. And I think empirical data is suggesting that we really do have a shot of doing it this way.
AK It’s not just the spy data part of it. There’s also the content contributions that people might make, or the expertise contributions. What you’re talking about is opening up monetization, but also expanding the definition of economic activity, right?
JL It has to be all bits that exist because a particular person exists. And that counts for data that’s given knowingly or unknowingly, that’s given through intensive design, or just implicitly because of behavior. It has to include biological data, for which the person did not have to show behavior. It has to be comprehensive, and then I think we’ll begin to see a total that starts to be impressive. But we’re already seeing something. It’s just hidden, because of the twisted way we’re doing things.
AK I think that you’ve answered the question a bit, because now you’re framing this as a research project. But I was a little unclear, when I got to the end of the book, how much responsibility you feel, personally, for making this happen, versus giving shape to the idea.
JL Oh, you mean following through with this myself?
AK Yeah.
JL I don’t know... I feel a bit of responsibility, in the sense that I was part of a mistake earlier on, in promoting open information too uncritically, and being a little too idealogical. My first responsibility now is to not repeat the same mistake, and not assume that I know all of the answers in advance.
I’ve gotten a lot of criticism for the solutions I propose being somewhat vague, but, in a sense, that’s deliberate. I feel that what we have to do is approach solutions incrementally and experimentally, and not assume we know the right answer in advance. I think that was the great mistake that Marx made. I can imagine Marx having written differently, saying “I think I see these problems, so we should start a research agenda to gradually try different approaches.” Instead of revolution, try an empirical agenda, and see if the economy and technology gradually improve. And then, maybe he would’ve been part of a path towards something useful, instead of these horrible regimes that keep coming up, still.
So the key thing is to not assume total prior knowledge. The moment we’re finished talking, I’m hopping in the car and driving to Palo Alto where I’m meeting with some economics collaborators and a graduate student who I’m going to be working with to do models of some of the systems described in the book. To me, it has to be an incremental, experimental project, not a matter of ideology. It’s the only way to do it well.
AK Are you asking the question: “What if Marx were a hacker?”
JL No. Hackers think too much of themselves. Hackers think they’re superior, and that’s an unfortunate thing. I’m speaking about myself, as I guess I am one. There’s this tendency to think, “It’s obvious to ME how to set Facebook privacy settings, so who really cares if all the untechnical people don’t understand them”. Or, “It’s obvious to me how to control my privacy online, so who cares if those mere mortals can’t use software well.” And I don’t want to go there.
To me, hacking culture is part of the problem. We have to come from the more responsible technology culture, where we recognize that the way ordinary people can use technology is the only measure of that technology, if it’s meant for ordinary people. This idea that technology can be considered good, even if it’s not usable, is simply false. I would say I’m more of a usability wonk than a hacker, in the context of this book.
AK That makes sense. This weekend, there was this Day of Civic Hacking event all over the country, and I live near Portland, Maine, so I went to my local meetup. And what was interesting was that, in Portland, there are a ton of smart people, but there aren’t a ton of developers. It’s not a really advanced hacker culture. And so, actually, at this event, no code got written. There was conceptual hacking and problem solving, and it was interesting and useful, much more along the lines of usability thinking than “Let’s write a ton of code.” But the whole notion that citizens could be engaging with problems in local government on a usability level, a “How can we make an app that tells you where you can park” level. I thought that was interesting, but I wonder how that fits in with what you’re talking about.
JL Let’s suppose you want to have an app that helps people park. The benefits of that are clear, as there’s this insane amount of urban traffic that’s just people trolling for parking spaces. You reduce this congestion and increase efficiency and reduce carbon footprint, and increase happiness. There’s a tremendous utility value for it, but, at the same time, there exists this creepiness potential, because, suddenly, there’s a central command station where everybody knows where you are.
There’s this kind of transparency that some people think they like. It’s a differential transparency, where whoever has the biggest computer has more ability to see you than you see them. So it’s not an equitable transparency, and that’s a key point. So, in other words, if there’s open information, it’s not an equalizer. It benefits those who can analyze the information more, who are the people with the more advanced computers. So it’s a fake kind of equity. It doesn’t work out that way.
