I am somewhat appalled by the sloppy thinking of many of the Internet's latter-day critics. For example, in Joe Nocera's glowing review of Jaron Lanier's book, Who Owns The Future
, I read:
"There are two additional components to Lanier’s thesis. The first is that the digital economy has done as much as any single thing to hollow out the middle class. (When I asked him about the effect of globalization, he said that globalization was “just one form of network efficiency.” See what I mean about a universal theory?) His great example here is Kodak and Instagram. At its height, writes Lanier 'Kodak employed more than 140,000 people.' Yes, Kodak made plenty of mistakes, but look at what is replacing it: 'When Instagram was sold to Facebook for a billion dollars in 2012, it employed only 13 people.'”
Think about it for a minute. Was it really Instagram that replaced Kodak? Wasn't it actually Apple, Samsung, and the other smartphone makers who have replaced the camera? And aren't there network providers, data centers, and equipment suppliers who provide the replacement for the film that Kodak once sold? Apple has 72,000 employees ( up from 10,000 in 2002. http://bit.ly/1lEY8HG
). Samsung has 270,000 employees. Comcast has 126,000. And so on.
Of course, there was a much larger ecosystem of people making money from photography in the Kodak era than those who worked for Kodak directly, but so too, the digital ecosystem is far larger than Lanier's silly example suggests. An economic ecosystem is a lot like an iceberg. Most of it is underwater. And shallow pronouncements like the one above do us all a disservice.
I do agree with Jaron Lanier's key point, as reported by Nocera:
“If Google and Facebook were smart,” he said, “they would want to enrich their own customers.”
I agree with that point - and have repeatedly warned about the risks. See for example, my 2007 observations about lessons from Wall Street for internet companies, Trading for Their Own Account (http://radar.oreilly.com/2007/12/trading-for-their-own-account.html
), and my repeated urgings for companies to create more value than they capture (http://bit.ly/1lF0d6y
). But I don't actually believe that internet companies are hollowing out the economy, and I do believe that many of them do think about enriching their customers. See for example Hal Varian's analysis of the economic impact of Google advertising (http://www.google.com/economicimpact/
) or my own analysis of the economic impact of the web hosting market on small business (http://radar.oreilly.com/2012/07/open-source-small-business-report.html
Contrast this with the damage to the economy done by financial firms such as Goldman Sachs and JP Morgan, who have truly worked to enrich themselves at the expense of their customers and the public, and the Internet gets a pretty good grade.
The full story of the economic impact of digital networks has yet to unfold, let alone to be understood. There is an awful lot of blind internet boosterism, but the latest round of critics seem even more wilfully blind than those they lambaste. For more nuanced, thoughtful reading on the impact of the internet, Nocera would do better to read books like +Ethan Zuckerman
's _ Rewire_ (http://www.amazon.com/Rewire-Digital-Cosmopolitans-Age-Connection/dp/0393082830
) or Andrew McAfee and Erik Brynjolffsson's Race Against the Machine
and The Second Machine Age