Thursday, 27 July 2017

Capitalism and Social Media

Every so often, Facebook users get weird reminders. Over the last few months I've had happy memories replayed to me about the time I posted such-and-such a status update, or gave a blog a bit of a plug. It also told me I've been on Facebook for 10 years. Now, I'm not an avid user and it's only these last couple of months I've properly woken up to it as a campaigning and dissemination tool, but it and Twitter are pretty much integrated into my everyday. And so it is for millions, hundreds of millions of people. In fact, Facebook has not long celebrated its two billionth user. Social media has certainly come a long way since I signed up. People now, particularly in the metropolitan countries, have a far greater range and numbers of friends and acquaintances than was previously the case - the debates about the quality of these connections need not concern us here. Social media has passed from fad to infrastructure on which relationships, and not a few businesses, are totally dependent.

Sociology has long had an interest in cultures of the internet and what computer mediated communication means for social interaction, presentation of self, and the display and reception of gender, ethnicity, sexuality and so on. The political economy of social media, the character of the corporations, their business models, and how they fit wider developments in the character of capitalism hasn't received quite as much attention. Therefore Nick Srnicek's small book, Platform Capitalism, is important because it does the job of situating social media in recent trends and what it means for the development of capitalism stubbornly stuck in crisis.

For Nick, we need to examine the origins of the digital economy out of the syncopated sputtering of Western economies following the crisis of the 1970s. This period saw the dominant position occupied by the US diminish in the face of competition from Japan and West Germany, and exacerbated by glutted markets and growing inflation off the back of the oil shocks and the Vietnam War. As the crisis threatened to grow over into one of profitability, American firms (and others) responded in two ways: by importing management methods from Japan and reorganising production and moving to leaner models with fewer 'just in case' redundancies. Simultaneously, the second strand involved the crushing of the labour movement. Where this was accomplished (chiefly America and Britain) it prepared the ground for enforced flexibility of work, the export of jobs, and the universalisation of precarity. These crude class war measures, which also allowed for the privatisation of state-owned infrastructure and the extension of transactional relationships (and therefore, the market) to greater areas of social life, resolved - at least for a time - the crisis tendencies of 1970s capitalism. However, capital's restoration of profit levels by grabbing a greater share of the wealth generated by labour has a whole set of problems of its own.

As we entered the 1990s the internet was opening up as a new commercial opportunity. The hype of the time conceptualised it as cyberspace, a frictionless domain where relationships - and therefore trade - could proliferate unhindered. Just like the frontier of the Old West, if you found yourself a sweet spot in the land rush you could make a pile. As the internet broke into popular consciousness its infrastructure was built by speculative capital flooding in. Newcomers entered the field to try and define - then corner - markets and existing firms were forced into providing web-based service lest a competitor jump in and grab their slice of the pie. This was the period of the search engine wars, competition between web-based email services, of listserv and chatroom (and later instant messaging) providers, online retailing. Whoever won out in these emerging markets had the potential for monopoly profits written in their source codes and algorithms. Such investment surged during the 1998 Asian/Russian crisis that brought the so-called tiger economies of South Korea, Taiwan, Hong Kong and Singapore to a sudden stop - and were encouraged to do so by Alan Greenspan, then of the Federal Reserve. The bubble eventually burst and many tech companies were driven to the wall, but what was left was an infrastructure, a clutch of surviving firms in monopoly spots, a public growing habituated to the internet and, crucially, investors more wise and less taken with hype.

The main problem survivors encountered was coming up with business models that could generate profit. While retailers had retail and could make money sans a shop front, it was less obvious how search engines or instant messaging could provide a return. Advertising seemed like an obvious answer, and so it proved to be. It was data that was key to sustainability. It's long been recognised by retail that capturing information about your customers can inform marketing and greater sales. For instance, the proliferation of reward card schemes in supermarkets during the 1990s enabled companies to build up profiles of their customers on the basis of their purchases, to target advertise, and send them bespoke special offers. Applying this logic to the internet, if your business is dependent on advertising revenue then you need to know who you are advertising to. This is why data is key: the more they know about people using their service, the more targeted adspace can be sold. The question then is how to get internet users to use your services? The genius of what came to be social media sites is you provide a space for people to do pretty much what they want. As Nick notes,
At the most general level, platforms are digital infrastructures that enable two or more groups to interact. They therefore position themselves as intermediaries that bring together different users: customers, advertisers, service providers, producers, suppliers, and even physical objects. More often than not, these platforms also come with a series of tools that enable their users to build their own products, services, and marketplaces. (p.43)
Users generate data. Videos, status updates, tweets, conversations are all tracked and stored by their host sites to build up a picture, as per loyalty card schemes, and this is used for the basis for selling advertising. The more data, the greater the scope of targeted ads and the possibility of more profit for the platform. There is now a clear impetus for firms to get as many people as possible using their infrastructures. Social media is therefore free at the point of use, easy to navigate, provides a simple (and familiar) web presence for businesses, and within certain limits allows the user to utilise the space as they see fit. Whether sharing the latest tunes heard down the shopping centre or screeds on immaterial labour and Corbynism, it's all so much data for the platform to gather, to refine, and to make money off.