But anyway, how can you split the difference? How can you get the social utility of being able to analyze where it makes sense to park, get the benefits, without creating a creepy, surveillance society? How do you get both at once? And it’s tricky. If you try to design a bureaucracy that regulates how the information gets used, hackers will always be one step ahead of the bureaucrats, who will find it hard to predict what kind of scheme will come up.
But my general idea is to make the information be paid. So, if the system grabs your driving in order to analyze congestion issues or parking issues, it has to pay you. In the event that it’s a general system to figure out how to improve city planning, they’ll want to minimize their expenses and gather the minimum necessary amount of data to achieve their goals. This means there won’t be universal spying system. They’ll only have to measure a percent of the data. And if it’s a parking recommendation system, what they might want to do is not get your data, because it costs money, and you can be confident your data isn’t there. Otherwise, some accountant might find it, and you’ll be owed money. So you might get a recommendation for parking, without your data accruing to a central server, because that would also come with a bill.
I’m not saying that making information coat money completely solves the problem. All I’m saying is that it reduces the nature of the problem to the point where we can at least talk about laws being possibly enforceable. It keeps it down to a dull roar.
AK You have to balance the vitality of hacker culture with the potential unintended consequences. Local government look at unintended consequences in a different way than the people who say they can build these things.
JL I’m just saying that if we want to have money and markets in our society, then let’s really use them. One of the limitations of the power of government in market systems, which I think is a healthy one, is the power of the purse. That we don’t give the government free police cars, or something like that. The government has to buy things like everybody else. That way, legislators have the power of the purse. And if we bring that into economics, then we have a shot at being able to get the benefits of the parking app that you described, with at least a bit of a check on the degree of creepiness. It’ll always be a balance, not a perfect system.
AK How do you recommend people look at trying to move things in this direction? What can individual people do?
JL I’m writing about a big-picture issue that will need to be solved in 2 or 3 decades, because that’s how long I think it will take for technology and automation to become advanced enough to force the issue to a serious crisis. In a way, everyone’s used to this Oprah-fication of everything, where you are supposed to be able to do something, but I’m not sure if it’s that kind of problem.
I could recommend things that hackers could do. One thing I’d like to do is develop experiments that test our orthodoxy, instead of just being totally beholden to it. For instance, 3D printing is coming online, and there’s this idea that 3D printed object design should be shared on an open-source basis. But, why not just have an experiment? It shouldn’t be sacred, it should be an open question.
We should always be ready to test our orthodoxies to see if they really work. And I think technical culture has to overcome that orthodoxy and be willing to test it. It doesn’t mean deciding in advance what the answer should be. It means testing it, once in a while, to see what happens. We need to start doing that, and it may be too late for 3D printing. That’s already gone down the Linux path.
We need to find examples to come up with new technologies, and I don’t expect that we’ll find an immediate perfect formula. What we need to do is learn along the way, and eventually, once we have successful models, we’ll start to spread, and I think there’s going to be a mixture of business, government and all sorts of societal models that need to come into play once we understand things better.
I think we’ll sort it out. It’s not one of those instant, “what you can do” things. People need to be more aware of their data, and what needs to be done to be in control of it, but if you’re not technical, that’s a very hard job. And it’s hard to tell people to do something that’s actually not within their skill set.
AK Do you have any companies that you’re looking at who are moving things in this direction?
JL There’s a lot of them. Although none of them are perfect, lots of them are doing interesting things. One is person-to-person commerce sites, like Etsy. Another is athecrowd-sourced funding movement, like Kickstarter. They have a lot of potential, and a lot to offer.
In the book, I go over the ways I think they could be better than they are, but there’s a lot there to look at. I’m interested in online tools that really let people own their own data, and control what’s seen of it.
Since I do my research with Microsoft’s labs, I feel uncomfortable either criticizing or promoting specific offerings from Microsoft or other companies. I feel like the ideas I’m talking about can be understood without getting that specific.
