Selling Social Media: The Political Economy of Social Networking 9781501319693, 9781501319723, 9781501319716

Citation preview

Selling Social Media

Selling Social Media The Political Economy of Social Networking Daniel Faltesek

BLOOMSBURY PUBLISHING Bloomsbury Publishing Inc 1385 Broadway, New York, NY 10018, USA BLOOMSBURY, BLOOMSBURY ACADEMIC and the Diana logo are trademarks of Bloomsbury Publishing Plc First published in the United States of America 2018 Copyright © Daniel Faltesek, 2018 For legal purposes the Acknowledgments on p. ix constitute an extension of this copyright page. Cover design: Louise Dugdale Cover image © Daniel Faltesek All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. Bloomsbury Publishing Inc does not have any control over, or responsibility for, any third-party websites referred to or in this book. All internet addresses given in this book were correct at the time of going to press. The author and publisher regret any inconvenience caused if addresses have changed or sites have ceased to exist, but can accept no responsibility for any such changes. A catalog record for this book is available from the Library of Congress. ISBN: HB: 978-1-5013-1969-3 ePDF: 978-1-5013-1971-6 eBook: 978-1-5013-1970-9 Typeset by Integra Software Services Pvt. Ltd. To find out more about our authors and books visit www.bloomsbury.com and sign up for our newsletters.

For the users

Contents List of Figures Acknowledgments

viii ix

Introduction1 1 2 3 4

Monetization or: The Romance of the Click25 Securitization or: Seeing Wall Street as a Server 75 Disruption or: Steel Mills, Disk Drives, and Hackathons 109 Litigation or: In Defense of Patent Trolls 131

Conclusion: After Social Media Mania157 Notes165 Bibliography200 Index222

List of Figures I.1 The social media ecosystem 1.1 The flow of advertising exchange 1.2 Waterfalling 1.3 Header bidding 1.4 The two-sided market 1.5 Dating services 1.6 Finding Foursquare’s quadrant 1.7 Negative interest to value 1.8 Monetization matrix 2.1 Matrix of positions on value and scale 2.2 The IPO Timeline 3.1 Monetization matrix with disruption 3.2 Disrupting the news 4.1 Core monetization matrix with intellectual property law 4.2 Patent activity across the lifespan of social media C.1 Industry life cycle All figures, apart from 4.2, are created by the author.

13 41 43 44 48 50 51 52 57 86 94 122 128 144 150 163

Acknowledgments Books are hard to write; tracking their development over the years can be difficult. Over the years, David Depew, Gerald Voorhees, Joseph Bookman, Sofia Karatza, David Z. Morris, Hojin Song, Tim Havens, Paul E. Johnson, Rita Zajacz, Ron Seymour, Melissa Zimdars, Meryl Irwin, David Hingstman, G. Thomas Goodnight, anonymous reviewers, my parents, and many others have given feedback on ideas that appear in this book. Atilla Hallsby provided invaluable feedback throughout the writing process. My colleagues at Oregon State are the best: thank you. It is entirely possible that you (the reader) engaged with some of these ideas on Facebook, Twitter, or some other social network. Those touch points are an important part of academic life in the early twenty-first century. This book would not have been possible without the support of my partner Emily Kay Kirkeide Faltesek.

Introduction

This is a book about the strategies that persuade users, investors, and governments to adopt a particular vision of the economy, technology, law, and communication enmeshed with social media. There are four key ideas that organize the sale of social media: monetization, securitization, disruption, and litigation. Before turning to explain the theoretical approach of this book, relationship to the existing literature, and chapter summaries, the stories of three different sales pitches for social networks can provide a starting point: the story of the Facebook IPO Roadshow, the launch of Twitter, and the failed launch of Google+.

Selling Facebook: The art of the S-1 In February 2012, Facebook filed form S-1, the document that declares a firm’s intention to sell capital stock to the public. At first glance this is unremarkable: the form summarizes revenues, opportunities, and risks. Tables, charts, and graphs communicate the distribution and proportion of various values over time. Generally accepted accounting practices and the threat of incarceration for fraud prompt those completing the form to be as accurate as possible. Documents (and further financial filings like from 10-K) are important resources for study. S-1 documents in non-media industries are typically drab. After a 1998 rule change by the Securities and Exchange Commission calling for documents to be presented in plain language, firms offering new shares to the public have increasingly plied their documents with pictures, letters, and other advertisements for the company presented as objective information.1 For all of the information contained in a document like this, few communication scholars seem interested in them. Facebook’s S-1 includes this basic information as well as other material like mission statements, graphics, and founder’s letters.

2

Selling Social Media

Zuckerberg’s letter to potential investors from the S-1 is an exemplar of the genre, describing the ways that Facebook improves relationships, businesses, and even governments. Facebook could change democracy and the course of history. According to Zuckerberg, “By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible. These voices will increase in number and volume. They cannot be ignored.”2 In this sense, Facebook is nothing less than a force that transforms the conditions of democratic life. It is not simply that the diverse voices of publics will be accessible, but that the affective position of governments will change. Once the intermediary moderation of the New York Times, CBS, and Fox are replaced by the intercession of Facebook, politicians will care— or at least that is Zuckerberg’s theory. Broader concerns with the structure of the public sphere and political accountability are less important in this model. Individuality is everything. At the opening of the S-1 is an image with Facebook’s characteristic logo and thumbs-up. A collage of user’s photos are superimposed with a claims hundreds of millions of photos uploaded per day, a network of one hundred billion friendships, nearly three billion likes and comments, in addition to approximately one billion monthly active users.3 Against the black background of a third image, bluish white lines connect major hubs of Facebook activity to form a world map. This style of map is commonly used in describing travel patterns, especially flight routes. There are no national boundaries, no topography, no governments, nothing except the conviviality of the users and the statement of the company’s mission: “To Make the World More Open and Connected.” What the image represented so effectively is not that it connected a world, but that the social moment created through communication is a world in itself. Users are the light in a dark reality. This light in the darkness aesthetic appears in Facebook’s celebratory video “Things That Connect Us.”4 At the conclusion of a series of escalating metaphors, famously beginning with the claim that “Facebook is a chair,” the narrator compares the functions of Facebook to the totality of creation itself, “The universe. It is vast and dark and makes us wonder if we are alone. So maybe the reason we make all these things is to remind ourselves that we are not.”5 Existential hope sells. The corporate logo follows. Facebook is not a product or service, but the necessary counterpoint to anxiety in the human experience. The image of Facebook users lighting the darkness of a cold universe punctuates both their celebration of human communication and their appeal for a vast fortune.

Introduction

3

Excitement in the stock was stoked by stage performances with leading actor Mark Zuckerberg, the CEO of Facebook, in his celebrated hoodie. The Wall Street Journal covered a stop on the roadshow (the tour where corporate officials travel to promote a coming initial public offering [IPO]) in midtown, describing it in terms reminiscent of a Hollywood premier.6 Facebook brought “swarms” of lenses and “star-power.” The players ride in black Cadillac Escalade SUVs, keep their audiences waiting, and answer just a handful of questions. The audiences’ very financial lives hinge on the answers. Hollywood celebrities want for such importance. Even the stock market has need for the red carpet. The information exchanged is not about the fundamental business of the company, but about the dream of what the company might be. This process is not unique to the Facebook IPO. Selling a new security to the public is theater, and the roadshow is an integral part of the performance. Investors buy the dream, not the reality. The roadshow is literally a show, often accompanied by paratextual supplements like videos. Selling a security is a transmedia event. Facebook’s video was not structured in such a way as to describe the position of the company in terms of future business performance, but as the basic stuff of human communication.7 Visually, it featured fairly banal interviews with key people: David Ebersman, the Chief Financial Officer, Mark Zuckerberg, the Chief Executive Officer, and Sheryl Sandberg, the Chief Operating Officer, as well as a large number of user’s images. Faces of users were presented alongside the faces of the employees, with the narrative of the video beginning with the story of Facebook as a photo-sharing service. In this version of the history of Facebook, noticing the ways that people used their profile picture to build a narrative took the lead over other descriptions of the business. This is just one of many histories of Facebook that could be written, each of which would have their own commitments and entanglements. Instead of a history of technology, corporate strategy, or startup culture, Facebook told a story about users. Humanizing the story of Facebook happens both in the arguments made by the executives and also through the insistence on the images of users’ faces. Identification with the faces of users becomes the fulcrum for lifting the social network. Faces of users exist in a more theoretical sense in the description of the most valuable advertising products for the network, at least at that time. In her description of sponsored stories, Sandberg makes it clear that inclusion in social context dramatically increases the value of advertising. The sponsored story product framed an advertisement as a recommendation from a friend. Nearly

4

Selling Social Media

five minutes of the thirty-minute roadshow video were devoted to extolling sponsored stories’ value. High margins for Facebook didn’t come as a result of careful targeting and advanced metrics, but through the affective power of friend’s likenesses. Ventriloquism sells, and people aren’t made of wood. Users did not take this use of images and text lightly—appropriating faces went too far. Shortly after the IPO, Facebook discontinued sponsored stories because of a combination of user dissatisfaction and a class action lawsuit.8 For many popular press analysts, the initial instability of the stock was shocking, either because they had not read the S-1 that described in plain language some of the problems with company, including declining user growth, or because they were fully invested in the idea of the greatest IPO of all time. The S-1 is a work of corporate art. The S-1 is functionally a formal document with blanks to fill and boxes to check. The aesthetic format of the document has an air of authority when speaking to affective and communicative questions. When properly completed an investor should be able to read the form and have learned the basic material needed to make an informed judgment about purchasing stock, the fundamentals. Filing an S-1 can be revealing, turning the opaque walls of the boardroom into glass. Privately held companies enjoy relative secrecy in operations compared with their publicly traded counterparts. Going public is not just a matter of revealing more information, but a declaration of maturity. As a right of passage, the S-1 marks that a firm is no longer a startup. Going public offers real opportunities for capitalization and expansion. At the same time, publicly traded companies are at risk of takeover by hostile rivals or becoming beholden to the whims of the stock market and frightened owners. It is not capitalist largesse to think that a company has too much money, but a real threat. A large pool of money could be used to expand the company, pay shareholders, or to pay off debts accrued in a takeover. The very strength of a company can turn against it—more on this in Chapter 3. Performing the speech act of offering stock has a deep set of expectations, requirements, and processes. Looking at current documents filed by Facebook is revealing. They no longer include the inserts; there is no light in the dark: the performance of the ideal image has given way to the everyday management aesthetic. This story is not unique to Facebook. It is repeated every day. Scales may shift, but the structure is similar. Fame and fortune earned by an industry that finds ways to make money (ideally large amounts of money) by repackaging everyday life and stamping it

Introduction

5

with a trademark. At stake in this process is more than the fate of a company, but a larger concept of the human condition. How do we reconcile the nature of the lifeworld, the sum of all the relationships and texts that make up everyday life, with the technologies of advertising and targeting that would seem to exchange personality for cash? How do we argue when neoliberal prudence has eclipsed other values? It seems surreal that a culture could begin to auction off a customized stream of feeling. As Sandberg made clear in the roadshow video, social context nearly doubles the recall of an advertisement. In a short video appendix, the international liquor conglomerate Diageo suggested that their clicks-to-bricks efforts with Facebook increased purchases of spiced rum by twenty percent. The creation of “Small Business Saturday” as a joint effort of American Express and Facebook is celebrated in the roadshow video for allowing the rapid diffusion of a marketing concept. Sandberg emphasized that the partnership “is a good example of guiding consumers from the very top to the very bottom of the [sales] funnel.”9 Publicly taking credit for this sort of campaign demonstrates that the roadshow video is not intended for the lay public, but for a select group of people who are in the know—the anxieties about the television talking to people, transmitting hidden meanings are ignored and strong media effects are taken a literal fact.10 While this is not a particularly surprising idea, the choice to be so cavalier about manipulating the public is remarkable. The plan for selling Facebook and social network use in general to the public must not depend on secrecy. In the age of the social network, everyone is an insider.

The art of the party: Selling Twitter There are many reasons why someone would choose to use a social network. Some networks connect family, some show short video loops, others help you find a great party. A jaunty green bubble typeface welcomed users to twttr, now known as Twitter, with the promise that “If you have a cell and can txt, you’ll never be bored again … E V E R!”11 Some people watch television, others make love; boredom is a powerful force for self-realization and creativity. Building the moment requires more than some random time, there must be something to be experienced, a hook for organization. The scene: South by Southwest, a music festival, now accompanied by a film festival and massive interactive media conference. Atmospherically,

6

Selling Social Media

the festival, or as it is affectionately known South-by, graphically as SXSW, is electric. Keynote speakers rouse audiences with tales of monetizing clicks and maximizing personal brands. This is an army of potential users, focused and ready. In 2007, when Twitter was launching at SXSW, this was a novel app and possibility. Instead of forging connections that might help them organize something, they could enter into a literal stream of time. Here was a positive feedback loop where their participation would help them reap the rewards of ambient awareness of the party space all around them. Twitter provided a new interface for the perception of space and time, organized through the lateral link of the hashtag. Beyond the prospects for rapid network formation, the event of the festival allowed the users to make the event into something bigger. The social promise of Twitter is the ongoing now. Pre-eminent social theorist Jürgen Habermas and many public sphere theorists following him have noted the importance of collected and focused attention.12 Twitter focused diffused attention into a laser. In the context of South by Southwest the reasons for using the hippest new app were quite clear, this is a party publicizing and perceiving itself. You can find out about the YouTube party and head there to collect a pair of YouTube tube socks. In the life beyond, the uses of Twitter include news gathering and micropublishing. Although these moments would be less haptically satisfying, they would be a reason to use the platform and to experience the calcified ambient now. Even as Twitter succeeded in structuring attention, it has faced many challenges selling itself to users. Especially difficult for Twitter is the perception that it is riddled with trolls, sadistic users who prefer to attack other users than to make new contributions to the conversation. A temporal network like Twitter is sold on the capacity to connect users to the social now. An affinity network, like Facebook, on the other hand is sold based on its capacity to modulate affect and produce ambient awareness of a kin system. This is not to say that users are not constantly assembling their larger social maps through Twitter, but that the emphasis points and the user experiences differ. Twitter was aggressively sold to the public as an exciting real-time flow of information. Raw Twitter activity is known as the firehose. The underlying theory of the public sphere that has informed the development of Twitter is a strong theory of liberal free speech. The theory of free speech that drives so much decision making can be traced to Justice Brandeis’ elegant writing in his concurrence in Whitney v. California.13 In this opinion, Brandeis argues powerfully for the capacity of speech to resolve

Introduction

7

disagreements, going as far as to argue that government repression of speech tends toward radicalization. The misstep in the application of this argument comes in the resolution of disputes. It is not that Brandeis was arguing for the universal acceptance of every utterance, but that social processes judgment are preferable to legal ones. Brandeis was arguing that argument can be effective, more effective than silence. At the same time to take this as an acceptance that any speech would be acceptable in any time, manner, or place is wrong. It is entirely reasonable for a person in a democratic society to choose not to argue at certain times, or that they might choose not to associate with someone they find unsavory, or that they might maintain the standards of politeness of their culture. This is the underlying strength of affinity modeled networks: they provide users with enough control to avoid painful, unnecessary conversations. Using this idea of control, we can explore the ways that users sell themselves affinity networks. From this logic, more control should mean more success.

Give them exactly what they want? The curious case of Google+ In June 2011, Google announced the release of a new product, a social network that would “fix” what was “broken” about social network formation.14 In no uncertain terms, the press release for the product was targeted at Facebook and the slippery position of the Friend (much less the like). Google’s culture emphasizes an engineering mentality. There are problems and solutions. Facebook’s Friend model had three primary problems: it lacked precision (sloppy was their term for it), it was overly public, and it didn’t deal well with the names given to particular relationships. One of the problems that Google+ was intended to fix was the offense felt by users that their familial relationships were labeled as something apparently less, friendships. The solution to these observed problems was a result of their perception of everyday life: “From close family to foodies, we found that people already use real-life circles to express themselves, and to share with precisely the right folks. So we did the only thing that made sense: we brought Circles to software.”15 Beyond the presence of mere circles, Google+ would serve as a nexus linking many popular Google features including photo-sharing. As a bridge, Google+ would mark the return of something like the vaunted homepage of Web 1.0:

8

Selling Social Media

a unifying point that would become the top layer of the internet experience. The social network proposed by Google should have been successful. “Sparks” would allow users to include flows of material about issues of public concern. Hangouts were positioned in the initial press release as the creation of a digital public sidewalk or pub. These online video chats were explicitly described as a replacement for instant messaging and phone-based tools. A Foursquare upgrade was posed in the location features of the circles, automated photo-uploading, and messaging services. This new network would replace four previous offerings and buttress the content following through the Google system by matching this with e-mail. As a response to a potential concern about privacy Google overprovided, this is not a social network that is merely a more private version of Facebook; it was an entire social networking productivity suite with highly granular personal controls. Google+ should have been a sure thing. Privacy problems with Facebook were posed as an existential threat to the service. In September 2013, Victoria Woollaston, writing in the tabloid Daily Mail, reported on the new phenomena of “virtual identity suicide.”16 According to the research marshalled for the article, a wave of users were ending their Facebook accounts with concerns about privacy a top issue for nearly half of users. This was just one of many stories that would attribute lost users at Facebook to decreased privacy. In 2012 Katie Rogers wrote for The Guardian that it was time for Facebook to come clean with users about the lack of privacy on the site.17 Two years earlier, technology journalist Dan Tynan reported on a number of glitches in the platform that compromised user privacy, a risk for the future of the platform.18 Going back further, leading social media researcher danah boyd decried “Facebook’s Privacy Trainwreck.”19 The newsfeed and similar new developments at Facebook in 2008 were exposing and invading the lives of users bringing the network to something of a privacy crisis. Other examples can go all the way back to the genesis of Facebook, the reign of Myspace, and the time Friendster. In 2004, Andrew Orlowski, writing for the IT blog The Register, warned of the dangers of the new social network fad for user privacy, especially the clones of Friendster: Plaxo, Ryze, and Orkut.20 These are just a few of many stories in this genre and they make an important point: early social networks were poorly engineered. The simple news story of the social network industry is the immanent collapse of power players due to lost privacy. Surely this story will recur every few months for the foreseeable future as networks are constantly changing. Given the staying power of this challenge, the failure of Google+ to launch must come as something of a surprise. People

Introduction

9

claim to like privacy, wouldn’t stand to reason they want more of it? Just as CocaCola mistook that the perception of Coca-Cola as an idea was more important than the results of flavor analysis, Google did a poor job of conceptualizing what privacy meant for the average user. Google made similar missteps in their framing of the need for Google+. Not only were the circles precise, they assumed that the practice of social transmission was mapped onto the particular relational needs expressed by the users, and that these needs overwhelmed other needs such as simplicity of use. Privacy was one of many competing needs, not the single most important. Google took their metaphor very seriously. Not only did they deploy circles as the way they described their network, they designed the product to place users in circles. The problems with the Google+ product itself can clarify how we understand all social networks, thus we detour into interpersonal communication. First, communication behaviors are not precise. Meaning is unstable and shifting, especially in such a highly contextual field. The engineering problem solution framework typically redefines a problem for the purposes of finding possible solutions, a strategy that depends on fixity.21 A critical aspect of redefinition is the move to isolate and stabilize the variables in the case study. If the variables are not isolated or stabilized, the problem solution framework will not produce the desired stable alternatives matrix. Second, the motives for making choices on social networks are complex and varied. Social psychologists Ashwini Nadkarni and Stefan G. Hofmann divided use motivations into motives for belonging and self-presentation.22 Belonging was internally focused. Self-presentation in their research was positioned at the intersection of numerous dialectically oppositional social factors, including neuroticism and shyness. This offers the beginning of an explanation of what media researcher Susan Barnes described as the “privacy paradox”: users report that the desire increased privacy; however, when presented with opportunities to increase privacy, users elect not to.23 Research in Communication Privacy Management Theory, as developed by Sandra Petronio, positions privacy and self-disclosure as separate concepts, and that understanding the contextual rules that determine when, where, why, and how people disclose is a critical field of study.24 Disclosure behaviors are contradictory and situational, changing because of any number of judgments and negotiations in everyday life. Third, like so many engineering-driven efforts at Google the final product was an unworkable moonshot that grew awry from a reasonable kernel.25 One insider account noted that the original project behind Google+ was

10

Selling Social Media

not a social network but a homepage.26 This is not a unique product idea— the return of the halcyon days of the homepage inspires many companies.27 Instead of the story told in the press release, the story of Google+ is one of a product that grew to counter the threat of Facebook without an underlying social motive for adoption. Privacy as the core idea of a social network with a clean interface should have been an easy sell. Instead it is the new Coke of the social network era. Google became caught up in the old stories of the industry: the idea of the coming privacy cascade and the simplistic user. What Google missed was that Facebook was vulnerable on mobile and their ad experience was deeply flawed—instead they took a perennially accurate insight about the negotiation of private boundaries and used it to justify sending a poorly executed product.28

Why do users participate? Social networks that primarily serve to connect friends and family are affinity networks. The most popular of these in the United States is Facebook. An important theory for explaining the use of social media is the expansion of what Ana Levordashka and Sonja Utz termed “ambient awareness” to describe the ongoing collection of bits of information that may appear to be noise into a coherent, satisfying, relational whole.29 Synthetic awareness included members of an individual’s they had not met and further that this awareness was not influenced by time using a social network or network size. The new layer of interaction interposes evaluations of relationships from third parties. This contours the understanding of the positive features of social networks; even random bits assemble into a meaningful gestalt of a friend group. Ambient awareness for Paul Leonardi and Samantha Meyer produces a powerful “social lubricant” that makes social networks go.30 These findings build on the insights from Joseph Walther’s hyper-personal model, which supposes that computermediated communication, while less rich and natural than face-to-face, may be more enjoyable.31 Despite the temptation to attach these theories to new technologies, we should remember that people made family trees, wrote post cards, distributed holiday letters, and imagined their distant relations long before the development of computers. Affinity networks often sell themselves through products like Facebook’s Memories, recounting important moments in the user’s life or anniversaries of friend connections on the network.

Introduction

11

The point of bringing in a wide scale of relationship research is to note that people enjoy ambient awareness and are seemingly eager to negotiate boundaries and consider the lives of other people. Surely there are times when the risks of boundary violation or the revelation of impertinent information are too great. Sadistic trolls might prey on average users. Everyday disclosures, boundary errors, and mistakes could be compounded by accidental transmission. Yet, you gain so much by interacting with the online public sphere. The research cited so far suggests that there are powerful pro-social and relational motives that would explain why people would enjoy a platform like Facebook. It sells itself. Social media use enables other social activity and enhances the perception of social support. Surely there are other models that emphasize the uses and gratifications inherent in social media use that could offer alternative explanations. These explanations do not contradict the one provided here that ambient awareness and increased social support are pleasant; even further the sorts of failures in the system make it possible, if not likely, that imperfect systems could be more enjoyable than systems that are closer to perfection. In the context of other modes of network organization there are similar answers. The public sphere is real: people want to be political online. Twitter in particular is sold as a public sidewalk, valorizing the idea of democratic contestation. Users take to their social networking applications to persuade each other to vote for particular candidates. This is, of course, not traditional politics. Some have described it as slacktivism, much akin to Pepsi’s ill-fated block grants.32 For a time, Pepsi operated under the assumption that their advertising budget could be moved into charitable giving which might produce a similar effect. This was not the case. Research on social media and electoral activity is mixed, with users strongly engaged being more likely to vote, but with the independent variable not necessarily controlling voting behavior.33 Users taking token actions through social media tend to be those who take more actions at a later time. Beyond that, social unfriending patterns suggest that users take political conversations on social media very seriously.34 Finally, entertainment matters. This may seem to be a trivial point, but users enjoy browsing stacks of images of places where they would like to live. The public sphere is not just the system and formal governance; it is also the lifeworld, the complex map of everyday communication and culture that is life. Transmedia theorist Henry Jenkins’ contributions can be understood as insisting that these foundations for models of society not be ignored in an attempt to focus on institutional factors or detached political theory.35 Arguments for

12

Selling Social Media

fan culture are important because they require that we recover the richness of everyday life. It is in the everyday where people develop values and aesthetic preferences. In this respect selling social media is quite simple. People often enjoy the culture they participate in; social media is one of many vectors for producing and distributing culture. Studying what people like and use is an important window into their lives. Starting at this level can be useful for understanding the structures, cultures, norms, and aesthetics that are expressed in formal systems later on. Laughter means, just as tears do. Surely one might respond that all of this is subordinated to the mandates of the social network platforms financiers, that this is all mere support for neoliberal capitalism. Although there are important points to be made about the ownership structure of social networks and the regulation of these systems, subsuming these complex issues into a simplistic framework of someone being duped is not helpful. This book takes the macrostructure of social media companies quite seriously. Similarly, accounts that dismiss user agency as an attempts to become micro-celebrities dismiss grounded accounts of the use of platforms.36 Understanding the political theory that justifies and is justified by these technologies is important, but attempts to re-read the terrain of everyday life to fit into the critique is backward. This is not to say that there are not people who are trying to build their celebrity worlds on Instagram—we should read the structural conditions that make this rational. Building social movements is an embedded, worlded task. Telling people how to feel is rarely an effective political strategy. Presuming that they would agree with you if only they were not duped is a mistake. Users are quite aware that social networks are commercial enterprises, more on this in Chapter 4. Activists and critics should take count of the constellation of concepts in the lifeworld and use that as the launching point for critique. Each network to be studied has a different underlying affective logic and reason for edifying the users. Tracking these reasons for use is important as it begins to tell us something about how these users can be sold as a group to different companies. Further, the ways that these groups of users are characterized by the companies that manage social networks offer an insight into the management of major networks. Facebook positioned itself as the unifying whole, while the ill-fated Google+ positioned their technology as a solution to the problems with the world making light in the dark of Facebook. The first sales pitch is to the users. For networks to make the pitch stick they must have a coherent platform and reason for using their network. From there, the relationships and networks

Introduction

13

grow unfolding stories of monetization, securitization, and disruption, haunted by state power primarily in the idea of litigation.

A critical, cultural approach to the study of social media business communication Social networks serve multiple roles as telecommunication companies, prodigious capital stocks, name brands for ambient awareness, and sites for everyday communication. These new platforms for communication are insinuated into almost every industry and conversation. This is not because these platforms are new, but because what they facilitate is old. This book is concerned with the ways that these companies sell their products to the public, capital markets, other businesses, and governments. These products then tend to be described through key concepts, in this industry monetization, securitization, disruption, and litigation. On the lowest level, the transaction is imagined in a number of different ways that must produce some tangible result. Those small transactions then interplay with the big money of the stock market; after all, none of these companies are truly successful unless they have an IPO. Disruption presents the opportunity to imagine the relationships between companies and industries. Social network firms, among many types of technology firms, are embroiled in

Disruption

Litigation

Social Media Ecosystem Social Activity

Monetization

Figure I.1  The social media ecosystem. The key concepts play around actual social activity.

Securitization

14

Selling Social Media

ongoing litigation. As much as they might want to believe that technology has surpassed state power, the state is the dominant force in their world. Activities feed back into each other and into the representation of the others. This can be situated along with many other circuit models of cultural production that emphasize that cultural products are often co-productive among their effects and their causes. Users often shape their behaviors in accordance with their perceptions of the law—stories to this effect can be found in Chapter 4. Users looking to take on the role of Instagram model or YouTube star change their text production practices in accordance with their perceptions of monetization. This model of multiple intertwined feedback loops is similar to the circuit model of cultural production, shifted to consider the discourses of social media through the categories of that practice.37 In particular, this book tends to focus on the discourse of the businesses and circuits within that world, rather than the larger cultural circuits that drive the adoption of technology. Categorically, this book fits relatively easily into communication and media studies. This book is willing to take business discourses seriously, reading the practices of companies, self-representations, and business plans as a primary source. Taking these texts seriously requires a close reading of the design of systems with theoretical approaches that can provide meaningful leverage on those systems; this becomes something of an eclectic method. Rather than describing each reading strategy taken in a chapter at the outset, I will highlight a few of the larger frames that describe concepts throughout the book and introduce allied theoretical concepts in the chapters themselves. This first requires a defense of the broader framework that situates the analysis, the muchmaligned conceptual terrain of business. In his pivotal book describing fundamental analysis, The Intelligent Investor, Benjamin Graham describes an encounter with the anthropomorphic character of Mr. Market as occurring on a walk down the street.38 Everyday Mr. Market makes investors an offer for their shares. There is one major problem: Mr. Market may be a psychopath. He is often irrational, irascible, and given to fits of mania and fugue. The idea of Mr. Market is quite useful as the market is often given human qualities and the traits of human reason. An investor for Graham should ignore the whims of the market and focus on long-term gains derived from their own judgment about the fundamentals of a company, rather than the noise of price changes. The appropriate topic for business research from this perspective is not the price of a stock, but the underlying company. Figurations of the stock market have been important in the construction of the exchange for

Introduction

15

decades. Graham argues persuasively for a view of the markets that is concrete and connected to the world.39 Fundamental research is no dead letter; some of the most prominent traders follow this method, including Graham’s star pupil Warren Buffet.40 On the other hand, in A Random Walk Down Wall Street, Burton Malkiel offers investment advice and a summary of nearly every major approach to investing. In his introduction, Malkiel explicates the phrase “a random walk.”41 The term is not intended as a literal invitation to walk down the street past hotdog vendors, but an insult directed by academics against professional stock prognosticators, who are no more accurate than a blindfolded monkey throwing darts at a newspaper page of stock quotes. Instead of conducting an analysis of the actual business of a company, technical analysis supposes that all relevant information is already encoded in changing price signal of the stock market. Instead of ignoring Mr. Market, he is the only person you should talk to. Modeling the price itself would offer all necessary insight into the market. Technical analysis is interesting, but it loses the actual field of business for the end result of the sale of a stock. Reducing such a vivacious area of human effort to stock market gains is a loss for understanding society. There are a few particular concepts that will be repeated in this book. Price/ earnings ratio compares the current price of a company compared with the earnings of said company over the past year. Although this measure may come off as old-fashioned, it captures the relationship between net income and market perception. Understanding the earnings of a company requires accounting for earnings and costs. A company is a collection of different businesses with different earnings, risks, and costs. Share prices are treated as products of the market, not some master judgment of the fundamentals. Fundamental analysis should seem very familiar and straightforward because it is. It will become clear throughout this book that there are reasons why one might choose to describe business as a romantic, even mystical, practice. Often businesses are presented in this book with matrix models which produce a two-by-two table comparing key factors. The classic two-by-two matrix presented either as boxes in a table or as quadrants of a graph can clarify many key points. When relationships involve more than two discrete factors, systems of equations can help us analyze the relationships. By the late 1940s Nobel Prize–winning economist Paul Samuelson noted that new approximation methods allowed mathematicians to present solutions to differential equations without falling back on graphics or “the mind’s eye as a primitive

16

Selling Social Media

‘differential-analyser’ or ‘integrator’.”42 Despite the availability of other approaches to presenting information, the use of systems of linear equations continues as they are so easily understood. This is true for public communication, classroom discussion, and this book. Systems of hypothetical equations are a useful tool for understanding business. The other major genre of business books is the light hagiography. These take on the story of the heroic innovator or founder using their personality and identity as the driver of history. These books are interesting as they offer a glimpse into the psychic life of rich and powerful people, but they do a poor job of describing how some industries came to prominence. By producing these books businesses are well positioned to engage what John Thornton Caldwell has described as industry self-theorizing.43 Companies in the media industries tend to provide their own explanations of their operations and industrial conditions. Because of their inside line, these would seem to be superior to detached, critical academic accounts. Telling their own story allows these companies to deal with problems in their underlying businesses; they want to both provide the narrative framework that interprets the facts about the industry and produce social facts about media production on their own grounds. Business is an important field for understanding contemporary culture. Businesses are a translational point where theories of communication and technology collide in new and interesting combinations. Explaining the field of business as Boltanski and Thévenot argue, “What is problematic in business is that they encompass resources that are heterogeneous in terms of their mode of coherence and the underlying principle of justice on which that coherence is based.”44 In the everyday life of a business, questions and concerns are not reduced to simple profit and loss. Further, for Boltanski and Thévenot business discourse is heterogeneous to the point that it emphasizes the ways in which justification (argument) is possible: “In the business context, situations that are juxtaposed in time or place are justified according to a variety of principles thus business offers a good context for bring into light the various ways in which the different worlds make their objects available for use in justification.”45 Business is not a flat world of rationalization, but an active mode of world making. This makes business a strong site for argumentation theory, sociology, or, in the case of this book, media studies. Economic criticism is an emerging area of communication studies. Researchers in this field engage in this same sort of analysis of business practices utilizing the tools of rhetorical criticism, social movements, and media

Introduction

17

studies.46 What these scholars want us to take seriously is the idea that the basic commitments of economic life are political, grounded in discourses which make sense of flows of money and power, and that those flows are best understood through critical, cultural theory. Economic criticism shies away from strains of ideological critique that suppose that groups of people might be self-organizing, that ideology is simple, or that economic reality can be easily reduced to an equation. Economic criticism is at its best when it explains how a particular frame for understanding business comes to be accepted. As a work of economic criticism, this book leverages rhetorical concepts to understand public address and visual metaphor. At times there will be a discussion of economic concepts and some theories developed by economists; however, these theories are not advanced in service of a view of the world as governed by economic behavior but rather to understand how these discourses interact with the story of business in this book. An example of this would be the use of the idea of a bubble—this is a common trope in discussions of economics. Publics generally accept that bubbles are a serious problem for society; resolving the debates between bubbles as rational, irrational, or invalid is beyond the scope of this book, although the cleavages between these theories can help us explain the world. Media industries theory tends to focus on a particular media industry and the discourses that sustain the subject industry. Methods in this field include readings of public disclosures; exemplary works in this area include prominent media industries researcher Amanda Lotz’s analysis of the transitions in postnetwork television.47 Embedded practices of labor and technology produce a particular kind of work life and creative output as demonstrated so effectively by Caldwell.48 Timothy Havens’ research on negotiation considers the ways that groups of media industries professionals consider each other.49 Transnational critical geographic approaches offer robust accounts of media industries in context. Media geographer Sierra Tinic’s research on the spatial politics of the Canadian media system is a strong example.50 As a work in media industry studies this book is closest to Amanda Lotz’s approach of cataloging public industry discourses and finding the key points around which they are organized. Finally, a number of terms familiar to those involved in qualitative research will be used to describe some important features of the world of social media. I will provide a short introduction to what these terms mean in the context of this work to avoid repetitive explanation or footnotes later. This book often returns to a vocabulary adopted from the work of Walter Benjamin, specifically the concept of the dream image and the ruin, as explicated

18

Selling Social Media

by Susan Buck Morss.51 Dream images are loaded with hope and possibility. To understand what the dream that organized the political space of a media system truly meant is to understand that moment. At the same time, plans often fail. There is a truth about those plans and looking for the ruins, the remains of the great plans can tell us a great deal about why those plans failed from any number of aesthetic, affective, and practical angles and why they were accepted in the first place. History written from this perspective emphasizes the political moments of possibility over the collection of mundane details, the possibilities of dialectical insight in the key organizing concepts of a media system.52 The great strength of Benjamin’s Arcades Project comes in the way that the aesthetic and phenomenological aspects of the experience of everyday life are described alongside physical processes and objects. Fashions, building materials, police practices, and literary references are collected together. Understanding cycles of idealized futures and their literal failures provides important insights into the affective constitution of the world of social media that complements the other models employed in this book. This is both a blessing and a curse: Benjamin can provide sparks of energy that connect ideas, yet his work is not well positioned to provide an organizational model. Perhaps Benjamin’s most famous character, the flâneur, would fit in with the aspects of this introduction that debate the ways one might walk down Wall Street: the flâneur mainly walked through the marketplace.53 Many of the most important ways that ideas are connected come in the form of dreams, the projections of what a design will mean for the future. In The Net Effect, Thomas Streeter argued that the history of the internet as it is now known is neither the product of individual genius inventors nor the product of state power alone.54 The truth lies somewhere between these poles—individual users experiment and produce everyday life and institutions provide infrastructures for that experimentation. This works against the propensity to write the history of the internet as a “political morality tale” where the development of the networks provides evidence of the superiority of romantic values.55 Romanticism (the key concept for Streeter, used in this book) and capitalism have a long history together, at times in opposition, at others complementary. In this book romanticism is useful as it describes the fantasy of the individual creative genius outside of culture or history. Finding the points where these different stories integrate and disintegrate is more important than prioritizing one over the other. Often this will take the form of arguing against the romantic fantasy, but understanding that this thread is woven so tightly into the tapestry that it is the fabric itself. Presenting the romantic individual as the

Introduction

19

driver of technological development has been an essential element of the story of the internet, as it is for social media. Melodrama appears a number of times in this book as well. Elizabeth Anker argued for the key role that melodrama plays in understanding political discourse in the United States where seeming contradictions in values, preferences, and policies are common.56 Anker’s melodramatic texts are primarily those of the War on Terror, but also forms of left melodrama that reduce systems to simplistic stories of heroes and villains. The greatest left melodrama identified by Anker comes in the form of The Communist Manifesto, where overthrowing the bourgeois offers limitless future freedom rather than the return to a harmonious past.57 Particularly important in the theory of melodrama is the position of freedom—the virtuous character in the story receives freedom as a prize, even if they must enact unfreedom to arrive at that position. The interface with romanticism and melodrama is apparent as “The norm of freedom that circulates in melodramatic political discourse is rooted in particularly liberal and Americanized interpretations of freedom as self-reliance, as unconstrained agency, and as unbound subjectivity.”58 Anker argues that melodrama promises unlimited freedom which is particularly appealing as publics so often perceive themselves to be powerless.59 The three stories that began this introduction are romantic and melodramatic. How else would Facebook be taken seriously as toppling dictators and inciting world democracy? The melodramas of social media depend on romantic players building their dream designs. Blending concepts would come to an observer organically and why business, a field devoted to decisions made on the basis of incomplete information at a largely arbitrary moment, is the starting point for this analysis. Boltanski and Thévenot use business as a key site for understanding argumentation theory as a whole as because it is deeply translational. Julie Cohen has put this succinctly: “In a networked information society, methodological eclecticism is not an indulgence; it is a necessity.”60

Social network literatures There is a developing well of research in social media. Like so many academic fields, the sure scope of the impact of social media and the relatively sparse population of researchers are a concern. To this point there has been little by way of a grand theory or even synthetic effort to understand the impact

20

Selling Social Media

of social media at different levels of organization. Many studies’ contributions are isolated by the fact that the researcher may be relatively isolated in their sub-field. By telling the story of the internal coherence of the discourse of the social network firm without turning to the external leverage of ideological critique, this book can work across levels, from the individual to the societal, with occasional stops at corporate self-understanding. This is a book about the social media industry. This is not a book about “the digital” or an attempt to integrate social media into an existing explanatory framework of journalistic media agency and ownership. There are a few works that come close to this book in approach and content area, these books inform this one, and they differ in some important regards. Christian Fuchs has offered a number of important insights into the political economy of social media. Fuchs’ Marxian perspective emphasizes ownership of social networks, and the evolution of the public sphere under conditions of capital accumulation.61 Social media tend to continue the neoliberal project of blurring boundaries and dedifferentiating spaces, enabling the expansion of capitalism into every aspect of daily life. Developing an alternative social media is critical, for Fuchs, as the rationalization and bureaucratization of social media continue along the trajectory of the culture industry, the potential for democratic activation and enlightenment become regressive. Fuchs proposes an alternative public service social media, free of the problems of self-organized efforts (exploitation of “free” labor), flush with capital from an external source. Fuchs’ Culture and Economy in an Age of Social Media offers a strong reading of the ways in which new social networks are implicated in the continued exploitation of labor, as well as expanding traditional Marxian theory to include the realities of new exploitation of time and space through social network technologies.62 Fuchs’ account is important for understanding one conception of how material is distributed. Where the account in this book differs is in the site for analysis, rather than focusing on the distribution of capital as the starting point, I contend that understanding the ways in which people are invested in the idea of the platform is essential, and that those investments explain the difficulty in developing public service social media. Robert Gehl argues that the only meaningful alternative to corporatized social media is a socialized social media.63 Reverse engineering is a critical idea in this conception of the economy of social media as the internet we have provides the foundations on which another network could be build. Gehl’s manifesto for a socialized social media calls for: equal capacity to receive and transmit,

Introduction

21

decentralized architecture, anti-archival norms, fluidic identities, and major legal reforms in security and intellectual property. Gehl’s inclusion of cultural, technical, and infrastructural factors is important. Critical to transformation for Gehl are the development of new capacities for communication, in both the technical apparatus and the framework for understanding the social benefits of networking. The price for activist appropriation of these systems is too high from this perspective; replacing the platforms is necessary for true transformation. At the same time, this leads to the same conclusion—how will users feel about abandoning the network positions of extreme economic value and ambient relational support of existing social networks to join darknets? Jose van Dijck’s approach to the study of the political economy of social media emphasizes the ways in which platforms “undergrid the construction of sociality and creativity.”64 Challenging the structure of corporate social media would require a rigorous attention to the ways in which platforms and discourses normalize certain expectations and patterns in the life of people using social media, or, as van Dijck would term, “connective media.”65 Opting out of social networking would not be a meaningful solution for most people; they are embedded in a web of social relations that need a careful pedagogy. Escape is not an option. The cost of disconnection is just that much higher than the chance that disconnection could overthrow capitalism. By focusing on the value of connections and networks The Culture of Connectivity brings the debate to the level of the actually existing social relations in everyday life, especially as they relate to the actual choices made by relatively disengaged folks textured to drive the idea home that users negotiate among options they are thrown into. This book joins the conversation on the political economy of social networks by pursuing a different angle, one that places the discourses of those networks and potentially associated bubble before traditional categories in the political economy of media.

