Category: Digital Culture

Disruptive Behavior

Bullshit and buzzwords go together like pick-up lines and Jagermeister.  And the bullshit buzzword of our times it seems is disruption.  Being disruptive used to get your mom called into school for a conference with the teacher; but ever since Clay Christensen published The Innovator’s Dilemma in 1989, we’ve been fascinated by the disruptive kids, especially the ones who play with tech toys — even when they fail.  In fact, as Jill Lapore points out in this piece in The New Yorker, Christensen’s study of disruption (and she points to some flaws in his work) is a study of business failure.  In her summary, Lapore writes, “Disruptive innovation is a theory about why businesses fail. It’s not more than that. It doesn’t explain change. It’s not a law of nature. It’s an artifact of history, an idea, forged in time; it’s the manufacture of a moment of upsetting and edgy uncertainty. Transfixed by change, it’s blind to continuity. It makes a very poor prophet.”

The first thing to hate (or at least distrust) about buzzwords is that their meanings are diluted because they are buzzwords.  I remember when MTV’s reality programming was a relatively new thing and video producers working in New York would ask a shooter or an editor to make something edgy.  But if every project is edgy, then we lose any context for what edgy actually means, and so it means whatever edginess looks like to whoever is in charge.  Cameramen and editors would smile and nod, thinking, “I have no idea what you’re talking about, but if you’re happy, and I get paid, we’re good.”

The word disruptive has produced an aroma of ambiguity to say the least.  In fact, I’d say the term is getting rather gamey the more it is applied to just about any proposal (i.e. tech startup) that breaks convention, even if we maybe don’t want the convention broken.  For instance, we probably do not hope to foster a culture in which, say, armed robbery is reframed as “disruptive finance.”   Admittedly, Kickstarter is a virtuous example of disruptive finance, although it may be too soon to say for sure that crowd-funding is here to stay.  As Jaron Lanier points out in Who Owns the Future, “Kickstarter continues to produce some wonderful success stories and a huge ocean of doomed or befuddled proposals. Maybe the site will enter into an endless game with scammers and the clueless, as it scales up, and render itself irrelevant.”  And as if on cue, I see in my news feed that a young man has raised about ten thousand dollars on Kickstarter to make potato salad.  Not life-saving potato salad.  Just potato salad.

In truth, I’m not picking on Kickstarter; I hope the site continues to evolve as a positive force, and so does Lanier.  But I am also by nature skeptical of religion, even apparently secular religions that see magic in technology and the social engineering promoted by its entrepreneurs.  And in the words of the silicon prophets, we will one day all be entrepreneurs. And it will be good.  A new venture in robotics may one day disrupt truck drivers out of their jobs, but not to worry because other disruptive innovations like Uber and Lyft offer a new way to make a living in transportation, right?  In reality, only sort of, and for a select few individuals in certain markets. And these few are likely making supplementary rather than primary income. Meanwhile, as we cheer for disruption sector by sector, and get a little buzz off the initial cool factor and implicit independence of an entrepreneurial society, we overlook the fact that we’re disrupting accountability, liability, and a network of social safety nets that were largely constructed in the late 20th century.  These include everything from insurance and pension funds to environmental regulations.

If you think you’re angry that certain investment bankers didn’t go to prison after the housing crisis, stand by.  It can get worse  in a market that disrupts thousands or millions of jobs into obsolescence with the false promise that we can all be networked entrepreneurs.  And again, as Lanier points out, many of these disruptive innovations built on networked systems he calls Siren Servers rely on making the servers unaccountable.  So, when we consider the larger implications of unregulated taxi services, for instance, it isn’t as simple as labeling such caution mere stodginess begging for unfettered disruption.

It is tempting these days to get high on the narcotic of tearing down systems and apparent empowerment of taking what feels like control via networked servers.  We forget, however, that these networked servers are not necessarily designed with said empowerment in mind despite what the marketing messages say.  They are designed to make money right now for the relatively small number of individuals whom we revere for being disruptive innovators.  But networked systems want efficiency, while democratic societies that support the well being of a majority of its population are notoriously inefficient. And that’s not always a bad thing.