Nick identifies five basic types of platform. The aforementioned collection of big data sets used to sell advertising space, cloud platforms that rent out computing power and software off-the-shelf and gathers data from their use, industrial platforms that produce software enabling internet connections and automated systems and, yes, also gathers data from use, product platforms that transform goods into rent-able services - think Netflix, and lastly lean platforms profiting from reducing costs for others. For example, our Ubers, Airbnbs, and Deliveroos. In practice many firms are combinations of two or more of these ideal types. For Uber to hook up drivers and customers, it depends on cloud computing and software rented from elsewhere. It is lean because the only asset it really owns is its data sets.

With the drive to expand, each of the platforms have a tendency toward monopoly. Therefore the natural model isn't one of market equilibrium: megaprofits are possible only if a market is completely cornered. That often is not enough: the drive for more data leads platforms into new markets. See how Google has expanded beyond search into other social media platforms and industrial applications (AI, automated vehicles, robotics), or how others try and make themselves into a closed ecosystem. It is possible and many millions of people rarely venture onto the internet beyond Facebook. In each case the opportunities have muscled in with cloud computing services and the provision of digital goods from their online stores.

The question Nick finishes with is whether the social media revolution can recharge capitalism. He concludes - rightly in my view - that they may offer the potential of increasing productivity, particularly in the industrial arena via the automation of systems, it does nothing for markets that are already glutted. And that's before the replacement of jobs by further rounds of robotics and AI are factored in. Second, lean platforms in particular are in a precarious position. Uber depends on lax regulatory regimes that many jurisdictions are clamping down on, not least on the question of whether their drivers are employees or not. Revenue streams are also episodic (how many times do you need a cab or a quick delivery?) and not everything can be outsourced. As far as platforms go, Google and Facebook are doing well but there can only be one of each. They create opportunities for returns but themselves cannot upgrade capitalism into a new era of growth. The lean platforms, however, will only last for as long as the venture capital pledged remains.

The book is an interesting and very readable entree into how capitalism is struggling after the crash, and also shows up a lot of problems it has in coming to grips with the growing importance of immaterial labour and the production of information, knowledge, signs, affect, and social relations. Midway through the book Nick addresses the issue of whether the data being produced should be treated as the product of labour a la Marx. He suggests not as there is no element of compulsion in play and what is being provided is a raw material that is then refined by the firm into a material that yields its value when employed to sell advertising space. In other words, the data impressions left by our digital footprints are effectively a force of production. What we are seeing with the data capture represents the shift in exploitation away from the direct organisation of work and the extraction of surplus value from behind the veneer of the wage relation to, more or less, poncing off the interactions and the social production of the people who use the platform. In a formal sense it is a free exchange. We click the tl;dr terms and conditions and get to use the platform wizardry for free while they make billions from the content we make and share. It is the contemporary equivalent of the "fairness" between the employer and employee we know and love, of them generously providing a wage if we work for x number of hours under their direction. Such kindness.

Platform Capitalism then is about the new, about the cutting edge and seemingly most dynamic sections of capital. Its suffusion of the glamour of high technology with the promise of mega profits offers hope beyond the impasse. What Nick has done is to show that for all the smart science and gizmos, platforms shows capital running up against its limits. It doesn't solve the contradictions balling up in front of it. Instead, following William Gibson's classic definition of cyberspace, the apparatus of social media is a consensual hallucination. And those city lights, receding are the hopes capital has for the new technologies pulling it out from the mire.

No comments: