You Are the Product

13 September 2017

From The London Review of Books:

At the end of June, Mark Zuckerberg announced that Facebook had hit a new level: two billion monthly active users. That number, the company’s preferred ‘metric’ when measuring its own size, means two billion different people used Facebook in the preceding month. It is hard to grasp just how extraordinary that is. Bear in mind that thefacebook – its original name – was launched exclusively for Harvard students in 2004. No human enterprise, no new technology or utility or service, has ever been adopted so widely so quickly. The speed of uptake far exceeds that of the internet itself, let alone ancient technologies such as television or cinema or radio.

Also amazing: as Facebook has grown, its users’ reliance on it has also grown. The increase in numbers is not, as one might expect, accompanied by a lower level of engagement. More does not mean worse – or worse, at least, from Facebook’s point of view. On the contrary. In the far distant days of October 2012, when Facebook hit one billion users, 55 per cent of them were using it every day. At two billion, 66 per cent are. Its user base is growing at 18 per cent a year – which you’d have thought impossible for a business already so enormous. Facebook’s biggest rival for logged-in users is YouTube, owned by its deadly rival Alphabet (the company formerly known as Google), in second place with 1.5 billion monthly users. Three of the next four biggest apps, or services, or whatever one wants to call them, are WhatsApp, Messenger and Instagram, with 1.2 billion, 1.2 billion, and 700 million users respectively (the Chinese app WeChat is the other one, with 889 million). Those three entities have something in common: they are all owned by Facebook. No wonder the company is the fifth most valuable in the world, with a market capitalisation of $445 billion.

Zuckerberg’s news about Facebook’s size came with an announcement which may or may not prove to be significant. He said that the company was changing its ‘mission statement’, its version of the canting pieties beloved of corporate America. Facebook’s mission used to be ‘making the world more open and connected’. A non-Facebooker reading that is likely to ask: why? Connection is presented as an end in itself, an inherently and automatically good thing. Is it, though? Flaubert was sceptical about trains because he thought (in Julian Barnes’s paraphrase) that ‘the railway would merely permit more people to move about, meet and be stupid.’ You don’t have to be as misanthropic as Flaubert to wonder if something similar isn’t true about connecting people on Facebook. For instance, Facebook is generally agreed to have played a big, perhaps even a crucial, role in the election of Donald Trump. The benefit to humanity is not clear. This thought, or something like it, seems to have occurred to Zuckerberg, because the new mission statement spells out a reason for all this connectedness. It says that the new mission is to ‘give people the power to build community and bring the world closer together’.

Hmm. Alphabet’s mission statement, ‘to organise the world’s information and make it universally accessible and useful’, came accompanied by the maxim ‘Don’t be evil,’ which has been the source of a lot of ridicule.

. . . .

Internet companies are working in a field that is poorly understood (if understood at all) by customers and regulators. The stuff they’re doing, if they’re any good at all, is by definition new. In that overlapping area of novelty and ignorance and unregulation, it’s well worth reminding employees not to be evil, because if the company succeeds and grows, plenty of chances to be evil are going to come along.

Google and Facebook have both been walking this line from the beginning. Their styles of doing so are different. An internet entrepreneur I know has had dealings with both companies. ‘YouTube knows they have lots of dirty things going on and are keen to try and do some good to alleviate it,’ he told me. I asked what he meant by ‘dirty’. ‘Terrorist and extremist content, stolen content, copyright violations. That kind of thing. But Google in my experience knows that there are ambiguities, moral doubts, around some of what they do, and at least they try to think about it. Facebook just doesn’t care. When you’re in a room with them you can tell. They’re’ – he took a moment to find the right word – ‘scuzzy’.

. . . .

As Tim Wu explains in his energetic and original new book The Attention Merchants, a ‘facebook’ in the sense Zuckerberg uses it here ‘traditionally referred to a physical booklet produced at American universities to promote socialisation in the way that “Hi, My Name Is” stickers do at events; the pages consisted of rows upon rows of head shots with the corresponding name’. Harvard was already working on an electronic version of its various dormitory facebooks. The leading social network, Friendster, already had three million users. The idea of putting these two things together was not entirely novel, but as Zuckerberg said at the time, ‘I think it’s kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week.’

Wu argues that capturing and reselling attention has been the basic model for a large number of modern businesses, from posters in late 19th-century Paris, through the invention of mass-market newspapers that made their money not through circulation but through ad sales, to the modern industries of advertising and ad-funded TV. Facebook is in a long line of such enterprises, though it might be the purest ever example of a company whose business is the capture and sale of attention. Very little new thinking was involved in its creation. As Wu observes, Facebook is ‘a business with an exceedingly low ratio of invention to success’.

. . . .

The fact is that fraudulent content, and stolen content, are rife on Facebook, and the company doesn’t really mind, because it isn’t in its interest to mind. Much of the video content on the site is stolen from the people who created it. An illuminating YouTube video from Kurzgesagt, a German outfit that makes high-quality short explanatory films, notes that in 2015, 725 of Facebook’s top one thousand most viewed videos were stolen. This is another area where Facebook’s interests contradict society’s. We may collectively have an interest in sustaining creative and imaginative work in many different forms and on many platforms. Facebook doesn’t. It has two priorities, as Martínez explains in Chaos Monkeys: growth and monetisation. It simply doesn’t care where the content comes from. It is only now starting to care about the perception that much of the content is fraudulent, because if that perception were to become general, it might affect the amount of trust and therefore the amount of time people give to the site.

Link to the rest at The London Review of Books

Advertising-Promotion-Marketing, Social Media

33 Comments to “You Are the Product”

  1. Poor Mark. The more he tries to force his vision on others, the more of those others that turn away.

    Facebook will slowly die the death of a thousand self-inflicted paper cuts as the user base gets tired of his tricks and rants and their attention goes elsewhere.

    • People have been predicting the death of Facebook for years now, and it doesn’t seem to have happened in fact, as the article shows, The people using it are more engaged than ever.

      • Funny, I’d heard the kids are avoiding it so their folks don’t know what they’re really up to. Then there’s the minor bit that Mark is counting those accounts like mine (which has been accessed less than three times in the last year.)

        Also remember that all Zuckerberg ‘announcements’ are to keep advertisers spending money there; the moment he has to admit any downturn the ads and his value dry up.

        (They call these things ‘bubbles’ for a reason, the only question is whether it sinks like a tire with a slow leak – or pops.)

        • Facebook Gross Profit:

          2016 $23,849,000
          2015 $15,061,000
          2014 $10,313,000

          https://finance.yahoo.com/quote/FB/financials?p=FB

          • I’m one of those who has predicted the demise of Facebook from year one. I could never see the value in bulletin board software that isn’t much better than stuff that has been around since the mid-80s. FB has managed to scale, and that is no small achievement, but compared to Amazon and Google, the Z machine seems like a lightweight.

            I’m still not sure they have a wide moat in the Warren Buffet sense. Maybe in the sheer mass of subscribers, but their interface is nothing to crow about IMHO, and their news-feed feels like a badly trained neural net to me. I see nothing about their service that could not be supplied by a number of others.

            But FB clearly has something going. I still don’t know what, but the numbers are there. Beats the whoo-who out of me.

            • Try this: FACEBOOK isn’t about news.
              FACEBOOK is about gossip.
              (To a lesser degree it is about narcissism. Text selfies.)

              • FACEBOOK is about selling advertising.

                Anything else is a side-effect.

                • All social media are about gossip. Selling advertising is almost the entire way the non-ecommerce internet is monetized. Facebook is one among many. What’s special about FB? I can’t figure it out.

                • What’s special about FB? I can’t figure it out.

                  It’s the network effect. Lots of other services can provide the same thing, and maybe lots better. But FB has the population of users that no other service has. That’s what’s special.

                  And it’s not a single net, it’s nets within nets, within nets. The magnitude and reach are what makes it special.

                  Why did FB get all those subscribers, and not others? That’s a clustering effect we see in lots of things. Growth leads to more growth simply because of the existing base. Much of it is random. If it didn’t happen to FB, we would be here asking what is so special about XYZ that has all the subscribers.

                • @TOB — You are absolutely right. Scale and the network effect is their Buffetian moat, but it surprises me that the FB team has been so successful at fostering networks where others have been less so. Of all the big tech companies, FB seems to have the least tech and the most social savvy (followed by Apple, but that is entirely a different bone of contention.) I guess that shows what is most important in social media.

              • I won’t go near commenting on gossip and narcissism. I skipped Psych 101 and read Freud as literature.

                • I think a lot of people dislike Facebook for their own reasons And assume that everyone else does or should dislike it as well.
                  My own personal philosophy is that if you enjoy using it, keep using it and if you don’t, don’t.
                  It’s a free and voluntary service after all.

                • A significant portion of FB accounts are about posturing, preening, and virtue signaling. Burglars are known to take notice yet the puffery endures.
                  (Shrug)

            • Google: network effect

          • I neglected to translate those income figures from the financial statement. The figures above are in thousands. So, the 2016 gross profit is $23,849,000,000. Billions, not millions.

          • Terrence,

            Those Facebook gross profits are in thousands of dollars. Gross profit in 2016 was $23.8B, not $23.8M.