What does it mean to sell social media? Social media is sold again and again. Selling social media to the individual user is relatively easy; people enjoy entertainment and the development of their ambient relational network. The analysis in this book concerns how the attention and passion of the public is sold to different audiences, including the public itself. The chapters of this book are organized to flow from the smallest level of analysis

22

Selling Social Media

as the monetized transaction through social networks as transnational business actors. Chapter 1 describes monetization. On the smallest level, social network business activities are discussed as forms of monetization. In different contexts monetization refers to a number of different ways of understanding advertising transactions. The central business of these companies is and will likely continue to be advertising. The interfaces between the different designs, monetization metaphors, and advertising methods require excavation. Chapter 1 of this book includes the ways in which monetization is described through metaphor, what these metaphors entail for understanding the social network industry, and how these metaphors describe and resell the advertising industry to itself and a skeptical public. This chapter discusses monetization at length, and the specific industry practices both traditional and new tied to different ideas of what monetization might mean. Chapter 2 concerns securitization or the translation of small monetization schemes into larger securitized frameworks. Monetization is micro—to make the big money social media companies need to go bigger, much bigger. Securitization describes the practice of producing immaterial fractional assets. Selling social media on the stock market is really a matter of selling the idea of the users of a social network and the propensity of those users to increase their engagement with that network in the future. Stock markets, as a logistical media technology, compress time. Metaphors taken from other fields of business analysis are liberated of their specificity and become the textures of a different work of art. Roadshows in particular become powerful aesthetic performances that tell the meta-story of a company and a media technology. Outside of those narrow confines, social networks are sold to individual investors through a host of public relations campaigns, stock tips, and screener results. Stock markets have a particular style and vernacular of authority. Advertising is a relatively small industry. Device sales are driven by social networks, but devices are largely provided by Google (a failed social network site [SNS] firm depending on how you theorize search) and Apple, a hardware and OS vendor that never really entered the space. As these networks move larger they craft stories of the ways that they will revolutionize other industries; these stories are branded Disruption—which is the topic of Chapter 3. Social networks are well positioned to be the most disruptive of all businesses. An analysis of the kinds of industries that social networks might morph into, and the ways in which disruption seems to constrain and enable this transition, will be critical.

Introduction

23

For many computational and communication industries the final backstop of value and long-term proposition for development is not so much the technology or the advertising itself, but the legal edifice protecting it. Patents are particularly important in this regard, as are the emerging transnational data sovereignty frameworks that will make or break social networks on a global level. Among the topics of daily news in tech are stories of law and litigation. This chapter considers Twitter’s willingness to sacrifice patents and poses a defense of one socalled troll. It should also be clear from the outset that the analysis in this chapter is not restricted to intellectual property law, but encompasses a number of forms of state power. By the time we reach this phase of the analysis, these are not new companies with new strategies, but traditional, highly refined businesses. The conclusion considers forward-looking questions: Is this entire book the description of the inside of a business bubble? Is there another Facebook coming? What does it mean if the answer is no?

1

Monetization or: The Romance of the Click

By developing a fundamentally new way for people to create, distribute and discover content, we have democratized content creation and distribution, enabling any voice to echo around the world instantly and unfiltered. Twitter S-1, October 20131 Among the ruins of the dot-com bubble were the dreams of banner advertisements paving the path toward a new life. A few inches at the top of the page were supposed to be incredibly valuable. The idea of a simple technology providing an income for millions of people is appealing; build it and they will come. Space on websites could be more tightly targeted, more interactive, and more direct than any advertisement that came before. New advertising products would seem to be much more valuable than their analog predecessors. Viewers can’t click a bus ad—it drives away, leaving a cloud of smoke. Internet advertisements don’t smell and won’t make you cough. Any sliver of space where an advertisement could appear was presented as an opportunity for monetization. This is no mere buzzword—“monetize” appears in legal documents, popular press articles, technical descriptions, and everyday life. Monetization has become the standin for a host of business processes, including advertising sales, lead generation, inventory management, and customer service, among many others. It is unclear exactly what monetization is and what it isn’t; we know that it is the thing that generates wealth. Wealth is good. Visions of infinite wealth inflate bubbles. Money is the root word of monetization. Writing the history of money is not a topic for a book chapter; several volumes would be inadequate. The review of the history of money and monetization literature in this chapter reveals an important emptiness. Instead of a smooth, linear trajectory from barter to the electronic market, the actual assemblage of facts seems to unfold in a contradictory and herky-jerky way. Unlike the smooth stories of monetary development repeated so easily in economic literature, the story is very complicated. Monetization is often defined as either the rapid expansion of the production of official money

26

Selling Social Media

or the expansion of money to ever-expanding realms of social life: these don’t improve clarity in understanding the use of the term in the world of social media. Money is tricky, it means but it doesn’t mean, it has the weight of soldier’s steel, but is as light as linen. From this poor anchor point, the chapter will unfold the meanings of monetization in the political economy of social media. Monetization appears as arbitrage, extraction, and alchemy. Metaphor makes the actual business distant, yet intelligible. Just as an affiliate link makes the idea of a referral less banal, the extraction of key of “influencers” makes the idea of advertising less boring. The unstable, amorphous, and shifting sands of monetization are the grounding point of the bubble world. Once declared found, or at least deferred, a monetization strategy adds texture to the entire scene of the business. Beyond the idea of what a business might be, dreams of monetization carry the logic of the romantic individual self as a central theme. It is not simply that they claim to secure value from people, their attention, or their clicks, but they must also theorize who those people are, and what it means to be a person with attention. Monetization is the defining concept of this era. This chapter covers quite a bit of territory. The ideas can be broken down into a few useful clusters: The story of monetization requires a discussion of money itself. More than a simple social construction or mere transaction moderator, money interacts in any number of curious ways with culture. Monetization introduces any number of slippages and surpluses that need to be accounted for in understanding social media. Monetization Metaphors. Each of the three primary metaphors for monetization—arbitrage, extraction, and alchemy—be presented at length with allied examples of how they are literalized in the media industries. The meaning of money itself shifts depending on the metaphor. Monetization schemes will be situated in the dominant language of the social media companies for selling advertisements, specifically in the idea of the social graph (Facebook) and the interest graph (Twitter) and what these different models of monetization, market segmentation analysis, advertising, and public relations say about the larger structure of the media industries. Pinterest will be considered as an outlier, as the network should be considered a prime property as per social media industry discourses, but is often ignored or even maligned.

●

●

●

●

Monetization

27

A brief history of monetization Money is tricky. In one sense it is incredibly simple; money is a transaction moderator that is more efficient than barter. This story is not untrue. Money is durable, easy to transport, and, if emblazoned with the markings of a strong state, authoritative. Money is more than an effective transaction moderator; it is a thing that is valuable in and of itself. Scrooge McDuck, Disney’s extension of the Donald Duck archetype for the Regan generation, loved to swim in gold. Scrooge’s pool of bullion, his money bin, is a central narrative device in many episodes as access to it is the highest priority. A giant box full of gold is the most valuable thing in the world, aside from his nephews and their friend Webby. Money is magical; it is a metal that flows. A surprising number of theories are willing to take barter story for granted as the basis of the authority of money. The barter story is persuasive for a number of theorists in politics, economics, sociology, and communication as it seems to provide an elegant description of a social process with a very small number of assumptions. If the role of money in society is simple in the context of the theory presented, the barter theory might be enough; if money plays any larger role a more complete accounting is called for. There are a few considerations in the history and theory of money that weigh heavily in this book. First, the historical trajectory from barter to Bitcoin is by no means linear or clear. Second, on a personal level, conceptions of money exceed the boundaries of mere transaction moderation. People love money; they hoard it. Third, theories that depend on the barter theory of money provide it with power beyond the mere extension of barter: the ostensible evil of money is taken as a powerful starting point in many social theories. Money is described as being more than a mere transaction moderator on the structural level; it is an agent of either salvation or destruction. The use of money and money-like instruments has waxed and waned over the course of history, with money taking different forms, and transforming different societies along the way.2 David Schaps argues that the earliest society to use coin money was Athenian Greece.3 Before this, payment standards existed, but came in the form of specified amounts of grain, metal, or other local materials.4 Accounts transacted in silver could be measured in barley, for example. Relationships between money types were difficult as the properties of different money like things were very different.5 This stands in contrast to historical theories that might deny that money transactions existed before coinage. Transaction forms other than pure barter preceded the existence of money proper. The technology

28

Selling Social Media

of money does not have a single origin and was likely invented autonomously in at least three places.6 Kublai Kahn transitioned his empire of the thirteenth century to purely paper money.7 The earliest forms of paper money in the United States were tobacco-backed notes in the nineteenth century, with many states allowing wildcat banks to issue their own currencies.8 Theories of money that begin with the United States miss almost the entire history of currency. A contemporary economy with money is an economy with serial numbers, standardization, and more easily transmitted pricing information—which is not to say that money drove the development of new market technologies. Electronic trading via telegraph came before the standardization of money.9 Instead of an even historical evolution of exchange relationships, the very thing that facilitates exchange is unstable and highly political. Without belaboring the point, it is fair to say that the story of barter quickly giving way to money is an occasionally useful counterfactual. In his account of the history of money and desire, What Money Wants, Noam Yuran argues that the history of money is a counterfactual shibboleth—tales of the rise of money are necessarily false, and their expression ties the teller to a community.10 Telling the story of the rise of money sets the parameters for a theory of the economy. Money is worthy of consideration in its own right, specifically the ways in which the desire for money shapes the ostensibly rational world of economics. Values and aesthetics are focused by money like a lens. Yuran’s central contention is that money is not a historical communication technology, but as desire itself. What does this mean for this analysis? The desire for money is detached from what it actually is. Monetization is the prospect of making more, more reality, more power. Yuran positions John Searle’s theory of money as social agreement as an alternative to this view.11 Much like the barter story, the social agreement story supposes that people came to accept one day that money was valuable. If money were to simply be a unit of exchange that exists as much as it socially agreed upon, more money would be produced, allocations of wealth would be overthrown, and the underlying agreement changed. Searle’s account of money as agreement would need to account for the processes by which the agreement is made and maintained; it is not enough to posit an explanation of how money works; a theory would need to account for the ways that money appears legitimate.12 After establishing that money is an agreement the turn to the quick historical narrative covers the rest of the history.13 Money is more than a mere effect of other desires: it is co-productive with desire. Fetishistic attachments to money would make

Monetization

29

little sense as it would merely be one of many possible transaction mediators.14 In overcoming many possible challenges, both practical and intersubjective, money proves that it has value as much as it can disavow challenges to its own authority. Yuran’s approach requires that theories of money that are affectively sophisticated be woven into theories of economic systems. There is no magical solution in this conception of the market, but a new insistence on affect from the lowest level up. After all, to say that all the social functions and positions of power related to money are tied to mere agreement loses the monotheism of money—there is no money but money, except all the other money. Consider a common accusation in right Libertarian political discourse of the United States: the Left will debase the nation’s money. The accusation is a response to plans to build social programs or infrastructures through government spending. It supposes that in order to finance programs, additional currency would need to be created and this currency would not be backed by gold. There are many problems with this argument. Few currencies have been backed by convertible gold. Some inflation can be healthy, while deflation is associated with depressions. Gold convertibility is an idea from the late nineteenth century. The period of time when private persons in the United States could demand payment in gold, keep bullion, with no alternative money, was very short. Events during this apparently auspicious era include numerous panics, recessions, and depressions. Yet for some, the end of the gold standard was a capital crime. It removed the stable referent from the value that made the world coherent. There are many factual problems with the debasement narrative, which may be an important part of how it continues to be persuasive. Joining the movement of people invested in the story would confirm accession to that ideological matrix. Campaigns against debasement retroactively legitimate a currency that was never legitimate in their framework to begin with. These alternate histories posit the past as stable and harmonious, a key reactionary fantasy.15 Everything was awesome: objects had clear and transcendental meanings, until these people and their words got in the way. It should be no surprise that the economic histories offered by gold bugs have particular pathologies—since everything was better in the fantasy space of the gold economy; the real problems with a rapid boom-bust cycles are ignored. Turning to the social scene of money, the presentation of money as a social force is complex. In The Social Meaning of Money, sociologist Viviana Zelizer emphasizes the point that most histories of money overplay stability. Zelizer argues that even important accounts like Simmel’s History of Money overstate

30

Selling Social Media

the stability of currency.16 Simmel’s “colorlessness”, a nineteenth-century theory of the colonization of the lifeworld, demonstrates the problem with the assumption of a happy, stable money in the nineteenth century.17 It is new money that causes problems, not the old money. Things became too stable, too commoditized when exposed to money for Simmel, an argument common across critical theory. Zelizer’s approach is important as the social meaning of money is independent of the function of the currency—money is not a neutral transaction mediator and it never was. Zelizer defined monetization as the increasing use of money.18 Zelizer’s money was transformative, strategically reversible, and unstable. The use of money brings social change. Although money may flatten some relationships, the idea that money is always already corrupting is conceptually too simple to deal with the strategic reversal of power relationships that transactional arraignments might produce. It is not always a loss or flattening when uncompensated labor is remunerated. Values constantly shift around money, and if the analysis in this chapter is persuasive, money is often defined by the idea of things that it purchases or prices, just as they are redefined by it. Zelizer’s history focuses on the late nineteenth century and the practice of earmarking, or delineating pools of money to be used for different purposes. Once in a pool, money would be appropriate only for certain tasks. Money from gambling would be dirty, while money from digging a ditch would be virtuous and clean. Expanding the use of money produced new social dynamics and possibilities; the story of rationalization or colorlessness, to use Simmel’s term, is not born out in the history of the nineteenth century.19 The attention to the actual affective dimension of the use of money that comes from Zelizer is something that this book aspires to and thus I try to avoid recourse to positions that assume the stability of money, the cross-cultural power of money, the preference for noncommercial values, or the automatic corruption that comes with monetization.20 Just as these conceptual errors drive poor theory in orthodox economics and business, they also lead to faulty media studies research. This is not to say that there are not times when money can be corrupting, but to assume this as axiomatic in cultural critique is too simple and too quick a move for a deep and foundational problem. This is one of the most important melodramatic assumptions in media studies. Disciplines turn to fables when the stakes are high. In other sociological work, money often appears in a relatively conventional vein. Monetization functions in this original context as a speech act, as money’s

Monetization

31

value is performatively produced.21 Anthony Giddens and Clifford Geertz both use monetization to refer to the process of rationalization.22 Marx posed monetization as one of the advanced phases of capitalism; money is alienation.23 Money in this sense distorts the relationships between the worker and their labor by providing world-making power that should have instead been derived from the distribution of material.24 John Durham Peters juxtaposed Lockean and Marxian conceptions of money as concepts of dissemination: Locke welcoming dissemination and Marx despising it.25 The limits on the economy that would be essential to the stability of a Lockean system, mainly concepts of propriety and stewardship, are mitigated by money as it does not spoil. The Marxist critique supposes a transparent theory of communication. For Peters, this calls called for a more serious consideration of the sources of power in communication as dissemination might be more productive than it at first appears.26 In Debt: The First 5,000 Years anthropologist David Graeber argues that the process of monetization is the redistribution of debt under different symbolic codes.27 Debt prefigures money. Money in this sense is not created by the government, but by a network of financial institutions (of many eras and types) ad hoc, and that this structure is underwritten by the need to finance the basic business of military operation, or, in Graeber’s terms, “tribute.”28 Crises for the modern state come in the seeming incapacity for monetization to expand membership in the middle class to the population as a whole, that the strategic reversibility of power relations noted by Zelizer would not be maintained. Monetization would expand, but money wouldn’t be well distributed. People like monetization schemes if they get a share. In much the same way, the story of the turn to hard money for Graeber fits with the psychoanalytic account of the retrocausal effect of the gold standard for Yuan; foundational metaphors help things make sense. Graeber’s idea that money is always inadequate, that it only stands in when a debt cannot be paid, is insightful as it speaks to the impossibility of exchange—something also true of language itself.29 Money isn’t just a convenient way to transact business, but a great place to store pent-up feelings. Money both flattens and acknowledges their facticity. The story of money could be even more complicated than we know. Something is denominated, transformed, cooked, split, acidulated, transferred, or somehow manipulated into another state. Even if we were to take money as a dynamic stabilizer for social systems, the social structure created by that force is very real—money shifts and changes, friends and enemies blend. The “sharing

32

Selling Social Media

economy” is perhaps the most perverse version of this idea; sharing can exist only if a cut is sent to San Francisco. Arjun Appadurai’s juxtaposition of the gift and consumer economies has become a doppelganger.30 Remaking the world through the disavowal of transactionality is romantic—the idea of money polluting otherwise pure relations is a comfortable idea. Yet all of the examples of sharing that have become so fashionable involve the exchange of money. Graber notes the importance of the theology of monetization through George Gilder’s 1981 bestseller Wealth and Poverty.31 Gilder’s theology of wealth posed that money was the extension of the creativity granted by God—this theory of money creation and double theology drove the relationship between the Evangelical right and supply-side economics. Who would doubt the will of God to make some people rich? Separating the theologies of the rich and the poor shows the affective power of money as a thing itself—the state of being of contemporary money can be found in divinity. The money of the poor, money from labor, is different from the money presented as the reward of investments for the rich—higher taxation rates for regular income and lower tax rates for dividend income are only a reflection of a pseudo-Calvinist doctrine of taxation for the preordained.32 Consider the leading alternative form of money: Bitcoin. The relative appeal of computationalism, the price of Bitcoin, and the Winklevoss Bitcoin exchangetraded fund (ETF) in particular, function as an index of paranoia.33 ETFs suppose that an investment manager could craft a portfolio that follows the public perception of a particular asset, industry, or quality. A gold ETF would include a variety of investments in companies that handle gold or gold-processing technologies. Mining equipment can easily be a better investment prospect than mining. If the fate of gold improves, the underlying assets should increase in value and thus shares of the ETF should increase in value; the opposite is also true. The block chain does not transcend the psyche of the investor. Mr. Market is more persistent than the most unyielding zombie. If Bitcoin is not money, it is something akin to a social network of money producers, with their own bubble world, which hinges on money. Bitcoin is a metaphor for the larger case of legitimation in the early twentyfirst century—value is more than allocated or managed; it is imagined. This is not the first time that value has come from the affective dimension of currency; this is in fact one of the clearest aspects of the history of money. Money means and feels. In the case of computational money, this deeply personal aspect of value creation is wrapped into the fantasy structure of capital itself. Legitimacy is

Monetization

33

performatively backstopped through computation. Instead of the coup de force of a state or government the raw gravitas of waste heat and wanton electrical consumption serve their purpose in providing the narrative of value for the money. Supercomputing clusters will drive the bubble in alt-currency. Even with payments in an alternative currency, the businesses that use this money and the contracts they make will still be party to law. Dreams of escape from the law and government fail at scale. Secrecy is for small organizations, more on this in Chapter 3. In this sense, the dream that Bitcoin could become money without money is not false because of the failure of the currency, but because of its success. What is subject to monetization becomes money. In everyday life, “monetization” can be something of a cynical term referring to the failed models that circulate so freely in the public sphere. “How are you going to monetize that?” would carry by the implication that the person you are conversing with believes your business to be flawed. Explaining a monetization plan would be a matter of providing a justification or an explanation, rather than just some additional details. In the act of asking for details it seems likely, if not probable, that an interlocutor is looking for more than a gloss on a business plan, but a metaphor as well. Confident expressions that future monetization is assured confirms that one knows they are among the monetized few. Rejecting a billion-dollar buyout from Google or Facebook is no act of hubris: it is an act of witness in the power of money. Financialization, the tendency for the economies of great powers to increasingly focus on financial products to the exclusion of basic research or commerce, hollows out the marrow of an exchange network just as it reaches peak value.34 Financing a car sale is more lucrative than selling or building the car. Monetization is seductive. A crude critique of the instrumental rationality of the machine or the market does little other than confirm bourgeois morality. Money is dirty, awful, wonderful, and everywhere.

Monetization as arbitrage Monetization often means arbitrage. One guru has gone as far as to name his entire concept after the linkage, “lead generation arbitrage.”35 For the uninitiated, “lead generation” is a sales term for a referral. Typically, leads that are cultivated (spoken to with regularly) are far more likely to convert (make a purchase) than customers browsing the internet organically or bluebirds. Making a sale takes

34

Selling Social Media

time and effort. Brick-and-mortal retailers commit to developing a relationship. Wasted time is wasted money. Online there is less of a risk of wasting time when selling consumer goods, but there is a real risk that nothing will happen. If you were to enter your information on a real estate agent’s website, you would get a call quickly. A small percentage of people browsing housing websites actually intend to make a transaction. Houses are interesting to look at. Leads are valuable. Web-based models make this waiting process cheaper. The underlying assumption made in arbitrage is that the identity of one quantity can be substituted for another. Simple arbitrage involves selling a single good on two markets. If one is buying and selling pigs, they could exploit price differences to buy and sell pigs on different markets to be delivered at a later date. You have the pigs in Detroit to sell on Tuesday; you take the best price available between New York and Chicago. Arbitrage is a pure price play. It is a classic business. Small changes in communication technology make these opportunities particularly attractive. Telegraph-based commodities arbitrage began in the 1850s between Cincinnati and New York.36 Some products tend to be particularly well suited for this type of transaction. Pork bellies, frozen orange juice concentrate, and oil are all relatively standard, durable, and easily tradable. Alissa Hamilton has detailed the ways in which orange juice production has been crafted to ensure a constant supply of goods; deoxygenating standardization offers the orange juice industry a unique measure of stability in product production that is not present in other markets.37 To be well suited for arbitrage a product would need to have a stable identity that can be transported. Web browser cookies and clicks are particularly good in this regard. Online products are made for trade. They are already similar and their transportation is as easy as pressing a button. Beyond simple spatial arbitrage, futures contracts allow arbitrage to occur across time. Buying beef in Chicago and selling in New York is no longer the most common form of arbitrage activity. Pork belly arbitrage ended because there simply was not enough hedging activity to keep the market running.38 Futures and options allow agricultural firms to manage risk and secure future cash flows. Insurance programs and other subsidies blunt the impact of price fluctuations on the market. Futures contracts can become objects for arbitrage in their own right if they are mispriced. Similarly, this idea of arbitrage includes short selling stocks. To sell short, one would need to rent stock to sell now and rebuy at a lower price. The original shares would be returned to the lender with rent. Naked shorting is

Monetization

35

this very practice, although without the benefit of having pre-arraigned to rent shares to sell and repurchase. One could easily attempt this practice and find that the owner of shares to repurchase charges an exorbitant price; this is called a short squeeze. A typical exchange in a forum would pose an arbitrage scheme where one would create a website with content and ads, join an advertising network, and route artificial traffic to secure payment from a major advertising network.39 The business plan: if the advertising revenue generated by the traffic is fifty dollars and the cost of the traffic is only twenty-five dollars, the person running the website makes twenty-five dollars. In this world the user “sends” traffic to a website. As long as the network recognizes that traffic, it counts. Artificial traffic is the ultimate arbitrage play: substituting fake clicks for real clicks. Clicks are clicks after all. At least, until the ad network detects the robots producing them. The arbitrage occurs on the side of the advertising network; the person using this system is claiming that a click is a click regardless of the source. Traffic sales companies can easily route large click numbers to websites and the creators expect to generate a substantial yield if the advertising network cannot accurately determine the kind of traffic hitting the website and seeing the ads. Often, sources of traffic for hire are not reputable.40 More legitimate sources of traffic include accidental clicks or even occasionally well-written headlines on pages intended for arbitrage. As of the writing of this book, a page intended for arbitrage will have between thirty and forty ads wrapped around little to no human created content. These products bask in the warm glow of pure traffic. Why do major players tolerate this? Ad networks are a low-margin business. Any transaction is a good transaction. Companies in the social space are layered with one backing up others. The initial arbitrage may use Google Ad Words to secure traffic to generate clicks via Taboola or Outbrain as the actual paying party. If the sponsored content link is slightly more valuable than the Ad Words click, the arbitrageur makes money. As long as an ad network attached to the next page will pay more for the click than the page prior, the click could be passed on for eternity. Or, at least until the user tires of viewing poorly designed pages and clicking advertisements. Then the last site with the user loses as they paid for the user to be brought to the page assuming they could sell that user to the next page for a larger sum of money, assuming there was even a user in the first place. This repeated selection process could be an effective strategy to sort false positives from a potential victim pool. Microsoft’s Cormac Herley has

36

Selling Social Media

described the idea that the biggest problem for scammers is the false positive.41 If someone can be passed between garbage pages, they might be a viable victim for a more vicious operation. Losses on individuals bouncing between initial arbitrage pages can be tolerated if the final payoff is large enough. Arbitrage also occurs between advertising networks. This could include placing advertisements of inferior quality, or even attack sites, through some other firms advertising network or other means devised after this book was written.42 Hackers affiliated with the Syrian Electronic Army have had success using third-party advertising inserts as a source of bots for their net.43 There are a number of different advertising networks that share basic sources of traffic; these networks often place ads from affiliates. In this sense, an advertising network is an advertising network is an advertising network. Anyone willing to pay to include their content on a page is a potential source of cash. Given that the categorical identity of the advertisement is assumed to be stable, anything that can be named an advertisement should seemingly qualify. On the other hand, the Yieldbot blog formulates arbitrage not as substituting user for user, but intent for intent.44 At the end of the day someone needs to be making a purchase to support the business ecosystem. The intent of a person reading a website is likely distinct from the intent of a person looking to purchase shoes. While Yieldbot’s approach is an improvement, it does little more than any established path for advertising communications, which is why as Yieldbot concludes, “the future of the web looks a lot like the past.” The future: affiliate link exchanges. According to MonetizePros the process has two steps: buy cheap clicks and max out ads.45 Pages designed in this tradition look like the classified advertisements of the 1990s. Small boxes litter the screen, with tiny writing, and garish colors. Sexy, disgusting, and otherwise provocative images are commonly served by the site designer’s third-party ad network. Social network firms know that these pseudo-news products damage the user experience and actively work to deemphasize them in the feed. Click page specialists attempt to design around their efforts to suppress them.46 Or, as another click page designer put it, “Cheap clicks + High Pageviews per Visitor + Lots of Ads = Arbitrage Profit.”47 Although these descriptions seem strange at first, they are ultimately not dissimilar from the attention arbitrage that underwrote the broadcast era. Television had an established business model depending on a combination of revenues from advertising, subscription payments, and product placement. The

Monetization

37

program provider is selling the audience, a concept much akin to the pricing of banner ads. The arbitrage idea, if applied to television, works through the metaphorical bond between the chance to access one audience and treat it as if it is another audience. An audience tuning in for a show is not necessarily the audience for the advertisement, although some of them could be. While convergence theory has rightly demonstrated the importance of televisuality to the internet, the relationship between the revenue structures of the industries is less than clear.48 The underlying relationship is also under unique stress. Advertising revenues on television are decreasing and the reliance of television systems on carriage fees is breaking the business. The great fear in the screen industry is that users might arbitrage the past for the future, disconnecting their cable and satellite systems so that they might watch Cheers from now until the end of time. Sam and Diane had the greatest romance. Affective products are tricky for arbitrage. In the literal sense, this is the distinction between a small farmer and a beanie baby boutique buyer. The 1998 Beanie Baby buyers’ guide armed purchasers with prospective future values for their plush novelties.49 Buyers were promised outlandish returns for storing beanie babies for a number of years. Antique toys become valuable because the objects were loved, not because of the idea of the future value of the novelty. Affective investment in the object often precedes affective investment in the price tag, although not always. Treating the beanie baby as a potential investment object changed the underlying affective conditions that drove people to love these toys in the first place. Demand for media products is inelastic; there is only so much money for entertainment, shoes, or propaganda. Clicks outstrip coins. The fantasy image of media economics hinges on the presence of an apparently stable normal state for an industry that has been seemingly upended by new technologies. Instability is the norm. There were never more than a few years without some upheaval in the television industries. Click-through rates for online advertisements are already known to be extremely low; the most effective advertisements on Facebook are those which feed on already generated sales leads.50 These leads are typically worth three times more than initial advertisements.51 Completing the conversion process is where the money really is. Monetization as arbitrage relies on the idea that there is value in some other industry that can simply be transferred into a business form like those in the new company. The metaphor becomes a simile, and the relationship strains under examination.

38

Selling Social Media

Arbitrage, program planning, and re-runs Network television traditionally sold advertising time during programs well in advance. Every spring during “upfronts” networks would put on a show to convince media buyers to purchase packages during top programs for the next spring.52 Billions of dollars changed hands. The underlying relationship is very similar to the arbitrage relationship described in the online advertising segment. An important idea from this media industry is retained in the sale of advertising today—that nobody knows what will be a hit. This idea informs key works in media industries theory. Richard Caves formalized the nobody knows principle in his grand theory of the creative industries. Caves derived his principle from empirical studies of the television programming and industry lore.53 It does not take a trove of hacked e-mails to conclude that studio executives are adapting to the market at best, and randomly guessing at worst.54 Researchers in media industries thrive when they are positioned to avoid demand modeling of the industry, focusing instead on the actual discourse and business practice of the media. Econometric work in demand modeling faces a second hurdle, even if demand was easily modeled; executives make decisions based on factors other than demand. The most important and award-winning television shows are not those that fit existing models, but those that play with and even break those models. All in the Family pushed on the conventions of the sitcom, Murphy Brown and The Simpsons changed the assumptions of what would be considered to be inoffensive content. Great television does not attempt to mine existing demand; it goes further to take the next step produce demand for a new product. Visionary leaders in television take risks that stay slightly ahead of the market. Backward-looking models are not well positioned to develop future hits. On the other side come the long-running staples. Chris Anderson described the phenomena of the “long tail,” the sum revenue generated by products not in the head of the distribution.55 Anderson pushed on the distinction between relative and absolute value. A combination of mid-tier products can accumulate the same value as the products at the very top. On-demand video services like Netflix and Hulu work on this principal stockpiling old television series to fill their menu while only producing a few new offerings. Scrubs has been a mainstay of Netflix, in the older television industry; stripped episodes (five days a week at the same time) of The Simpsons were a tent pole. Caves got at the heart of this problem with the ars longa principle—a new media product competes against

Monetization

39

all stored and reproducible media products, not merely those that are new. An important issue with the long tail is that it does not continue forever, eventually either the cost of storage and delivery for an information product will exceed any possible access revenue or demand will simply drop to zero.56 Which is not to say that there are not fascinating business opportunities in the down-market space. Down-market spaces and social media will be discussed at length in Chapter 3. Much of the basic content of any given social feed is boring or old. Cheng, Adamic, Kleinberg, and Leskovec have found that low-level news events tend to exhibit recurrent cascades; they reappear and recirculate on the feeds years after they took place.57 The death of Andy Griffith makes fairly regular rounds in the feed despite his death in 2006. Stories that tend to recirculate in this respect are those that are mildly affectively engaging and slow in their initial onset. Real news is a one-time deal, and secondary cascades tied to products like Facebook’s “Memories” would not have the same intensity of something like an election. Mid-level human interest news is the Scrubs of the social feed, interesting enough but not wildly engrossing. When interesting content does come along, it makes sense that Facebook distributes it widely and persistently. Unlike television products, social products tend to age a bit more rapidly. Everyday comments on news or the weather from a few years back are not interesting or useful; particularly interesting emotional moments can be recirculated repeatedly. What social network feeds have in their favor is sure volume. The nobody knows principle is becoming increasingly apparent in social media management as well. Some social media companies recklessly change their products without doing diligence to see that the newly formed affective equilibrium is positive. Others maintain their products in configurations that are self-destructive despite repeated warnings. Twitter attempting to make their feed pleasant in 2017 is too little, too late. A visionary leader for a social network firm would provide the basic substance that both users and advertisers want with a little more by way of features that smooth the underlying affective logic of the network. This is not how these networks tend to be managed. Much like the executives of television, social media executives engage in ham-handed adaptive decision making. Features are added and withdrawn. The whims of Mr. Market are taken as more important than the needs of the actual users. A list of these errors could take several pages; some of these were discussed in the introduction to this book such as Google+ missing the actual nature of privacy or Facebook overreaching with the use of images. One of

40

Selling Social Media

the most frequently told stories in this vein comes from the fall of Friendster. Before Facebook, Myspace, Twitter, and the rest, Friendster was the king of social networking. Users of Friendster created a number of fake accounts that were both playful and useful as they allowed greater network integration.58 The management of Friendster was less interested in this as it begged the question of the site as a place for friends or people with strong ties. They purged the fake accounts: angering users while simultaneously eroding the structure of their network. Friendster never recovered. Although large social network firms rarely make choices this dramatic with regard to network affiliation and structure, firms make many risky decisions that could easily be the turning point in their demise. Much like a well-run television network, it is possible, if not likely, that a firm in this industry will arrive at a steady state. It does not take a visionary economist to recognize that demand for advertising products is inelastic. The budgets for buying will not expand to meet the possible slots to be filled. Eventually the average spot price would fall toward zero, or entire classes of advertisements would have no value and others would retain their value. Steady-state media management is unthinkable in a world of monetization. Metaphysically, money is more. On the topic of artificial demand, when Facebook began to value their video advertising inventory, they considered that every second of viewing would matter to advertisers, and divided this by the number of engaged viewers.59 The quantity of waste viewing is mind boggling. Spare seconds that add up to a lifetime. Surely wasted viewing and fleeting impressions were worth something; counting that remainder is difficult. A spot in the feed is just like a spot during prime time: nobody knows exactly what you want to see.