But I want to point out that, when Google introduced their Glass Project, they’re in this absurd position where everything they say about it has to do with restricting it. “We won’t let it recognize faces, we won’t let it do this, we won’t let it do that.” And in a way that’s stupid. If there was just money involved, you could find an in-between path of moderation.
This idea that you have this unrestricted spy device that you then impose restrictions on is unbelievable. Nobody believes it’s going to last. I still believe what I say in the book, which is that solutions along the lines of what I’m seeking would be better for companies like Google than what they’re doing now. They haven’t realized it, but I think they will.
AK I think that was a really interesting point in the book, that if the internet had been set up, from the get-go, with two-way links, that Google wouldn’t be as necessary. The idea that all these internet companies have come up to, in a sense, fill the gap in the original architecture is fascinating.
JL I’m not saying that Google wouldn’t have anything to do. One core part of their mission—not their whole mission—is the gathering of who’s connecting to who. That wouldn’t be needed, because it would just be present [in the structure of the internet]. There would still be a place for the particular algorithm for ranking, and there are other things that Google does that there would be a place for. I hope it comes across in the writing that I’m not anti-Google, and I try to say that in as many ways as I can. I say things like, “they bought a startup of mine.” I don’t hate Google. Far from it. I just think that what we’re doing isn’t sustainable. There’s no animosity towards Google, and honestly, there’s a lot of technical brilliance, but I do think that one aspect of their core functions should not be needed.
AK What kind of infrastructure do you need in order to make two-way links happen? You point out that one of the reasons HTML took off was because you didn’t need to set it up on the other side. You just needed to write your HTML, and the link said, “Go here”, and it went there. But if you’re constructing two-way links, does that require you to have some centralized server that keeps track of all that? How does that work?
JL No, it doesn’t. There are many ways to do it, and it wasn’t any experimental thing, it was totally normal, and what was weird was that it was dropped. What happens is: when somebody links to you, they’re obliged to do it. If you’re really worried about enforcement, if you’re worried about bad actors, you could use some kind of BitCoin thing, where there’s all kinds of encrypted messages so that somebody would have to prove that those they’re linked to know that they’re linked to them. You could build up an elaborate enforcement procedure like that if you wanted to. I don’t view a technical challenge there. It would need a little engineering, but it’s not a big deal.
AK Was the information about what was linking to a page reside on the page? Where’d that data go?
JL The architecture would have duplicate information to cross-check. And so, one of the issues is that, if you link to somebody, the page records that it’s been linked to. And if you see the link to it, you need to see if there isn’t some zombie back-link that shouldn’t still be in effect. And getting rid of those is the principal overhead. So there’s two technical challenges: one is getting rid of obsolete back-links, and the other is dealing with potential bad actors, who lie about who’s being linked to, for some reason.
I have to say, this has been done a lot, and is a normal part of any graph-shaped network. For instance, Facebook has to do these tasks to deal with who’s friended who, and whatnot, and make sure you don’t think someone’s friended you when they think they haven’t, or that kind of stuff. It’s totally normal software engineering. There’s genuinely nothing new or exotic about this. It’s just really 1950’s-level computer science. It’s not hard.
AK To transform the internet that we know into a graph-shaped, two-way linked internet... How would that happen?
JL I think it’ll start to happen when people realize that they’re owed money, and if they start participating in a two-way link system, they’ll get it. If I were emperor, I might declare a law that said, “Any business which is offering people discounts and free services in exchange for access to their information also has to offer them an equivalent payment as an option.” That law would immediately change everything. It would take some years to implement, and there would be some confusion about it, but what you’d see is economic expansion, and a lot of employment opportunities, and a lot of new business niches. You’d see economic growth, and you’d be able to do it without raising taxes, or anything like that. It’s simple.
What it would do is force all the people with the most effective computers, the ones I call the “siren servers”, to really look at whether they’re adding enough value to earn their way, or whether they’re just benefitting from a situational cheat. And what I think would happen in the end is: better businesses and bigger markets.
Now, I don’t expect that law to be introduced next week, but I expect it to be introduced in the next decade. I’d like to know more first, and do some more research in advance, so we’re not just guessing, but I think all indications are that something in that zone would be really beneficial.
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