Techno utopians

“The price of nothing”

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Kim Dotcom
Kim Dotcom has a new service, with features that Forbes calls “See No Evil, Store No Evil”. But perhaps that should be “see no value, store no value”.

I have not come to mock the rotund self-promoter, but rather to talk about what might happen if its users were to throw themselves at the service to share copyrighted content. But first, a history lesson.

One criticism of the monetarists during the Thatcher years was that they “knew the price of everything and the value of nothing”. It’s a magnificent phrase: a withering encapsulation of the view that value doesn’t merely reside in a price. It also strongly implies that these individuals were guilty of philistinism.

This condemnation was a response to some radical changes. After many years in which the supremacy of technocratic planning had been unquestioned, Britain in the 1980s saw supply-side reforms introduced in many areas. These were intended to reveal a pricing signal. John Birt’s Producer Choice at the BBC – which gave programme makers the power to buy services from outside the BBC – was one example, and internal markets at the NHS were another.

Enthusiasts for the changes argued that while the new systems coughed up occasional absurdities, the internal markets put a price on goods which ultimately allowed resources to be used more efficiently than a central planner could anticipate.

People responded to the pricing signal by thinking about how they used things. They began to use things more cleverly, and source alternate supplies, for example. The “value of nothing” was a response to the fact that “somethings” had a value beyond the immediate market price signal. For example, we might want to subsidise a good or service (like transport, or coal power) for a long-term benefit.

Now let’s wind forward to today. Something quite remarkable emerges.

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Why do sheep need Twitter?

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Spot the broadband user in this picture

A House of Lords committee this week declared that British taxpayers must foot the bill for an internet that nobody wants – unless perhaps they have a second home in the country.

Some observations by the committee may be accurate: Britain’s broadband is slower than its rivals. But this doesn’t seem to be what vexes our noble and learned friends. Observations don’t amount to a rational argument – what the Lords are making is a very radical proposal. Huge and open-ended taxpayer funding must be committed, they argue, to build a national utility. One that will largely be used by sheep.

As every one knows, the nation’s finances are in a dire state. The national debt is increasing. So what’s the economic argument for new public spending? The peers won’t say: their report almost completely avoids making the economic case. To our knowledge, no study, public or private, has ever shown any benefit to UK plc from expenditure on rural broadband infrastructure. The committee has a glimmer of understanding how much this will be – citing a four year old Broadband Stakeholder Group study estimating the cost of building fibre to the home to every home as £28bn.

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How to fix the broken internet economy

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How can we begin to unpick the tangled mess that the technology and creative industries have created?

There’s certainly no shortage of blame to go around. In the past every new wave of technology has delivered healthy creative markets – but today this is no longer happening.

Just 20 years since the birth of the internet economy, with the advent of the worldwide web, it’s worth asking why. It’s time we looked afresh at where both industries went wrong, and how they can get on the right track again.

Much of what follows will highlight key mistakes made – but before we do that, we need to put them in some historical context. What worked in the past is a fairly reliable indication of what can work again in the future.

The current impasse between technology and copyright sectors is certainly an odd one. Historically, war is the greatest driver of technological innovation of all, but in peacetime it’s the demand for culture and entertainment that spurs the most innovation. People want to see and hear stuff, and are prepared to pay for it.

The cash generated is ploughed into more entertainment – even creating new art forms. (Recall how the first movie dramas were starchy, filmed theatrical plays.) This creates more investment in technology so people can enjoy the entertainment in a better way. Round and round it goes.

At the heart of this virtuous circle, copyright has been the obscure back-room business-to-business mechanism that keeps the players honest. Creators demanded that their industries engage with the new technologies to create new markets, which returned more money for their talent.

As a result technology innovators needed to attract talented creative people, and induce them to produce stuff for their kit: recording their music on long-players rather than shellac, or printing their movies in Technicolor™. So the two sides need each other. Technologists’ incentives were simple: create more amazing gear to deliver the best of other people’s stuff. And each wave of innovation grew the market, and ensured the creators and workers were richer. Remember: No innovation has ever made creative industries poorer.

Unfortunately, the truth of this historical mutual dependency gets forgotten today because the incentives aren’t lined up. Investment decisions in technology services are made without a thought for the health of the creative people who generate the demand for the goods. Creative investment decisions either don’t take advantage of the technology, or are hamstrung in a way that leaves the potential of the technology untapped. Things are also complicated by another factor we’ll call the Unicorn.

I’ll open the catalogue of errors at chapter one, the music industry.

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“Immense wealth awaits. Email Ian Hargreaves with bank details, statute book”

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Now we know why what was widely called the “Google Review” into intellectual property came to the conclusions it did. And we have it from the horse’s mouth: not Google, but Professor Ian Hargreaves and his team at the IPO, who “guided” him.

If you recall, a year ago the Prime Minister David Cameron revealed that the Google founders that they could never have founded Google in the UK, because of its copyright law. Even Google could never substantiate the quote, or provide a citation. Rather than getting a public inquiry, and shaming, of a foreign corporation for misleading our PM so badly – Google got the government to explore how the law could be altered… to benefit companies like Google.

So the review began with a mistake, and its guiding philosophical idea was a naive, simplified, and fantastical version of the world. This set the tone for what followed.

Hargreaves came across as wry and likeable, as he always does, but his words revealed the bien pensant view of the internet, its potential, and its commercial challenges.

“Politicians are afraid to address [copyright] because of fear of damaging the entirely legitimate and desirable wishes of musicians and other creators to have a fair level of protection, so they can make a return on their own work. I do disagree how this machinery has spread, and become an undesirable regulatory restraint on the internet [our emphasis] and the internet’s effects on the economy“

He continued:

“That is a very, very big risk for an advanced knowledge economy like the UK to run. In my view we can’t afford to run it. It’s urgent; the government has to take the action I have recommended it take”.

The sky was falling, he’d felt a piece of it land on his head. And he hammered home this urgency in his conclusion, in case you missed it:

“The digital revolution is not one-third complete, based on the penetration of the internet around the world. If we don’t ‘Get with the Pace‘, we will pay a significant economic price.”

There are several flaws to this approach.

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The BBC struggles with the concept of ‘tech bubble’

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The BBC has a real problem with social media. It’s delighted when something new appears. It slips into the patrician role that comes naturally to broadcasters – and especially the BBC. It can express childlike wonderment – Wow! – at something new and amazing. Getting beyond that though, is where the trouble starts.

Perhaps the BBC is haunted by the idea that people simply get on and use new communication tools without “Auntie’s” assistance. The viewers typically also have much more realistic expectations of the technology than, say, pundits. So we keep hearing wonderment, and advice on how get online, a bit like a slightly mad primary school teacher.

The gears really grind when something more critical is required. This week the corporation’s news flagship Newsnight – one of the last remaining TV programmes for grown-ups – asked if there was a “tech bubble”. Investment is pouring into social media startups. Would it all end in tears?

Yet having the posed the question, the report and discussion that followed were designed to dispel understanding and analysis. Before long it had turned into a gathering of the Unicorn Preservation Society. We were even told that only people who might want to describe the web investments a “bubble” were self-serving opportunists.

Bad people, in other words, thinking bad thoughts.

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Nathan Barleys to fill Olympic chasm – PM

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Prime Minister David Cameron has cast his gaze east across to Essex – and dreams of a landscape filled with social media marketing consultants and SEO boutiques as far as the eye can see.

In the aftermath of the Olympics, Cameron wants to put the land and property on the Lea Valley to private sector use, and his Big Idea is to “nudge” the Shoreditch and Hoxton crowd eastward.

“Our ambition is to bring together the creativity and energy of Shoreditch and the incredible possibilities of the Olympic park to help make east London one of the world’s great technology centres,” said Cameron today.

That would be a sight: a mass migration of tiny designer tricycles as the Nathan Barleys pedal across the Hackney Marshes to Essex.

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A brief keynote to Westminster Digital Forum

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My name is Andrew Orlowski from The Register, I was looking for an illustration to try and bring a very old debate to have a fresh perspective, and I came across this in my library, which is an extraordinary book written by a gentleman called Yoneji Masuda. The book was written in 1980 and it was the Japanese plan to computerise Japanese Society on Cybernetic lines.  It was a very modest project. It would have cost about $65 billion in the currency at the time, and plans included robotically controlled personal transporters, he forecast the death of the television by about 1985; an “information sharing” society would follow, democracy would be reborn.  Much of this utopian rhetoric is stuff we have heard since then, but we are in a very interesting time, I think, for digital networks and for society. 
 
We are faced with a paradox, very briefly, I will try and encapsulate it in about a minute.

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Hypnotic illusions at the Wikileaks Show

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There’s a theatrical quality to the publication of the Wikileaks Afghan logs that’s quite at odds with what they contain. You’ll recall that Wikileaks obtained a large number of classified field reports from US forces in Afghanistan and gave three media outlets, the New York Times, Der Spiegel and the Guardian, advanced copies of a … Read more

Mrs Brin’s Medicine Show

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Companies selling DNA kits have been deceiving customers with “fictitious” and “misleading” medical advice, an undercover sting operation by Congressional watchdog the GAO has discovered. One of the companies, 23andMe, was co-founded by Mrs Sergey Brin – Anne Wojowcki – and boasts veteran Silicon Valley socialite Esther Dyson as a director. All the companies investigated have been referred to the Food and Drugs Administration and the Federal Trade Commission for “appropriate action”.

The GAO investigation [summary – text] titled Direct-To-Consumer Genetic Tests: Misleading Test Results Are Further Complicated by Deceptive Marketing and Other Questionable Practices sent DNA samples to four companies, and followed up with undercover calls for medical advice.

The results ranged from misleading, to what the GAO found as “horrifying”. Two of the companies claimed to “repair damaged DNA”. The GAO castigates the companies for implying that their advice that is diagnostic.

“One donor was told that he was at below-average, average, and above-average risk for prostate cancer and hypertension,” the report notes. Another donor with a pacemaker was told he had a below-average chance of contracting the condition. Another donor was told they were “in the high risk of pretty much getting” breast cancer.

How odd that skeptics devote so much time to the fraudulent claims of homeopathy, but have given DNA testing a free pass. But maybe it isn’t so strange at all.

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