Programmatic advertising and the hint of arbitrage Arbitrage is not simply a practice associated with nefarious black hat forums, junk mail styled pages, and Facebook; it is also big business. Safety is important in any industry, risk mitigation is the foundation of academic media industry studies, and arbitrage is one of the lowest risk models.60 This sort of opportunity is not lost on the advertising industry. Agencies established trading desks to arbitrage buying opportunities. If a brand client were promised social placements at a certain price and the firm could secure those placements or clicks at a lower cost,

Monetization

Advertiser

41 Programmatic Advertising Feedback Loops

Agency

Bypassing gatekeepers and middlepeople

Demand Side Platform

Ad Exchange

Supply Side Platform

Transaction Facilitation and Arbitrage Ad is deployed at this level

Publisher

Source of Attention Dashed–the user converts

Tracking provides key data for transaction facilitation

Figure 1.1  The flow of advertising exchange. Unless an advertiser reaches around intermediaries, the completion of their interaction with the public is seven steps away.

the firm might keep the residual, instead of money being paid to vendors. Why let money flow away? Veteran advertising reporter Mike Shields reported in Ad Week that adoption of the desks was slow as clients were skeptical of the sunk costs and the potential for the appearance of conflicts of interest.61 Research and development are expensive; an ad trading desk needs people and computing power. Building an ad network system is not cheap. This figured to be a great strategy, until the brands opted for greater control.62 At the Digiday Summit in January 2013, Kellogg, a major cereal producer, announced that they had begun working on custom campaigns with demandside platforms.63 Tony the Tiger could buy ads without agency help. Why can’t you? Many clients are reconsidering the role of desks and even building their own.64 Facebook also sees these arbitrage operations as parasitic with their basic premise, price opacity, being explicitly prohibited in the terms of use for the

42

Selling Social Media

Application Programming Interface (API).65 Facebook prefers to be transparent. Some established firms like, Ogilvy, have gone the other direction by increasing transparency. Clients are increasingly bold in leaving old relationships, as they already have robust internal creative divisions.66 Creativity is everywhere. There is no shortage of creative talent on the client side; after all they dreamed up this great business that has money to spend on advertising. There is no special sauce that only exists in one city, one office, or one agency. Within two years, Publicis had disbanded their centralized trading desk.67 Changing Vivaki would improve the client experience. If fees aren’t transparent, clients will stop paying them. A major figure in this industry has defended the practice with the idea that prices were “transparent but not disclosed.”68 One of the best-known trading desks insists that the arbitrage characterization is not accurate. CEO Brian Lesser argues that Xaxis never agreed to provide underlying bulk prices to customers and that complaints based on a lack of transparency are unfair.69 The idea of bulk pricing of online advertising begs the question of online advertising in the first place. If these technologies isolate the intent or demographic profile of individual users on a multiplicity of networked sites, why would the best possible placements be sold on a bulk basis? The firms should be targeting more precisely. In the most positive light, bulk priced buys from publishers would likely be plain display advertisements. There are only so many site sponsorships, and firms selling ad space may be willing to take a lower price to sell larger volumes of inventory upfront. Xaxis has thrived as the other trading operations have waned as they focused on inventory development, rather than momentary opportunity.70 At the same time, the magic is gone. The trading desks pulled back the curtain and revealed Oz, the man. As buyers would take an increased interest in controlling their ad purchasing programs, new business opportunities formed with the offer of greater control. An important concept for selling inventory is known as “waterfalling.”71 In the waterfall concept, the publisher sequentially offers inventory to possible preferred partners. At the same time, waterfalling causes an old problem to return: latency.72 Progressing from one potential buyer to the next takes time. Some particularly strong publishers might find this to be an ideal arraignment. If the best quality advertising space is sold to strong advertisers, everyone wins as the publisher quickly sells inventory to a reputable partner with reduced risk of arbitrage by intermediaries. For niche publishers or those down market, there may not be an advertising network that provides an optimal opportunity, or the prospect of higher return through an auction process that is more open. Header

Monetization

43

trading offers an opportunity for sites to compare a few simultaneous offers, often using a second price auction method.73 Opaque second price auctions tend to increase the total value by encouraging higher bids that would clear other bids as the Price Is Right strategy of bidding slightly higher than another bidder would be unavailable. Those involved in header bidding must carefully tune the benefits of opening up their inventory for bids to the damage to the user experience caused by latency—every bidder slows down the load of the site.74 If site load times drag enough, Google will downgrade the site for search rankings. Advertising firms run from the word “arbitrage.”75 Properly named, transaction facilitation is unromantic. High concept becomes opening price point. Keeping the dream alive takes work, complex public relations, and an ongoing commitment to the fantasy. Amazon debuted the delivery drone to continue the dream logic of Prime, not to introduce the robotic delivery droid. The success of third-party arbitrage firms would make the risk appear worthwhile.76 And there is a risk: building an arbitrage business requires Waterfall Model

Preferred Advertiser Second Advertiser Acceptable Advertiser

Unsold Inventory after waterfall, remnant

Figure 1.2 Waterfalling. In the waterfall method, each advertiser buys their preferred inventory.

44

Selling Social Media

Restricted Auction Among… Preferred Advertiser Second Advertiser Acceptable Advertiser

After the auction, unsold inventory (remnant) may be sold via advertising exchange, latency permitting Header Bidding Model

Figure 1.3  Header bidding. In the header bidding method, advertisers compete in limited access auctions, capturing some of the benefits of markets without the drawbacks.

substantial engineering labor to connect as efficiently as possible to both demand- and supply-side platforms. If a firm could routinely scour the major advertising networks for price differentials, arbitrage would be a profitable business. The response has increasingly been to turn away from transparent exchanges, as a third of ads will be on private marketplaces by the publication of this book.77 Good arbitrage opportunities are rare; the time of simple ad arbitrage is fleeting.78 This will become increasingly clear as new programmatic models that decompile the creative text are introduced—these models will produce new advertising on the demand side that reacts to the available supply.79 It would only stand to reason that firms will appear to intermediate new arbitrage models that resell the opportunity to sell the opportunity to deploy a customized ad experience. At the same time, of course this description of arbitrage is limited as it covers only display advertising. At the same time, the business models that end in an affiliate sale are quite similar, especially if those models depend on an affiliate link exchange. Further consolidation in the online advertising industry will also continue to close the space for third parties. The end of the Facebook

Monetization

45

advertising exchange, or FBX, is the case in point: Facebook can operate on both the supply and demand sides.80 Simple arbitrage opportunities exist organically for tiny windows, during infrastructure upgrades, and when mistakes are made. The appeal of internal arbitrage is that you might stabilize the time frame as you control both sides. Walled gardens where control is complete are the future. One final note, it is important to understand that much of the advertising sold through open markets is remnant—advertising that could not be sold by optimal channels. It is entirely possible that this surplus could be more trouble than it is worth if the technology necessary to sell the final advertisements increases the latency of the page too much for the publisher and advertisers may find their returns on remnant to be null. Arbitrage is persistent because it works, and, when it doesn’t work, the feeling of arbitrage provides an imprimatur of safety and success. Investors learn arbitrage through stories about simple commodities, especially those discussed in this section, orange juice and pork bellies. Everyday things become special sources of value; the familiar becomes magical. Margins decline with enhanced communication and information access. Prudence dictates that the lower prices will beat higher prices. Walmart wins for a reason. Just as the underlying truth of arbitrage being a simple calculation breaks the spell, the metaphor shifts.

Monetization as resource extraction A second common usage of monetization describes the extraction of value from audiences. It is no coincidence that searching for terms like “monetization” brings a mix of results for both oil and internet companies. SuperGlossary. com, the seemingly appropriate site for understanding new media marketing terminology, goes as far as defining monetization as extraction: “To extract income from a site. Adsense ads are an easy way to do this.”81 Microsoft uses the same term in advertising a seminar on social media—the audience extracts value from content.82 Microsoft is in the extraction business. The best market position can beat the best product. Monetization in this sense implies the relationship between well-known business processes and already existing legal regimes. Most notably, the use of monetization for patent systems relies on an invention, which for the most part are physical things. What is important in this respect is that the idea of extraction is not premised on the invention but on the preexistence of the value to be captured. If this seems vague, your intuition is right.

46

Selling Social Media

Extraction metaphors distance actually existing business process from the act of monetization itself. Extraction typically shifts from the active voice of creating value to the passive voice of finding it. Goldenfeeds, one of many common sites to use the metaphor, accomplishes monetization as extraction by finding patterns of information that would drive sales.83 Value is positioned as already existing, like oil or timber. In panning for golden nuggets, the social network is really just sifting through the river of communication waiting for the right sands. In the American cultural context, the idea of the harvest of oil or gold is akin to a morally righteous form of gambling. Consider the television program The Beverly Hillbillies—a stray bullet causes an oil geyser to erupt and enrich the family during a hunt for food. Oil extraction appears frequently as a path to great wealth with few complications. Money only causes funny problems. Abundance has a rich life in fantasy. New users are hard to find. Traffic in real human attention is quite expensive. If the new media business were so simple that vast riches were a banner advertisement away there would be turmoil. The arbitrage models described in the previous section are volume games with low margins. Extraction finds something valuable that is already present and sells it for the first time. Unthinkable is the Dutch disease or the resource curse, a theory that poses that a source of free value injected into an economy can cause distortions that damage the recipient.84 Inflows of money can dampen local industries, shift exchange rates, and mute expectations of participation in social development. Dutch disease is a difficult topic to broach as it is so contrary to the aestheticized vision of abundance as blessing. Consider the Norwegian Christmas butter shortage of 2011—popular audiences in the United States were incredulous that a country with such abundant fossil fuels would have a shortage of an agricultural product that they could simply purchase from Denmark.85 Protecting an economy from wealth makes little sense given the dynamics of money in this culture. Twitter’s slow destruction is evidence of the paradox of plenty; trolls are very heavy social network users, they drive posts and attention, but a cascade of trolls disintegrates a social network. Managing abundance is unthinkable, why regulate perfection? The vision of the infinite, harvestable resource appears as a cornucopia, and in the lingering trace of manifest destiny.86 It would be un-American to suppose that a land of plenty could be economically stagnant. Found money feels deserved. In crude extraction discourses the thing to be sucked out of the audience is understood to be money. The SuperGlossary definition was quite clear about

Monetization

47

this—the description moves straight to exchange, no conversation needed. This is about income. In more sophisticated discourses, the thing to be extracted is nebulously named value or attention. While not as crass, this view still depends on the idea that there is a great mass of money waiting to be collected like shells on a shore. In this sense, extraction is similar to, but distinct from, arbitrage. Arbitrage presumes that the businessperson is doing some kind of transformation. In extraction, the value is waiting in piles. Extraction keeps the affective life of the business moving forward. As the extraction strategy turns from simple claims about free money now toward more advanced demographic targeting and infinite segmentation, it looks less like conventional oil drilling and more like fracking. If we just break apart the social into enough pieces money will just come bubbling out, no business plan needed. Once again the specificity of the business plan is a real downer.

Maps, dates, and two-sided markets: Balancing extractive models If there is no user, there is no network, and absent a network, no value to extract. Balancing the business process by which the value is extracted with the engagement value of the product depends on the affective quality of the product and the means of exclusion that drive value in the first place. To get a sense of a two-sided market, we should consider the extractive monetization of a simple Facebook post. For a standard post that simply marks that a user is active, a cadence post, neither a corporate nor an individual user would pay a substantial sum of money. Standard posts that are intended to draw some engagement would still be priced at zero dollars for the standard user and now more than zero for the power user. In the final case, an important post for a regular user would once again be priced at zero, while a corporate user might be expected to pay a substantial quantity of money. Concretely, Facebook benefits strongly when a user posts that they are going to be a parent; this drives interest and engagement. When a company posts that they are having a sale, Facebook does not benefit and perhaps loses some value as the platform appears less intimate. As such, Facebook might choose to extract some value from the power user as they are now in a separate market class from the individual user. Much like in an arbitrage scheme, the unit of analysis is the individual post; in this case we have two entire separate pools of demand. In

Selling Social Media

48 Price

Standard Social Media Model: Two-Sided Markets

Advertiser

Average User

Users willing to pay

Figure 1.4  The two-sided market. If the underlying product is similar, such as the distribution of a post, we can see different potential buyers as two sides of a single market.

an extractive model, the revenue secured in the most profitable box must cover the costs of all non-revenue-generating boxes. Paul Krugman used this theory to explain the economic rationale for the closure of Google Reader—a large number of users at a net negative cannot be offset by a large number of users at a low margin.87 Some combination of cost control and revenue maximization will lead an extractive firm to find a sweet spot where the high-demand, high-price side of the market can subsidize the low-demand side. This is a conceptual graphic showing the linear system of two different demand curves—those of a corporate user and an individual user. The number of users willing to pay declines dramatically as price increases, the curve on the left would suggest that some users are willing to pay for services, but the market space is exceedingly small. Surely some aspiring celebrity will be willing to pay for the seed on the right of the distribution. The market space for corporate users is much larger. Assuming a static consumer or individual demand curve near the axis, larger the space between the curves, the more likely a freemium

Monetization

49

business model can succeed. If this assumption is broken by a consumer demand curve moving away from the axis, a subscription business model becomes viable and this is no longer a two-sided market as that term is used to describe social networks. As you can see in the first graph, if user demand does collapse, the network effects will likely collapse demand on the corporate side as well, which explains why most, if not all, social networking products aside from job and date finding are provided free of charge. For a subscription media business this is a very straightforward model. Consider a streaming service; in order to induce users to subscribe they must offer programming that is more appealing than rival services. This very appealing hook programming is then buffered with lower-quality, less expensive fare. A strong children’s program can be that hook, like Sesame Street for HBO Go. For a social network, the most appealing feature to draw new users is quality content and strong network effects. These are all too often not forthcoming. If a user has a desire for a thing or a connection, an extractive model is possible, although these are uncommon outside of a handful of specialty features and products. For non-advertiser users, there is no special version of Facebook or Twitter. There are special formulations for certain market classes of social networks—enter Tinder. People enjoy romantic partnership. Partners are hard to find, so people have devised technologies for finding them. Walkabouts, church basements, matchmakers, and now social apps connect possible romances. Demand is not really in question here. People are interested either in finding a partner or in the thrill of considering possibilities. Tinder can deliver a free app and then a paid version called Tinder Plus which provides superior service. Further performance can be purchased as a Tinder Boost with up to a tenfold increase in profile view performance during the boost period.88 Tinder can extract value from their users by manipulating the feed to drive interactions that their users seek. The exact balance point where the additional return will be enough for a high enough price is the key. Users of these services are typically sold through the promise of the platform and the particular technologies that drive it. EHarmony promises compatibility based on social research, while Match relies on raw volume and success.89 Dating is a hot market segment; people want to meet singles near them. On the other hand, purely locative products have struggled. Foursquare was an evolution from other social networks that hinged on the idea of co-location to drive value.90 The promise of Foursquare was that it might connect friends in real time and space; much like the story of the origin of Twitter the affective potential of meeting up is quite real. Communication researcher

Selling Social Media

50 Price

Dating Sites: Setting a Price Floor Price Floor Set by an Exclusive Service

Dating Site Power User Average Dating Site User

Services here likely have a very different character…

Users willing to pay

Figure 1.5  Dating services. Services in a particular niche may find that maximizing the total user base is less beneficial than a targeted, higher-priced product.

Lee Humphries described this process of converting ambient knowledge of connection into physical movement as molecularizaiton.91 A molecularized group of social atoms could then be steered to particular locations based on other factors like additional molecular groups of friends or deals offered at other locations. Regular flows of attention were to be produced through a social game of check-ins where the local check-in leader would be declared the mayor of a place. Mayors could then have some social standing in a place and through regular check-ins could become key nodes in different places. Unlike other networks, the idea of being near other people, especially people you do not already know, can be uncomfortable. Unlike the overwrought privacy crisis that Google+ attempted to mitigate, the idea of strangers tracking you in real time does raise important privacy concerns. The social benefits of mayorship were not particularly enticing—aside from novelty value the local leaderboard does little for ambient awareness of either the social moment or personal social network. A second concept could be more enticing: reviews of key local landmarks. Foursquare could draw attention and traffic from those looking to either place or read reviews. This second product is distinctly a classic

Monetization

51

advertising play. In any event, these local landmarks have very small advertising budgets. Unlike mass market arbitrage plays, these are very small, specific opportunities. The final extractive business model of Foursquare (and related product Swarm) is as a business-to-business data vendor, relying on their vast dataset of real locations and movement patterns. Access to this data would be sold as a subscription service. This is not unlike other API products like Yummly or Twitter Firehose access which offer different tiers of service at particular price levels. Foursquare can be used as the case study to understand the extraction of value from social datasets that are not easily arbitraged. As a business process a data brokerage is not particularly new or innovative. The biggest challenge for Foursquare has been the lack of excitement for the platform and the relative simplicity of integrating the product into other technologies. Locative technologies are a secondary feature that is best controlled by the user on a case-by-case basis. This poses a substantial challenge for Foursquare going forward as they have no real claim to value aside from a modest arbitrage model and a data brokerage with little or no ongoing claim for high levels of user engagement. Consider this chart of Foursquare’s value prospects for monetization. The biggest concern in this model is that the value to the client for participation is minimal and, in the case of negative customer feedback, it is

Locative

Affinity

Not Affinity

Not Locative

Affordance provided by Facebook’s Friends Nearby, Foursquare

Core affordance of Facebook, Snapchat, Instagram

Molecularization of strangers, key competition: Google Search, Dating Systems, Foursquare

Temporal or Creative Networks: Twitter, Pinterest, Reddit

Finding Foursquare's Quadrant

Figure 1.6  Finding Foursquare’s quadrant. There is no space in this market matrix where Foursquare is alone, and many where actors with stronger network effects provide superior service.

Selling Social Media

52 Y in italics

Failed Two-Sided Model: User Interest and Value Proposition Inverse

Potential Ad Value

User Interest This intercept may not cover overhead Probability of Conversion

Figure 1.7  Negative interest to value. If the value proposition (selling change in consumer behavior or conversion) is inversely related to user satisfaction, the model may not be viable.

entirely possible that the arbitrage model would suggest that one might want to avoid engagement with customers on this platform. For Foursquare, the most valuable users would be those who are not predictable and use the software regularly; these are customers who are then the subject of natural experiments in molecularization. Value in this market comes from the down-market segment exclusively. Heavy, loyal users of Starbucks are not apt to change their behavior or preferences. This is a challenge for developing value for this firm as their best features are transplantable to other platforms and their upmarket space is inhabited by users who are not valuable for the platform. The curve for user interest versus value cannot be negative. This is why Foursquare transitioned to an API backbone role: although upside of the market did not form, they could sell user data and capacity as an entirely separate product class.92 The extractive model in Tinder is straightforward and successful, the model in Foursquare less so. Both depend on down-market users to provide the basic feed stock of social interaction. Tinder extracts value from high-demand power

Monetization

53

users; Foursquare extracts value by building products based on users who may not be extractable at all. Why is Foursquare in this category? There are a number of reasons. Despite a basic arbitrage model for selling advertising, Foursquare had neither a compelling story of vast future value nor a unique lock on this arbitrage product. What Foursquare has is the map and in the later passive check-in versions of the product is a last-ditch attempt to sell a dataset. Two-sided market theory offers a way of reading Foursquare as the opposite of other extractive firms that focus upmarket. There is also an issue of life cycle here; Foursquare is among the older products. If Dodgeball is considered to be a proto-form of Foursquare, it predates Facebook. The promise of alchemy is for companies far earlier in the lifecycle. Firms that tend to provide business services or secure payments from the users themselves are extractive; they have a different discourse and profile than those that arbitrage with the mass media market or alchemic unicorns. The best conclusion for Foursquare is that they never presented a two-sided market model; instead, they were in a dual-product market: a low-yield user-level game and a high-yield business-to-business service. Over time, extractive models in social media can become confusing for users as they lose track of the actual business process of extraction. Two-sided markets can be tricky. Instead of correctly perceiving that they are chum for sharks, they believe that their attention is valuable in itself—alchemy.

Lead into gold: Monetization as alchemy The final common formulation of monetization is alchemy, the magical process where useful, dangerous, dense lead is transformed into less useful, less dangerous, ductile gold. Mystery swirls around the alchemist. Media scholar Mimi Ito, in the context of a published discussion with Henry Jenkins and danah boyd, responded to concerns about the ascent of commercial culture in social media with the prospect that participation in labor startups like UberX could be evidence of a more fundamental transformation in the economy, “We’re seeing a complex alchemy of people participating in more transactional versus more community and values-driven ways.”93 Very real concerns about ownership, equity, and participation can be bracketed by the prospect of system changing force. John Lucker, writing in Information Week, describes alchemy as “companies buy, sell, or trade data for mutual benefit.”94 Isn’t that synergy? The business process of monetization would involve the exchange of the information related

54

Selling Social Media

to the formation of possible products. The strength of alchemy is that someone else is doing the business. A blogger described alchemy-based monetization as finding something to monetize and then doing that.95 One link to an arbitrage ad page combined the name of a popular media design professor with buzzwords including “alchemy” to drive traffic. It is most depressing that the alchemy metaphor finds additional credence not on the cluttered pages of a hastily made website, but through the venerable pink pages of the Financial Times. The Alchemy section of the Financial Times webpage was no accident: with the figure of the chemist standing abreast of a background of currency denominations used as arcane symbols and a splash of money green.96 As pink liquid was poured into a new Erlenmeyer flask labeled alpha it becomes gold. Alpha, for the uninitiated, is the glyph for return above reference performance on the stock market. The topic of this page is not social media monetization, but alternative investing writ large. Perhaps the board could have been retitled “Magic Today.” Monetize the monetization. A favorite example company for the alchemy set is Zynga.97 In casino gambling, high rollers who bet thousands of dollars (or more) are known as whales.98 Whales are hard to find. There are only so many rich people who enjoy losing a fortune. Build more casinos; each will have fewer whales. The same is true of virtual goods—there are only so many people who want to spend a large amount of money on badges and in-game playables.99 It is a matter of magical thinking that drives publics to believe that there are either wealthy locals or eager tourists to support their casinos. Zynga, the leader in this market segment, calculates their relative success using a custom metric called ABPU, meaning average bookings per unique: this metric divides total booking revenue by the number of days in the billing period by the number of average daily unique users.100 In very literal terms this divides their income (mostly virtual goods) by the number of people playing per day. This metric has a substantial drawback, as the total number of users plummets the whales continuing to spend can keep the number high or even grow it. Facebook’s early experience with virtual goods is telling; in their first quarter of processing transactions they earned just over one billion dollars from under 2 percent of users.101 This was not sustainable. This is not to say that Zynga is involved in gambling, but that the underlying market for the alchemy-based market faces different challenges than the extractive two-sided balance. A well-developed customer buying virtual goods is an extremely high-margin revenue source. Virtual goods have almost no cost to produce aside from some coding and graphic design. Structural costs, such

Monetization

55

as securing users and the overhead of building a social network based game, are persistent. Those users get exhausted. Magically, the users pay directly and repeatedly. In Lucker’s example, the transaction context shifts from the murky world of ad networks and front-running micro-transactions, to the clean, clear world of consumer purchases. Historically, “alchemy” and “chemistry” were not interchangeable terms; “alchemy” was better than “chemistry.”102 The idea of alchemy as transformation and more specifically as a source of energy can be traced to the Victorian interpretation of Ancient Greece. The figure of alchemy as inherited from that period was an inspiration for those given credit for the refinement of chemistry.103 Phillipe and Newman saw the revival of the idea of alchemy as chemistry as a form of Romanticism.104 Romantic interpretations of spiritual alchemy would provide for seemingly unlimited life, energy, and persuasive force. Alchemy would make you a great public speaker. As an ontological form, alchemy would allow the conversion of one substance into another—giving publics increasingly jolted by the rise of scientism a way of understanding themselves to be the real, spiritual, and substantive. Given the context of Romanticism the idea of alchemy as fraud would not challenge the context—alchemy is seductive because it supposes that some part of your body—be that your physical self or your idealized golden Facebook tongue—is worth something.105 It wasn’t that the Victorians were looking for the secret formula to manufacture valuable metal— they were looking for a way to remake their world as a dream. Alchemy calls for simplistic direct transaction business models combined with a romantic aesthetic as magic. This differs from arbitrage and extraction in both aesthetic sense and business practice. Just as extraction discourses decline to include the resource curse, the idea that there might be too few transactions is bracketed as well. This is not a cognitive error or positivity bias, but an underlying feature of an economic world. Pure monetization, effervescent more, the core concept of money comes to fruition in the alchemic metaphor.

Extraction, arbitrage, and alchemy in the mass market Facebook uses each metaphor in different ways. The roadshow video used extraction. Clients can access new levels of data from the social graph. Facebook for a time subverted this value through throttling how many users could be reached via free status through a program called EdgeRank. Pruning the newsfeed was

56

Selling Social Media

intended to improve the experience, bringing the user content they would really enjoy. EdgeRank and its descendants are discussed in a number of places in this book; it is fair to say that Facebook would prefer to be in charge of extracting and refining value from their user network—not their clients or, worse, trolls. Facebook’s curious advice for advertisers to develop large followings on their platform should be understood in that context—Facebook understands that it develops value when it can control who advertisers get access to. Over the years, Facebook has been more willing to allow users to increase the volume of content flowing through their feed. This does not mean that advertisers have gotten back their once-lucrative direct access to their publics. The roadshow video’s deployment of more conventional marketing mix discourse and case studies captured the power of the arbitrage metaphor. When the CMO of Diageo proposed that targeted Facebook advertisements increased sales for Captain Morgan by 20 percent, Facebook made a clear argument—a well-targeted campaign on their social network has a similar conversion rate to that of a Super Bowl ad. Once combined with the power of an interface and a database system, the appeal should be clear: it wasn’t that Diageo had well positioned their brand but that there was something magic about this new kind of advertising—that they were able to get something more from advertising that would already be taking place. The hoodie is the magic cape of the twenty-first century. What Facebook lost in detail they gained in style. The introduction of this book opens with a reading of Facebook’s Magic Maps, the dark worlds that are filled with light by the virtue of Facebook alone. The fantasy of the alchemist is the same as that of the planner and the same of that of the website designer. Through the particular logics by which Facebook operates users have found that they can transform their images and lives through the careful editing; they can make something completely new. This is not the world of middle class anxiety that would suppose that Facebook is a dangerous world racked with social change, but a carefully created romantic dream space. Social media provide important emotional resources for their users. Facebook is not a distraction or a nuisance. If anything, social networks provide users with important sources of social support. danah boyd argues persuasively that teens use social networks to fill their basic social needs when they can’t access physical sites for socialization.106 Much like the story of the oversimplification of money by early twentieth-century media sociology, the flattening of the actual use of social media should be avoided. Activity in the continuation of distant relationships and kin-keeping is the replacement of dull

Monetization

57

passivity with activity. Facebook finds real emotional connections and somehow profits; sans a secondary plan this may be the most important form of alchemy of them all. Unlike other social network firms, Facebook is willing to allow their core product to develop out of sight of market demands. Twitter, on the other hand, was not so fortunate. To this point, the taxonomy of monetization schemes looks like this:

Monetization Scheme

Source of Value

Allied Industry

Arbitrage

Business Ad Buyers

Ad Sales

Extraction

Users Themselves

Subscription Media, Business Services

Alchemy

Future Markets

Any/All

Figure 1.8  Monetization matrix.

The following sections will discuss the idea of the graph, and the specific manifestations of the graph concept presented by Facebook and Twitter, followed by the great difficulty in understanding how Pinterest is positioned in this system of relationships.

The graphs In this section, the analysis of the social media industries turns toward the graphs, or the popular representations of data proposed by social network firms as key value propositions. These graph concepts came from sociology as methods for understanding the relationships between individuals, the key insight of the Google search engine; the Page Rank algorithm used the consideration of a network as the basis for the construction of all knowledge. As a form of metadata, network structures often defined as a source and target or as a matrix of edges offer a rich diagram for understanding relationships between people or units of knowledge. Media researcher Alexander Monea described Google’s Knowledge Graph product as a key iteration of this process where Google would

58

Selling Social Media

buttress their already deep underlying network of linkages with a network of all knowledge.107 It is in the graph that knowledge is situated in a structure of how different nodes relate to each other becoming progressively more computationally important at each juncture. The structure of the knowledge graph is a network, just as Facebook, Twitter, Foursquare, Pinterest, and many other products are networks. Of the major “graphs” the knowledge graph came after the social graph of Facebook, although the concept of using network analysis as a central analytical approach at Google began in the 1990s. This is not a book about search engines, but about social networks, thus my analysis of Google as anything except Google+ is relatively limited. The next sections will discuss monetization as it is described through the graph concepts of major social network firms, in this case Facebook and Twitter through their rival concepts of the social graph and the interest graph. It is also important to consider the firms and products not listed here, in this case Pinterest, Foursquare, Yik Yak, Snapchat, Instagram, and many others. It is not that these firms lack a grand concept for their metadata, but that they choose not to advertise such a concept. The pair of graph concepts that we have luckily provides a chance to juxtapose both social network operations and ways of thinking about publicity management.

Advertising, public relations, and social graph Between pictures of a delicious dinner and a joke about current events on a Facebook page, almost any advertisement can appear. Only the sure number of organizations willing to pay for placement in the feed limits the possibilities.108 Television commercials function in much the same way. The flow of a story was broken at reasonable points to insert commercials. Inserts into programs would need to be correctly tuned to resonate with the content in which they were situated. Conventional wisdom held that political attack ads were to be placed during newscasts and positive character stories during family situation comedy programs.109 Placing advertisements during Family Guy was difficult even with high ratings.110 Advertisers didn’t want their brands associated with the uncouth antics of Peter Griffin. Social advertising is similar, with some important differences. Persons purchasing advertisements utilize data collected by the social network to isolate the particular flows in which they would like to embed their content. In this sector the companies provide both the platform for making advertising transactions

Monetization

59

and the analytics products for those purchases. Novices often make the mistake of underspecifying parameters, casting too wide a net, leading to wasted clicks for a mayoral race a thousand miles away or to advertise their products to people who not only are NOT customers, but strongly opposed to their existence.111 The valence of an attachment is paramount. Someone committed to gun control would not be interested in a magnetic mount for keeping a loaded handgun on their refrigerator for rapid access. Twitter vertically distinguished itself from Facebook on the basis of the creation of this ongoing flow, which speaks to the power of this conception of the link between programmatic organization and engagement. Facebook has taken an active role in curating the newsfeed; this process was initially called EdgeRank.112 The purpose of this algorithm was to keep the main newsfeed as interesting as possible by curating the most relevant content in the feed and holding it in that position for a sustained period of time. Even if a user has hundreds or thousands of Facebook friends they often only see content from a handful of them, unless they take particular actions to see more. Ideally, the Facebook selected content will be the most affectively engaging. Stories about new babies often stick far longer than a picture of a recent lunch, and a recent lunch lasts longer than a simple text message about walking to a food truck. Food pictures are a low-risk communication that maintains the flow of content on the network, not an expression of narcissism. Think of everyday communication as the heartbeat of a social network. Curation allows Facebook to create a more compelling feed and thus to hold more user attention. Dropping posts that could be annoying or uninteresting is the stock and trade of all commercial media, save junk mail. Advertisers who spent a great deal of time cultivating Friendbases on the platform only to find that Facebook had limited the diffusion of messages along their network were not happy.113 Instead of being a transparent distribution mechanism, Facebook was a complex product with a particular preference for moving material. It isn’t just material from an obnoxious relative concerned with the latest conspiracy in Area 51 that is excluded; it is the flood of posts from a baseball team that would be as well. In order to secure placement additional payments are needed. Social networks have quite a bit in common with traditional television advertising norms. Further, they rely on the same pricing structure for advertising products, the cost-per-click model, just as Google and the rest of the online world. Sponsorship is a common mode of television and web advertising with some sites replacing their background image with that created by an advertiser.

60

Selling Social Media

Instead of interrupting flow this method of placement rests in the background. List posts (known as listicles) on BuzzFeed take product placement to the next level through the creation of unique, original content designed around the product placement. Through participatory advertising, users are not expected to be persuaded by an actor eating a burger from some particular chain, but to engage in an entirely branded experience. This would mean submitting a selfie chomping a burger for a chance at meeting the star in the picture. By involving the users’ desire to be involved in the publicity process, firms make the turn from advertising to public relations. Distinguishing between advertising and public relations can be tricky. There is a meaningful difference that is important to note in the social network environment—advertising refers to processes that are intended to inform and solicit desire; public relations to processes that manage existing desires. This distinction is not historical, but practical. The uses of social networks for advertising and public relations are different, and different networks have different affordances for each. High-concept branding sublimates desire, history, and aesthetics with an object in abstract terms.114 The purpose of advertising was not to inform as much as to create short circuits between the banal world of everyday things and the figurative world of the image. Advertising in its greatest traditional form sublimates desires and objects with the potential fulfillment of those desires. Most advertising on social networks is decidedly less sophisticated attempting to connect known products to well-mapped desires. This is not to say that more deeply intertextual projects are impossible, but that advertising sold in microunits is well suited for smaller ambitions. Public relations professionals manage problematic desires and impulses directed toward a structure of governance (or a firm) from an actually existing audience. Instead of incepting desires in an otherwise uninterested public, PR manages publics who are too interested. Edward Bernays supposed that the propaganda industry (proto-PR) could effectively manage and even correct the abhorrent desires of the public.115 Combining psychoanalysis with mass communication (the basic technology of Bernays’ propaganda industry) would offer resolution for a host of social ills. Advertising and public relations call on different ideas of the public, with two dramatically different visions: one public open and receptive to creating new meanings and possibilities, another on the brink of panic and prone to violence. If the angry public is the default, the idea of managing their rage becomes central. Public relations is a necessary aspect

Monetization

61

of a mass society for Bernays: “Propaganda will never die out. Intelligent men must realize that propaganda is the modern instrument by which they can fight for productive ends and help to bring order out of chaos.”116 By shifting the mass communication into the realm of the inevitable, Bernays worked along similar lines to radical democratic theory today. Just as decisions are inevitable in any society, the desires of large numbers of people will be. As long as there are a lot of people, there will be a need to coordinate their action. More on scale in the next chapter. The model of ideology proposed by Bernays supposes that the public will eventually become aware of the ways in which public relations professionals attempt to persuade them; they will become both better consumers and recirculators of propaganda, just as much as they are shaped by it. “If the public is better informed about the processes of its own life, it will be so much the more receptive to reasonable appeals to its own interests.”117 As the public becomes more in tune with older methods for public relations new ones are devised. Bernays in this sense also provides a response to the simplistic critique of ideology as well, as publics are presumed to be aware of the ways in which they are manipulated. Bernays was committed to a vision of the social psyche that required management without any sentimental attachment to a pre-formed public or any mode of self-organization. There is no structural model of a default public, just the network of relationships between people. The creation of anything resembling a public sphere requires careful affective modulation. Cultivating public argument is about more than creating a fair legal system: it requires people who know how to argue. Publics may form by attention alone, but it takes real work to make something that draws them in and convert that attention into potential action.118 When Facebook describes their value driver, they reference the social graph. The social graph is a relational model in two senses: understanding the relationships between people and how units of a network relate to each other. Between people means that Facebook emphasizes family and friend connections as important; content from these people about their lives is very likely to make into the feed. Close family members’ daily developments are more interesting than those of a nearly forgotten school friend. On the level of the network this implies that the organization of your click patterns and other factors might provide meaningful information about you that could be used as audience constructs for advertisers. The promise of Facebook is that the constructed audience will be small and pure. Social network firms make

62

Selling Social Media

an inferential leap in categorizing people who might have similar social characteristics for advertising placement. Categories need to be good enough to effectively target advertisements, but not so perfect that the categories collapse into singularities. Pure demographics are critical for an advertiser as they allow a relatively limited number of advertisements to be created with better specificity and quality; even with tighter targeting advertising copy needs to be proofread and high-quality art produced. Facebook takes this a step further, using the information about your social network to make inferences about you on the basis of information that you may not have shared. Political affiliation can be relatively easily ferreted out through proxy variables. If one supports the concealed carry of handguns, they are likely not progressive. The social graph allows Facebook to chase after the dream of unlimited segmentation through knowledge of affinity. The social graph is well suited for advertising as it might allow one to effectively guess the articulations that would be meaningful for the viewer. Someday they will know which of your loved ones will be the right one to sell you a bar of soap.