Hobby Lobby: The Principles of Principals

There are certainly many troubling aspects of yesterday’s Supreme Court ruling in the Hobby Lobby case.  That the majority opinion rests on upholding the 1993 Religious Freedom Restoration Act has been rightly criticized, particularly by democratic authors of that bill. The protection of religious freedom for individuals was never intended to extend to for-profit corporations, they say; and certainly this expansion of the RFRA has implications that go well beyond the sphere of a couple of franchises.  I am sure that I’m not alone in feeling that SCOTUS has awarded corporate owners far too much latitude to engage in discriminatory practices, but I also feel it’s worth noting that this decision comes at a terrible time, when some of the wealthiest and most powerful corporations trade in a new commodity comprised of personal information.

If under the 1993 RFRA, an employer can refuse to pay for coverage of contraception for female employees, why does it not allow an employer to simply fire a woman for some other sin against said employer’s religious beliefs?  After all, the employer supports his employees with a salary, so why should he not be allowed to sever that support upon learning that a woman in his employ is pregnant out of wedlock or has terminated a pregnancy while in his employ or has bought contraception on her own — with the money he pays her dammit!  Sound crazy?  Well, this is a ruling predicated on crazy, and if RFRA can trump one federal law, why can’t it trump another?

If in fact this is the slippery slope on which we now stand, how long do we think it will take for employers (sincerely or insincerely “religious”) to acquire the kind of personal information that is implicitly now part of their purview?  The answer to that is no time at all.  Google, Facebook, Twitter, et al have been bundling whatever personal information we share into commodities bought sold by data brokers. Bought and sold by which entities?  Searchable according to what organizing principles?  I know from experience that, even pre-Internet, it took various companies about ten minutes to know my wife was pregnant with our first child and to start sending us coupons and other offers for baby products.  How long before networked systems and social media reveal a woman’s pregnancy termination or some other physiological, social, or sexual information that is none of an employer’s damn business?

Incorporation provides a number of opportunities and establishes a number of responsibilities, all of which are predicated on the fact that the business becomes an entity separate from its principals.  This ruling on Hobby Lobby invests non-human entities with the right of religious freedom while disenfranchising actual human beings from a newly enacted right to healthcare. That this event coincides with the loss of privacy and the commoditization of personal data ought to scare the hell out of everyone.

Are You Confused by the Buy Button?

This week, I sat on a panel at Harvard University as part of on-going series of roundtable discussions hosted by the USPTO about a variety of copyright issues in the digital age. The topic of our conversation was whether first sale doctrine ought to be expanded in the digital age. In case you don’t speak lawyer, first sale doctrine has its roots in the 1908 case Bobbs-Merrill v. Strauss, and in simple terms, it set the precedent that allows you to resell a physical copy of a work protected by copyright. In the original case, the publisher of a novel wished to exert control over the price of copies being sold by the retailer. The court found that once the publisher received its initial compensation (i.e. wholesale price) for the books, that it no longer had a copyright interest in the copies sold and, therefore, the retailer had the right to dispose of the goods as it saw fit. Ever since this decision, you and I have been free buy and sell in a secondary market of used books, record albums, DVDs, etc., and that’s been a good thing for all of us and has never harmed the primary market for these works.

Presently, first sale does not apply to content that we obtain strictly via download (e.g. a song from iTunes), although there are certain interests — some altruistic and others opportunistic — who argue that the doctrine ought to be expanded to include these types of files. There are several topics related to the larger question of expansion, but one that came up in discussion at the panel, I thought was worth writing about here; and that is whether most consumers realize that clicking the “Buy” button for digital downloads of music or filmed entertainment doesn’t quite mean what they think it means. When you click “Buy” and download that new album, what you’re actually paying for is a limited license that gives you the right to store and play those files on a limited number of devices. Admittedly, this is a little different from our usual notion of “buying” something, and some members of the panel discussion asked whether any entity has a responsibility to educate the consumer or perhaps change these buttons to reflect the real nature of the transaction.

Maybe.  But here’s the thing…

When we bought CDs or record albums, we bought limited licenses then, too, but we didn’t really think about it in those terms because the limit of the license was tied to the inherent limitation of the physical objects on which the music was recorded. In other words, buy an LP of TRex’s The Slider, and unless you start mass producing bootleg dubs, you’re pretty well limited to listening to the record, giving it to someone, or selling it in a secondary market transaction like a yard sale or eBay. Moreover, even if you made bootleg dubs using older tech like cassette tapes, these would be inferior in quality to the vinyl original. But in a digital file paradigm like we have now, a copy is a clone and not inferior to the source file, and so the rights holder had to come up with a new structure for offering the customer a similar kind of limited license while still providing flexibility. I don’t think consumers have ever been confused that the retail price of an album did not pay for a license to broadcast or redistribute the music in some other form. In that sense, nothing has changed except a licensing structure that coincides with the absence of physical media in these new transactions.

I would argue that flexibility is greater than it ever was (e.g. you can download one song at a time), the purchase price is remarkably cheap, and that we consumers seem to generally like the idea of having music, movies, books, and TV shows at our disposal without the need to install more shelves in our homes. For $1.29 I can listen to a song anywhere in the home or office, on my phone while cycling, in the car, or even copy it legally onto a CD to make a mix for a party.  And even if we only factor for inflation, that $1.29 in pre-Internet dollars is about $2.35, so we’re getting a pretty good deal in terms of access and pricing compared to the days of content distributed solely on physical media.

Tech-utopians like to wave a banner that says “New Tech! New Models!” with regard to content consumption in the digital age, but this restructured licensing relationship between consumer and producer is a new model that maintains the correct relationship between consumer and producer. We’re buying the rights to enjoy and use the works, not the rights to redistribute those works; and given the nature of the technology, one limitation has to include proscribing resale, partly because there is no such thing as a used digital file.  One of the trade-offs we make for better convenience and flexibility with prices as low as they already are, is that we forego the option to sell these files in a secondary market that would actually threaten the primary market. And because this is consistent with where consumer trends are going anyway, the question of educating folks about the “Buy” button may be moot.

iTunes for music makes a good example for discussion, but even that model is already being supplanted by on-demand streaming services like Spotify. Digital downloads are quickly becoming an obsolete notion as consumers, especially younger ones, demonstrate that their interest in “owning” works is dwindling in favor of streaming services supported either by advertising or subscriptions. Netflix for films is looking bright, and we see new services like Oyster, calling itself “Netflix for books.” Industry and policy efforts should be focused on getting the economics right for these models because the natural progression is for the consumer to use the web as a big jukebox. We just have a few kinks to work out with regard to whose feeding quarters into the machine.

The trend we’re likely to see continue will be a bifurcation of consumer consumption in that we’ll stream the lion’s share of what we watch, read, and listen to, but we might simultaneously rekindle or maintain an interest in high-quality physical media for keeping the things we really love on our shelves. I don’t think, for instance, that it’s just a hipster thing to rediscover vinyl for music. Maybe one of them will want to pay a premium for my copy of The Slider, assuming I’m willing to sell it.

Photo by Moppet
Photo by Moppet

FOOD FOR THOUGHT:  Just as an exercise with regard to the economics of digital resale for the consumer, consider the following:   Imagine you consume on the high end of average and that you’ve legally paid for 100 songs a year from iTunes since it launched in 2003. Now you have about 1,100 downloaded songs and you want to shed as many as half of these, which is a high estimate for music you wanted to buy in the first place.  At an average 29 cents per track from a reselling middle-man like a ReDigi, you’d get back about $160 if you sold all 550 tracks. That’s about $14.50 per year since the day you started buying digital downloads, and that recovery is roughly on par with selling that copy of Fifty Shades of Grey at the next yard sale. Now, was it really about getting a quarter for the used book, or did you just want stuff out of the house?