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Month: February 2021

The media bargaining code and the future of the internet

Ted Ted
February 28, 2021
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Limbourg Brothers, Les Très Riches Heures du duc de Berry: Mars (fragment), 1412-1416, Musée Condé, Chantilly, France

The Australian government’s recently introduced News Media and Digital Platforms Mandatory Bargaining Code is not an isolated phenomenon. I believe it sets a firm precedent for other countries and trading blocs to introduce similar legislation in the near future. This is part of a complex process of an evolutionary realignment of the internet with long-reaching consequences. To simplify, we can look at this realignment at three scales, let’s call them tactical, operational, and strategic.

On a tactical scale, media bargaining codes of the type recently negotiated between the Australian government and Google and Facebook give established legacy media companies a stable income from their content circulating within the Google and Facebook walled gardens. This is represented by these same legacy media as a victory against the social media giants but is in fact a victory against smaller media competitors who would find it much harder to negotiate similar payouts. The income stability gives legacy media companies in the newspaper, TV and radio sectors a brief life extension in the face of collapsing audience numbers and advertising revenue. However, the respite will be brief because Millenials and Gen Z consume their news and media entertainment in completely different formats, and from platforms outside of legacy media control. In the short term, the media bargaining codes do not affect the social media giants in any meaningful way because their revenue does not come from content but from leveraging the behavioral data of their users.

There is an argument that tech giants can retaliate against this type of legislation by scaling back their operations in a given country. I think this is a possibility in a few isolated cases where the loss of users does not seriously affect advertising revenue. However, tech giants are far more dependent on their users than their users are on them. Of course, they do not like their users to know that, but the logic of revenue generation is simple. The business model of social media giants is built around content delivery and advertising based on user behavioral preferences. When users start migrating to other platforms advertising revenue starts falling and the entire model is in crisis. Facebook made an important mistake in closing news channels in the Australian market as this only managed to generate bad optics with the public and more support for the government to call Facebook’s bluff. Which it did, and Facebook folded immediately.

On an operational scale, media bargaining codes set a precedent for direct government interference in the revenue streams of internet and social media companies. From now on this interference will only intensify, with governments around the globe pushing the envelope on what is possible. If content qualifying as news can be legislated in this way, then so can all other content. For example, governments can start legislating different monetary values for different content, based on content types or the semantics of the information being displayed. Or, they can start imposing penalties for censorship, as the legislation currently being discussed in Poland, or for its absence. In other words, what is at stake is the entire modus operandi of social media, built around content delivery and advertising based on user behavioral preferences. Break content delivery, or make it too expensive, and you break the entire model.

Fundamentally, the tech giants have no effective retaliatory measures against these types of legislation, short of lobbying against them with legislators. After years of creeping selective censorship, they have long lost whatever good will they had with users. Remember Google’s “don’t be evil”? After the spectacle of US social media giants coordinating to shut down and censor the voices of a sitting US president and his supporters in an election year, no sane government will stop to consider the ethics of legislating against these companies. Their time is up.

On a strategic scale, this realignment is part of a tectonic process of clusterization of the internet. The network was built to be information-agnostic, that is, data was to be able to travel freely across the network regardless of the semantic value it carried. The internet was, and to an extent still is, a “river of copies” as Kevin Kelly put it. With the selective legislation of content, we are seeing the appearance of dammed lakes on the river of copies. The long-term effects of this process lead to the emergence of different sovereign internet clusters with their own legislative frameworks around content, and a highly filtered information flow between them.

I don’t think it will be a full fragmentation, because the network is far too valuable to break it completely. Instead, I believe we will witness the emergence of sovereign internet clusters organized around national and supranational borders. The Chinese internet is an obvious example, and I think Russia will soon close off its own fully sovereign internet as well, to be joined by an EU internet, possibly a Commonwealth internet, and so on. Information flow between clusters will still be possible, just like it is possible to access the open internet from within the great Chinese firewall by using a VPN. However, I think clusters will try to keep content within the cluster as much as possible. There would also probably emerge a fully distributed internet 2.0 which would act as a wild west periphery to the sovereign clusters.

Horizon loss

Ted Ted
February 15, 2021
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Yesterday the NYT published this piece, describing what appears to be a veritable mental health pandemic among Gen Z and late millenials in the developed world, ostensibly resulting from the COVID-19 social distancing measures.

The article reports that youth psychiatry wards in many European countries appear to be filled to record capacity, while in the US a quarter of 18- to 24-year-olds have seriously considered suicide.

It is not only the loneliness associated with social distancing, but also the loss of purpose caused by economic collapse and gigantic youth unemployment. There is a massive spike in anxiety, depression, and a sense of guilt from ‘missing out’ on the bright future of carefree consumption promised by the global media-entertainment complex.

Someone in their early twenties describes how they are struggling to envision a future after a year of social distancing and massive job losses. The NYT aptly frames this as “a world with a foreshortened sense of the future.”

I would describe this as a catastrophic horizon loss.

The future is not ‘foreshortened’, it is completely absent. The horizon has been disappeared. Where? Perhaps somewhere between planned obsolescence, environmental collapse, a parasitic global financial system, forced isolation, economic collapse, deliberate social atomization, a global ersatz-culture celebrating hyper-consumption, and a gerontocratic global elite completely out of ideas and utterly divorced from the everyday reality of the 99%.

This horizon loss has nothing to do with the Gen Z and late millenials who are on the receiving end of its arrival. I also don’t think it is caused by the global reaction to COVID-19. The pandemic only sped up and made it visible earlier than it probably would have been otherwise. The disappearance of the future was baked in the paradigm whose death spasms we are living through now. After all, when Fukuyama celebrated the ‘victory’ of global liberal democracy as the death of history, he also inadvertently announced the death of the future and the arrival of an eternal present.

The good news is that this brief and terribly destructive 30 year paradigm has come to an end. There are no more horizons left within it, and many possible futures outside of it.

On energy loss in a system

Ted Ted
February 15, 2021
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Every system is in its essence a network of actors that perform it from moment to moment into existence. The participants in the system, or actors in the network, enact and perform it through their daily routine operations.

Some of these routine operations are beneficial to the system being performed, and some are not. Some add to the energy of the system and therefore reduce entropy, while others take away from that energy and increase entropy. If the former outweigh the latter, we can say the system is net positive in its energy balance because it generates more energy than it wastes. If the latter outweigh the former, we can say the system is net negative in its energy balance as it wastes more energy than it generates. How to distinguish between the two in practice?

The rule of thumb is that any action that increases complexity in a system is long term entropic for that system. In other words, it increases disorder and the energy costs needed to maintain the internal coherence of the system and is therefore irrational from the system’s perspective. For example, this includes all actions and system routines that increase friction within the system, such as adding steps needed to complete a task, adding reporting paperwork, adding bureaucratic levels a message must go through, etc. Every operation a piece of information needs to go through in order to travel between the periphery, where contact with external reality happens, and the center, where decision making occurs, comes at an energy cost and generates friction. Over time and at scale these stack up and increase entropy within the system.

Needless to say, the more hierarchical and centralized an organization is, the more entropy it generates internally.

In addition, what appears as a rational action at a certain level is irrational from the perspective of the system as a whole. For example, if a layer of management increases paperwork this is a perfectly rational action for that management layer, because it makes it more needed and important within the system’s internal information flow; however, this is a totally irrational action from the point of view of the system because it increases its internal operational costs.

Put differently, from the point of view of a system such as a large hierarchical organization or a  corporation, the only actions of the agents comprising it that can be considered rational are the ones that increase the net positive energy balance of the system – i.e. reduce internal friction and/or increase external energy intake.

Importantly, this should be viewed across a time axis.

For example, when it comes to a complex operation such as a merger between two departments, or two companies, it might be a good idea to compare the before and after energy net balance for the two systems and the new system that has emerged as a result of their merger. It is also important to look in high enough granularity in order to understand the specifics of each network within the system, and its operations in time.

Say you had two admin structures servicing two different departments, and, now that the departments have merged, senior management optimizes the two admin structures into one, and cuts 50% of the stuff due to ‘overlapping roles’. On the face of it this is logical and should reduce internal energy drag, as admin structures are net negative – they don’t bring in new energy and have no contact with external reality.

However, the new merged admin structure now must service a twice larger part of the system than before, and as a result ends up delegating 30% of that new work back to the front line staff it is nominally servicing. As a result, the front line staff now have to perform 30% more reporting paperwork, which is net energy negative, and that much less time to bring in new energy into the system. In effect, the long-term effects of this ‘optimization’ are net energy negative and result in increased friction within the entire system that was supposed to be ‘optimized’.