Twitter and the interest graph Twitter offers an interest graph that displaces the relational nature of the social graph with a view of the possible desires of the user. Analysis of Twitter behavior is not so much about understanding a closely tied network or family, but understanding a provisionally articulated public of strangers around hashtags and celebrity follows. Twitter relationships mean something different than Facebook relationships. On Twitter users elect whom they follow; while there are some controls for users to make tweets private or to lock an account, the overwhelming majority of the network is public. Symmetry is courteous, but not the norm. Celebrities often follow only a handful of other users, with sports personality Jay Bilas famously a follower of none.119 An exclusive follow list is better than a bouncer at a club—everyone gets to see the list on Twitter. They still can’t get in. Knowledge is key to envy. For all the claims that social media has a dialogic nature, even a cursory reading of the celebrity follow pattern reveals that of mass communication, not equal dialog. A thoughtful firm could attempt to manage publics through strategic communication efforts to tweet particular sorts of material, to seed publics with talking points and images, and to use powerful central nodes (celebrities) to integrate public attention around

Monetization

63

particular ideas. Users’ interest in engaging these central nodes is the proof of increased value. It is not the interest graph itself that is dispositive for the public relations argument but the use of lateral linking through the hashtag. Hashtags organize the public sphere around trending topics of emotional interest; instead of passively deriving the meaning of communications from a network, Twitter goes a step further and literalizes the connectivity of the post through the symbol #. These affective nodes organize activity and communication around particular ideas; the nodes themselves become valuable as condensation points. Twitter makes this position clear in their visual choices in the S-1 document.120 Facebook’s S-1 images were connections between people, of the network of families and friends being together. The images chosen by Twitter are those of crisis or panic being controlled. These are images for an authority looking for evidence that errant desire has been contained. The first image was a logo and the claim that Twitter is: “Public. Real Time. Conversational. Distributed.” The second image is a stream of tweets during Hurricane Sandy, advising that the National Guard has arrived in Hoboken, that the Red Cross is on the ground, and that Mayor Bloomberg assures that the water is safe to drink. Second, comes the idea of real-time news, with an image from the water landing of a US Airways flight on the Hudson River. There is no need to panic. Twitter can show you that everything is under control. Twitter did not introduce the idea of the crisis in their S-1. The use of mass communication systems for controlling panic is a decidedly old idea. Moments of levity at a potentially frightening moment underscore that Twitter is for managing a crowd in real time. The third image chosen fit with this theme as they are from public relations campaigns that are intended to make Mario Batali accessible to the public, to provide that touch of contact that is the hard kernel structuring so many para-social fantasies. Yes, Gavin Rossdale (a rockand-roll personality) and Mario Batali (celebrity chef) might discuss your use of garlic in a pasta sauce. It isn’t likely though. Finally, the idea of breaking news comes across with an image of Barack Obama’s landmark tweet, “Four More Years.”121 At this point, the document breaks into the regular flow of financials. Twitter relies on a small selection of products that promote accounts, tweets, or trends, with a pricing scheme that carefully accounts for the impact of paid and earned media. The paid/earned distinction refers to the idea that one pays only if a targeted user clicks or retweets a paid tweet. Further diffusion of that content after that point, like a friend retweeting a retweet, does not count toward the client’s bill. Earned media is that diffusion of information that occurs without

64

Selling Social Media

the direct placement of an item into the feed of a user. Without screen takeover advertisements, video pre-roll, or other advertising products, this is a rather narrow slate of possible sources of cash, as Twitter takes no money from affiliates. Twitter’s nascent affiliate program, the buy button, is now defunct.122 Promoting accounts, sponsoring hashtags, and placing tweets are the only ways that Twitter makes money. Overcoming this limitation requires some careful explanation of the potential for the business. In the front matter of the document Twitter posits three important theories about the nature of its network that tell the tale of a hopeful future: a theory of velocity, a theory of virtuous value production, and a history of the social network that ends, of course, with Twitter.123 Facebook was merely a stepping-stone in this story. In their theory of velocity, Twitter supposes that the unique quality of their product is not that it is shorter, or better, or more technically capable, but that it is faster: “Tweets drive a high velocity of information exchange that makes Twitter uniquely ‘live.’”124 Liveness is implicated by Twitter as participating in a new social ontology: “We aim to become an indispensable daily companion to live human experience.”125 Temporality undergoes a register shift in this theory of communicative experience—the difference between Twitter and other forms of communication is that the former is faster, and it can become so fast that it constitutes a flow of information that is a reality itself. This is much akin to the function of the filmstrip; the eye can capture just a handful of images per second; a rapid succession of images overwhelms the capacity of the eye to see them individually. Streams of images are assembled into an enfolding that simulates movement. Twitter thus fixes a limited number of communications into a meaningful strip, in this case a timeline that allows users to browse and to take in the experience of the present moment. Twitter takes on a cinematic imaginary for what it could be to experience the stream of news, conversation, publicity, and experience itself with the seamless representation of vision. As marked in the epigraph the goal of Twitter is no less than the victory of the echo over the voice. Echoes are distinct from reverberations—in an echo the attack of the sonic envelope is returned to the listener. Reverberation is that acoustic phenomena where the sound and its return merge together in a sympathetic form to create a standing wave, with increased energy and depth. Twitter aims to return your communicative attack so quickly that there may well be a retro-causal relationship. It is apropos that in some asymmetric conversations may exceed the capacity of Twitter’s mechanism to keep them in order.126 When Twitter is running at full steam, time warps.

Monetization

65

The goal of Twitter as a company is not to offer advertising but a virtual world that has become immersive through the potential of speed itself. Twitter thus, “Brings people together in shared experiences allowing them to discover and consume content and just as easily add their own voice in the moment.”127 It is speed that constructs this moment and that rapid succession of ideas and images are interpolated into a flow.128 The second theory in the S-1 is that of a virtuous circle of value.129 The virtuous circle comes from a disclaimer of a fundamental weakness in Twitter: they gain no direct payment from their partners. Value is created for Twitter through their basic slate of products, and these products depend on a vibrant ecosystem of content in constant recreation (inserting voices) and recirculation (echo). This is both Twitter’s greatest strength and greatest weakness: the quality of content facilitated by their partners fundamentally limits their capacity. If users were to stop writing such great, awful, and insightful tweets, there would be nothing left to sell. Platform partners’ reputations and uses of Twitter are in this version of events not a dependency by Twitter but a symbiotic process—Twitter provides the stage for the moment and partners provide the meaning. This is why Twitter takes so much pride in the inclusion of hashtags in advertising and the integration of tweet buttons—their value position exists only in as much as they can offer their particular synthesis of the moment to advertisers. This is much akin to Twitter claiming that it is “as seen on TV,” or that it registers in the legacy media and thus is proven relevant as new media. It is important to remember that Twitter differs from Facebook in this regard; Twitter is not selling a network of your relationships or a social graph, but an interest graph; connecting users and their preferred products is more important than connecting users to each other. The final novel theory posited in the S-1 is that of an evolutionary history of the social network. The history starts with browsers that give way to portals, search engines, and Facebook. The dimensions of this evolution are tied not to the kinds of information being created, but to increasing levels of connectivity. Twitter directly refers to Facebook at this point and makes the distinction between the openness of their network as juxtaposed to the closed nature of Facebook. The idea of openness and connection through this form is both larger and faster than that facilitated by Facebook. The discussion of Twitter as the next evolutionary step depends on the moment in time created by Twitter supplanting the slower form of time incumbent in the affinity network of Facebook. It is not enough for Twitter to simply sell advertisements or connect family and friends.

66

Selling Social Media

Twitter’s claim to value is that it produces a world. Twitter is pursuing a strategy of vertical differentiation, but that differentiation is not negotiated as a form of experience. Vertical differentiation assumes that one product is superior to another. If you presume that all social networks directly compete, Twitter and Facebook are rivals. If the experiences that they offer constitute the core of their value proposition, they are not competitors. Twitter is not a chair, or even the universe. Twitter is the now, the moment itself. In a game of Silicon Valley oneups-personship this is the ultimate strategy. Twitter faces challenges: user growth is slowing, the service is expensive to provide, will become more expensive in the future, and the model of monetization is as flimsy as ever. Twitter will succeed in as much as the public’s appetite and aesthetic appreciation for purchasing capital stock allows. The IPO is not so much a lottery play at this point as a sure thing; people want these stocks and they will surely buy them. Paradoxically, Twitter creates some of the very problems which public relations it would seem to solve. Twitter played up its role in stabilizing public opinion during Hurricane Sandy, yet it was Twitter itself that was used by hucksters to secure followers with stories of catastrophe during the storm.130 Discussed above in the context of false-starting and the Starbucks annual holiday cup controversy, Twitter is the perfect technology for producing meta stories about media. Powerful users may manage their own accounts and receive substantial rewards for inflaming, rather than calming, the public. President Trump’s use of Twitter during the 2016 election cycle is testimony to the ways that Twitter can become a broadcast medium that amplifies powerful voices and disables the processes that traditionally stabilized the public sphere. Twitter’s history of social media (showing Twitter as an evolution past Facebook) in the S-1 is correct in that their emphasis on the creation of an artificial moment in time really does produce something distinct from Facebook. The follow-driven model of Twitter amplifies the creation of a center for articulating the public mood. The creation of this nexus of opinions and publics is distinct from any other major social network. Horizontally differentiating Twitter and Facebook is relatively simple in this regard. Facebook is for kin-keeping; Twitter is for the moment. Facebook’s attempts to make a more searchable, live timeline would be an adaptive strategy that attempts to capture some of the magic of the moment; however, Facebook would be loath to lose their product differentiation from Twitter. The real value of Twitter is not that you might find a new customer or a contact (although this is possible), but that you can use it to potentially control

Monetization

67

a ready, waiting mob. In their most basic form these “graphs” are intended to enact an aesthetic of discovery; the interests of users and their social connections are a seemingly natural resource, a free input for a complex system. In reality, the networks that enable the creation of social moments or ambient awareness of affinity networks create their network effects as much as they find them. The social graph and the interest graph each present an important position on the metaphors of monetization. They shift between metaphors as they see fit. When one needs to justify the position of items in a feed, the social network is an arbitrage play. If Facebook needs to dispel bad press, the company is an agent of magic, connecting everyone against the backdrop of a cold and unfeeling universe. When queried for a deep value play, the appeal of Twitter’s dataset is the prospect of modeling the preferences of a population—the technique for this method of capital development: data mining. Mining is the base of most extraction.

The magical horse Unicorns are magical horses. According to De Quincy in a nineteenth-century magazine, they are the “antagonist of the lion.”131 In contemporary social media business, unicorns are the special companies that have found a market space and reached a billion-dollar valuation, the lion? Existential despair. Exhausted IPO money. Firms that join the most official version of the ranking, Forbes magazine’s Unicorn List are not always social networks, but also other social media like payment processors and transaction facilitation platforms—existing businesses with a new social twist. Social network unicorns sustain the idea that monetization can be alchemy. Pinterest has a plan. Yik Yak’s underlying affective matrix is less yielding for revenue generation. Users do what they do on the Yak because of their anonymity, much like issues in monetizing flow during risqué programming; advertising on Yik Yak could be difficult if the stream of content is perceived as vulgar or otherwise undesirable. Snapchat is morphing into a broadcaster of centralized media content through their “Discover” platform; the underlying evaporating image message system drives regular engagement which the legacy media might deploy for advertising. Users can create their story, or a central sort of collage profile, but they cannot broadcast it widely. The propensity to broadcast is the core of a potential monetization strategy for Snapchat. Arbitrage, disguised as magic. The Forbes Unicorn list has little impact on the actual profit or loss of these companies; it does impact venture capital support. It is another reminder

68

Selling Social Media

that the practice of business in social networks and companies that use social network like technologies such as Uber and Airbnb depend on theater. Agglomeration matters for immaterial industries as well as manufacturing. Detroit brought glass, engines, and electronics, together with transport access via rail, sea, and land. San Francisco agglomerates the attention of capital and coders deployed in the service of a particular feeling. Excluding these apps from discussion as social networks conceals an important point. Although these systems very likely meet the boyd and Ellison definition of social media, their primary purpose is not the persistence of affect, the cultivation of taste, or the abuse of faceless strangers.132 These are businesses that are interfacing social affordances and screen layouts with everyday business tasks. Strangely the firms with the most concrete business plans run toward the most magical and ethereal of metaphors. Why would a taxi company be worth three times the revenue of all taxi and limo service in the United States before costs are accounted for?133 Silicon Valley ingenuity? In the social network bubble it makes sense to maintain a list of magical horses. More on unicorns and the discourse of business in Chapter 3.

Pinteresting possibilities? Does Pinterest have a future? Is it valuable? As Pinterest rapidly gained popularity in the spring of 2012, these questions were front and center. Pinterest needs to “bring more boys” to the platform.134 Debating the role of a social network for women was a topic of interest in The New Yorker.135 These concerns are not historical. In a profile of Pinterest CEO Ben Silberman, the concern about the possible success of a platform intended for women was a concern years later; the idea that a product could be sustained merely by a stable business model and devoted audience is simply not enough.136 Benchmarking Pinterest versus Facebook and Twitter is common. After all, these are the landmarks for rapid growth and success in the industry. Pinterest has been considerably slower than these other firms at reaching lofty heights. This is not because of a difference in use; Pinterest has experienced incredible user growth.137 There must be some other reason why a stable network with rapid growth is not considered to be extremely valuable. Monetization has a deeply affective dimension. One of the first points of this chapter was to argue that money, rather than serving as a transaction moderator,

Monetization

69

is a source of desire in itself. Magic for Pinterest is of a slightly different stripe. Pinterest challenges the idea of either a magical source of value production through alchemy or an analog to high-concept advertising. Pinterest is everyday fun without the trolls of Twitter, the monitoring of Foursquare, or the waterfall of Facebook. Adaptive strategy against such a power player would be to incorporate more images into existing product and use larger images. To consider Pinterest a mere feature loses track of the primacy of the user experience—the interface of Pinterest feels different; it serves a different audience, and constitutes a trellis for the organization of social activity. The creation of content communities, featuring aspirational images and photographs of craft items, is profound. Compared to Facebook or Twitter, Pinterest has the purest demographics, with the most robust engagement. The successful business of Pinterest is not a move to flatten the lifeworld; if anything, the creative potentiality in the collage interface transcends the overdetermined logic of television, magazines, and various social feeds. The practice of gazing as consumerism flips to become a practice of looking to produce community.138 Sharing designs for baby carriers is a tangible way for communities to organize themselves just as they improve the ways in which they care for their children. Money is an index of the creative in this case, not of the loss of color, and collapse of the world. Market segmentation is an old practice. Categorizing audiences and possible persuasive appeals is as old as rhetoric itself. Segmentation analysis is not so much a technical practice as an art form. The struggle in segmentation is the difficulty of determining how small segments should be, and when the cost of engaging in unique creative activity for any particular segment might outweigh the benefits of reaching the segment in question. Although cat owners between the ages of 16 and 17 who ride motorized tricycles might be a possible segment, it may not be a profitable segment. As an operational vocabulary, market segmentation is important—it is the way to describe the fragmentation of the public for business purposes. Segment formation is political. Categories are intelligible only through the identities that precede them. As Harry Kobrak astutely noted in Advertising Age, “Market segmentation is a little bit like driving a car, in that everyone believes he [sic] is good at it.”139 Whether their segments make sense or function as anything more than demographic clumps is another matter. The promise of the social networks was that they might supplant this process of trial and error, or blind faith, with a regression toward ever-smaller segments—ideally segments of a single person. Micro-segments would allow advertising products to be so tightly positioned that politically tenuous segment

70

Selling Social Media

negotiations would become unnecessary. All media would eventually be intended for someone, rather than anyone.140 At the same time, the categories provided for analysis are themselves quite fuzzy. It can be quite easy to mistake the noise for the signal. Depth hermeneutics begin to lose coherence when they are pushed too far. One can listen so hard that they hear the twitch of the muscles in their neck. Social segments found using Facebook data are market segments. Somewhere in the ever-flowing collage is the truth of the market. The things that people look at might provide hints to the things they want. The discourse of monetization within Pinterest is quite extractive. The first major monetization plan for Pinterest users involved the use of affiliate links with redirects. When someone would click through a link and make a purchase (a conversion in industry speak) the pinner would be paid. Pinterest served as something of an index of possible affiliates. Pinterest has taken different positions on affiliate links over time, allowing them, then disallowing them, and at the time of this writing once again allowing them.141 The rationale presented by a Pinterest representative for the change was that Pinterest had always been interested in providing ways for individual users to make some money, but that affiliate links had been abused and thus were closed until the spam detection system could be improved. There is a careful balance to be maintained here—at the same time Pinterest needs to stimulate enough activity by major users to keep the platform energized but not so much that it becomes a clearing house for false transactions. Capturing extraneous affiliate activity through the buyable pin button effectively positions the sides of the market. Advertisers looking for mass contact would buy the pins that they want directly from Pinterest, while advertisers looking for organic leads that they could not effective identify with the existing metadata are compensated by the affiliate link. Pinterest internalized the arbitrage condition. To counter the charges that this has flattened out the social space of Pinterest, Silbermann, the CEO of Pinterest, went for the most aggressive argument in response: that Pinterest was never a social network in the first place. Silbermann’s nested theory of the social network supposes that users ignored the profile development aspect of Pinteresting, rendering Pinterest as a “catalog of ideas,” which differs from social feed–based products as Pinterest is “self-serving.”142 As such Pinterest is more like a search engine than a social network, but this seems to provide more rhetorical power to the argument that Pinterest is special, different, and not to be compared with Facebook. On a practical level, this comes through when Pinterest spokesman Mike Mayzel disclaimed the idea that they no longer believed in “popular

Monetization

71

pinners”; the implication is that Pinterest would prefer the network to be shaped by the recommendation engine, rather than social network activity. The pins presented to a user would be “hand-picked” to help them “do that thing.”143 Instead of a social network, Pinterest would become a search engine; Pinterest would best be treated as something like Google search. The monetization model comes full circle in their own discussion of monetization; at first Pinterest is a magical community of women, who are then extracted of value through a centralized management scheme for integration into a magazine layout, and eventually compensated for curating those very handpicked recommendations through affiliate links. The model eventually returns to arbitrage. The idea of self-presentation through fashion is curious because the codification of fashion liquidates its status, yet decisions about how to present oneself are treated as a source of decision about the self. Creative uses of Snapchat abound. As a platform for fashion there is no delivery mechanism greater than Snapchat—the images transferred degrade, only through the gesture to take a screenshot do snaps persist beyond their initial transmission. Taking a screenshot requires special user intervention. The viewer really would need to enjoy your image. Unlike the soft celebrity of Instagram, the Snapchatter’s works are so rich with data that they are intentionally destroyed. Stale mass culture sites are sniffed out, which is why BuzzFeed morphs between genres of clickable material almost weekly. The romantic creation of everyday life is the stuff of Pinterest, making and crafting with love. By working without a conception of a graph, the public discourse of Pinterest shifts in clearer terms than their competitors. Silbermann justifies this graph-less approach as: “A lot of ads really suck. They are really ugly. They detract from the experience. You want Promoted Pins to feel like ideas you want to make your own.”144 Pinterest is a powerful network with a unique underlying affective foundation, clear monetization plans, and pure demographics. It is the coherence of Pinterest that makes it a threat. It isn’t that Pinterest doesn’t measure up to Facebook and Twitter, but that they don’t measure up to Pinterest.

You are the greatest resource In the world of social network monetization, the individual is inherently valuable. Alchemy is that magical potential. Everyone can be rich, but for some

72

Selling Social Media

reason only a few are wealthy. Symbolic products are everywhere: we make them continuously. Each one seemingly has a cash value, even if the means by which that cash is distributed are ethereal and the values indeterminate. This is the essential quality of the design of new media business models and neoliberal culture: it is not that they are based on an illusion or some form of crude ideology, but they are sold with the idea in hand that they are a version of a business process. That kernel of truth makes the metaphors stable. Monetization must remain in flux. Shifting between positions allows monetization to get the slick affective power from alchemy along with the concrete basis of arbitrage and extraction. Monetization depends on the vision of infinite segmentation—not in as much as that I could be marketed to personally, but that there would be value in my segment. Romanticism comes to defend rationalization in this case. Instead of the painful disclosure of the relative lack of worth of the individual, it provides the narrative of a highly valuable individual: the spiritual alchemist appears in what is an otherwise lonely and fragmented world. Facebook thinks your attention is worth at least a dollar, and that is worth something to the public. Any number of stories of betrayal by social network firms can be tolerated as long as the romantic narrative of monetization remains and the underlying affective logic of the system maintains coherence. Monetization recovers individual power. There is something very real and descriptive about noting the ways in which people come to replace one selection of goods with another. This is the basic relationship between all social networks and the legacy media. An ad is an ad is an ad. By rendering all sociality public and commensurable the culture industry provides itself with a meaningful feedstock for future interactions. Benefits from using social networks are very real; this is why social networks are unstable but not unsustainable. The valuations of these networks have been just the opposite. As a form of economic ideology this explains the bubble that now serves as a metaphor for the economy, with arbitrage, extraction, and alchemy defining the business processes of the early twenty-first century. The values for social, mobile, and data companies are high not because they have meaningful returns, but because arguing against these ideas runs up against foundational cultural tropes. The self-esteem of the user base has been interposed into the story of network publicity to the point that we are not simply sold (as was the discourse of classical advertising) but that audience is selling the idea of itself, to itself. The presence of advertising on these platforms provides a powerful refutation of the idea of the value of those products, yet because of their aesthetic power

Monetization

73

they are valuable even in multiples of a hundred over their real, fundamental price. Between the extractive and alchemic metaphors for monetization lies the idea that there is something out there that can exceed the boundaries of the physical; there is a basis for value. Even in the sense of arbitrage, the gnostic impulse to find more data, to create upon untold value, there is an emphasis on the dream image of the valuable individual. Drilling down, as is suggested by the idea of infinite segments, can only reveal human agency, which gleams brighter than gold and burns hotter than gasoline. Desiring self-realization or at least recognition becomes a form of drive; it is a loop that cannot be broken. Gilder offered a clue here—it is not simply that people are duped into thinking that they are valuable, but that the idea that they are valuable is deeply coded into American bubble culture; value is divine. To really get at the network-styles of the superrich we need to look at another level, toward the creation of securities, the combinations of monetization relationships that drive the top of the bubble. The desire for money is larger than the transaction, and the aims of the social network operator are larger than the click.

2

Securitization or: Seeing Wall Street as a Server

Candy Crush is one of the most successful social network integrated games to date.1 The game dynamic has the player to match similar icons which then vanish, allowing more icons to descend into the game board. Simply put the player combines matching shapes or colors into groups. Candy Crush uses narrative and immersion as spackle between individual level elements. When users complete acts of the game they are treated to cut-scenes, short animated interludes, which advance the story. To access the next plateau of the story world, the player needs to recruit three friends to vouch for them, wait a number of hours, or buy passage. Without support from other players, progress is slow or expensive as one would buy virtual goods to progress to the next level. Candy Crush avoids the problem of spam, as the messages directed toward other users are genuinely those created by other players. This is not to say that Candy Crush– related Facebook messages are not irritating, but that they are generated when a real person wants them sent. There is a real person there, asking for your help. Or at least that is the story that sells the game to the stock market. The social feature of Candy Crush does not facilitate interaction as much as it is a personalized advertisement for the game. Much like Tetris, Bejeweled, or any number of other fine small spatial games, Candy Crush is playable entirely alone. King, the developer behind Candy Crush, was no newcomer to the online game space. Before Candy Crush, King had developed a number of titles.2 The monetization scheme is relatively clear: direct payments from players for immaterial goods, which can be lucrative if an audience willing to buy can be found. The key to real value on the market is not the product, but the possibility of a template. A single restaurant can be a business: a viable franchise concept is an empire. Pet Rescue Saga (a format clone of Candy Crush) would never be a mega-hit, but if King had a format that could be replicated, mountains of cash could be on the horizon if spin-offs made even marginal profits. King was a single-product company, and the Candy Crush formula was their claim to value.

76

Selling Social Media

By keeping costs low, King could build a great product and a decent business, worth billions. Skepticism of the King IPO was quick to come. The New York Times’ DealBook noted that the Zynga IPO cast a “pallor” over the entire social games market.3 Zynga, the maker of such social network–enabled hits Farmville and MafiaWars, hit the market only to fall flat. By the time they began selling shares, their core products were stale. Zynga clearly did not have the secret formula for great games. How could King? Financial journalist James Surowiecki made a compelling case against King in The New Yorker.4 His argument was a pincer move where: the game market is highly unpredictable and development costs are very low. Together these produce a market flush with supply and difficultto-model demand. Discussed in Chapter 1, the nobody knows principle clearly applies to games. Even a well-developed product doesn’t necessarily sell and some of the most artistically interesting products never reach more than a small audience. Worse, unlike traditional media where some access and distribution barriers remain, the social game market may be more democratized, meaning that many firms would be constantly challenging and supplanting King in their own market. The case was so well made, that popular financial news site Business Insider covered the story as a “brutal” takedown.5 Compared to legacy media firms that were protected by high entry barriers, the social game market is precarious. The idea of making a major investment in a single game seems like the premise for a joke on late night television, not the New York Stock Exchange. The IPO did not go well. Nicola Leske, writing for Reuters, noted that underwriters for the IPO called in favors to prop up the sale.6 The price of King stock fell after the opening bell. The fact that 78 percent of King’s revenue came from Candy Crush did not help. King fell hard, but not as hard as Zynga. The notable difference is the overhead of the companies; King was a small, lean operation. Despite Candy Crush shrinking, there was still profit to be made. Future returns for Candy Crush depend on the durability of their play structure and their ability to retain their engaged whales. Cool sugar is fragile and beautiful, but it tends to break. King could have stayed private and milked the revenue flow from Candy Crush for years. There was no need to go public. Without the stock market, there would not be the chance to compress the possible value of the company. Returns from managing the company would have accrued, with a slow decline or possibly another hit. Issuing stock is something like a time machine: stocks sold today based on a future valuation make those returns real in the present.

Securitization

77

Compression shifts scale as well. A trickle today that one imagines as a future river can induce a deluge. The long story of King became short in November 2015 when ActivisionBlizzard purchased King. Although the share price at purchase was well below the IPO price, King was worth nearly six billion dollars to Blizzard. Why was King so appealing? Scale. Candy Crush had millions of active users, although those users had never been easily steered to other products in the past, the prospect that they might find a new product was enough to make them valuable. From a jurisdictional standpoint, King’s Irish home base allowed Activision to purchase the company without paying taxes in the United States.7 When combined, the social user base of the games owned by the conglomerate is larger than Twitter, making Activision-Blizzard-King one of the largest social networks in its own right, even if much of the business is a synergistic app running parallel to Facebook. This is the same story of the King IPO, replayed in the mergers market: the potential to monetize on a large scale overwhelms fundamental considerations. Synergy sells.

Taking stock In this chapter, the topic shifts from monetization to securitization. The performance of value shifts from the relationship between the user and the interface, to the perception of groups of users to the technology of the stock market. It is this issue of scale where a second discourse of market valuation connects the discourse of monetization on a small scale with the large-scale discourse of the IPO. The process where micro and macro are linked does more than simple combination—the act of combining those assets into companies and then to format elements of those companies as securities requires the construction of credibility, capacity, and responsibility. The stock exchange is both a pool of meaning to be dipped into and an organizational technology. Stock markets are alienating; their operations are seen as mysterious at best, and all too often nefarious. Although a number of different stock markets exist (Facebook is on the NASDAQ), the most important market for understanding the discourse of capital markets is the New York Stock Exchange. Currently owned by Intercontinental Exchange in Atlanta the figure of the NYSE is the synecdoche for all capital markets, even if the trading floor is something of a

Selling Social Media

78

relic.8 This is an important point as the NYSE is still presented as the center of capitalism, but now serves a role as the stage, rather than the market. NASDAQ is owned by NASDAQ OMX Group. NASDAQ is smaller and different in structure, operating without any physical trading floor, often with less prestigious stocks.9 Technology companies preferred the NASDAQ in the 1980s. This chapter will provide: A short history of stock markets that emphasizes the ways that the market has positioned itself for public legitimation. “Securitization” is a relatively young word, the Oxford English Dictionary tracks the term only to 1982.10 Securitization first appeared to describe the collection of home mortgages; it now describes the collection of many assets, and the potential of social revenue streams. The stories told and artistic renderings of the market historically hinged on affinity among traders rather than the technical capacity of the market system. Writing the history of the market in this way opens up new possibilities for understanding how publics become involved in the fantasy life of money. The chapter engages three key terms related to securitization:

●

Gamification, scalability, and valuation Public perception of the market is now shaped through the serious game of the stock screener. Gamification of the market is a key aspect in the transformation from a human to a technological market.  Scalability provides a conceptual framework for dealing with differing extends of communication systems as well as the physical infrastructure of social networks. This section on scalability and scale deals with the term in multiple dimensions for social networks, communication, and political theory.  Valuation is presented as both a technical assessment of a company and a sales pitch. This review of the concept and use in everyday life frames valuation as an art rather than a science. The theories of screening, scaling, and valuing are deployed to understand the affective dimension of IPO pricing and purchasing. Finally, the chapter considers the case study of the public relations campaign deployed by the NYSE during the Great Recession to maintain confidence in the idea of the stock market. This is an important point as it crystalizes many of the key concepts used to value social media. 

●

●

Securitization

79

From Amsterdam to Atlanta Amsterdam, 1602: the stock market is born.11 Early Dutch trading was sophisticated, including various derivatives and other options that tended to extend along affinity networks, such as families.12 Early efforts in equity participation were premised on the lucrative returns of trade missions to East Asia.13 Before the establishment of the permanent company, spice concerns were short-lived, often paying dividends in spices before dissolving.14 Instead of ending, the Dutch East India Company carefully maneuvered to avoid payments and survive to trade another day.15 A new technology for organizing business was born. Disposable was replaced with reusable. Dutch spice traders eclipsed their European counterparts. Early New York trading took place near Peter Stuyvesant’s barricade.16 After many years around this literal wall, the traders were more formally organized. The New York Stock Exchange began operation under the auspices of the Buttonwood Agreement.17 Traders did not meet at 68 Wall Street spontaneously, but as the reaction to the Panic of 1792.18 The panic stemmed from William Duer’s speculative attempt to corner the market on government debt, which formed feedback loops throughout the economy as rampant fluctuations in the price of the bank also caused contractions of credit that then destabilized the bank.19 Purchasing stock in the Bank of New York required payment in government debt; if one could control the government debt needed to purchase stock, they would have one of the most valuable assets in the entire economy. Cornering schemes are vulnerable as they require a great deal of money to execute and can be countered by another party recognizing the opportunity to capitalize on the attempt. Stabilizing the economy was not uncontroversial; the collapse of the bank was for some, like Thomas Jefferson, an argument against the Federalists and their large-scale institutions.20 Hamilton’s approach to buttressing the economy (extending credit and facilitating communication) became the template for future economic stabilization efforts. The Panic of 1792 is the original American political-economic melodrama: good, virtuous farmers versus bad, profligate city dwellers. The stock exchange of the eighteenth and nineteenth centuries was not like the exchange we know today. Outdoor trading was not prohibited until 1836.21 Complete statements were added in 1853.22 Watering, secretly issuing additional shares of stock to friends, was not prohibited in practice until 1869.23 Specialists

80

Selling Social Media

for continuous trading were not present until 1871; before that individual issues were read and traded twice per day.24 These are just a few examples. There was not a smooth transition from the Buttonwood era to the present. Entire careers would pass between substantial changes in practice. The nineteenth century was not a time of economic stability. The historiography of the New York Stock exchange is a fascinating topic as few histories were written before Donald Sobel’s landmark, The Big Board.25 Sobel told the story of a stock market that in, just over a decade after the Depression, had become fundamentally entwined with the lives of many people. This is shocking given the deprivation that the market had wrought. The people of the market are less of a feature of the story than the companies traded and the structure of the market. Charles Geisst took a slightly different view in his later history of the stock market, emphasizing the people more than the particular issues to be traded. Writing the history of the stock market is difficult because it is not a matter of writing the cultural history of a technology like the stock ticker, or even of the people trading stock: these are interesting topics for writing the history of the market, but they are not the market itself. To write the stock exchange is to consider a fleeting image and aesthetic—a sensibility, a time, and a promise. Sobel’s history is powerful today because it avoids the risk of being sutured to some other, less energetic mode of historical consideration. If you lose the dialectical play of the legitimation of the market and the facts of operation for a mere consideration of the traders at work, you lose the story of the stock market in the American imaginary. In 1992, the exchange commissioned a bicentennial coffee table book. Entitled The New York Stock Exchange: The First Two Hundred Years, this largeformat picture book uses a series of paintings, photographs, and timelines of important events to tell the story of the market.26 The book features two kinds of images: significant people and pictures of the exchange itself. Even when representing average investors, the focus is on the affinity of the people and their position in space, not market capitalization. The building is interesting for other reasons. Ezra Winter was commissioned in 1930 to paint a mural depicting the signing of the Buttonwood agreement.27 At the time of painting, the onset of the Depression, the mural was one of several depicting the history of the stock exchange. The image is framed as something of a snapshot, with a table in the foreground with formative documents being signed, with a man blocking our view of the table with his back. In the distance in a plane of focus beyond the scene of the signing we can see traders actively talking, and the rigging of a ship

Securitization

81

in the distance through the city. The idea of a friendly agreement, coffee house culture, and general affinity as a market foundation are key conceptual recourse in the worst of times. This is not a market of aliens, but of people, doing their best in difficult circumstances to facilitate trades. What appears constant from the eighteenth century on is a preoccupation with the figure of the trader—early in the book a two-panel charcoal drawing depicts a trader on good and bad days.28 In an upper panel we see a good day, a jovial fellow, clean-shaven, primping his velvet lapel. In the lower panel, the figure of the trader with stocks down, ungroomed with a wild beard, crumpling a newspaper in his hand. The history of the market is understood partially with timelines of important events, but often more through the use of caricatures. A particular favorite is an illustration of the “jollification,” a party to close the nineteenth century, which featured boxers dressed as a bull and a bear, hired to recreate an iconic representation of the bull goring the bear—that night the bear lasted a full four rounds.29 The stock market was a friendly club, an affinity network. The architectural details of the buildings of Wall Street have been a matter for public curiosity since for many years; the NYSE’s own history notes, “The public was attracted not only by the size and classic design of the structure, but also by its futuristic engineering features. Newspaper reported stories of these innovations—from the giant annunciator boards requiring 247 miles of wiring to the pioneering use of air conditioning.”30 For the time period, the building was a technical marvel. Until the mid-twentieth century photographing the interior of the trading space was prohibited during operating hours. A full page of the history is devoted to an early photograph taken with a smuggled camera that seemingly configures the aesthetics protocols for future images; the room itself is stable but any person in motion is made something of a blur—the stage is timeless, the actors temporary.31 At its height, this center for trading had many rooms in multiple buildings where securities were exchanged, luncheon club, hair salon, and gallery where tourists and other interested parties might watch the ongoing activity of the floor where prices were negotiated and the economy moved forward. After the September 11 attacks, all access to the trading facility ended.32 By 2009, two years into the Great Recession, there was one trading room left in operation, the luncheon club has closed, and visitors were no longer allowed in the gallery, even with the introduction of bulletproof glass.33 The market has moved from an open community where anyone could choose to be in proximity,

82

Selling Social Media

to a closed technical process. Perhaps most telling is an exchange between then CEO of the NYSE, Duncan Niederauer, and Steve Forbes. Forbes gestured toward the argument that it would be more efficient to simply close down trading on Wall Street. Niederauer responded, “But then we have that ability to intervene human judgment, real-time, if we have to.”34 The value of the built environment in New York is that is provides a tangible site where human judgment can directly interface with a machine world, with machine logic. At the same time, there is no reason why the floor or even co-location New York is necessary for intervention. This could just as easily be done from Atlanta or Minneapolis. After all, the NYSE is owned by Intercontinental Exchange of Atlanta. The unique demands of the ethos of the market weigh on Niederauer’s comments; he would not want to be the director of the NYSE who evacuated Wall Street. Even if the built environment has become fetishistic, that it exists only to prove the exception to the normalcy of the technological market logic, the image of Wall Street underwrites the sale of stock and the evaluation of the future. The rituals of this place go on. The bell is rung. Wall Street is an ideographic reference. The image of this place is pivotal to the global economic imaginary. This referent is still so powerful that Jeremy Olshan, editor of CBS MarketWatch, announced in October 2014 that the network would abandon the use of images of the floor. “Still, by relying on trading-floor photos, we have been distorting the truth rather than reporting it. We are doing a disservice to you, our readers, and therefore we too must change with the times and find new ways to illustrate the ups and downs of the market.”35 Even in an electronic trading world, the imaginary of the floor persists.

The screener aesthetic Seats dominated the stock exchange for centuries. Access was restricted on the basis of who might physically join the market. Electronics have collapsed the spaces necessary for market operation to the molecular scale. Direct trading is a high-volume, low-margin game. The extension of network technologies across the United States and affordable microcomputers enabled a broader transformation of the interface point for the imaginary space of the market. Unlike the boiler room operations shown in such a stark light in The Wolf of Wall Street, the online discount brokerage changes the relationship between the retail investor and the market.36 Gone are the shady stockbrokers, acting in their

Securitization

83

own interest. Brokerage houses are now positioned as logistical assistants. The interface allows the customer to place their order directly and see it executed rapidly. Instead of a strip of prices slowly printing, the customer is presented with a montage of prices and charts. Inexorable and immutable the strip makes the trading world. Access to information is democratized and accelerated with preloaded charts and graphs, and Securities and Exchange Commission filings a click away. The interface presents a deep well of resources that serve as a form of backing in their own right. When combined with the power of cynical reason, the investing subject takes on the position of the insider: the trader who is supposed to know.37 The logic of the market world depends on the turn toward the individual as the sacrosanct hub for agency. One person at the end of a chain of relationships is far less important than the single heroic rich person describing the ways that they manipulate a computational system.38 The trading interface is a critical step in writing the story of the romantic individual stock trader. The website or app where an order is placed is the micro dimension of the market; the imaginary of the market in New York is the counterpoint. Securitization in this aesthetic is tied not to the trappings of authority or the details of the lunchroom at the NYSE, but to the ways in which stock trading itself is reimaged computationally. Trading screens are organized according to best practices in usability research: design students are cautioned that “you are not the user” and that they should adopt design as a translational research paradigm.39 Kits for designing interfaces for phones and mobile webpages contribute to the standardization of the screen. Once standardized, users adapt to the screen. Iteration creeps along this feedback loop. Charts are manipulated through predictable controls that are remediated across web platforms. Learning to do stock trading requires only a cursory knowledge of the idea of a market and the identities of the firms being traded. Screens move from right to left; conventional sliders and tabs organize the information. Stylistically these forms feel mathematical. Screen designs are kept clear of unnecessary text, ads are internal, and functions are tightly mapped onto the display of trading information. Online stock trading did not create the computational aesthetic, but it does profit from the deployment of computational reason in this aestheticized form. Aside from shifting concepts of scale, the underlying ideas related to planning and reason are long-standing. Interfaces bring a high modern sensibility to the trading of stocks; the chaotic world of market relationships across a noisy discourse network are replaced by the seeming order of the screen. Documents

84

Selling Social Media

used to issue capital stock are riddled with warnings. Sales pieces for social network sites are graphical and persuasive. Once a stock appears on the screen it is legitimate; the prices provided in the montage are an accurate window of a real-time market—not the occasional report of an affinity network. Advertising for e-trade goads the potential customer—it is so simple that a baby can do it.40 Proceduralism is an idea from video game studies that can be very useful for understanding the rhetoric of interfaces.41 From a procedural perspective, designers are creating a series of cognitive tasks that users are meant to complete. These tasks then help users move toward a particular kind of feeling. The medium is the message, literally. Simulators are available to perfect trading strategies. Buying and selling become a complex game, only bolstering their appeal. Ian Bogost has argued that the best games are those without characters; complex system manipulators are the top of the genre.42 SimCity presented a complex system that could be manipulated, a game that asked users to consider the interaction of processes rather than their identification with particular characters as the starting point. Characters are enabling and limiting. Identification is known territory for communication researchers. The assumptions mapping a video game to a film or book are a little too easy. Books give the user a good deal of distance from the character just as they invite emotional integration. Films have less control and are more conventionally time-based media, but they are bracketed into shorter timespans. Video games unfold over long periods of play, the involvement of the interactive player making choices and making the reality is more powerful. Unlike certain artistic and activist game experiences, serious games like Sim City evolve over time and offer opportunities for creative play. Will Wright, the designer of Sim City, focused on deploying experiences that were mapped onto really existing complex systems.43 The variables in the farm or the city can be controlled with multiple intervening factors. Distance from an abstract system when combined with user creativity can be engaging. Stock trading is something of a game and a religion. Underlying the screener aesthetic is the idea that the underlying logic of the market can be understood; the price signal and the fundamentals mingle. What is tricky and compelling about the game of stocks is that so many of the other factors are stochastic—input response patterns change from moment to moment: the market is populated by people and robots with unexpected results. When played well, the game requires that the player be engrossed in a transmedia experience of market watching, interface manipulation, and research. In other games this is called the “meta” or

Securitization

85

the relationship between the different units of the game. Balancing the meta is an important task for any game designer. If we evaluate the construction of the stock interface as a procedural rhetoric, the collection of tasks and simulation tools are designed to help individual users appreciate the aesthetics of thinking at scale. Tactical everyday life is subsumed into the screeners of strategic rationality. Publics use the game interface to participate in the ideology of the market. The emotional payoff of the game is to see your line move higher, to take joy in money, joy itself. Once again the curious psychic life of money is apparent; this abstraction is a nexus of desire, personality, and possibility. Unlike the interface of Sim City, there is no need for iconic representation here: the world of stock is symbolic. Learning how to appreciate the beauty of the stock ticker itself is a critical part of the aesthetic of securitization. This sort of serious play does not diminish the position of the market in psychic life—it enhances it. The market is the absent cause of the behaviors that guide the world, aestheticizing that market makes the game fun, and the idea of the market even stronger.

Toward a theory of scale Considerations of the size of communication systems are essential for media theory. Size is baked into many disciplinary formations in communication in the term “mass.” How do people transact when their partners are from far away? How do I trade with a perfect stranger? Who are the people and what do they want? Techniques for managing scale are central in the formation of institutions. Acceleration and expansion can produce dizzying possibilities, and even greater failures.44 Democracy requires a count; that count is always wrong as it requires the creation of categories that organize what is being counted.45 Market segmentation is a politics of scale for business. Yet these segments are never truly accurate. The polis is distinct from the mass state, the transaction is distinct from the security, and the pointer is distinct from the platform. The question becomes how we might inform the kind of thinking that can deal with size. Scalability, the idea that a system could be adapted for many users, is the end point of the analysis, although considerations of scalability exceed technical capacity. Theories of emotional scale dovetail with technical scale. The polis can be seductive for communication research as it poses an alternative with more, deeper communication. Dialog is a panacea. There is a certain truth to the idea that smaller systems do have the potential to be faster and more

Selling Social Media

86 Conception of Scale and Claim to Value Dialog Tactical

Dissemination Strategic

Small Scale

Large Scale

Presents as the radically personal and emotionally invested

Accretion of participatory culture, structured sharing, voting, liking

Ambient awareness, status updates and feed monitoring, lurking

Traditional mass communication as claim to value

Figure 2.1  Matrix of positions on value and scale. Describing the value proposition in dialogic or tactical terms maintains the romantic façade; dissemination or strategic terms begin to appear to be much like television.

personal. Yet all too often, faster and more personal are not desirable. There are people who are not interested in sharing with you. Requiring disclosures from others is not helpful if the terrain of those disclosures would itself be violent. Disclosing sensitive information such as seropositivity or infertility would not be made easier by some sort of compulsory discussion. Communication privacy management theory, discussed in the introduction of this book, recognizes that engagement in dialog is conditioned on complex contextual rules. One cannot simply assert that more dialog is always better. Symmetrical and reciprocal norms of disclosure in dialog can be dangerous when the stakes are high. Dialog infused politics can also exist on a larger scale through para-social interaction, synecdochal participation, and the accretion of identity. Personality politics can fly too close to the sun, devolving into demagoguery. Breaking down the norms that conditioned the inclusion of some kinds of emotional communication into the public sphere can be at times productive. Expressions of pain can be moving; tears move in ways that legal motions never can. Yet, as the emotional becomes compulsory the public sphere might be saturated with secondhand emotion and endless contrived conversation. Simulated affect can degrade the power of emotion. Worse, emotional argument can fall back into a teleological loop. Including emotion might help some calls for justice so the norms that exclude those arguments are eroded. There are other emotions and other conceptions of justice. Without some regulating idea of the rational and critical argument some of the worst emotional claims will surface and win. Rising nationalism around the world provides powerful testimony to this point.

Securitization

87

John Durham Peters argued in favor of dissemination, going as far as to claim that one-way dissemination would be far more compatible with agency and the multiplicity of symbolic practices than forced dialog.46 Scale is not only required to reach a larger size, but is also a possibility. What is particularly striking is that the base of much of western culture is profoundly non-reciprocal.47 Hospitality, love, and justice are profound. Peters is not alone in arguing for distance—many approaches recognize that immediacy can be painful or counterproductive. It is not helpful to ignore the violence of compulsory reciprocity or to treat all mass communication as domination. Power, reversal, and generosity should be open questions in the consideration of the design of systems. Large-scale systems without emotional entanglement characterize the highmodern tradition. Abstraction, as a conceptual technology, allows the creation of new kinds of knowledge and new opportunities for control. James C. Scott’s critique of high-modern planning hinges on the elision of everyday human agency in the move from the small-scale model to the large-scale project.48 States see the way they do because they need to deal in massive sizes. Diversity of experience is invisible. Plans can’t work—they don’t deal with the everyday reality of people and how they exist in real time and space. Le Corbusier, for example, couldn’t plan for real humanity.49 People go where they want. High-modernist plans can come from a state social planner, Harvard Business School, or a large media conglomerate. Working on large-scale projects is possible only with the adoption of a certain way of seeing the world. Social network management sees at scale; this is not a question of the individual and their experience of the interface, but about the entire network as a thing. Friendster failed when they told their users how to feel: in telling them who their “real” friends were, they destroyed their own product.50 Twitter supposed that unmitigated hostility would be tolerable for access to their pseudo-agora. In the vision of Twitter executives, the benefits of using the platform were worth the unpleasantness of dealing with other Twitter users. Facebook inflicts a particular theory of emotional modulation on the public, bringing users the stories it believes will make them linger longer on the feed, good feelings might carry over. Through the writing of this book the Facebook mobile interface has changed; where there were once buttons for notifications, messaging, and the profile, there are now a haphazard Craigslist stylized market and live streaming tools. The core use of the app and the possibilities that come with it are replaced with a high-modern experimental ethos, the height of methodology. Facebook promotes this methodology to ad buyers through the use of their Power Editor

88

Selling Social Media

that allows the ad buyer to repeatedly split their audience for the purposes of testing different text-response patterns.51 Every interface has a potential A/B test—as if the reactions of the possible audience themselves are already understood and all relevant variables are held equal. There is no open response, just the confirmation of the superior logic of the designer of the technology. A/B testing is dangerously seductive, that which is easily testable via the interface and ad buying becomes the horizon of effect, deliciously quantified, styled with science. The counterpoint to this sort of large-scale research is hyper-tactical research on participatory culture. De Certeau’s research has found a home in media studies because of his emphasis on the tactical, the everyday space of agency that stands outside of the practice of modern planning and technical rationality.52 Media studies scholars who are not attempting to redeploy the technical rationality of the system turn toward the collection of examples from everyday life, the uses of social media, the habitus of the users. As an empirical critical lever this is quite successful in contouring possible worlds to be made. At the same time, these approaches are risky as they might fall into the other trap—that of the polis, the romantic small community. While individual users might be discerning, the structures those users create are more often not. High-modernism posts a network solution to political problems as well as issues in design and emotion. If the ideas of high-modernist social network planners could simply be applied to politics, the government could be efficient as Facebook. Evengy Morozov found fault with the politics of solutionism (the idea that issues in politics are merely issues with the technology of opinion aggregation) as it failed to account for the actual nature of problems, instead applying stale proscriptions for increased transparency or additional preference discovery.53 Consider his critique of political transparency—it is not that government is opaque, but that the political style of transparency is politically destabilizing. Adding more information feeds a sadism game that thrives on exposing secrets. New techno-solutionist plans call for even more transparency, even if transparency is contributing to political deadlock. This is not the slow government of James Madison’s, but a government so fast that venom spreads across the network faster than anyone could have seriously proposed in the eighteenth century.54 Representative democracy depends on dysfunctional communication systems. Morozov returns to scale as an idea, recognizing that scale and functionality are often competing outcomes.55 High-modernist technology advocates oversimplify agency to make large projects seem

Securitization

89

reasonable.56 Flattening the idea of political, aesthetic, and moral difference is critical to the modernist project. Key to the technological style is the presumption that a lack of clarity is precluding agreement, which is also a key premise of the idea of a number of theories of markets and the ill-fated Google+. The dominant style to be implemented in these plans features increasing clarity and granularity of control. With adequate verification of sensory inputs enhanced granularity and control should allow the formation of a meaningful stock market. Highly granular, scalable interfaces are fun to play with—Sim City offers a kind of instruction in economic governance. The King IPO is an important case for thinking about scale. Candy Crush is a core franchise with a declining user base. If privately held, the owners of King could have run the company and extracted value for years. Long-term, slow accumulation might reach a large scale, assuming consistency and good luck. By compressing time through the issue of capital stock, King could scale up the fortune that the company might make. Securitization deflects the challenge of expanding the company from the synchronic sense of the now toward the broader sense of the diachronic company across time. Flash forwards interrupt the present with the potential of the future. Monetization often comes to be a strategy of legibility. It is a way of making sense of everyday social activity for the purposes of strategic thinking. Chapter 1 detailed the ways in which these models work and don’t work—why the failures of high modernism are replicated again and again. Which is not to say that large institutions always fail; this book is a story of the success of high modernism in the form of Facebook. Scalability historically referred to the creation of a stable index for a variable, only coming to refer to rapid expansion recently.57 Google NGram analysis suggests that the term had turned to refer to use by many users, with rapid growth after 1993.58 Today to be scalable means that a system could be expanded for use by more users, in more places, simultaneously. As an engineering challenge, scalability calls for understanding the underlying technical capacity of a system. It is not enough to accumulate wires, disks, flash chips, and air conditioners. Metal and silicon pieces must be deployed in meaningful configurations. Data structures are designed to take advantage of relatively simple ideas, like using the closest hard drive to a processor to complete a task. Hadoop and Map Reduce have been developed to manage the problem of placing data in the right physical places to maximize system speed. At the most fundamental level, the promise of the cloud, ubiquitous enhanced capacity cheats on developing scale internally. Designing a system for scale is difficult. Specialized engineers and equipment

90

Selling Social Media

are expensive. Companies turn to Amazon Web Services, Microsoft Azure, or Google Cloud to do the heavy lifting. Problems in scaling are persistent. Twitter’s API does not return results for queries of the database for more than a few days in the past, keeping the data far off for researchers. Some third-parties claim access to large banks of Twitter data; these products are subject to the API and the physical infrastructure of Twitter. The actual flow of the moment is gone. Facebook also faces challenges with storing large volumes of data. The vast majority of the data stored by a social network is not needed on any given day. In fact, much of what is stored may never be useful again. Data must be retained, but it is not always valuable. The idea of now, a point, also called Kairos, is foundational in a number of approaches to communication research.59 Social networks capitalize on clicks for stories that make sense only for a very short burst of time. The clickbait industry provides a deep well of examples. From a distant historical perspective, few will remember and sparsely anyone will care about what images were associated with the winter 2015 Starbucks’ Holliday Cup Facebook story.60 By the time you read this—that last sentence will be stale. This story is an example of a false start—a popular press story that induces a reaction to a trivial bait, with reporters lying in wait to cover the reaction. In the most dramatic examples, there may not even be an aggrieved group; the center of social media politics is often hollow. The race for clicks often requires that a hot-take become meta as quickly as possible. Just as meta-data (data about data) is critically important, so are news stories about news stories. False starts are particularly effective when they allow the engaged public to express righteous indignation. Social networks power down the systems storing the images and statuses from the distant past.61 After all, what good would these do when they cannot inform the logic of a computer system or advertising campaign now? More data does not necessarily mean more insight. Fuzzy logic won’t produce an empirically meaningful set of market segments. Slow, careful, human reason provides concrete insights that can be missed in a fast computational culture. Without semantically aware, and dare I say creative software systems, the number of points created by the flow of time is beyond the capacity of thought. Every time one accesses a social network they are managing scale. Scale dominates the conversation about industries. It is not a question of which companies have the best return or stability or business practices, but which are the largest. What does it feel like when the owner of Zara passes Bill Gates for a moment as the world’s richest person, if even for just a second? The

Securitization

91

film The Social Network was on point as the drama of titans in a court room is more piquant than a discussion of computer networking strategy.62 It is that later formation that really matters for scale. The story of Facebook is not about giants of industry or Aaron Sorkin’s vision of Mark Zuckerberg’s love life, but the expansion of Facebook along a series of nodes, expanding to neighbors of neighbors to get ahead of ConnectU and other platforms. That story of scale is decidedly unromantic, just as the story of the sale of shares in an IPO to partners of the underwriter is less enthralling than the idea of making big, bold trades on the market. Representing a slick Silicon Valley office becomes the analog of the painting of the trading house. It is not that Sorkin’s history of Facebook is wrong, but that it is right. Criticism of The Social Network often misses the point—the film perfectly captures the imaginary of scale in the world of the IPO and the NYSE.63 Details and technique are for little people. Sorkin distilled the romantic melodrama down to an elixir. The success of the business is in the past tense and even the passive voice, Facebook succeeded, now we can write the story of the industry in terms of the people who built it.

Politics of valuation Much like the divergent approaches to business analysis posed in the introduction there are two similar approaches to valuation.64 Absolute pricing, and valuation, answers that a business is worth cash flow of the company. This is calculated using some version of the future possible dividends to be paid by the company, or given the propensity for new companies to not pay dividends, corporate earnings can provide key information. This answer is extremely concrete: the business is worth what the business is worth. Fluctuations in stock prices would be caused by differences in the evaluation of sectors or possible demand, but prices would likely be the result of the evaluation of the actual operation of the companies. Methods in valuation based on the actual business are commonly articulated to fundamental analysis, and involve calculating some multiplier from current performance over time.65 The second answer, relative pricing: whatever people will pay for the stock. This is relatively straightforward, after all, Mr. Market, Graham’s anthropomorphic character, will provide any number of quotes. Methods for tracking the progression of stock price quotes would do double duty tracking both the price of shares and the value of the company.

92

Selling Social Media

Some might say that social network firms are unicorns, that they are different, calling for a new theory of valuation to deal with their prices. Economist John Cochrane argues that the returns for firms financed by venture capital are not dissimilar from those of other firms particularly true as firms reach the mezzanine level (just before IPO).66 These companies often resemble more traditional firms; this resemblance is important as it renders strange startups familiar. Reduction to the balance sheet is a scary move for fantasy life. It only makes sense that social network firms engage in escalating shows of futurism and even seemingly wasteful project development. Discounted cash flow and relative methods for valuation offer a method of valuing startups (and most social networks) as if they were traditional businesses, like a steel mill. David and Michael Goldenberg proposed a method for calculating the value of options on the future growth of startups as a derivative, rather than as a company as the future possibilities for a firm like this are so probabilistic.67 If companies become their stocks, a mathematical model of the future of a startup would suffice. If this method were to be successful, the liquidity of the startup market could increase and prices could behave more like stock prices as they would be increasingly tradeable: a positive feedback loop. This might be good for capital formation, but it begs the question of building a business. Moving toward derivatives of possible future business is not entirely unreasonable; the scale of the market is increasingly tied to the trade in derivatives, rather than the firms themselves.68 Black-Scholes models for valuing social network companies can also be relevant, although they tend to presume that the investor is going to model the price of the stock going forward. Derivative instruments are reflections of reflections. These typically take the form of options and futures contracts. For Benjamin stock exchanges and gambling parlors were appealing as they played with time, just as commercialization and fashion played with objects.69 These are all parts of the same aesthetic game. Derivatives open the possibility of time travel and the excitement of making bets in the past, present, and future. Options can also have practical purposes. An option to buy raw materials at a fixed price could be very helpful for a company exposed to rising materials costs. Fuel hedge contracts can be helpful for an airline during spikes in the price of jet fuel, but painful when the price is low. With more sophisticated models for option pricing and creative methods for portfolio construction, the relationships between assets and options become far more interesting, confusing, and lucrative. Many financial instruments offer a chance to buy a change in the mathematics, not by switching out the

Securitization

93

equation, but by manipulating the variable t: time. Beyond simple European (single moment of decision) and American (continuous decision period until expiration) and exotic options taking many forms. Dual temporality highlights the distinction between evaluation and valorization. François Vatin argues that a central issue in the study of asset valuation is the tendency to conflate the evaluation of a positon with the valorization of that idea; the value of the company cannot be separated from the aesthetic and moral judgment of that same interest.70 Vatin leverages the distinction between evaluation and valorization in the French language to recognize the distinction the cognitive work of valuation and the affective dimension of the work. Evaluation is backward-looking and forensic; valorization is epidictic and forward-facing. Although option-based pricing may not be common in pricing startups now, it is a critical idea for understanding the market writ large. Valuation often is sold as evaluation. After all, these derivative-driven decisions are a leading factor in the decline of the NYSE. Dual temporality is one of the more important affective dimensions of the contemporary market. Reaching agreement on processes for valuation seems far off. Critiques of ideas like technical and fundamental analysis are presented at length in the introduction. What those critiques mean here is that we must understand valuation as an aesthetic practice that is articulated to abductive reason: truth is translational and probabilistic in the world of stock investing. Transfers of value, to use Boltanski and Thévenot’s terminology, are always already taking place.71 Valuation specialist Aswath Damoardan argues that implicit assumptions, rather than explicit data, differentiate valuation models.72 The state of the literature is that there is no concrete external solution to the problem of valuation; there is no one right model for either intrinsic or relative valuation. This should not be a surprise: if valuation was transparent deriving actual values for securities would be a simple matter of mathematics, not a complicated matter of faith.73 There would be no stock market without unpredictability. A world without beta (volatility) has no alpha (return). Calculation is an aesthetic in itself, not the truth of reality.74 Or to use Cochrane’s line: “The hurdles in asset pricing are really conceptual rather than mathematical.”75 Valuations for social networks can reach wild levels for little or no reason. If an assumption of the valuation includes the impact of the valuation providing the firm leverage to capture an entire sector, the valuation is clearly something other than an analysis of a current business. Instead of thinking about the valuation of a social network business as a financial valuation, it is important

Selling Social Media

94

to understand it as an aesthetic valuation. Writing an entire section of examples ridiculous valuations would not be difficult; it would not do much for improving understanding of the affective logic of the market. More than missing the point, the game of pointing out flawed prices hinges on evaluation, not valuation. This is a recurring theme in this book—the political economy of social networks depends on the aesthetic and moral assumptions of investors, not the actual dynamics of a business or even the relative behavior of the stock market. Shifting toward the aesthetic and moral question of valuation also calls into consideration the idea of the valuation of things not strictly financial. Denominations provide a lever of commensurability. Dollar values can be easily compared. It is not simply that money taints the evaluation of things that should be valued otherwise, but that money itself has an affective sense that is competitive with other values, as was discussed at length in Chapter 1. The key to understanding the politics of valuation for a social network is to read the legitimating narrative of the startup. The story of startup valuation is framed in the heroic terms “business development.” True believers are pitted against realists. There are two conceivable exit strategies: IPO or acquisition. The Cash Flow

An Ideal Model of Startup Lifecycle

Mezzanine IPO

Funding Series A-E

Valley of Death

Time

Figure 2.2  The IPO Timeline. Not pictured here acquihire, or the practice of entering the valley of death for the purposes of failing as an audition for a more powerful company.

Securitization

95

failure of the business, the most likely option, is not on the table. Typically, the value of these companies will not be known until their product begins to fit into some sort of communication market. These markets only exist at scale because of the network effects necessary to drive real value. In other words, valuation for any of these companies is nearly impossible because their products have yet to develop. Early investments, the lifeblood of the firm, are risky propositions as each round of investment dilutes the ownership of the founders. Overcoming the “valley of death” and reaching the mezzanine level are the key moments in the story. These are not merely phases, but identities. Investors who get involved early in the life of a company must be ready for the “roller-coaster” of adolescence, mid-life, and eventual old-age.76 Valuations at these different stages are tied to the future life and present management of companies and the people taking a great deal of personal risk to build them. Valuation speaks to the evolution of the story of the company over time, and to the existential position of the employees.

Valuing social assets It is clear that Twitter is worth something. The task of managing the opinion of crowds has been worth a great deal of money for a century, if not much longer. Compared with the value of Facebook during their IPO process, the value of Twitter has been rather restrained, with the company only looking for a few billion dollars, compared with the tens of billions sought by their counterpart. Business pulp writers at the time of Twitter’s IPO were excited about the offering; Twitter may have been undervalued. At each turn the ways in which dreams of value are constructed are revealed as ruins, and those ruins turn toward the next idealized business. The critique of valuation hinges on the idea that it is not simply that rationality is bounded, but that people are all too often invested in the idea of their rationality being bounded in the first place. For reasons of face-saving, ideological commitment, and reactionary zeal, valuations for firms are designed for publics to attach their identities to those valuations as if they were a creed. In the run-up to Twitter’s IPO a firm in Luxembourg filed a lawsuit against Twitter alleging that the price of shares in the company did not reflect basic financials and that this was in effect a synthetic market for a synthetic stock.77 For the most part the idea of a lawsuit arguing that a stock valuation did not fit

96

Selling Social Media

the fundamentals for that stock is not a meaningful argument in this world—of course Twitter had a roadshow that established the value of the stock. To argue that this is anything other than routine would require a high degree of naiveté. After all, one accepts risk if they own a security. Valuations today are not based on the fundamental value of the company. With price/earnings ratios in the hundreds or even infinite (meaning that a firm has no earnings), the idea of dividend is unthinkable; there is simply too little money per share to even attempt to return it to the owners. At lower ratios firms can return money to owners of individual shares through dividend payments. These payments allow firms to disgorge themselves of excess cash and pay retirees through a tax-preferred channel. The only hope for owners of these stocks to make money is through a substantial increase in demand for shares, a price increase. If stocks were valued strictly according to their fundamentals, there would be no conceivable way for these firms to sell stock to anyone. At each step in the process of constructing the dialectical image for the value of a stock there are a unique set of aesthetic markers for value. Monetization uses metaphor to aggregate small quantities into large masses. Securitization sanitizes the image of the firm, making it inhuman and technical instead of flawed, small, and human. Inhuman, technical judgment in this sense is not a reflection of reality but a description of a particular style. By shifting the view of the pricing of assets toward a view of communication and performance prices cannot be figured as they are in the efficient market theory, even with a relatively weak formulation of the theory. Pricing is not merely limited by our bounded rationality but should be understood to be the result of a series of complex discursive processes. Deciding when to change prices, the prices to use, and the way to narrativize those decisions are artistic and rhetorical decisions. Restaurants used the passage of the Affordable Care Act to justify increasing the prices on their menus, even when there would be no particular reason to increase prices.78 Lost sales and brand equity are the result of the application of a political test from a political world to a public world of commerce. Given the rules of a conventional argumentative world the prices that are announced to consumers are supposed to reflect some combination of the price of producing goods, some margin, and perhaps a brand premium. The test of a good price would be to analyze the cost of the goods relative to other similarly situated offers and then to select on the basis of some combination of costs and benefits. Appropriate pricing strategies in the world of the social network bubble would be impossible, at least in

Securitization

97

as much as the test to be applied involves the present cost of raw materials, labor, and margin. The relevant test for value in the world of social media is not a return on investment, or a price/earnings ratio, or even the hope of some distant return, but an expression of the recognition of the will of the investor themselves. It is not enough to merely have money—it needs to have come from an IPO. Nylon, a fashion magazine, is quite right to add the hottest entrepreneurs alongside bands, indie celebrities, and along with other fashions for analysis prior to purchase.79 The rules of the market world analyzing social media firms have tests beyond the margin of safety inherent in the stock—they have a margin of cool. Advertisements for ETFs from Blackrock, a major investment company, underscore this emotional immediacy. An ETF is intended to model of behavior of a larger market through a meaningful sample of securities or options. If the fund is properly balanced it should model the performance of a sector with no effort expended by the investor, and, if properly designed, the fund should operate at a relatively low cost. Blackrock touches on an important use of the ETF that is distinctly non-utilitarian: personal expression. Advertising an ETF hinges on the idea of the romantic individual. In their video advertisement introducing iShares ETFs, Blackrock used a montage of individuals expressing both their individuality and their opinions about what kinds of investments they should make. Midway through the video a man wearing heavy thick black glasses with carefully tended facial hair noted that his reason for using iShares was their capacity to use “his own ideas.”80 A woman singing in the background repeats the letter I in triplets. After a short description of the ETF product the image behind the logo of the fund shows a man embracing a child cutting to a musical performance with the narrator pushing home the core line for the product, “ETFs for the heart of your portfolio.” Given enough properly structured ETFs one could go long or short on each aspect of their psyche, personality, morality, and aesthetics.81 Purchasing securities would not be about analysis of a single company or even the structure of a fund, but of the feeling of the owner about anything in particular. Much like the structure of a mutual fund, the ETF absolves the individual investor of the responsibilities for making particular decisions about which stocks to purchase, opting to rely on a statistical sample of shares in that place. The question presented to the person purchasing those securities is not about the fundamentals of that firm or a series of shades of gray, but a Boolean question about the future of an industry or interest. Up or down? The ETF literalizes

98

Selling Social Media

the opinion aggregation feature of the market and in this sense it dissolves it as well as an index of the individual affect. It is not that the movement of stock prices reflects some selection of judgments about the underlying securities, but that prices of underlying securities are tied to judgments about something else. Worse still for the advocates of an efficient market, the sure scale of ETF operations could cause pricing distortions in the market, meaning that the impact of both conventional and expressive investors can create movements in the market they would ostensibly model.82 Even as the impact of high-frequency trading is beginning to wane (there is a maximum speed), new forces threaten the stability of the markets.83 The introduction of this book featured a discussion of Benjamin Graham’s allegory of Mr. Market that the anthropomorphic character used to describe capital market processes as random emotional outbursts. The communicative features of the system of valuation have been theorized before, yet the complex and complicated aspects of communicative decision-making processes are continually disavowed. If ideas like the random walk down Wall Street are taken seriously it is important to note that they are not constructed around the idea of the market as something fully rational, but something that is so complex with such bounded rationality that it is difficult, if not impossible, for it to be meaningfully modeled. In this sense, this critique of valuation as fantasy is in an important way more empirically grounded than a view of valuation as a transparent communication. The final act for the apparently rational investor is to create technologies that harness the power of mobs themselves to generate revenue. Investing in social media intellectual offerings is not a statement about the relative quality of the assets but an attempt to play the mood swings of Mr. Market, to fully embrace the formulation of ideology that Sloterdijk diagnosed as enlightened false consciousness.84 Some buy the stock as a form of expression, others because they are enlightened enough to make an expression about the expression. It is not simply that there are more people who want to invest, but that particular products have been developed that allow them to use their investments as a form of self-expression. The issue is not so much with the regulation of existing capital markets, or their relative transparency, but their democratization. There are simply too many people, too many mobs chasing after the same stocks. The transition from pension to the 401k drove money toward individuals; they put their money into instruments of their own choosing, thus the romantic frame. But how does the stock market avoid taking the role of the villain in this romantic melodrama?

Securitization

99

The currency of trust Running alongside the social network bubble was the financial crisis of 2007– 08 and the Great Recession. The most severe economic crisis since the Great Depression, the recession was driven by a combination of speculation, fraud, and wishful thinking. Entering into the discussion of causes of the crisis is difficult—there are many actors, each with a role to play in the failure of the financial system. Accounting for the causes of the failure is a difficult matter of scale—the relationships between firms and asset pools for shadow banking are so large and complex that credit and blame become political icons. The phrase “too big to fail” is the case in point. The size of institutions is one of the only meaningful levers for understanding the crisis. Size definitely played a role in the waves of damage across the economy if only because of the number of contact points a failing firm would have. Publics would be understandably incredulous that the size needed to cause a crisis would also be a defense of a firm, summed up in the expression “too big to fail.” Legitimation was at a premium. Unemployment surged, the NYSE dove, and hours worked per week dropped to the lowest level on record. Confidence in the capital market should have been shaken to the point of shattering. Forty percent of household wealth was lost during the recession.85 Yet, just a few years later IPOs in flimsy social network issues were once again attractive. In Chapter 1, this was discussed in the context of what Paul Krugman describes as the “confidence fairy,” the pop market psychology version of the collective mood.86 The affective conditions of the bubble and the collapse are paradoxical. Thrift can turn toxic in a liquidity trap—and in a very real way the demand that investors find lucrative places to invest their money drove the development of even riskier investment opportunities. Saving and investing become ideographic goods. The interesting question is why these goods remain articulated to capital markets. How is risk aestheticized in such a way that the stock market continues to appear, and likely to be, a good option for investment? Understanding the ways in which social network securitization becomes sensible requires a reading of the public relations strategy of the market itself in the moment of crisis. Investing in the Currency of Trust is the title for a campaign of online videos and interviews given by then NYSE CEO Duncan Niederauer in fall 2009. Following an argumentative structure that builds on the idea of the market as an important institution for life and governance, the videos rely on images of Niederauer speaking, images of the physical markets in operation, and the

100

Selling Social Media

exchange building itself. These videos are explanations from the president of capitalism about the operations of a seemingly arcane system.87 The videos will be considered both as individual texts and as a condensation of an imaginary of what the stock market could be. The first video, “Trust is at the foundation of how our markets work,” argues succinctly that the basis of a market system is trust. The critical element of this video is the move to assign the cause of the financial crisis to “unregulated” markets, absolving the authority structure of this market from culpability, and making the threat of an unregulated market, a trading state of nature real.88 The video makes an important distinction between the “markets that got us into trouble” and those that ostensibly did not cause trouble in the financial crisis. Distinguishing between these markets is the factor of transparency. Markets that failed were those that were seemingly opaque. To support the image of transparency the video accompanies claims of transparency with images of persons near screens and clear shots of technology in human hands without human faces. The market appears as a unified force with a distinct moment of judgment where Niederauer claims that the market knows that a wave of reregulation is coming accompanied by an image and background sound of a crowd applauding. The technology of judgment approves. Niederauer speaks for all markets. From the start of this narrative arc, the video acknowledges that there was a financial crisis, but keeps it relatively distant from the market mechanism itself. The issue is not that market logic itself causes bubbles and panics, but that an insufficiently technological version of the market causes failure. Trust is left to be a matter of human credibility, for now. The second video frames the future of the NYSE with a strong pronouncement: “We are now a technology company.”89 A critical moment in this video comes in the third paragraph of Niederauer’s spoken text, where he directly compares the value of the New York Exchange to the value of two data centers. Niederauer concludes in favor of the value of the data centers; they are “the two most important hard assets.”90 Here the figure of the data center, which is never visually represented, is more valuable than the physical space being presented in the visual. The argument goes further, arguing that the “that technology, properly deployed, helps us with capacity issues, reliability issues and stability issues all of which are building blocks of creating that trust so that the investors know when they come to the market, we’re going to be here.”91 Equipment has the conditional possibility of producing trust because it offers the possibility of

Securitization

101

connection. The issue isn’t that the investors get access to data, but that it allows the investor to “come to the market.” Metaphors for technology are mapped onto the historical metaphors for approaching the space of the market in the historical sense of the market. Approaching the market in this world does not depend on approaching other people, but on connecting with a server system. In the third video, Niederauer rehearses the history of trust in spatial terms. History for the NYSE is thought of as a series of acts that heal the wounds of national trauma. The Great Depression, the world wars, and September 11 are framed as a series of events that forced the market to evolve; “you can trace a parallel course with the history of the country.” As Niederauer narrates through the crises, images of crowds in black and white replace the image of technology. The crash of 1987 is framed through a shot pushing in on the face of a man who is clearly shouting, juxtaposed with a mustachioed trader “watching 25% of the market’s capitalization taken out in one trading session.” An image of a man holding his head in his hand ends the montage. A shot of a flag historicizes world wars; the trauma of September 11 appears with a man leaning on another for support with his opposite hand drawn to his mouth, finishing with a sustained shot of a man holding an 8.5 by 11 inch piece of paper with the message “We’re Still Here!!!” Emphasis shifts so quickly in the video that the elision of the Septembers (2001 and 2008) flows together smoothly. He could be just as easily talking about either event, or both, when Niederauer concludes somberly that events literally produce “scar tissue.”92 The financial crisis of 2008 is so completely sublimated into the long history of stock market trauma that the appearance of actually existing history disappears in a split second. The video theorizes time diachronically with the response to these scaring events being the next step in an “evolution,” which is taken just a sentence, five seconds of video later, to be making an investment in information technology. Turning to the history of the future, the person responding to crises in that future is supposed to be required to understand more about technology and social networking to ensure that the market is accessible to possible future users. History is so tightly bracketed into the world of the freeze frame that it is almost completely out of sync with the ongoing circulation and flow of the present. John Lucaties and Robert Harriman argue that the study of iconic images needs to remain attached to a theory of circulation in as much as an iconic image is produced by the complex system in which it circulates.93 A freeze-frame is never really frozen as it is very much alive with the energy of the moment in which it was captured, and the moment it is seen. The stark contrast in visual

102

Selling Social Media

styles (especially in color temperature) makes history distant. Historical crises exist in a different place than we trade stocks now. The freeze-frame makes it possible to create an alternative world of circulation with such different aesthetic rules that history has broken. The fourth installment argues for the capacity of the NYSE to “distill” the views of those it represents.94 The market here is positioned almost anthropomorphically as if it was the real embodiment of its corporate charter, as an agent in political discourse. Graham’s Mr. Market becomes tangible. The most important thing this segment does is to reframe the history of the market, claiming that for the full 200-year history of the exchange that it functioned as a unified voice, an assertion that would not seem to square with the loose association envisioned in the exchange’s historical documents, “Because of the trust we have engendered over our two-hundred year history we will be listened to, and we can use that voice on their behalf very effectively.” Duer, the nineteenth century, and almost all history of the market are erased. History in the fourth video depends on the figure of the market, and the more extreme idea that whatever the market is doing is the active creation of a dialectical social process, or a judged argument. What is particularly curious about this argument is the opening of the video goes out of the way to argue that the scope of the market exists beyond that of the nation state, using flags from other countries and claims about global scope to frame the space of the market as being in a virtual place that is not located in any given country. Whatever argumentative capacity the market would seem to embody is directed toward transnational governance. The rhetoric of distillation and advocacy takes on another important dimension as it implies a capacity for judgment. There are likely any number of different views that companies across the earth might have regarding regulation and policy. Somehow, in some way, the NYSE supposes that it has created a form of democratic aggregation, the means by which this democracy functions are unclear, invisible and species agnostic. Things (algorithms) as well as people argue in this polity. The history, the market, and its figural power allow it to give the imprimatur of legitimacy to that which it interacts. When combined with the narrative of capital market convergence that Niederauer is promoting, it becomes clear that the approval of a capital market is being sold as something akin to the approval of a referendum of humanity. Fifth, Niederauer defends the involvement of the government, the title argument, “The Government’s Involvement Was Critical If We Were Going to Restore Trust.” Adding government action increased the credibility of the

Securitization

103

market. Government intervention is framed as the thing preventing systematic “collapse.”95 The risk of collapse is important, as it is homologous to the vision of the unregulated market in the first video. Both return to the vision not of an inefficient market, but that of no market, as if the question that could be staged is between this current form of market system and the state of nature. Cutting back against the vision of stability and the figural interaction with the government as an audience in the fourth video, the fifth video uses the figure of the investing public as the site where a lack of confidence could be registered. Niederauer takes the involvement of the government as a solution to the crisis being created by “what the media was telling you,” turning toward minimizing both the importance of regulation and the existence of the crisis itself as something irrational, existing in discourse alone. The role of the government going forward in this imaginary is in creating a regulatory environment that feels good for the public. What this video does so effectively is to avoid any engagement with the idea of a bailout, instead framing the conduct of the government as “semi-nationalization” that generally agrees with what actions would be undertaken by the exchange itself. In the fifth video there are two different discourse communities with different exigencies—the public who needs to be constantly assured that they can trust the market, and the government who is already persuaded that they should trust the market. The identity of the third audience—the audience that depends on evaluation of technology to facilitate trust—is strangely absent from any of the videos. Finally, in the sixth video, space is remapped; Wall Street is displaced for the image of the earth. “Our world isn’t just changing, it’s exchanging.”96 This second climax connects the data centers and the figure of a global world, which is new to this video. This video emphasizes the continuous change in financial markets and doesn’t mention the NYSE until the final line, which argues that the New York exchange will be at the heart of future world markets not because of the space in New York, but because of the data centers. It is important to remember that Hannah Arendt focused on the image of the earth and the launch of Sputnik as the marker of a new technological age, not on the detonation of the atomic bomb. Restarting with the image of the earth has a similar rhetorical function here—it marks a change in epoch. This video is especially tricky for reading because of the appearance of a new discourse of collaboration. The way that capital allocation and exchange are framed in this video inverts the role of Hobbesian figural logic that normally

104

Selling Social Media

frames the operation of capital markets. Niederauer describes this in the passive voice, that we find ourselves in “the collaborative economy” into which the world has put “itself.” The sine qua non of collaboration: “Nothing is more collaborative than bringing a bunch of buyers and sellers together and allowing them to make investment decisions.” The decision that allows us to become fully democratic and collaborative is not tied to the future or the polity, but to the ways in which a 401k should be allocated. The end of this analysis is global connectivity. That is the “core” of an exchanging world. Visually the videos share an aesthetic and many individual shots. The videos have three primary visuals; those of Niederauer speaking, of the space being photographed, and of traders moving around the floor. The visuals of Niederauer speaking always have a very shallow depth of field: you never see the market apparatus behind or around Niederauer. When he is presented, he is singular, the only thing in focus in any given frame. This is critical, because the visibility of the human actor intervening is the visual exception; nothing else is visible when a speaking person is. The visuals of the spaces are in focus, but are punctuated diegetically with the flashes of cameras, and non-diegetically with artificial camera flashes for images like the outside of the building. The viewer is positioned as a part of a crowd taking pictures. Viewers of these videos are positioned as spectators. This use of visual noise marks the role of image both for the vicarious spectator who receives the image and to call attention to the idea that this space is worth recording on its own terms. When traders on the floor are represented, they are never in the flow of natural time. The people on the floor are always moving in fast or slow motion, while the technical apparatus of the room (trading posts, monitors, flags) are in focus. The space is always intelligible; the humans in their space-time are never intelligible, except for Niederauer who must be shot in his own temporal space, with nothing else in focus. This is an overt image politics that privileges the built environment over the operations of the people. We never have the ability to see the production of trust or the work of rhetoric in the scenes, as it is made invisible. Judgment and legitimation are secondary to technological capacity. Paul Virilio would suggest that this use of acceleration is a fundamental aspect of modern design—namely that the same structural errors are repeated under the banner of acceleration, with the good of increased speed cover the errors.97 Adequate regulation managed to soften the impact of the boom–bust cycles of the nineteenth century that made the necessary accidents of these systems, the booms and busts, harder to discern. Bubbles are the worlds of traders. The

Securitization

105

market technologies of the mid-twentieth century were particular adroit in their ability to defray crises; these market technologies were political categories and rules. Changes in the 1990s and early twenty-first century allowed dramatic acceleration. Scale and speed are linked—bigger requires faster. At the same time, this is a very particular kind of speed. Instead of going with tried and true technologies that Niederauer argues is likely inevitable, forms of rulemaking, the public relations campaign emphasized electronic technologies. After all, the fastest technology is always preferable in the current design vernacular. The return of regular recessions and boom and bust cycles should be no surprise— they are the necessary accident of a system that is in acceleration. At no point in the entire arc of the film series was the idea of market speed discussed—scale, and the prospect that scale implies democratic unity, overrode a discussion of how intermediary market practices might take place. These markets were designed to have a very particular kind of failure, an accident that comes through the inability of humans to exercise judgment.

Human judgment and stock picking In the world of the NYSE’s publicity the market exists both in a world of technological perfection and in human creativity. The most fascinating piece of evidence is the framing of the inclusion of human judgment as the exception by Niederauer, signaling the transfiguration of the humanistic basis of the market for technological one. Yet, this transfiguration is never complete—the human and the machine interplay to support each other. Rebuilding trust depends on the best, and worst, features of humans and machines. By playing between the human world of the stock market and the technological alternative time, the world of the stock market takes on the quality of the future anterior—that which is yet to come. This is an important idea, especially as it relates to social network firms. The monetization models proposed by these firms are forms of arbitrage and extraction that ultimately are not particularly special. There is nothing about running a reasonably sized television network that should justify these valuations. The question is not about the present, but about the future. The promise of the future has been a central aspect of American political theory. Social networks could collect information about human interactivity and use that information to facilitate a new world of exchanges and transactions that would make it possible to perceive the future of interactions now. The stock market functions

106

Selling Social Media

in much the same way; through technology it is possible that the market rather than being a troubling agent in history is merely a technology that holds out the possibility of a different future time. As such stocks representing social activity in the future tense are a perfect fit for this market; it should be no surprise that these stocks rise highest. Both the perspective on the market as a struggle between inhuman actors and a community sustain the digital economy. The technological market wouldn’t be palatable without the reference to the figure of the market as public, and the market as civil society wouldn’t be credible without a quantitative, technical market analysis. In this way, the two views of the market are interdependent. The way that his interdependence is structured makes it scarcely possible to find some third language that might re-describe the foundations of the conflict as long as time is both contracted and elongated through the visual grammar of the market. This capacity for shifting between metaphors has provided a deep well for capital markets to legitimate themselves. If the trust only appears legible in a world of the machines—in the state of techno-economic nature as such—then forms of credibility building that depend on a reference to a concrete, built human environment would be ineffective. Mechanical trust is articulated to a magical other place, the temple of Wall Street. Niederauer put the issue in stark relief with his comment to Forbes, the reason why the market floor must remain open is because it is the only place where human judgment can intervene into the market. If the NYSE were to invest in the economic community, reliability and capacity issues wouldn’t be understood as the “building blocks of trust.”98 The alternative is a transformative, world-building power of the image of a market as civil society offers that powerful, historically tested rhetoric that literally makes markets. The aesthetic of the market works so well because it does not collapse into mere community. For internal audiences, this campaign allows the uncontrollable world of markets to maintain their articulation to the locus of control in New York. The aesthetic logic of the old stock market, the temple of Wall Street, remains if only to give cover to the industrial logic of market design. Securitization can take the empirically meaningful bits of the world of monetization and connect them into a meaningful scaled product. Shifting the affective register of the social network bubble into the capital market offers new possibilities for legitimation and disavowal of potentially flawed business processes. The stock market has already judged the underlying quality of an asset or issue and found it worthy. The dream of big money retroactively makes

Securitization

107

monetization seem reasonable—when the capital from the prospect of scale encounters romantic individual fantasy they cross-pollinate. IPOs come as a form of wish fulfillment. The good guys win big in this story when they engage a carefully manicured dialectical financial institution. Choices of platform and valuation model are profoundly affective. It takes only a few minutes watching CNBC during the day to see the total lack of energy on the market floor. The remaining stock brokers lean, barely milling about, acting as extras on the market stage. In recent years the race for increasing speed facilitated by automated trading has taken center stage as a topic for criticism. The world of transparent markets with accurate, hard information may not be long for this world. There are no necessary aspects of securities trading that require that prices be public, reports accurate, or parties known. The histories of the market posed by Sobel and others take a trajectory that is suspiciously akin to new media history—they presume that the new market supersedes the old with increased transparency.99 The mid-century market, with clean lines, and the late twentieth-century market with the screener aesthetic are not the end of a historical process leading toward transparent markets. Beyond the NYSE there is a world of markets that exist in the darkness without meaningful public oversight or even the pretense of a community of friends. These are fully immaterial markets. Dark pools are curious as they provide many of the same functions as conventional stock markets, and may even enhance some properties of transaction facilitation.100 The question for this research is how capital markets continue to retain their layer of thin legitimacy even when that legitimacy should have dissolved in the acid of market volatility. Analyzing the hedging models taken by large actors on invisible markets is a laudable research project that surely receives a great deal of attention. Much like the ways in which the e-trade aesthetic disarticulates stock from the stock market, dark pools break the necessary relationship between capital formation and capital markets. Securitization in the dark pool loses track of all but the price quote itself. Pools for alternative instruments pretend that these gadgets are somehow as stable as the stocks of old. This is surely preferable for professional traders working at incredible speeds with massive volumes. Yet as long as the stage of Wall Street is intact, legitimation will flow. Obituaries for the NYSE are now written regularly. Emily Lambert, writing in Forbes, argued that the NYSE was killed by the replacement of capital stock activity with derivatives.101 For Lambert, the NYSE remains only as a

108

Selling Social Media

brand, which is “pointless.” A proper eulogy for the market could inspire the next generation to create new, better markets. Felix Salmon’s prognosis came on the level of legitimation—if the NYSE does not appear to be a meaningful investment mechanism for average people, it loses whatever traction it had to avoid regulation.102 Goldman Sachs and many other large firms no longer maintain floor business at the NYSE.103 Insiders already viewed the floor as “vestigial,” and as Michael Hiltizk reported in the Los Angeles Times, the floor was “not even good for PR photos anymore.”104 CBS MarketWatch described the use of floor images as deceptive. Legitimacy is thin; images of New York patch the holes. Insisting upon the creative narrative of capital formation, securities can be sold through narratives of founding and scalability. Scale allows a high-modern imagination of the relationship of the firm to the economy which obfuscates everyday relationships and media use, just as it encourages a particular feeling that is the material of markets. Gamification of the financial markets, when combined with the aesthetics of industrial design, creates new well of legitimacy for the stock exchange, even as the underlying conditions of the market deteriorate. What this means when the political economy of social networking shifts from the startup to the mainline firm is still an affective investment. Monetization of current transactions turns toward securitization of future returns. Social networks live and die by their potential returns on the market. The payoff for these firms, both affectively and financially, is in the cash surge of the IPO. Just as historical moves in and out at scale, the idea of a social network firm today moves between the monetization scheme on the individual level and the level of the imagination of the stock market over time. Facebook thus has two identities: the purveyor of baby pictures in everyday life and the index of possibility for the market self across time and space. Although others are not positioned identically, the social network segment as a whole sits in this powerful position. Understanding the longer life of these companies depends on understanding the discourse of the interaction between these firms and the economy as a whole—or the discourse of disruption.

3

Disruption or: Steel Mills, Disk Drives, and Hackathons

Novelty is the stock-in-trade of the annual Disrupt conference operated by TechCrunch, the must-attend show for demonstrating competence in new media business practice.1 TechCrunch’s Disrupt conference moves from city to city like a band on tour. Typically, a Disrupt event includes keynotes, panels, and a hackathon. Addresses and panels are fairly routine stuff. Delivering a keynote at a major business conference is a sign that you have made it, that you are a successful businessperson, even if your firm never turns a profit. A hackathon is something different, common in the world of tech startups but unknown in other industries or professions. For the uninitiated, a hackathon is typically an 18- to 24-hour work session where a new piece of software is written or an extension for an existing platform is developed.2 These new pieces of software are then judged and given awards. Unfortunately, most of the software produced at these events is relatively similar, with young engineers focusing on chasing established trends.3 Social media is a copy-cat field, especially in the area of app development. This is not a problem with the engineers but with the diffusion of innovation as organized by entrenched actors—hackathons serve goals other than the creation of entirely original ideas. Repertoire Shakespeare can prove an actor; repertoire app can prove a coder. As a form of labor organization the hackathon is something of a sacrifice— aspiring young engineers join together to create something of potentially great value with little expectation of return. In one sense it speaks to the wealth of the Silicon Valley culture: it is so rich with data and code that vast efforts can be allowed to lay fallow. If rapid work sessions could reliably create scalable, durable code, there would be no reason for anyone to be employed in the industry in the first place. Unlike a barn raising, where the assembled building is possessed by

110

Selling Social Media

someone in the community, the product of the hackathon is typically owned by a corporate partner. Participation is in essence a tryout for a major player. Song Zheng describes this in a guide to what a hackathon should be where “‘How do you make money?’ should never be asked of a hackathon project. The goal of a successful ‘hack’ is to be mentally stimulating for developers, not profitable.”4 Achievement motivation is useful for both decreasing payrolls and increasing participation. A gold star and a certificate can save thousands in pay. Intrinsic motivation provides a good cover for an intense job interview. A few major features of Facebook (newsfeed) were created through institutional hackathons.5 Several dozen hackathons in the exception proves the rule that most projects at hackathons are for practice only. Now mature, Facebook emphasizes stability and smooth product development over rapid, chaotic change. Even if the products are often short dated, the labor of the workers is quite real. Hackathons are a powerful instance for capital formation— new objects for investment created through the call to hack. Capital in the sense of this book could also include the affective dimension of styling the business. Or, in the case of Facebook, to create a reoccurring carnival that suspends normal working processes to strengthen the organization.6 Rather than being revolutionary, events of a hackathon are conservative in as much as they strengthen existing allocation of power within the industry.7 What the hackathon represents is not the emergence of an anarchic startup culture or the autotelic creation of applications, but the interface between existing formations of capital and the organization of space. Investors with existing APIs set the terms for collaboration. In very literal terms, they buy pizza and T-shirts. The hackers provide the engineering labor. Judging practices are carefully considered and exist only within the distribution of the sensible—a really revolutionary code might not even be recognizable as something interesting.8 There is no mysterious tacit knowledge to be rationalized, but an overt call by established firms to organize and utilize a well of attention and labor.9 There are only so many things that systems are either designed to do or can do. Changes in the underlying configuration of coding languages and equipment would be revolutionary, but are really quite rare. The microcomputer revolution was truly transformative as it replaced the underlying organization of entire domains of life such as file cabinets, pencils, and correcting tape. It is unlikely that new social network technologies will have any of the impact of the replacement of the typewriter, and that anything that changes the experience of living will be built in a night.

Disruption

111

This chapter turns from the idea of securitizing a particular issue of capital stock toward the ways in which the story of a social network firm engages the broader real economy. The companies building new technology at hackathons are not typically social networks in and of themselves, but firms attempting to add social network like technologies to other domains of commerce. Adding this social network layer allows firms to become disruptive—to replace incumbent players by offering replacement products with some social sweetener. Social networks are not simply selling the idea of advertising on the network, but the network itself. Instead of selling advertisements for a local restaurant, Facebook’s final plan likely involves transaction processing; Google could become a hedged fund. In a world with excess capital, social network firms may even have the ability to enter into entirely new markets if only for the fact that they might generate their own sales leads internally. Entering new markets testifies to novelty. Philip Rosen frames the relationship between the romantic individual and novelty excellently: “The digital utopia seems inexorably to push toward a closed circuit of individual subjectivity and image, the conceptuality of one defining the novelty of the other.”10 Understanding the evolution of a term such as “disruption” calls for an approach documenting what a term has meant, what it is its meaning, and what it will mean.11 This chapter is shorter, covering the idea of disruption: Three formulations of the history of disruption are considered, with a special emphasis on the work of Clay Christensen. Although Christensen’s formulation of disruption is often taken as authoritative, it is important to keep the other major ideas of disruption from that time period in mind as they inform much of what the term has come to mean. Disruption is considered as an argument, focusing on the ways that disruption stiches systems of claims together. By invoking disruption, an arguer can gloss over changes in physical and economic processes. Strategically, social network firms are mature; they are moving to leverage advantages across sectors and often operating in ways that call the very idea of disruption into question as these firms begin to leverage traditional incumbent firm strategy. For social network firms an important and paradoxical part of a mature strategy would include maintaining business behavior associated with younger companies called unicorns.

●

●

●

112

Selling Social Media

Defining disruption In 1996, the term “disruption” wasn’t particularly positive. Turning to conventional dictionaries, there are really three meanings for the term: to throw into confusion or disorder, to interrupt or impede progress, to break or rupture.12 Disruption was ambivalent at best; confusion and disorder are rarely positive. Now one can celebrate being labeled as disruptive, receive a great deal of money to disrupt an industry, and even attend the Disrupt conference. Disruption changed—what once indicated the destruction of something has now become creative. Schumpeter’s creative destruction, where old institutions and structures give way for the growth of new, has been transformed the necessary pain of progress into a masochistic virtue.13 Schumpeter’s critical idea is that change is a persistent feature of economic systems that should not be thrown away prematurely. At the same time, we should be careful to avoid the assumption that all destruction is positive, that the impact of destruction should be amplified, or that destruction should always be accelerated. Disruption was described negatively as there is some value in the continuity of the status quo. There seems to be agreement in the world of business books that Clayton Christensen coined the term “disruptive innovation,” and that this term is often the key referent for disruption today.14 Unlike other business books, Christensen was clearly embedded in a scholarly conversation with a meaningful bibliography. The term appears on a regular basis meaning simple injunction or difference in works like Foster’s The Attackers Advantage, where disruption refers to the interruption of a past state.15 Christensen’s disruption advances Foster’s and is the focus of this analysis for few reasons: his work has a robust citation history, his work came first, and the continuing citation of Christensen as an authority in this field. Continuing influence is tricky as Christensen’s argument may drift. The focus on Christensen and case study–driven business writing then turns toward the grand economic theory of Downes and Mui in a reading of The Killer App, and the advertising-driven origin of disruption in Jean Marie Dru’s Disruption.16 Organizationally this progresses from the concrete to the ethereal—from administrative theory to textual magic. The purpose of this history is not to find a definitive starting point for the use of disruption, but to provide depth to the interaction of this term with the others that it so powerfully interacts with, namely, the securitization, valuation, and monetization: disruption is the interface between these ideas and the broader

Disruption

113

network of businesses. Another way to engage this idea—what happens the day after the IPO?

Christensen’s dilemma Clayton Christensen’s theory was the opposite of the type of management advice offered in the airport bookstore classic: Good to Great, covering instead the path from average to gone.17 The central question—why do strong companies fail? To answer this question Christensen deploys a series of case studies, building from an initial story about the disk drive industry. In each case the incumbent powers are defeated by some combination of startups, seemingly without warning. Christensen’s paradox supposes that the greatest strength of a company becomes the greatest weakness. Firms tend to cater to their existing contracts and customers: this puts strong firms in a trailing position. Investments in products with no demand would not be productive for their current investors. Why change if the business is winning? New products or markets are ignored in favor of maximizing current returns. Listening to the customer becomes akin to giving the inmates the keys to the asylum, and maximizing margin is nothing more than arraigning the deck chairs on the Titanic. In his cover blurb, Dr. Andrew Groves, Chairman and CEO of Intel, notes that the book is “scary.” With good reason—companies that are about to fall from grace are aware or even happy about new competition but unable to adapt or compete. All the choices have already been made—the next step is the enactment of the fantasy. Feeling beyond the point of no return is compelling, and terrifying. The feeling of control would seem to be doubly important for the supposed captains of industry. Midway through building his argument, Christensen describes the theory of resource dependence.18 As an approach to understanding the relationships between firms’ behaviors and customers’ needs resource dependence theory focuses on the intractable, irresistible power of the demands of customers. Instead of auteur managers cunningly crafting strategy, firms are much more often the created by their external context. Post-structuralism, enter the Board Room. Disruptive innovation interrupts not just the flow of money, but agency itself. Given the power of external actors to shape the flows of money and power within a company, it would be folly to discuss any disruptive effort without reading the industry as a whole. What this theory does is emphasize the importance of demand—firms need to stay with (or to survive ahead) of the

114

Selling Social Media

potential pull of customers. What should be even more worrisome for corporate leaders is that organizations consist of many lower-level players who can often thwart even a visionary management.19 The structural arguments behind disruptive innovation theory are not particularly complex. Typically, a new entrant into an established market elects to focus down market where margins are not as rich and the struggle between maximum quality and minimum price is often more easily decided on the basis of cash in the pocket. These are opportunities when an excellent expensive product might be replaced by an average product at a lower price. In the disk industry, many of the established players had focused on maintaining, or, to use Christensen’s terms, sustaining their current position. New entrants were quick to adopt new technologies and focus on fringe products. Established players, due to their focus on sustaining existing relationships, were unable to justify working on smaller disk drives (in both capacity and size). Customers did not see the need for smaller drives and thus the established players in this industry did not focus on those markets. Eventually customers decided that they were interested in smaller drives. At this point, business shifted away from the established firms toward the new entrants. As larger cultural and market forces created a surge of demand in excess of, and transforming the needs of, the existing clients, the former startups were positioned to inherit the high-margin accounts. Customers are fickle. Christensen’s case study of steel mini-mills emphasized the capacity to control a market with low-quality goods. Firms like Nucor were not a threat to Bethlehem Steel because their technology, the mini-mill, did not produce large sheets of blemish-free steel. If customers accept only large rolls of top-quality product, the market will not change. Before mini-mills the production of steel required large facilities that required near-constant output. Making steel involves the proper oxygenation and blending of metals at extremely high temperatures in a specialized furnace. Getting that furnace hot and safely moving materials in and out of it is extremely difficult. Mini-mills allowed much smaller amounts to be produced at many more locations at reasonable quality. Other innovations in the use of iron carbide saw the industry faced with oversupply of sufficient goods.20 Good steel can replace great steel if you needed only good steel to begin with. Overproduction of steel is a problem worldwide.21 Oversupply may have been inevitable: the role of small mills could be overstated. Good, cheap steel made quickly has driven the market to failure. Insulin offers another study, where the replacement product is not lower in quality, but articulated with a new delivery system. Christensen refers to this as

Disruption

115

performance oversupply.22 Really good insulin delivered in an ingenious way beats really, really good insulin delivered in the conventional way. Eli Lilly’s strategy for success for decades (increasing purity) had overdetermined the range of possible corporate decisions. For users of insulin there is a threshold where good enough is good enough. If perfect is only marginally better than good, the perfection premium will plummet. What unites all of these stories is the theme that a down-market competitor, empowered by a slight technological change, can upset the pricing model that has made a powerful company successful, and further that established companies often are unable to rationally justify changing their businesses. Disruption comes to refer to a number of ideas ranging from accessing the discount segment of a market to focusing on product innovation. The stories focus on the ways that a small company gets larger. The real-time scaling of innovation structures an unstructured narrative. The break in the continuity of business agency opens space for reader identification. Stories of fundamentally strong businesses become tragedies where the Achilles heel of the hero is formerly a source of great strength. Although the second section of the book introduces the idea of adaptive strategies against disruption, the gravity well of the critique is too intense. Escaping from the propensity to maximize current results may be impossible. At this point the counterfactual appeal of Glassman and Hassett’s 1990s business classic Dow 36,000 should make sense—they imagine a world where the demands of outsiders have lost their power.23 Dangerous down-market vipers that would threaten your business have been defanged and pessimistic leftists silenced: now everyone can be rich; everyone will buy a Volvo. Brand names offered them protection against downmarket entrants. The popularity of the Dow 36,000 theory makes perfect sense. The qualities that make Christensen’s work so readable are also opportunities for critique. The Innovator’s Dilemma, like all business books, is a synchronic slice; it understands the now even as it makes historical claims. Harvard Professor of History Jill Lepore made a number of useful arguments about flaws in the disruption argument in a powerful essay refuting Christensen’s work after the initial publication of The Innovator’s Dilemma.24 Many of Lepore’s points are resonant with this reading of Christensen, but there are important differences. One of Lepore’s central points of contention with Christensen comes on the diachronic level; over the years the finality of his case studies was not so final. His vanquished firms were never as defeated as he made them out to be, and the victors never quite as dominant. U.S. Steel, for example, was not defeated by

116

Selling Social Media

Nucor. Eli Lilly remains a major pharmaceutical company. Melodrama requires concrete good and bad guys; there is very little space for ambiguity. In terms of prediction, Lepore is points out that Christensen’s theory driven investment firm lost money and closed. Hindsight does provide Lepore leverage, just as it did Christensen. Predictions of disruption are the everyday work of the business press. There is no basic business research; application is everything. Thousands of startups have been funded with aggressive valuations because of their disruptive potential; few, if any, have ever been realized. Disruption builds from a narrative sensibility; Boltanski and Thévenot (discussed in the introduction) are particularly insightful on this point. Working in shades, probabilities, and potentialities is space of both communication and business scholarship. Telling the story of disruption to inform practical reason is the primary purpose of Christensen’s work. Translational research always poses this challenge. Survivorship haunts the case study method.25 It is an approach that supposes incompleteness. Conclusions in this approach often hinge on what is complete and persistent. Lepore identifies a key aspect of disruption discourse that will appear later in this chapter: often disruption is a stand-in for change itself. Change is persistent. Betting on the continuation of change is an easy call to make, almost to the point of tautology. Lepore concluded that the history of disruption was, “Transfixed by change, it’s blind to continuity. It makes a poor profit.”26 The Christensen used as a point of reference in this chapter is the concrete Christensen of the 1990s, not the Christensen of today.

The law of disruption and the birth of the killer app Disruption for Larry Downes and Chunka Mui in The Killer App is the space created by the exponential increase in technology versus merely linear human growth.27 Changing technology is so dramatic that it is beyond human control. By the time of the writing of The Killer App, stories about innovation had taken on a vernacular quality through named laws. Underlying disruption are the twin forces of Moore and Metcalfe’s laws: computer power is rapidly increasing (Moore’s Law), and networks are more valuable as they become larger (Metcalfe’s Law). To visualize this relationship in their writing, the authors use a graph with a bundle of curves appearing on the same axes, with slight curves being present

Disruption

117

for the rate of change in business, society, and regulation, with one exponential curve for technological change dwarfing the rest.28 Downes and Mui go as far as to cast disruption as being something of a malevolent agency: “The Law of Disruption is relentlessly opening closed markets, exposing corporate waste, and laughing in the face of government intervention.”29 The lack of human motivation to cause change is inverted into the agency of disruption. Disruption laughs. Their summative vision for the law of disruption is that the forces of Moore and Metcalfe are invisible powers to be compared with “earthquakes and volcanoes are the manifestations of complex interactions between geological forces beneath the surface of the Earth.”30 What is remarkable about the appearance of disruption in The Killer App is the way in which technology is inserted into accepted economic theory. Instead of taking an approach to the reading of public culture or a sector as the site of disruption or Christensen’s analysis of a particular product market, the theory of the market itself is taken as providing the force that is disruptive. This is accomplished through the interplay of two important ideas introduced by Ronald Coase: the theory of the firm and the theory of transaction costs.31 The theory of the firm posits that issues in contract law and communication make it difficult for firms to create contract relationships that are clear enough to secure what they need from potential partners. Firms respond to these inefficiencies by integrating additional units into their company; once internalized there is no need to create a contract and efficiency increases at least in as much as middle management can be controlled. An integrated firm captures the profits of both the supplier and the manufacturer. Coase’s theory of transaction costs argues that in a world with no transaction costs, resolving the damage of tradable negative externalities is best done through a market mechanism. These are fairly heavy conditions. These are two important ideas for understanding the world today. Explaining the benefits of vertical integration and issues in contract writing is a topic for introductory classes in many fields. The theory of transaction costs, often referred to as the Coase theorem, has a far more conflicted life. The theory has a very limited scope of application: to a hypothetical world with no transaction costs and tradable externalities. As a thought experiment this is useful for understanding the conditions under which different sorts of remedies might be optimal. The idea of the Coase theorem has strayed from this limited application to be a way of providing an authority warrant for the argument that private markets are always best at distributing negative externalities despite

118

Selling Social Media

communication problems. If something bad happening could be equally well resolved by negotiating between two parties, they likely will arrive at the best solution through a contract as long as they have equal information, no transaction costs, and the bad thing (the negative externality) is tradable. Negotiating about who should provide parking in an urban center could be quite effective. Negotiating about who should compensate persons exposed to radiation would be much less productive as the damage is done. Coase’s examples tend to be incremental and interruptible. The world of bargaining for negative externalities is very limited. This break between the theory of transaction costs in a limited sense and the deployment of the theory as a vision of the perfectibility of the market is crucial to understanding contemporary neoliberal politics: Coase is the brand name under which deregulatory impulses now are sold, even if they fail to fit with Coase’s analysis. Expanding negotiation to apply in cases where there are high transaction costs or non-tradable externalities pushes the argument to the breaking point. Coase was not nearly as doctrinaire as those applying this theorem. This will shape the debate over the legacy of Coase going forward.32 The explanation of the enactment of their two-force model of disruption in actually existing discourse networks is that technology has provided a complete, knowable network with unlimited computing power, that accurately distributes externalities. With this counterfactual space of friction-free transactions in place, the communication and contractual difficulties that had driven Coase would be reversed. Any benefits of integration could be captured through contracts. Every externality would be tradable. The firm would dissipate into a self-organizing post-corporate economy. It only makes sense then that Downes and Mui are interested in algorithms and devices that replace even the need for humans to purchase things or do much of anything else: they are imperfect aspects of a perfectible technical network. If you assume omniscience and telepathy, your ideas about the economy can get strange fast. Technology in The Killer App gains the magical power to make perfect communication possible, all in the service of the idea of transaction cost optimization. Or, as Downs and Mui argue, “It is a great time to be a schizophrenic [sic].”33 Downes and Mui arrive at a position curiously inverse to Christensen. Instead of starting down market, disruptive innovators for The Killer App start up-market, “cherry-picking” the most lucrative customers.34 Disruption is now the opposite of what was described by Christensen. Adapting to disruption would suppose that a firm would change their relationship to the ownership of

Disruption

119

physical things and thus become a holding company organizing the efforts of a diffuse network of agents who would be left holding the bag while the firsttier firms buy and sell it. This is basic post-Fordist organization, referred to in this text as the law of diminishing firms. By installing the size of the network and the density of transistors as the engine of business development, the agency displacing aspects of Christensen’s writing are carried through with a renewed intensity. It is not merely your engagement with your network that causes your firm to fail, but the invisible structure of the universe. Instead of presenting a theory of disruption as a matter of industrial organization, this is a theory of disruption as technical force. The impact of this theory of the market is muted in the conclusion, where the ontological vision of Moore’s Law as earthquake is replaced with a theory of the channel. Companies could seemingly adapt to change and become disruptive if they add “an e-mail culture” but that responding to the world rending force of disruption requires “trauma equivalent in force (but faster in velocity) to the movement from an agrarian economy to an industrial one.”35 Hyperbole is always in fashion. Like all books in this genre, the third act requires that the intended audience have some capacity for change and survival. The theory of disruption in this book supposes that there are insatiable forces that drive the inversion of economic conditions that appear in the form of a post-institutional demon known as The Killer App. The reason why this book matters is that it represents an inversion of the sort of disruption proposed by Christensen that might appear right alongside it on a popular business reading list. Disruption for Downes and Mui inverts everything we already knew about market processes and in this shift it pushes the disruption vernacular into an increasingly high conceptual orbit.

In the ether Jean-Marie Dru’s Disruption supposes that disruption means affective change. Disruption is a practice of interruption into the everyday life of a client. Conventions are disrupted by visions. Disruption is a form of poetic selfrealization. Disruption in this sense is not a matter of producing a new product or doing anything physical (there is no mini-mill or perfect transaction market) but the process of selling the aura of difference. In this third approach, disruption exists because you say that it does.

120

Selling Social Media

For Dru the move to collapse the claim to value into the business process is understandable: his object for analysis is advertising copy. The impact of disruption happens in textual and affective waves the entire way down. The appeal of contemporary figurations of disruption would make sense as well because so many basic monetization processes are tied to advertising. In this sense even the ethereal approach to disruption plays a powerful role in legitimizing monetization stories’ deployment in the discourse of securitization. Advertising is the ultimate industry for a disruption story as it is an industry that has been constantly cycling through disruption. The case for including Dru’s variant on disruption extends beyond the reflexive use of this idea within and for advertising, but to the sequels to the book. By the point of Dru’s third book on disruption, the argument is no longer prescriptive but historical. How Disruption Brought Order is not even necessarily an evaluation of a particular process but a guide promising a strategy for the institutionalization of the unconventional.36 This process of creating an ongoing revolution is intended to operationalize the advice of popular writer Peter Drucker in implementing a Schumpeterian version of creative destruction— an idea that seems to resonate more with Downes and Mui and less with an advertising industry representative.37 Dru has distilled the process for disrupting advertising and entire industries down to a relatively simple formula: hold a disruption day, what would become a hackathon, “when participants are invited to imagine the future of their company while wearing the hat of an innovative business leader, such as Steve Jobs or Richard Branson.”38 Although the Steve Jobs imagination exercise is just the beginning of the disruption process, the remainder of the exercises that Dru proposes for disrupting industries from computers to body wash seem to be creativity games. The special activity proposed seems to be located in the day itself, meaning that disruption is something you do with a speech act, not something you do with a product and a price point. After the initial run of the creative process, where conventions are disrupted by visions, the visions are worked backward toward the conventions and the conventional news media, which Dru considers to be a foundation of his method.39 The conclusion of his recap on the recent history of disruption advises that companies should think of themselves as brands.40 This advice is not particularly revolutionary. What is important is the way that changing companies, cultures, and business continuity are described. Disruption tales make it credible that the mere application of a few games or a new brand concept could effortlessly transform an industry.

Disruption

121

Disruption as argument Arguments about the nature of a thing are important; they stage other arguments. Contrarian arguments often turn to ontological claims for this very reason; claims about entire categories of things can do a lot of heavy lifting with very little effort expended in the proof. The definition of society dramatically affects sociology. In the first iterations of the disruption argument as proposed by Christensen the term describes the replacement of incumbent products with adequate lower price point competitors. As disruption evolved it took on the character of distant reactions to those competitive shifts. Disruption becomes visible as its signs ripple through industries, not in the price patterns of a particular good or even in the success or failure of a case study. How industries and businesses are understood as moderators between individual transactions and capital markets are argued about through claims about action across the scene. Unfortunately, this means that Lepore’s answer to Christensen means little for the trajectory of the argument—disruption lives in the prospect of ongoing action through a complex network, not in the theory or even an example. Disproving disruption by disputing the points is very difficult. Disruption takes on a life of its own—an implication of activity unmoored from the original theory is powerful. Phillip Rosen developed a theory of the indexical trace to distinguish between the digital and the analog—both are expressing the same sort of ontological commitment to prove that they were somewhere, to establish the existence of the past.41 Media provides the proof of existence of what came before and hints of the mode of production.42 Audiences are engaged both because they retroactively add aspects of the indexical relationship and because they hold themselves distant. The knowledge of the happening, of the undefined (or audience defined) change animates the argumentative scene. Disruption is not an image or a fragment that interpolates an argument but a testimony to the nature of things and actions in reality that sets other arguments in motion. As a form of historical work in itself, the indexical trace appears as a figure of the digital, providing both evidence of a radical break with history and a break in itself; disruption is much the same.43 Arguments about the nature of new media, ranging from relatively banal corporate tropes to the founding of the MIT Media Lab, depend on an indexical argument for novelty, for a break with prior history.44 Business research in particular can benefit from an idea of the indexical. The mode of case study compilation has a deep narrative dimension—there is no computational depth metaphor coming to rescue business from the humanities.

Selling Social Media

122

Disruption simplifies and imagines action into the scene. It is the training montage of the fight movie. It is the flashback of the melodrama. Relatively simple terms like “digital,” “disruptive,” and “internet” have deep wells of meaning as indexical terms which depend on their incompleteness. Concrete details about equipment or even the real details of examples about the market itself are omitted. This also adds an important rhetorical dimension for understanding how worlds are articulated together; we describe the things, the feelings, and the actions that exist in any network of associations. An indexical argument is answered with an alternative explanation, not defensive answers to the internal surface of the action. Moore’s law is perhaps the most famous of indexical arguments about technology.45 The public formulation of the argument: computing power doubles every eighteen months, so it is safe to assume that computational limits will be transcended. In a more technical sense, the number of transistors in a given space doubles every eighteen months. This was true. Engineering changes. Increasingly power is dependent not on transistor density by on cooling. Chips work better (or worse). Heat dissipates. Each individual electrical action requires heat to be produced between two points, even of those points are very close together. The hotter the transmission medium, the more resistance: more resistance, more heat. A feedback loop. Electric stove burners work on this principle. As electricity is applied to the resistor (the coil) it gets hot. The most recent innovations in extreme speed processing are increasingly not focused Disruption Theorist

Action

Monetization Metaphor

Christensen

Lower level preference discovery

Arbitrage

Dru

Cycle of refinement, ongoing improvement

Extraction

Downes and Mui

Reversal of structural economic norms

Alchemy

Figure 3.1  Monetization matrix with disruption.

Disruption

123

on using more transistors or even different structures of busses and chips, but in enhanced liquid cooling systems.46 Although Moore’s argument is referred to as Moore’s law, it is not a scientific law. It isn’t ideal gas law or Ohm’s law. Moore’s Law only has force because it has disavowed the dimension of electrical engineering as dissipating heat in favor of a form of technological power. The inexorable march of processing power is a much more stable referent than the increased dissipation of heat or a multifaceted discussion of processing design. It is a slogan for exponential growth. Perhaps the most telling, Dan Woods, a contributor to Forbes magazine, used the phrase “creates a Moore’s Law for data” to describe the indexical relationship inherent in increased production of information.47 Even in a world where the basic idea of doubling computing power is no longer true, Moore’s Law still means a great deal.48 The appearance of Metcalfe’s law, the idea that larger networks are more valuable, becomes a practical ontological truth through the disavowal of its origin in network math.49 Larger networks are larger: they have more nodes and more edges connecting them. Networks are not symmetrically valuable; in fact often times distant notes can be a drain on the center of a network—meaning that Metcalfe’s law only really make sense when edges and vertexes have some real value. Although an airline network diagram might show Miami, Dallas, and Austin as three nodes, they are quite different. Dallas and Miami are hubs for a major airline; Austin is a small city destination. Networks are uneven. Some nodes are worth more than others. Some connections cost more than others. Attempts at evaluating network centrality demonstrate this problem. There is no universal method for determining what the most important node in a network.50 Determining the correct measure of centrality depends on an evaluation of the network and what centrality really means. Evgeny Morozov uses a similar argument in his critique of internetcentrism—the internet is a real thing, but its characteristics as a physical system are often ignored for the purposes of treating it as a magical source of energy and action.51 Stuart Brand’s “information wants to be free” or Zuckerberg’s “privacy is no longer a social norm” does very similar work as indexical arguments.52 Information does not want anything in a very literal way; the idea that people might be interested in sharing basic information as a matter of culture is another matter. Privacy on contemporary social networks refers boundary negotiation.53 Boundary negotiation entails a complex trade-off between competing interests with high stakes for individual communicators. This tends to mean that people are willing to make some exchange of information for access to the goods of

124

Selling Social Media

publicity. Or in direct response to the idea of Metcalfe’s law, the expansion of the network makes uses more reticent to share, decreasing the value of the network as it expands.

Where do unicorns go when they grow up? TechCrunch, the sponsor of the Disrupt conference series, maintains a leaderboard of unicorn companies, the Unicorn Leaderboard.54 Rival Fortune maintains the Unicorn List.55 At first glance these pages seem like a sort of joke about business discourse. Unicorns are magical, mythical horses with one horn. It seems hard to believe that more traditional firms would accept a label associated with a flimsy concept. Yet, “unicorn mania” is sweeping the economy.56 Although slightly cartoonish, the TechCrunch leaderboard does a fine job of collecting information about these unicorn firms as well as their investors in a tabular format. It is not uncommon to see multiple rounds of investment, marked as series A–G, for each company. Unicorns tell the story of the magical super startup imagined as if it were a fully developed firm. Collected onto a single leaderboard, individual entrants in many markets appear to be a single cohesive force, rather than an array of diverse firms. This is also a strategy for allocating network effects more rapidly; absent a unicorn list it seems likely that press coverage would be slower in coming. Among the pride of the blessing of unicorns Uber, Airbnb, Snapchat, and Pinterest share some important characteristics. Snapchat and Pinterest seem to be social networks. Uber and Airbnb use social network like interfaces to engage existing markets. As disruptive plays, these businesses make sense. Reducing transaction costs and increasing inventories of goods are traditional means to expand a business. Uber depends on the continuing stock of taxi cabs that are augmented by their newly recruited drivers to create an increasing supply of cabs in service, keeping wages relatively low. At the same time Uber is positioned to maintain a flexible labor force that provides the capital for what would otherwise be a lower-margin, locally coordinated business. Airbnb depends on individuals to provide the rooms to be used for their distributed hotel concept. By providing transaction facilitation, Airbnb offers users real value in the construction of an alternative network of hotels. These businesses fuse social networks and another business concept. The other business concept is ultimately the driver of leads and thus of transactions through the social interface. Social interface making

Disruption

125

is interesting work, but ultimately not limited to new players in established markets. On the other hand, the final money-making vision for established social networks is often to enter into an existing market by virtue of the network effects from their social network products. The ultimate example: Facebook’s final business plan would be to become a transaction processor. The feature, known as payments in the messenger app, is the first step in becoming a financial institution. William Foxton, writing for The Telegraph, identified this as “disruptive” innovation.57 His logic is sound, large financial institutions are not well regarded, many households are under- or unbanked, and in many emerging markets mobile banking has been far more widely embraced than it has been in the United States. Well-capitalized retail banks can be a powerful pro-social force; the same is true of postal banks. The reason why this market would seem to be ripe for disruption is the difficulty of the banking process itself. Banking is a capital-intensive business that runs at a very low margin. Facebook would be better off not becoming a bank. Target stores mistakenly moved into groceries, not because they were interested in the grocery business itself (this is low margin and high capital) but because of the prospect of increased foot traffic through their stores.58 For social networks, the product they have already cultivated is like the grocery store; they are trying to move into general merchandise. Target soon discovered that the grocery business, the Canadian retail market, and online shopping were difficult businesses. Walmart is successful in these areas because of heavy investment, not luck. Instead, if Facebook could become a credit card company or even a major transaction processor, they could have a meaningful financial business. Even with ambitious growth, Facebook looks financially like CBS; if they can parlay their success as a communications firm into another sector, they might build a business that could support an incredibly high valuation. Unlike other industries that would actually require fulfillment these payment processing industries entail less risk. Pure transaction processing is a higher-margin industry as there are no loans to be made. Robert Byrne and Jason Hanson, principals for the consulting powerhouse McKinsey, argue that the prospecting of an integrated paymentsadvertising experience is the future of retail and banking: “To capitalize on this opportunity, merchants need payments solutions that integrate adjacent business services and enable new functionalities that enhance loyalty programs and advertising performance.”59

126

Selling Social Media

Facebook adds features regularly that look like the business that unicorns might add. Many unicorns exist because Facebook or another established social network player has yet to leverage their capacity for networking to absorb their industry. What would Uber be if Facebook purchased and deployed Lyft across their network? Airbnb with the strength of a Facebook network backend would be unstoppable. Google, now Alphabet, attempted to institutionalize this capacity through their “moon-shots,” an effort to use success in coordinating search advertising placement into dominance in other sectors.60 This cyclical conception of disruption is exactly what Dru was arguing for, and what Christensen missed in his concrete discussion of market positions. The final act for an alchemic monetizing disruptor is the transformation of reality itself, thus the penchant for extreme opportunities like space flight and immortality. Acting magically makes a company magical. Unicorns are made for the purposes of stoking excitement and building media coverage. They are special animals that deserve special levels of press attention. The network effects created by this attention allow these firms to build their network like communication infrastructure and thus engage in the industries they have targeted. At the same time, any firm that has an established business might do the same by cultivating a new social network interface. Lepore was on point in showing the ways in which Christensen overplayed his hand; established players do fight back and they can win. The performative making of a unicorn completes the work of the indexical argument that a social network like startup might disrupt and thus gain access seemingly to an entire industry. This is the outcome of alchemy—the network is turned to gold. Horn glue can be worth a fortune, assuming you can find a business that will allow a horn to be affixed to its forehead.

Disrupting disruption The power of the disruption argument to explain relationships of cause and effect should not be underestimated. Tracing supply and demand in the disk drive market, the steel market, or the insulin market is difficult, and many of the key factors in these stories cannot be cleanly mapped onto each other. There are commonalities, especially in terms of preference level, but there are also stark differences. Many of the theories of discourses of disruption that play out today depend on network effects conjoined with new interfaces or raw increases in

Disruption

127

computer power. The power found in sheets of atoms in graphene has some real referent, as do network effects.61 It is not merely the size of the network that is important for understanding value, but the prospect that the network is knowable. This is the founding problem of Big Data—it is data about something. No matter how fancy the mathematics, the insights produced by the analysis must be implemented in the real world.62 Disruptive innovators seemingly have access to the entire market utilizing the network of causal relationships between suppliers and customers reimagined through a single indexical claim. All of the weird, complex, unpredictable fabric of the real world is supple in the disruption story. Notice that these innovations are presumed to expand rapidly; they scale as if they are a visual projection—speed is easy when it is imaginary. In contemporary use the value and structure of the world depend on what has been identified through our synchronic-diachronic study: a combination of down-market entry with surprising innovation in the moment and the reversal of economic processes in the historical story. Disruption appears differently depending on the context and timeframe. In traditional value chain analysis as theorized by Michael Porter, a business can be broken down to the steps by which value is added to a final product.63 Some steps are more rewarding than others. Transforming flour into dough may add more value than adding seeds to the field to grow grain. Value added can be charted along the chain of the business. The ideal scenario for a private equity firm requires purchasing an inefficient company, quickly adding or removing failing units from their business process, and holding an IPO for the revitalized company. Immaterial goods and labor can also be read through this model. Finding the weakest and strongest activities of a firm is essential. Private equity firms and venture capital investment represent an important approach for adding value to companies. Buying and selling companies to each other makes sense in this world. In the early days of this organizational model there were a sizable number of companies that could be transformed quickly; as the decades have drawn on the prospect of rapidly creating value through buying and selling a company has decreased dramatically. There are only a handful of successful national fast-food chains. Not a thousand. You can only fix Burger King once: there is only one home of the Whopper. On the other hand, as I argued in the introduction to this book, the process of selling the combination of businesses is rhetorical and the value of a business is created through careful stagecraft and performance. If the roadshow is good enough, almost any burger could have that flame-broiled taste: if only in an investor’s dreams.

Selling Social Media

128

With dramatically more money seeking a relatively small number of opportunities, the future of venture capital is not bright. Despite the claims to novelty of businesses in Northern California there are still businesses in other parts of the world, even some of the much loved unicorn crowd. Investors do not provide money out of the goodness of their hearts or to intellectually challenge developers: they want a real return. Unicorn mania may be resolved by acute pocket book nerve pain. Returning to the fake news as discussed in Chapter 1, we find that eventually any product may settle toward the minimum acceptable level. In Chapter 1, the discussion of monetization fake news was posed as a site of arbitrage where down-market spaces were suddenly opened by the short circuit of the ad exchange. This is also a strong example of disruption in action. To visualize this, consider an idealized ecology, where overhead is positively associated with quality and popularity is negatively associated with quality.

Y in italics

Overhead

Popularity

Acceptable Curve Legacy

Acceptable Curve Social Quality

Changing Acceptability Levels: Editorial Floors

Figure 3.2  Disrupting the news. The dashed lines are demand curves set by any number of means; in this example the social demand curve opens both the high quality–low popularity space and the low quality–high popularity space. These demand schedules could, of course, be changed in any number of ways depending on your view of the public good.

Disruption

129

As the preference level required for the editorial content of news drops, the possible regions for profitability dramatically increase. In the legacy era, the distribution constraints held the curve higher than it would be now. The constraints existed in both industry norms and practical implementation. Eventually, if the quality of content was not controlled by distributors and remunerators like Google and Facebook, the curve would approach the axes. Cheap, popular, low-quality content could overwhelm the industry. The relationships presented here are simplistic to make a point: the fake news explosion of the 2016 election indicates that there is no natural preference level that would protect the public sphere. Thus in the wake of the election activist strategies included subscribing to major news sources to pool capital in the upper-left region of the graph, and more importantly major advertising facilitation platforms like Google enforcing quality standards. As overhead drops toward zero firms become more dependent on other actors for distribution. In the longer run, the intervention of state actors may reframe the relationships in this market. Some spaces in this market could be foreclosed to block propaganda; others could be curtailed to shape public debate. At least in the formulation provided here, shortly after the election Google added a circuit breaker: they no longer place ads on fake news sites.64 Disavowed through the image of monetization and disruption are the real gritty characters of business. Disruption spackles the story of business smooth. After disruption, the landscape must be resettled through the legal system. Compared with the indexical world of disruption the world of litigation is very different. So much of the techno-utopian discourse of Silicon Valley depends on ever-expanding freedom and a self-organizing world; this world has always been a creature of the legal system. This chapter has proposed that a major feature of this bubble is cross-subsidy between different communication markets. In a prior distribution of power in the industry, these models would have faced substantial scrutiny. Now it is not only possible for a firm to use revenue and attention from one sector to pollinate their efforts in another, it is assumed. This is not to say that these efforts are equally accepted in all jurisdictions. In the following chapter, the dynamics of this market for intellectual property rights are read against the activities of dominant social media firms. The results are not simply a critique of certain aspects of intellectual property litigation, but a dialectical recognition of the interaction of state force and legitimation into what is otherwise a gauzy fantasy.

4

Litigation or: In Defense of Patent Trolls

Stock markets, cable systems, and internets do not simply appear. Communication systems and institutions are deeply intertwined with legal systems and governments. Without assurances from state and local governments that a company would be the only provider for a region, there would not have been adequate cash for digging up the streets to install wiring.1 Universities provided critical infrastructure to develop the internet. Many of the technologies associated with Silicon Valley have their origins in the rich capital pool at Bell Labs—the telephone monopoly drove the creation of incredibly new technology. Much of this underlying legal structure continues in the world of internet service providers. Comcast, Cox, Cablevision, and many others are the cable providers of decades past. Offerings for advanced internet service provided by terrestrial telephone lines are limited, although those telephone companies, particularly AT&T and Verizon, provide excellent service through mobile telephones. Some other firms, such as Google, have entered the basic communication services industry, although they too depend on state-governed infrastructure. At the same time, creative people tactically invented new ways of doing things as Streeter argued.2 The interplay of the vision of the romantic individual inventor and the state drives development. Artificial scarcity is critical to any digital media business. Computer files are easily reproduced and transported. Normal inventory and shrink controls do not apply to data. Legal structures related to ownership and copyright are the only thing standing in the way of the rapid distribution of content at near-zero cost. Contract law governs the formation of firms and their procurement of materials. Privacy and defamation law govern the kinds of information shared. State sovereignty determines what contracts, intellectual property, and speech law are in any given country. A full assessment of the legal institutions of social media would take more than a single book. This chapter will take on the more specific question of how

132

Selling Social Media

legal structures interact with the internal discourse of the social media industry as it relates to investment. This is not an exhaustive legal analysis, but a reading of a particular slice of legal considerations that play into the valuation of social networks. There are two major factors that play in the expansion of the industry: intellectual property law and international data law. Copyright is an issue for social networks and the internet as whole; it has little role in the bubble, however. Defamation is a matter for online journalism and to this point social networks have escaped liability for defamatory posts. Privacy is often misconstrued; as argued in many places in this book, privacy today means boundary negotiation, not absolute isolation. Privacy as understood through international law is a different matter that can be understood as the practical discourse of state sovereignty. By focusing on the law, and legal aesthetics at contact points with this industry, we can gain leverage. This chapter will cover a number of key points for social media in intellectual property and international law: The chapter reviews the core aspects of intellectual property law in the United States, and through legal aesthetic theory argues that intellectual property regimes interact differently depending on the metaphors for value and structure deployed by a media company. ● Links between aesthetics in this context become clearer in the evaluation of business methods patents, a controversial area of intellectual property law that would serve to add police power to monetization schemes themselves. Business methods patents will be a critical vista for future legal struggles over social media. These discussions will also explain linkages between monetization, securitization, and disruption through intellectual property law. ●

Following this discussion are two case studies that get at key discourses related to markets and conflict in social media. A limited defense of patent market maker Intellectual Ventures is proposed to make disavowals of the market clear. If industry discourses of openness and market supremacy are to be taken seriously, a company that makes a liquid market for intellectual property rights should be lauded. Intellectual Ventures is often posed, across the tech sector, as a villain.

●

Litigation ●

133

Twitter has deployed a legal instrument that would decrease their ability to utilize their intellectual property rights to generate a revenue stream. Deferring litigation has many strategic benefits, and in deferring Twitter makes the case that the key to extractive monetization is state power.

Finally, the chapter turns toward international law. Although this section does not go to the depth of the sections exploring monetization and the law, the key points will shape the future of the market. State control of communication infrastructures has been the norm; through concepts of data sovereignty and privacy many states are now challenging the vision of a single world connected by a single neoliberal communication network. This comes full circle to the opening of this book—Zuckerberg’s contention that Facebook would provide an affective light that would erase all national boundaries.

Patent, copyright, trademark In the United States there are three primary instruments of intellectual property law: patent, copyright, and trademark. Copyright law concerns the creation of works and derivative works that contain aspects of a protected expression. A work is created when an expression is fixed to a medium for more than a transitory period of time. Fixed to a medium refers to the idea that a work must be attached/inscribed on some physical thing. In recent years the federal courts have protected the meaning of the term “transitory” as well, ruling that merely moving through an electronic system is not fixation for more than a transitory period of time. “Transit” is the key word here. If someone transmitted something that violated a copyright through a wire that you happened to own, you would not be liable for a copyright violation. Inherent in this approach to law and protection is a distinction between the idea and the expression of an idea. An idea is public and cannot be protected, while a particular expression of an idea can be protected. This distinction is important because it establishes a common pool of language, culture, and thought. Ecological thinking about of this common pool is a central theme of James Boyle’s The Public Domain.3 The ecological concept does two things for Boyle: it provides a legitimating metaphor for reform, and a model that can include both basic suppliers of resources and those that consume them. Culture is an interdependent web, a common resource.

134

Selling Social Media

Unfortunately, the legal protections for these commons are weak. The idea of fair use is complicated as it is an affirmative defense costing thousands of dollars to wage against far more powerful firms. Defining a derivative work is notoriously difficult. Siva Vaidhyanathan reviewed historical attempts to clarify the meaning of this term, concluding that even the best efforts of Judge Learned Hand were inadequate to persuade other judges, and, in the worst cases, weakening the critical idea/expression divide.4 The preference for the original over the derivative is not required by the law, a tenet of romantic authorship, and an illustration of the slippage of the indeterminacy of the law, the structural problem that has animated Critical Legal Studies approaches for decades. Indeterminacy refers to the idea that meaning of law is not objective and scientific, but ambiguous and political. As a form of affirmative defense, fair use requires a great deal of money to put into practice. From a perspective of a critique of legal aesthetics, fair use is little recourse because it relies on what Pierre Schlag has termed the energy aesthetic in American law, while the basic copyright case relies on the grid aesthetic.5 The energy aesthetic relates different things through metaphorical connections; ideas relate to each other and evolve. The grid aesthetic creates clear distinctions and boundaries that make law easily compartmental. Easy, clean tests stabilize the meaning of the law. It is very clear to the judge, jury, and everyone else from the outset how the meaning of the plaintiffs’ case functions. The defense relies on a number of logical leaps, extensions, and the idea of an immaterial commons. From the standpoint of metaphor and persuasion, the initial claim is fairly straightforward; the defense requires leaps of faith. Penalties for violating copyright are particularly harsh with statutory damages of one hundred and fifty thousand dollars for a single violation. Harsh damages are supposed to produce a deterrent effect, as well as simplifying murky damage awards. Defamation by contrast has no statutory damages provision, and as a common tort may not necessarily result in a meaningful award as in many cases there is no particular way to measure the level of damage done to a person.6 Simplifying the damage scheme tends toward large awards for what would be perceived to be small infringements. University of California Law Professor Pamela Samuelson and Tara Wheatland have concluded that the failure of statutory damages provisions likely requires substantial judicial and congressional attention.7 These outsized automatic awards make it too easy to win big, which isn’t a problem if one assumes a melodramatic intellectual property economy where derivative works are crimes done by evil doers.

Litigation

135

Ever-increasing terms for copyright protection places culture in a state of suspended animation where publicly created systems of meaning are frozen; they may never find integration into the lifeworld again. A mass commercial rendering of a folk story or popular music form can place it beyond the access of other artists. The estate of James Brown controls the beat of the Funky Drummer, even though Clyde Stubblefield (the musician that composed it) was still working.8 Media firms rely on franchising and artificial scarcity—value is created and preserved through the courts in the first instance. Rosemary Coombe argues that this legal framework creates a chilling effect on the creation of new cultural symbols, and further that it attempts to rationalize the intertextual space that is the affective core of the public sphere.9 When firms are functionally allowed to own culture the possible flexibility to create new culture is extremely limited. Conversely the non-exclusive copyright that social networks claim over user’s content demonstrates the power of ownership—Facebook or Twitter claims the right to recirculate your material without your consent. If your memory is a bank account, someone will want to make withdrawals in addition to deposits. Pools of content are everything. Trademark law is frequently understood through the use of litigation to protect the icons of Disney, and the special exemption given to the Olympic movement to exercise control over speech in excess of what would be afforded to any other company, person, state, or local government.10 The term “Olympic” is restricted to use by firms over 60 years old and those on the Olympic peninsula of Washington. Other uses of the term are not allowed—there is no comparable protection. Protecting the public and owners from confusion is the justification for trademark law. For this reason, trademarks are not necessarily exclusive, as the McDonald’s restaurant chain would not have a legitimate reason to preclude an optician named McDonald from naming their business eponymously.11 Trademark law can have many of the chilling effects of copyright law when the deployment of a trademarked signifier requires an affirmative defense from the user. Trademark for Coombe becomes political in that the identities of corporations themselves and their trademarks have become cultural touchstones and a part of the web of meanings that constitutes public culture.12 It is understandable that Kimberly-Clark may want to protect the trademark value of Kleenex, but the use of their brand name in everyday life is undeniable.13 Patents confer a negative right to pursue litigation, not a positive right to practice a particular art form. Filing a high-quality patent, with well-written claims and a good prior art search, can be quite expensive; even lower-quality

136

Selling Social Media

patents cost real money. The majority of patents that are litigated are software patents, and the majority of the litigants are non-practicing entities, many of which lose if their cases reach trial.14 There are four basic criteria that an invention must meet to receive a patent: that it be patentable subject matter, novel, non-obvious, and useful. Some materials are not patentable.15 Materials that are patentable may change; at one time processes for filling out tax forms were considered patentable subject matter.16 Novelty requires that the invention be something new. Non-obviousness is somewhat more difficult as what might be obvious to some is not to others. The basic client-server model that has been at use in networking for half a century is obvious.17 Using a single-click to complete a transaction on a website was not obvious.18 Being useful would require that the art be possible to practice.19 For example if one developed a really neat design for an anti-gravity lift, one would need to have the ability to defy gravity, or at least have a meaningful set of technical drawings for the lift to be truly useful. Patents provide a limited right; after a certain period of time the right to sue is exhausted. The bargain of the patent is that sharing with the registry advances the cause of knowledge creation by expanding the pool of information that is available for general use. In an ideal world this creates positive conditions for the creation of new inventions while rewarding current inventors. At the heart of this compromise is the idea that knowledge is a public good and meaning is shared between people freely. Law professor Oren Bracha places the origin of this market vision of intellectual property law in the context of the political theory of the eighteenth century, and most tellingly in the work of Adam Smith.20 The romantic fiction of the single individual using labor to transform natural goods for sale operates in the patent, and this form of liberalism is an important element of American society. Patent law has been substantially revised only on a handful of occasions since inception with the Constitution.21 Through this time the prestige of patent law waxed and waned with patents being associated with big business and foreign encroachment. For example, the Smoot-Hawley Tariff Act expanded the authority for the use of patents to preclude the import of infringing items.22 On the other hand public opinion about patents generally was negative with the middle of the twentieth century featuring strong anti-patent sentiment.23 Calls for the reform of patent law have been recurrent. Virtuous inventors have been struggling with the legal system for quite a while. Patent abolitionism has never advanced much beyond a few initial arguments—or as Mark Janis, Director of the Intellectual Property Law Research at Indiana University, quotes from

Litigation

137

Machlup and Penrose in his review of patent abolition efforts, “little, if anything, has been said about the patent system in the twentieth century that was not said equally well in the nineteenth.”24 The 1980s saw substantial liberalization of patents, with the Polaroid and Xerox cases bringing substantial attention to the idea.25 Major changes to the legal structure of patents in the United States have happened in the early twentyfirst century. Of particular note was that the United States shifted from a first to invent toward the world standard of first to file.26 In a first to invent system a firm or inventor could wait until they had some progress on an invention to file paperwork and then retroactively displace others who may have filed first, but invented second. Questions of the order of invention and the quality of evidence were matters of concern. The first to file system is elegant in this way in that there is a bright line: the first application filed with the patent office was first. By shifting the tense of the patent from the past to the present this forces an increased attention to paperwork onto potential inventors. This change, among others, was made to make defense against frivolous suits easier. Patent thickets, the problem of many firms holding patents in a similar area, and patent assertion entities, a type of firm popularized in the early twenty-first century, would have been beyond the realm of consideration for earlier forms of law.27 It is the collection and use of these groups of patents that seemingly inverts the rationale for the patent deal—that suppressing innovation would become profitable. The level of control available through patents has led James Boyle to conclude that the sort of collaboration and innovation necessary to create the World Wide Web would be impossible in the contemporary litigation environment.28 The affective environment of copyright is stabilized by a romantic theory of authorship, while the patent accords with classical liberal political theory. Trademarks take aspects of both approaches. Challenging the deployment of these legal structures requires careful attention to the ways in which those legal regimes are maintained. Pierre Schlag’s theory of legal aesthetics provides important conceptual resources for the critique of the affective dimensions of law.29 For Schlag, there are four major aesthetics that pervade jurisprudence in the United States: grid, energy, perspective, and dissociative. The grid is beautiful as it clearly defines what the law is and how ideas might be situated with regard to it. Grid aesthetics legitimate themselves through sharp distinctions and reliance on settled law. Energy aesthetics emphasize balancing tests and forces. This is the jurisprudence

138

Selling Social Media

that expands and contracts the law on the basis of social change and evolution. Beauty here comes through the appreciation of the potential of the law as a dialogic force. Perspective-driven aesthetics shift the source of authority of the law toward other sources of power than the judges themselves.30 Dissociative aesthetics come closer to the popular understanding of law; a semi-coherent mass of contradictory opinions, this aesthetic is almost always concealed in some other approach—yet the dissociative forced articulation will remain.31 The turn toward the aesthetic dimension of law is helpful as law is an interpretive field— circumstances and texts must be connected to be meaningful in the first place and at different times different readers reach very different conclusions. This is particularly true with regard to capital formation and intellectual property, where the courts already appear less as a legitimate governing institution than as a potential gambling mechanism. Legal aesthetics in the area of intellectual property are particularly dissociated through jurisdiction picking problems. It is important to note that the primary site for the litigation of patent claims is not New York, Philadelphia, or San Francisco, but East Texas. Even in the wake of decisions that potentially limit patent litigation, the plaintiff-friendly bar acts seemingly outside of the trends and procedures.32 If this strikes you as incongruent and unpredictable, yet still the law, you are experiencing the incongruity of the dissociative aesthetic. Schlag’s central example of this aesthetic is the institution of corporate personhood—a structure that is definitely controversial, poorly legitimated, and yet presented as a unitary body of law.33 The court is in a difficult positon, attempting to craft a legal structure that facilitates future innovation while maintaining the bargain of state power and monopoly that has facilitated so much innovation, all while operating in a narrow band of possible affective moods. The dissociative mess of intellectual property law and immaterial industry is productive as it allows seemingly endless romantic identification. The grid of the mature firm meets the energy of the inventor. Ugly law, beautiful fantasy.

Patenting business methods Business method patents posed a substantial legal challenge in the early twentyfirst century. These patents supposed that the conduct of business could be patentable in itself. Given the relatively new businesses proposed by Friendster and Myspace, it is important to consider: why don’t social network firms litigate

Litigation

139

each other out of existence? The Supreme Court of the United States has decided a number of cases related to business process patents in recent years that define important parts of the social media business landscape, especially as these firms relate to the disruptive potential of the combination of their social networks for other industries. Business patents were accidentally in the shift away from the machinetransformation test in the Federal Appeals court case of State Street Bank & Trust Co. v. Signature Financial Group.34 At issue in State Street was a product for combining securities, especially mutual funds in complex ways that were not possible without substantial computer power. This process did not improve the computer or transform an input with a machine but was determined to be patentable as it was “useful, concrete, and tangible.”35 Machine transformation had been established in a triad of patent cases that provided hints as to what might be patentable; by expanding to that which is useful and tangible, the Court dramatically changed the law.36 Useful and tangible are lower standards. The story of business process patents began to turn in Bilski v. Kappos. Justice John Paul Stevens’ concurrence noted that business processes were not patentable until the late 1990s, “For centuries it was well established that a series of steps for conducting business was not, in itself, patentable.”37 Hedging risk was not a novel concept.38 Justice Anthony Kennedy, writing for the majority, found that hedging was an abstract idea.39 Balancing or hedging risk has been a part of business for centuries. Justice Stevens’ concurrence underscores the disjunctive position of Bilski: “In fact, the Court’s understanding of §101 (what is patentable) is even more remarkable because its willingness to exclude general principles from the provision’s reach is in tension with its apparent willingness to include steps for conducting business.”40 The decision in Bilski did not end business process patents; the Court opted for whittling down what is not abstract. Yet, this was unsatisfying given the history of business processes and intellectual property law. Business processes were definitely not patentable in the nineteenth century, and in a humorous note Justice Stevens noted that even the diaper service, one of the “greatest” inventions, was not patentable.41 The First Inventor Defense Act, cited as the point where Congress would have created business method patents was actually a reaction against the decision in State Street Bank.42 Supporting business method patents would read Congress’ reaction backward. In a separate concurrence, Justice Breyer closes in on the discursive problem of patent law through the emphasis on “the clue.”43 Patent cases are tricky as they so often deal with things that were not foreseen at the

140

Selling Social Media

writing of the law, with judges searching for hints and signs. Much like the social scientist amalgamating social facts, the legal system has a process for creating facts; some methods are more opaque than others. Quixotically striving for clarity in patent law is at odds with the ways in which patent law constructs facts. Justice Stevens’ arguments calling for a more expansive decision came to fruition within a few years. The Supreme Court had revisited patentability on several occasions and abstract ideas specifically three times: in Mayo v. Prometheus, Molecular Pathology v. Myriad, and CLS v. Alice.44 In Mayo, the Court emphasized that a transformation was still necessary, merely watching a patient to see if they respond to a drug was not patentable activity, Myriad plants.45 The doctor was always going to check in on the patient. Although Mayo and Myriad are important cases for the evolution of intellectual property law, the developments in Alice are the most important for understanding the social network bubble. Alice involved the use of computers in banking for managing escrow—seeing to it that both parties actually complete their part of a transaction.46 To achieve patentability, an idea would need to prove a substantial invention beyond the explication of the method for application using a computer.47 The Court found that Alice was merely engaged in banking with a computer; this combination of an established practice and a new piece of technology did not qualify for patent production. Making a novel drawing is not enough. Language in the opinion contours the trajectory from Bilski to the present; by framing the involvement of a computer as an addition to an existing concept, “simply” and “merely” appear in the language of the opinion to emphasize that the additions made in the patent were not inventions. Justice Clarence Thomas rebuilt the logic of the legal grid aesthetic through his emphasis on the initial facticity of the abstract idea. Escrow is obvious. The evaluation that must be done by the Court on a case-by-case basis comes in the determination of a machine transformation of the next step in the process. Justice Thomas characterizes the claims of the plaintiff provocatively as: do the existing process and “apply it with a computer.”48 This standard will not end all business process patents, but the particular sorts of models that depend on patents for the basic business processes of the internet are likely in peril. It seems likely that “do journalism with a computer” would be a patent that the Court would reject post-Alice. In the trajectory of the computational turn, this may be an important turning point; no longer would energy enable companies to run unchecked, boundaries were back.

Litigation

141

Unfortunately, abstract idea law is not necessarily the most efficient way to decrease filings. The Court will likely need to revisit other business method patent cases in the future, although there is some hope that Justice Thomas’ tone communicates that the Supreme Court is not particularly interested in hearing clever variants on “do it with a computer.” One critical argument concerns section 112 regarding the level of detail necessary for a patent. Justice Ginsburg’s opinion in Nautilus v. BioSig shows the potential of this analysis. Historically, the courts had determined that a patent would be “insolubly ambiguous” to be rejected.49 Justice Ginsburg argued that this standard allows any meaning to be sufficient. The Court remanded the case at hand—related to the common design of a heart rate monitor on an exercise machine—for further consideration by the original court with the new standard that the claims would need to be understood with “reasonable certainty” by a skilled practitioner. This is a further move to apply a definite grid to what had been an ambiguous area of law. A new move toward increased certainty would also surely decrease the utility of intentionally vague patents, a hot trend in the early social network bubble era. Unfortunately, this approach could provide clarity only in areas where the underlying patents had weak claims. Even in the case at issue, it is entirely possible that on review the claims would pass the new test. Although section 112 provides possible defenses, it may not do the work of abstract idea law in eliminating patents that are clear, but related to abstract ideas, like advertising on a website. A single legal solution will not necessarily resolve all the problems. Once identified as an abstract idea, the claimant must prove that they have some meaningful invention. Many inventions include what might be understood to be an abstract idea. Through the opinions in Myriad, Mayo, and Alice, the Court protected the inventions, including cDNA and plants, while invalidating many business method patents. Motions related to abstract ideas, section 101 of the patent law, are becoming more common and are successful in court regions not traditionally known for a great deal of patent litigation.50 Given these parameters for the evolution of patent law, it seems unlikely that underlying patents for social networking would survive. Social networks are now decades old; there is robust prior art. The only hope would be to patent the business process of advertising with a computer. The legal force that would have made it possible to foreclose alternative entry into the industry was restrained in as much as the industry had already formed. The first entrant was Friendster, destroyed by the high-modern hubris of telling the users how they should feel. Prior art had been clearly established by this point. Patents on social network

142

Selling Social Media

software may fare poorly against a 101 challenge in the post-Alice litigation environment if they are not too vague to be caught by section 112.51 Although the networks themselves have not been heavily involved in intellectual property litigation, their market worlds are constrained and enabled by the law. On a deeper level, the intellectual property consideration that controls social media companies is not tied to product invention as much as to the nationality of the systems in which they operate, and the presumption of law in the first place.