            In general, one may call into question whether their growth is sustainable or if they are a viable long-term concern, but Facebook’s 38 P/E is far more justifiable than Amazon’s 254 P/E.

  2. This guy is so stuck in an echo chamber, he can’t even see it.

    First of all, “Facebook is generally agreed to have played a big, perhaps even a crucial, role in the election of Donald Trump.” Generally accepted by who? Trump got fewer votes than Mitt Romney in Wisconsin, Pennsylvania, and several other key states that he won. The 2016 election was always a referendum on Hillary Clinton, the most corrupt politician in American history. The Russia-Trump collusion story is and always has been a political witch hunt. Lots of smoke, no fire.

    Second, why should we accept Facebook’s 2 billion active users stat at face value? According to Facebook, they can reach 41 million Americans between the ages of 18-24. But the actual population of Americans 18-24 is only 31 million! Who are these extra 10 million ghost people that Facebook claims it can reach? When confronted with this and other obvious errors, their response was: “[our metrics] are designed to estimate how many people in a given area are eligible to see an ad a business might run. They are not designed to match population or census estimates.” How convenient.

    Third, Google and Youtube have been anything but nuanced in their handling of objectionable content. There is significant evidence that they are demonetizing channels arbitrarily based on political ideology. Then there’s the whole Google memo scandal, where an employee was fired for daring to state that gender quotas are counterproductive and that there are better and more effective ways to narrow the gender gap at the company. For this, he was branded a racist sexist Nazi bigot—and Google is the company you trust to filter the internet for you?

    What a farce.

    • I noticed their population numbers were odd when they told me I could reach 75000 in a city with a certain ad. The fact that the city has about 45-50,000 people raised an eyebrow….

    • Ha! I loved your comment, Joe.

      I switched to DuckDuckGo and Bing after that Google fiasco. I thought it would be difficult but it’s turned out to be surprisingly easy.

      It’s not too difficult to leave FB, either, but unfortunately many disgruntled users only stay because X family member still uses it, so… Yeah, and if everyone maintains that attitude, then we end up with 2,000,000,000 worldwide users. People have more power than they think.

      (Tapped out on my not-$1000 mobile phone.)

  3. If I may venture a positive comment about Facebook…

    Because of its global reach and ease of use, it has allowed me to establish contact with a second cousin in Argentina whom I used to correspond with…over fifty years ago. Also with long-lost friends, formerly missing classmates, potential networking contacts (in a casual rather than formal context) and of course readers.

    And Facebook doesn’t charge me a penny. (Yes, I know, I’m the target of endless ads, but I can handle that).

    On the whole, I’m glad it exists. Now I’m putting up my umbrella, so you can throw rotten fruit and it won’t make much of a mess.

    • No produce here. So long as you know what is involved, you have no problem with the loss of privacy and the use by Facebook of any information you put on Facebook, and you are aware of the risk of possible censorship, Facebook away.

      *shrug* I do not have an account, I do not care to have one, and that’s my choice, just like your decision to make use of the good features of Facebook is your choice.

      • I use Facebook to stay in touch with my family on the other side of the Atlantic, because it’s easier than having email addresses for everyone.

        But the more it stuffs my screen full of ads and things I don’t care about, the less time I spend there.

        Internet advertising is just another bubble, largely funded by the cheap credit bubble. It won’t last forever, and all these companies will disappear when the bubble pops.

      • Censorship?
        I thought that could only be done by the government?

      • So long as you know what is involved…

        People don’t know what is involved, and don’t much care. They are consumers of technology, not analysts.

        If they become aware of some feature some folks criticize, they do an evaluation, and usually decide the benefit is worth the cost. Or, even easier, they just ignore it.

        Expectations are changing with the adoption of the new technology. The standards defining privacy are changing.

        Like many other things, we will have multiple standards being applied to the same stuff. The growing population of FB users is an index of how much those standards are shifting.

    • Same here, Jacqueline, although my cousins are on the opposite side of the US, not in a different country. The same for former coworkers who have also scattered since we worked together.

      I resisted Facebook longer than most. I only joined when several people from a traditional writers group I belonged to (that wasn’t very indie friendly) decided to form their own group for indie authors and chose Facebook to do that. This group and these writers (lots more than when we started) are still the ones I converse most with on Facebook. I’ve also found a second indie writer group that is made up of helpful people.

      I enjoy Facebook–as long as I don’t waste an incredible amount of time trying to correct the misinformation that gets posted there. That’s an all-too-tempting time-waster, since most people would prefer to jump on click-bait headlines than find out whether that’s what the link is about or even if it’s true.

  4. “Then there’s the minor bit that Mark is counting those accounts like mine (which has been accessed less than three times in the last year.)”

    Given the numbers are MAUs – monthly active users – that’s not the case.

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