THE NEW GILDED AGE (Part 2)
THE NEW GILDED AGE (Part 2)
How Facebook, Google & Amazon Cornered Culture and Undermined Democracy
22nd June, 2017 0
Author Jonathan Taplin has meticulously constructed a stinging and disconcerting polemic that traces the destructive monopolization of the Internet by Google, Facebook and Amazon, and that also proposes a new future for musicians, journalists, authors and filmmakers in the digital age.
Move Fast and Break Things is the riveting account of a small group of libertarian entrepreneurs who in the 1990s began to hijack the original decentralized vision of the Internet, in the process creating three monopoly firms -- Facebook, Amazon, and Google - that now determine the future of the music, film, television, publishing and news industries.
Taplin offers a succinct and powerful history of how online life began to be shaped around the values of the men who founded these companies, including Peter Thiel and Larry Page: overlooking piracy of books, music, and film while hiding behind opaque business practices and subordinating the privacy of individual users in order to create the surveillance-marketing monoculture in which we now live.
The enormous profits that have come with this concentration of power tell their own story. Since 2001, music revenues have fallen by 70 percent; while newspaper, book publishing, film, and television profits have also fallen dramatically. Meanwhile, revenues at Google in this same period grew from $400 million to $74.5 billion.
Today, Google's YouTube controls 60 percent of all streaming-audio business, but pay for only 11 percent of the total streaming-audio revenues artists receive. More creative content is being consumed than ever before, but less revenue is flowing to the creators and owners of that content.
With this reallocation of money to monopoly platforms comes a shift in power. Google, Facebook, and Amazon now enjoy political influence on par with Big Oil and Big Pharma, which in part explains how such a tremendous shift in revenues from artists to platforms could have been achieved and why it has gone unchallenged for so long.
The stakes here go far beyond the livelihood of any one musician or journalist. As Taplin observes, the fact that more and more Americans receive their news, as well as music and other forms of entertainment, from a small group of companies poses a real threat to democracy. This is now a winner-takes-all market, and it extends far beyond the culture industries.
“Since 1995 the digital distribution of most popular forms of art has reinforced the popularity of a small group of artists and cast almost all others into the shadow,” he writes. “To be a young musician, filmmaker, or journalist today is to seriously contemplate the prospect of entering a profession that the digital age has eroded beyond recognition. The deeper you delve into the reasons artists are struggling in the digital age, the more you see that Internet monopolies are the heart of the problem and that it is no longer a problem just for artists. The Web has become critical to all of our lives as well as the world economy, and yet the decisions on how it is designed have never been voted upon by anyone.”
Indeed, those decisions were made by executives & engineers at Google, Facebook and Amazon (plus a few others) and imposed upon the public with no regulatory scrutiny. The result is what President Obama called “a Wild West” world without privacy or security that leaves every citizen vulnerable to criminal, corporate and government intrusion. As Obama wrote in The Economist, “a capitalism shaped by the few and unaccountable to the many is a threat to all.”
The Internet has changed our democracy, too: Facebook (the new primary news source for 44% of Americans) was hugely responsible for Donald Trump’s victory, according to Ed Wasserman, the Dean of the University of California, Berkeley, Graduate School of Journalism, because “Trump was able to get his message out in a way that was vastly influential without undergoing the usual kinds of quality checks that we associate with reaching the mass public.”
As Ian Bremmer, president of the Eurasia Group told the New York Times, “If it wasn’t for social media, I don’t see Trump winning.” But according to Taplin, the men who control the major Internet firms do not really believe in democracy. The men who lead these monopolies believe in an oligarchy where only the brightest and richest get to determine our future.
Peter Thiel, the first outside investor in Facebook and cofounder of PayPal, thinks the major problem of American society is its “unthinking demos” and told The Wall Street Journal that “only 2 percent of the populace – the scientists, entrepreneurs, and venture capitalists – understand what is going on and the other 98 percent don’t know anything.” And even The Economist, in a special issue on American monopoly capitalism entitled Winners Take All, stated, “firms are abusing monopoly positions, or using lobbying to stifle competition. The game may indeed be rigged.”
United States antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. The main statutes are the Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914. These Acts restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade. Second, they restrict the mergers and acquisitions of organizations that could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.
The Federal Trade Commission, the U.S. Department of Justice, state governments and private parties who are sufficiently affected may all bring actions in the courts to enforce the antitrust laws. The scope of antitrust laws, and the degree to which they should interfere in an enterprise's freedom to conduct business, or to protect smaller businesses, communities and consumers, are strongly debated. One view, mostly closely associated with the "Chicago School of Economics" suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest.
The rise of the digital giants is directly connected to the fall of the creative industries in our country and the facts decidedly back-up the need for our elected leaders to start enforcing these anti-trust laws and begin breaking up these monopolies.
For Taplin, the starting point dates back to August of 2004, when Google raised $1.67 billion in public offering. In December of 2004, Google’s share of the search-engine was only 35% and now it is 88% in the United States and higher in the world.
In 2004 Amazon had net sales revenue of $6.9 billion and in 2015 its sales revenue was $107 billion, and it now controls 65 percent of all online book sales, whether print or digital; and now it is moving to compete against brick-and-mortar Mom & Pop shops that define the very lifeblood of our communities.
Consequently, over the past decade a massive reallocation of revenue – perhaps $50 billion per year – has taken place in which economic value has moved from the creators of content to the owners of monopoly platforms. Since 2000, US recorded music revenues have fallen from $19.8 billion to $7.2 billion per year and the Pointer Institute estimates that Facebook has sucked well over $1 billion out of advertising budgets for local community media outlets in 2016.
Does it make sense to have most of the country’s data in the hands of a few very large firms?
Monopoly control of our data, and corporate lobbying are at the heart of this battle between creative artists and Internet giants, as well as the freedoms we have long taken for granted. As venture capitalist Marc Andreessen noted, “Software is eating the world” and soon the technologists will be coming for your job, too.”
Sadly, what is needed is active antitrust actions, but unfortunately this is something that the Federal Government has not pursued since the case of United States vs. Microsoft back in 2001; and now all we get is more and more mergers with global giants that does not serve either the public good and subverts the very notion of free market capitalism. Hence, we now have the War between the Nationalists and the Globalists that is currently fighting for the heart & soul of our democracy.
Move Fast and Break Things offers a vital, forward-thinking prescription for how artists can reclaim their audiences using knowledge of the past and a determination to work together. Using his own half-century career as a music and film producer (Taplin was a manager for The Band and also worked on The Last Waltz) and early pioneer of streaming video online, he offers new ways to think about the design of the World Wide Web and specifically the way we live with the firms that dominate it.
Ironically, about the easiest way to obtain this important work is through Amazon.com, seeing as most local book retailers and even national outlets such as Borders have also bitten the dust.
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THE NEW GILDED AGE (Part 2)