Connecting disruption, securitization, and monetization to litigation In 1994, an intellectual property defense law firm produced a fun, instructional classic, “The Patents Video.”52 Possible patent-asserting entities were figured quite literally as trolls, hiding under bridges waiting to ambush passing businesspeople. The video plays with the aesthetics of the early 1990s to great effect—the style of the video is pitch perfect, including both a lawyer explaining important concepts and graphical jokes about key terms and low production values. At the time the video was produced patent litigation was more limited to corporate titans like Xerox, Microsoft, and Apple arguing about the nature of the graphical user interface.53 While litigation was a distinct possibility, it would likely be from competitors, not from third parties. Defending against another active firm is strategically preferable as a firm might leverage their portfolio of patents against a plaintiff. By properly patenting an invention a firm would protect itself against trolls, or at least have leverage should a possible lawsuit come. What has changed dramatically since this video was made was the chance of encountering one of these trolls. In the early 1990s, the number of bridges was relatively high, and the number of trolls small. As a form of millennial commerce the surge of patent activity in the twenty-first century represents a basic change in the business environment. Attributing the cause of the surge in litigation to a particular source is difficult, and any method for determining the actual loss of value in the economy caused by excess litigation is even more difficult. Calculating transactions not made is much harder than calculating those completed. These concerns about measurement are largely immaterial for the precise reason described in the reading of patent abolitionism. The public narrative of innovation, creativity, and commerce is different in kind from the

Litigation

143

discourses of adjudication and judgment. What trolls feed upon is the fear of small businesses—trolls want a quick settlement before court. Counting troll attacks is far less important than the narrative power of the stories of their survivors. This chapter is staged to avoid engaging in the melodrama of the hero and the villain of business. It is entirely too easy to tell the story of intellectual property law as a battle between good and evil, just as the introduction refused to frame social network firms as a nefarious Matrix and individual users as duped sheep. Firms involved in this sort of offensive patent activity are known as nonpracticing entities or patent assertion entities. These firms are the doppelganger, the post-Fordist models of corporate organization. Instead of a firm outsourcing production and becoming a holding company, these firms exist as a holding company that engages those involved in production. This is the nightmare that haunts post-Fordism: a firm that was born immaterial, never bound to the sinew and tissue of supply chain, labor, or customers. Disintermediating accounts receivable and legal from any meaningful business process is a truly disruptive model. The patent assertion entity or troll scrambles Christensen’s model of disruption as it can access the flow of capital within a market without entering that market, as does intellectual property law generally. A patent assertion entity would be retroactively brilliant for Dru; they can wait to find where the market goes, secure patents from failed firms, and then litigate. Trolls have perfect vision. Lastly, for the Downes and Mui reverse causal variant of disruption there is nothing so disruptive as a firm that inverts the basic relationship between commerce and the law. The passage of the America Invents Act through a gridlocked Congress makes sense—companies need protection from their own adaptive strategy run amok.54 Yet, without this adaptive strategy they have little chance of escaping the gravity well of zero margin and the collapsing effect of lost agency. Consider the disruptive firms and models that made up the skeleton of Christensen’s analysis: how many of those stories make sense in a world with patent assertion entities or strong intellectual property rights? Would a firm leave alternative syringe ideas unpatented and their enforcement lax? Would the business method of using a smaller hard drive remain up for individual firms? The increase in patent activity in the early twenty-first century should be read as an adaptive strategy against down-market insurgents. No longer would insurgent firms find a deep pool of collective resources to utilize in defeating incumbents: they would find themselves parties to litigation. Business process patents further allowed immaterial inventions to secure access to commerce.

Selling Social Media

144 Legal Regime

Exclusivity

Protects

Monetization Metaphor

Copyright

Strong statutory protection, general damages

Content, textuality

Alchemy

Patent

Presumption that information will be shared, licensed

Means of production/ distribution

Extraction

Trademark

Only exclusive in the case of consumer confusion

Reputation

Arbitrage

Figure 4.1  Core monetization matrix with intellectual property law.

By reading the surge in patent litigation as the necessary counterpoint to discourses of disruption we arrive at a new theory of the business of social networks. Resisting diabolical trolls is attractive for the same reasons that the motif of the individual inventor was attractive in the first place—it is radically individual; it feeds the liberal imagination of the romantic individual inventor. By standing outside of the world of innovation social networks may for a time appear to be outside the umbrella of state power. There are a number of strategies that firms have attempted to use to challenge particularly nefarious sorts of lawsuits. Some, like countersuing, are effective only if the firm filing the initial suit is actually in practice. Goliath on Goliath battles between firms like Apple and Samsung are not typically covered as involving patent trolls because there is no hero. While these litigation fests are not particularly trolllike, they do slow the diffusion of innovation for edge firms. The development of post-tape disk technology was substantially slowed by the risk of lawsuits. What allowed the DVD to eventually come to market and what allowed the H.264 codec (the basis of a sizable number of recent online video systems) are patent pools.55 A patent pool is an agreement where firms decide not to sue each so that critical mass of rights for a particular end product might be established. By collecting and managing the rights for the H.264 codec, MPEG-LA created stability within the video processing market that would not have been likely otherwise, allowing lower costs and more flexibility for end-users.56 Unfortunately firms have increasingly

Litigation

145

recognized that patent pools may substantially reduce their ability to recoup on research, and worse actually enable down-market competitors to enter their space. Cooperation is not common on this level. Where cooperation is more likely is on the level of the API, where large social networks invite other firms to use their platform resources. Instead of facilitating a login database, a firm could use Facebook login to drive their website or application. As described in Chapters 1 and 2, entire products exist within the framework of a social network. Zynga’s games are not playable without help. What firms have learned the hard way is that these cooperative agreements are not legally binding; as long as they contribute to the attention pool on the network they will facilitate access. Zynga never recovered from Facebook restricting their access to the newsfeed. Firms pivot to deal with changing feed production methods. Even without patents in play, the legal architecture of the social network world is crunchy.

Intellectual ventures and the literal market What if one of the largest trolls was not a troll at all? The business model of Intellectual Ventures is straightforward—solicit patents, review them, price them, buy the good ones, and then license those patents to large firms. Intellectual Ventures is for the most part a non-practicing entity (they do have research labs). For the Silicon Valley news media this makes Intellectual Ventures particularly perverse, a firm that is not practicing, has solid revenue, high margins, and is associated with old players in the industry. The firm is nowhere near San Francisco, meaning it is not a magical startup. Worse, Intellectual Ventures is from Bellevue, which means it is nestled among many highly successful firms like Microsoft, Amazon, and Costco, a source of anxiety. The unicorn pen is out of view: if the public looks away, the magic might evaporate, the horns might fall off. Intellectual Ventures is one of the most hated firms in Silicon Valley.57 Intellectual Ventures’ Chief Technology Officer Edward Jung publicly argued that Silicon Valley is the result of a particular combination of government projects, which would suggest that Silicon Valley is not a magical place but an agglomeration—a place where the proximity of multiple firms in a sector results in cost savings for all. Minneapolis-St. Paul is the site for the processing of grain and mass agriculture. Detroit makes it easy to produce cars. Intellectual Ventures argues that it does not sue small

146

Selling Social Media

companies, they make good cases, and they own good patents. This is not the stuff of small business horror stories. Vice chairman Peter Detkin is clear to situate the Valley (and Washington) as distant antagonists going as far as to almost sarcastically report, “In fact, just yesterday, we announced our newest customer is one of Silicon Valley’s favorite startups, Nest.”58 Dependence on Wall Street or Bellevue must be quite disheartening for those invested in the story of a magical city of inventors. Sand Hill Road is the capital of social network capitalism.59 Running just a few miles near Stanford’s campus, ZIP code 94025, the suburban road boasts the most expensive real estate in the United States. There is nothing particularly special about this particular site other than proximity to firms that have already been funded by other venture capitalists working on this road. The spatial fix to this particular place is arbitrary and tenuous. This could just as easily be a freeway in Florida or a boulevard in the Bronx. Defending Intellectual Ventures seems counterintuitive. The purpose of this section is not to defend this particular firm as much as it is to take their counterpoint to the romantic inventor seriously. As a non-practicing entity the firm would seemingly extract cash that could be circulating back through the Valley or through other segments of the economy at other locations. Intellectual Ventures’ defense is more than that they are not a troll, but that they are providing an important ecosystem resource in connecting a supply of meaningful inventions with practitioners. It seems likely that many innovative scientists would be more committed to research and teaching than to commercialization. Entrepreneurship is not for everyone. Intellectual Ventures would facilitate capital formation. Rather than existing primarily as a boiler room, Intellectual Ventures presents itself as partner for inventing persons and agencies, complete with a Washington-based research laboratory. While Intellectual Ventures emphasizes their business process of purchasing patents from partners there is an important dimension of their work that involves collaborating with other major corporations and various humanitarian causes. If the motif of the genius inventor (or techno-auteur) is abandoned, a more accurate model of the invention ecosystem might be circulated. Inventions are the result of a complex web of discourses, networks, and relationships—something that contemporary studies of science or actor networks would no doubt agree with.60 In an essay in Harvard Business Review, Intellectual Ventures CEO Nathan Myhrvold made the case against labeling his firm as just one more patent troll.61 Myhrvold’s

Litigation

147

argument hinges on the process of innovation itself. Innovation requires funding. Philanthropic donations are not nearly sufficient to support the development of new technology. Government support is contingent on the whims of policy makers: they might elect not to support science at all. In more concrete terms, if politics requires that vaccine and anti-vaccine efforts be treated as equal political positions, the case for public health funding would be difficult. If the post-modern inflection of congressional discourse holds, finding enough common ground to support any research will be a challenge. Investments in research through private equity firms are triple those of the government.62 Even with this support structure, Myhrvold writes, “The current market for innovations is illiquid, opaque, and dysfunctional.”63 The eventual goal of these market making processes would be the transmission of stable price signals for patents.64 In this narrative, Intellectual Ventures situates itself as a liminal institution and communication system much like the public characterization of capital markets in Chapter 2. A true troll would not bother with labs, licensing, and philanthropy. Eventually the communication mechanism of Intellectual Ventures ends with the creation of a predictable, stable, legitimate public market for intellectual property rights, if the dream image of the firm is taken to its conclusion. It is not difficult to see this becoming an entire world of business complete with securities; hints of this can be seen in the section of Chapter 2 on valuation models. Mhyvold concludes, “Create an invention capital market, nurture an invention capital industry, and the resulting virtuous cycle can change the world.”65 At stake in this is the vision of the American small business—Intellectual Ventures asserts that the basis of business should not or at least should not be imagined as an individual or firm that autonomously develops an entire portfolio of patents and technologies, but a complex corporate assemblage that coordinates contract relationships across space and time. For all the claims made by advocates of the discourse of disruption that Coaseian firms were obsolete, those logics seem to continue with a vengeance. Intellectual Ventures is the embodiment of everything that would seemingly be associated with the monetization, markets, and disruption. In that embodiment it becomes something far more threatening than failure—a clarifying point. What is fascinating is that the alternative to this ultra-rationalized version of the software enterprise goes the other direction, choosing to not to condense but to release diffuse capital as if it weren’t valuable at all.

148

Selling Social Media

Twitter and the sacrifice of capital Twitter has been willing to defer the protection afforded by patents through a mechanism called an Innovator’s Patent Agreement (IPA).66 These legal instruments are designed to allow employees to retain their patents under contractual language that precludes their assignment and use for offensive purposes. For a firm using IPAs the risk is that they are not the owners of the patents for use of their basic technologies, relying instead on either the idea that the firm could succeed or that in the case of infringement that employee owners would of their own volition engage in defensive patent activity. Details as to how this defensive activity would take place such as who might coordinate these thousands of patent owners in defense of a third-party firm are unclear. At stake in Twitter’s choice is the ownership of the basic resource of a largely immaterial firm. I use the qualifier “largely” as a social media company likely owns a good number of servers, routers, wires, and some office furniture. Any Silicon Valley firm worth working for has several foosball tables. These are valuable. Collections of customer data and patents are the treasures of a failed firm. Take corporate personhood literally. Selling memories would be profoundly profitable. All the promises of privacy are negotiated as the firm lives; once the firm is dead they are renegotiated. As the firm lives and dies, the affective constitution of what it meant for that firm to promise is renegotiated as an act of mourning.67 If a firm does not require the assignment of patents created by its employees as a part of business operations, that firm is sacrificing a major source potential value and future revenue. This would be a major factor in the discussion of the use of IPAs in Twitter’s S-1. As a risk factor it is interesting, as it would suppose for someone purchasing capital stock that a share of Twitter is fundamentally different than share of Facebook—if Facebook were to collapse in the near future there would be more assets to sell. A share of Twitter represents only a share of what is likely to be a relatively limited revenue stream and some retargeting data. The reality is that purchasing a security is really about securing ownership of part of a pool of corporate assets, and in any event possibly offensive patent activity is far more profitable than almost any traditional industry. IPAs suppose that it is in sufficient public interest for a firm to sacrifice the consolidation of capital so as to preclude litigation. Opposing the doppelganger of the troll requires something worse, allowing centralized capital to sublimate. This is strategy is as fascinating as it is dreamlike—Twitter’s response to the problems posed by patent assertion entities is to sacrifice the capital itself.

Litigation

149

The public good created by the agreement is not even really particularly public as it deprives the inventor and the firms of the full exchange and use value of the package of negative rights associated with the patent. Instead of seeing this as a formation of a public good it might be more useful to read Twitter’s decision to create pool of common value that ices out litigious firms as a way of deciding between monetization metaphors, rather than disposing of them. The use of the IPAs would allow Twitter to flag itself as, to use the parlance of the business community, a white knight. The good guy. By electing to diffuse their intellectual property to employees they establish a preference for the windfall of advertising over the steady cash flow of licensing, and to provide an affirmative defense against the figure of the greedy troll. At the same time, it is entirely possible that the inventor’s patent agreement could represent something far bleaker: an acknowledgment of Twitter’s inevitable failure. By disclaiming the right to use its underlying stockpile of intellectual property rights for litigation Twitter could be attempting to make itself appear to be less valuable as a collection of parts. Without patents to sell, hungry investors might be kept at bay. This reading would be completely incompatible with the narrative of a bubble firm; after all the promise of these firms is not that they will become small stable companies, but that they will transcend the economy itself. Although Twitter’s stance may be noble, it is entirely possible that it will change with time. Gene Quinn and Steve Brachman, figures in public propatent advocacy, contend that the lack of patent activity by Twitter, Zynga, and other social network firms (Facebook included) is the reason for their post-IPO stumbles.68 They suggest that the major social networks will need to “grow up” and develop robust litigation divisions if they intend to survive. Although it is highly unlikely that users consider which firm has the strongest intellectual property portfolio when posting a picture of lunch, they raise an important point that has been made by many intellectual property scholars; as firms age they tend to become more litigious. The theory proposed in Chapter 3, and in this chapter, is that litigation strategies are decidedly unromantic and only after the affective positioning of the firm as a child of the bubble gives way would the insistence on police power make sense. Since inception of the IPAs Facebook and Twitter have dramatically increased their rate of patent production.70 Although the IPA may be a strategy to keep Twitter from starting the intellectual property war, it seems that defense paradox may be forming where every side collects defensive weapons that can be misconstrued as possible offensive battlements. Yahoo! at one point attempted to use their patent portfolio to gain

Selling Social Media

150

Cumulative Patent Total

All Patent Assignments to Selected Major Social Media Firms, y axis unlimited

Facebook b

1000

Assignee FB FOUR FRIEND SNAP

500

TWTR

0 7,000,000 February 2006

8,000,000 August 2011

9,000,000 April 2015

Axis: Publication Numbers, Issuance Dates on the Millions

All Patent Assignments to Selected Major Social Media Firms, y axis limited to fifty total patents 50

Cumulative Patent Total

40 Assignee 30

FB FOUR FRIEND SNAP

20

TWTR

10

0 7,000,000 February 2006

8,000,000 August 2011

9,000,000 April 2015

Axis: Publication Numbers, Issuance Dates on the Millions

Figure 4.2  Patent activity across the lifespan of social media. Although Snapchat and Twitter are now securing some patents, Facebook dominates the industry. Facebook may be preparing for mature business litigation with wellprotected players like Apple, Amazon, Microsoft, and Google by developing a robust portfolio of patents. Data displayed here were collected from the USPTO Full-Text Patent and Image Database.69

Litigation

151

access to Facebook’s; this was unsuccessful because the attack involved patents that were not likely to succeed.71 It would seem that next time the struggle for control of the social network revenue stream will be far more intense, although it is possible that changes in the litigation environment may have already doomed this phase of business development.

Data sovereignty Every few months a wave of statuses flow though Facebook asserting the material submitted by the user is their copyrighted property and that Facebook has no rights to use it.72 The statements typically include references to Facebook selling stock and various legal instruments including the Berne Convention on copyright and the Rome Statute of the International Criminal Court. These statements have no legal effect. Users agree to the terms and conditions of Facebook when they use the service, the assignment of intellectual property rights, and risk thereto. This is not to say that these rights are not important, but that some assignment of limited intellectual property rights is necessary for the function of the network. Social networks are clearly concerned with users’ perceptions and the ways in which their privacy agreements shape behavior.73 Although the statement that circulates is pure puffery, there are important differences in the legal regimes of the United States and European Union that portend trouble. The European Union and the United States have different approaches to balancing factors involved in the monitoring of information systems. Firms intending to operate transnationally are bound by the logic of the locations they serve. In very practical terms, absent satellite linkages, there is no way to escape the geography of the land and the sea. Undersea cables constitute the backbone of the global communication system, and national regulatory regimes are central to the structure of communication companies. Cables land at sites near shore. Many countries control their waters closely. Satellites are tracked and can be shot down. Jamming via either radio or DDOS (distributed denial of service) is a possibility as well, in addition to coordinated activities to manipulate the emotions of a target population.74 On an international legal level, what is meaningful for Facebook, Twitter, and other service providers is the evolving landscape of Safe Harbor laws for international business.75 Some future harmonization may be possible, although this would require substantially stronger protections of privacy by the United States.76 Interstate access of

152

Selling Social Media

information systems can easily be perceived as a violation of sovereignty and traditional law enforcement agreements are not equipped to deal with the electronic environment.77 This is not to say that there would not be enforcement or that the internet would not be controlled, but that state reactions will only be more intense with unclear regulations. Contrary to claims that users are unaware of problems of labor or ownership, the continued salience of hoax copyright statement speaks to the engagement of users. Users know and consider their labor as valuable material for social networks, and as any young person knows, their online identity is essential to their future employability. There would be a temptation to file this under the same sort of ideological formation described in the earlier chapters of this book, participation as enlightened self-deception. Instead, we should consider user copyright statements as attempts to strategically reverse power relations. Many have already documented; users’ change their social network use patterns in accordance with their perception of observation.78 It is entirely likely that these users are both changing their behavior and making a political demand. These are not users duped into feeding the neoliberal ambient affect machine, but people attempting to negotiate the conditions of their affective worlds. As a broad horizon for future growth, as claimed in financial documents of social network firms, the global scale is typically not as smooth, flat, or easy as they claim. On the contrary, the boundaries posed by national governments shape the future of social networking. One tech writer framed the expanding role of data sovereignty as “chipping away at the beauty of the cloud.”79 Instead of the cloud (and social media as a manifestation of the cloud) transcending the limits of the physical and producing new pseudo-physical laws as described in Chapter 3, the future of networks is tied to the nation state as a condition of their possibility. Rita Zajacz argues that this move to control the network is a proxy for ongoing efforts of states to control the behavior of end users—in this formulation intermediate actors often are quite willing to accede to the wishes of states.80 Zajacz’s framework for understanding state actors and network control is important as it can account for both the tactical dimensions of state social control and the structural formalization of the computer network itself through legal instruments. It is not simply that the state might put some pressure on companies to fall in line, but that at the end of the day the internet is tied to the coup de force of state violence, not the coup de grace of transcendent communicative potential. Hagiographic stories of innovators hinge on this point; they claim to have invented their worlds, to stand outside history. Grace

Litigation

153

came from the technical assemblage. Overplayed indexical arguments and the inflated aura of Silicon Valley ingenuity dent and break against the sharp blow of the baton. Just as in the context of intellectual property law, the power of nations precedes the construction of the network. This will also be clear in the critique of the vision of the autonomous individual inventor; not only were large numbers of people involved in the production of innovative products, the products likely flowed from this collaborations and structures. Data sovereignty is not as much a threat to the open structure of the internet as an insistence on the continuity of governance and territory. The European Union asserted control that accorded with the wishes of member states, and thus in a real sense the will of the public. To equate submission to the national security regime of the United States with freedom would be a mistake. There is no guarantee that the internet will continue to evolve to suit western liberal norms. Contesting claims to control over infrastructure and deliberation over structure is the crux of meaningful governance of social media. There is no choosing not to choose, and, as the diffusion of this non-statement makes clear, users care. Despite dramatic changes in the international data environment in recent years, claims continue that the internet somehow transcends state power and that state attempts to control the network will fail. These are empirically false. Alternative cloud infrastructures are being constructed to reaffirm data sovereignty. Companies are rapidly building capacities to internally comply with laws in the countries in which they intend to do business.81 Russian data localization laws have changed the landscape by impeding access to data by American authorities, increasing Russian control over data within the country, and beginning dialogs with foreign communication firms who are interested in compliance.82 This is not limited to Europe: data sovereignty struggles are beginning across the globe; the era of the rapidly expanding network is over.83 The European Union takes a substantially different view of competition in the market place than the United States. Brad Stone and Vernon Silver, writing for Bloomberg, contend that the distinction between US and EU approaches to Google represents divergent cultural positions on surveillance and power.84 An important feature from the perspective of European regulators were efforts ostensibly intended to improve the user experience, especially those that replaced content from websites that might be clicked upon with material generated by Google itself. In the United States, there has been a trend that the government tends not to act if the end consumer is not harmed by conglomeration.85 Stone

154

Selling Social Media

and Silver conclude that the Google anti-trust case was not, as some thought an extension of American posturing, but an expression of local political will: “It faces a straightforward prosecutor in a hostile political climate dominated by powerful local business interests with their own regulatory agendas. Good luck to Google searching for a way out of that.”86 Much like data sovereignty, local competition laws will shape the future of the market. Efforts at building disruptive cross-sector businesses, described in Chapter 3, will find a very hostile audience in the European Union.87 This is not limited to search—social networks, including Facebook, are also engaging with regulators.88 Contentious legal battles will be the norm in the future. At the same time there is a case to be made that differing legal regimes will prompt additional consideration by tech firms—restrictions could solidify currently weak business practices.89 Constraints in the market, rather than sapping business confidence, could stabilize markets and increase predictability. The story of rising state power to this point has been relatively partitioned from the romantic story of the social media market. After all, the romantic imaginary of social media is profoundly tied both to places in the United States and shifting metaphors for transnationality that would seem to be disruptive to the point that they would challenge the laws of physics. None of the details gathered in this short section on international legal factors should be surprising: state power has always been deeply tied to the communication infrastructure.90 When international factors do surface they will come as a surprise—Facebook’s S-1 was a lithograph of the Silicon Valley geographic imaginary—a dark world with no states and only their light. By the time the Snapchat, an app whose appeal comes from avoiding surveillance, filed an S-1, such maps were long forgotten.

Disavowing the actually existing market The magic of Silicon Valley was a combination of agglomeration and ubiquitous computing. Fairly standard business terms describe it effectively. Defenders of so-called trolls are correct in arguing that the term is relatively undefined and that there may be important ecosystem functions served by patents; reforms that clarify abstract idea or complete claims law will not end patent activity but make it evolve.91 At the end of the day, the patent bargain can be finely tuned to achieve many goals. All too often, the explanation of the social network bubble disavows the ways in which the law makes social media possible, yet,

Litigation

155

as American Enterprise Institute scholar James Pethokouis argues, the tech industry is increasingly comfortable with the welfare state and libertarianism is losing ground.92 The classic Californian gloss on innovation and independence is a great, but fading, marketing campaign. Refusing to accept the legitimacy of Intellectual Ventures while continuing to accumulate patents reveals coming obsolescence of the Californian Ideology: alternative models free of the state are fading fast.93 Institutions are treated with contempt—in Chapter 3 disruption went as far as to “laugh” at the institutional logic that created it. The laughter that remains is theatrical and forced. Innovation and the narrative of innovation are tied to a regime of property rights that in many cases vastly exceeds the level of capital in any particular business enterprise. These chapters on disruption and litigation are intended to provide a number of examples of the discourses deployed by the social media industries to stabilize their positions in their romantic and often melodramatic market. Valuations are political, not practical. The deployment of the idea of toll-based extraction enacts a conclusion that insists on the critical linkage between state power and the economy. Data sovereignty insists upon the physical infrastructure of the network and the impossibility of transcending police power. Running from the patent bargain is important because it merely engages into another legal system—the private regulation of the API. Access to the backbone of Facebook, Foursquare, and Google (among many) is a fairly clear matter for contract law. It is at this end of the business lifespan, middle age, when state power will resurface as a central factor. These will surely come in the form of data sovereignty laws, changes in the tax code, arduous patent litigation, and the evolution of gatekeeping in API law.94 Law in this area will determine which building blocks will be available for general use in developing software, and if those building blocks will be available at all.95 Instead of an expansive, scalable world of social media, these legal struggles will contour the limited total pool of money and attention. Infinite scale will give way to fine detail. Legal aesthetics will be a major aspect of critique as industries battle for the ways in which they are represented in the world of laws and the way that companies position their efforts. Who builds the grid and who has the energy can easily play into the talk of the industry: the clarity of the grid is an anathema to the energy of experimentation. Affectively this is not the glamourous world of the social network bubble. Stories of evil trolls vanquished by gallant companies feed back into the

156

Selling Social Media

melodrama of business. Twitter is the good guy—laying down the sword of the patent suit just before the long winter of a mature industrial patent war could begin. Companies oppose distant tyrants seeking to control communication infrastructure just as they quickly build data centers to appease them. Instead of the glossy possibility of a legal aesthetic of energy, expanding possibilities and potential or even the reversible lines of the grid, dissociative corporate law will continue to shape the affective terrain. The underlying narrative of classical liberalism and the auteur inventor will give way to the process-oriented litigation tradition. In the end, monetization by litigation is crude extraction.

Conclusion: After Social Media Mania

No one wants to face the reality that this [alphabet/google] is an advertising company with a bunch of hobbies. An ex-Google executive, quoted by Max Chafkin and Mark Bergen, in BloombergBusinessWeek1

On February 2, 2017, Snapchat filed form S-1: the drive for the IPO was beginning. The opening image of the document was a bright yellow page declaring that “Snap Inc. is a camera company.”2 The promise of the company is “reinventing the camera” which changes how people “express themselves, live in the moment, learn about the world, and have fun together.”3 At this point Snapchat lays claim to the core affordances of every major social network: the personal expression and community of Facebook, the temporality of Twitter, the locative awareness of Foursquare, and the creative inflection of Pinterest. This should be the new homepage of the phone. Following this statement of purpose is a history, tracing the evolution of their product punctuated with the release of major features including the capacity to “barf rainbows” and virtual goods sales. Snapchat does not own a physical infrastructure relying on Google Cloud to deliver performance for users with advertising almost exclusively as a revenue driver. Daily active user growth is failing, Facebook’s Instagram is successfully flanking their key advertising concept—placement in the story.4 For all the claims to Snapchat providing a “new” model of social network organization, readers of this book would recognize this as a platform for producing a supply of possible social impression sites for sale, arbitrage; dressed as the magical reinvention of the camera, alchemy. Snap’s IPO was read as a social sign of the market and the users. Kevin Maney, writing for Newsweek, proposed that the app is a user vote for privacy and the looming prospect of state surveillance by the Trump administration.5 Therese Poletti framed the Snap IPO as a competition between two rival camps: those who believe that Snapchat is an advertising company with “staggering overhead”

158

Selling Social Media

and a stock to be purchased and amassed like a fine wine.6 Changes in potential user behavior provide leverage for alchemy, reduction to a sales platform for virtual goods (filters) and advertising not as much. Disrupting the camera itself could be profitable. The major points of risk, aside from cooption by competitors: litigation and political change. This is not to say that Snapchat does not afford users an enjoyable experience, but that at the end of the day, it is a stickers app for an ephemeral messenger, likely just a feature, not a network in itself. This book was organized around key terms used to sell social media to publics, markets, and governments. The theory developed through the chapters details the ways that these companies explain social phenomena and is explained by the cultures they express. Rather than offering a summary of the contents of this book, this conclusion remains true to the spirit of business though by answering two of the most frequently asked, practical questions about the future of the social media industries: is this a bubble and is what is the next Facebook? Brief answers to each question: yes and no.

Is social media a bubble? Many social media companies exist in what we should understand to be a bubble. Bubbles are interesting topic as they are qualitatively diagnosed. Bubbles tend to be negative. Economists take a number of different, but not incompatible, positions on bubbles. Carmen Reinhart and Kenneth Rogoff provided a comprehensive history of bubbles and crises, treating the bubble as an aspect of a system that produces recurring crises more than as an anomaly.7 Without beta or volatility, returns can be difficult to come by. George Akerlof and Robert Shiller elected not to define bubbles, but their account of shifting psychological positions is straightforward in suggesting that bubbles are a feedback loop.8 Again, this would challenge the idea of an efficient market by embracing the idea of an emotive, rather than rational, base for economic practices. It is not unreasonable to argue, as Peter Garber has, that the historical episodes known as bubbles are not in fact defects of mass psychology, but rational choices made based on the fundamentals at the time.9 The fundamentals as we know them rarely escape the narrative of the market that produces them. Hyman Minsky’s “Financial Instability Hypothesis” supposed that capitalist economies tend to drift during good times toward increased speculation; bubbles are a feature of forgotten pain.10 Firms begin in conventional stable configurations, take

Conclusion

159

on increased hedging activity, and eventually become unsustainable schemes. Minsky expanded the sorts of relationships that would be considered in the production of bubbles beyond capital and labor to include financial relations— this would get at the complex webs of relationships and feedbacks that drive an economy. Communication research would take this further to include the discourses of those financial relations. These common uses of bubble by prominent economists get at the reasons why bubbles are so troubling: they are destructive and yet attractive.11 The definition of a bubble that could be derived from the communication studies literature, and the one that will be taken here, is that a financial bubble is a positive affective cascade. In this cascade, the preferred values and aesthetics of the culture making transactions are attuned to the dynamics of the subject industry. G. Thomas Goodnight and Sandy Green’s theory of bubbles would suggest that the basis of the bubble is a spiral of attention, a cascade of energy into the image of what the economy should be.12 Affective investment in the bubble can drive the creation of discourses that make that bubble appear to be sensible. Evidence of this can be found in the highest formulations of disruption discourse where basic economic theories might operate backward. The hopes, dreams, fears, and fantasies that sell the bubble become working theories of the economy. Bubbles play with the space between the diachronic and the synchronic; the broad stretch of the time and the present moment shift into each other. Bubbles incorporate fundamental economic facts into a logic of feeling. What does it mean for there to be a social media bubble? First, the valuations of these companies vastly exceed what traditional models would suggest are stable. Chapter 2 argued that valuation is a political process with substantial artistic ambiguity. Analyses of what the market would bear are then paired with disruptive fantasies to justify current securities prices. Alchemic magic obscures the actual process of monetization as well as the role of business law in the life of any given company. Explanations of the system change to suit the bubble. The underlying fault of the bubble is explained in the epigraph of this chapter— these are advertising companies that have hobbies. If they are lucky, the hobbies become lucrative businesses. Although the greatest of these firms control their ecosystems significantly more than their predecessors, they are still advertising companies. Demand is ultimately inelastic, there is not an infinite supply of money to chase advertising opportunities on these networks, and there is not infinite attention to be paid across networks. Securitization and disruption have allowed these companies to work around these truths, to a point.

160

Selling Social Media

Strategies for deterring the formation of bubbles are important as no state actor would want to be responsible for popping bubbles—they are after all made good feelings. Feedback loops in economic phenomena would have amplified reactions to new information as the concepts that are disavowed or fetishized are often deeply interlinked.13 At first this bubble might appear to be in a single sector; thus a pop would not be terribly destructive. Given the degree to which many fates are tied to these particular stocks and stories, the pop of this bubble could be substantial. The biggest threat to the social media bubble comes in the decline of social media itself. If the network isn’t fun, why use it? If the network stales or the attention lens is mismanaged, the story of the company would simply fall apart. As companies become increasingly desperate to provide some backing for their value proposition they will add features, clutter interfaces, and demodulate their own affective balance. At some point, the product managers at Facebook will decide that they might fare better if their now sedate, but enjoyable, network vibrated with the rage with Twitter. Social networks like Yik Yak struggled with the balance between secrecy and affinity; secretive locative networks are highly energetic and nasty; there is no stability as in an affinity network like Facebook. Television companies easily fell into the trap of reality programming. It was engaging and impossibly cheap. It was a short circuit in the industry that was too tempting not to connect. Fake news, as discussed in Chapter 3, connected much the same circuit for Google and Facebook. Maintaining the health of a social network over the long term will require careful affective modulation and attention to changing cultural norms. Epidemiological modeling of the collapse of Myspace, and the experience of other collapsed networks, suggests that network abandonment could come as a swift contagion.14 The underlying cultural moment of rapid social network growth is passing. This is no longer the relatively benign problem of the filter bubble, but the much more vexing problem of decreased sharing. The perception of state power and surveillance is pronounced and rise of nationalism has transformed the position of the state in the lives of many. The affective world that saw Facebook burgeon is gone. Boundary rules and choices made in that moment will not be made again. It would not be surprising to see these firms increasingly act like media companies, curating streams of content and stabilizing their products to avoid future losses. Snapchat has become the newest darling for this exact reason. Discover, Snapchat’s broadcasting feature, has been strictly controlled. Instead of the social media of the past which depended on the wisdom of crowds, Snapchat

Conclusion

161

depends on the wisdom of editors and contracts. On the flip side, networks like Twitter and Reddit struggle to deal with their own users who express values and act in ways that will destroy their networks. The everyday life of the average user is a powerful response to utopian fiction. The threat to monetization itself is somewhat muted. Strong platforms are deploying improved metrics and increasing transparency to accommodate market demands. Bubble bursting on the advertising demand side would not be a result of a sudden increase in payments, but the revelation of inelastic demand. Better auditing tools would allow advertisers and the market as a whole to see the maximum possible value of online advertising. Seeing the summit of the mountain could be quite disheartening. The final burst scenario comes in the form of increased state power, especially the resurgence of aggressive state control of the communication network to counter another state. Politicians have already postured to this effect.15 The germ of this idea already appears in the critique of fake news. More advanced efforts might use the combination of weak social norms, media literacy, and the porous control of social networks to manipulate populations. Contrary to Zuckerberg’s utopian image, Facebook is not well positioned to make governments more democratic or the world more open. Compulsory participation in a bland social network would be a staple of this other world. By the time we reach this conclusion, social networks will have shifted to have a pseudo-government mandate and surely the bubble will have burst, that is unless the bubble is in what would be a state-sanctioned social network monopoly.

The next Facebook? What is the next Facebook? A persistent question for social media researchers. The answer is simple: there is no “next Facebook.” Affectively, the ascent of social networking is much like the boom of the 1990s is not a repeatable formula; it was an event.16 Facebook grew because of a combination of factors related to the prior work of other social networks, the perception of Facebook as an alternative to Myspace, the increased availability of high-speed internet connections, the converged smartphone, the high level of investment capital, and the discovery of enjoyment in computer-facilitated ambient awareness. Combine those with a stock market desperate for a big hit in the post–financial crisis slump, and a legend is born. Causation in complex systems is fractional and difficult to

162

Selling Social Media

establish. Success would be explained as anything except a confluence of factors beyond the control of a single individual. Instead, Facebook is described as the creation of a business genius, be that Zuckerberg, Sandberg, or the venture capitalists that backed the firm in the early days. First, the conditions are not ripe for a new network to emerge. Second, there are structural factors that would see Facebook maintain an advantage in the market. Facebook is and thus has an advantage. Network effects are powerful; the future for Facebook (and most disruptive firms) is to transform into companies that interface with elements of the market that are traditionally understood to be more lucrative, such as transaction processing. Chapter 3 describes this situation at some length; the promise of access to new sectors drives the value of a social network. Facebook is the largest and strongest social network; the underlying wealth of data and physical capacity provide Facebook with a profound edge over potential competitors. This tends to protect Facebook from challengers as their products lack the network development to be affectively engaging. Building a social network is an engineering challenge. A new social network would need both a strategy for being interesting and engaging and the infrastructure to function in the first place. This is especially true as Facebook controls the market space of the affinity network; it would be far more likely that a locative, temporal, or creative network could be supplanted. In any case, a network evolving as a restaurant recommendation engine will not take on a social role similar to a family member. Users are increasingly less likely to share information publicly: Facebook is working to understand the declining click count.17 The affective conditions that incited users to share large volumes of personal information with little active censorship have passed. Once they have experienced the perception of presentational rules’ violation there is no reason why they should trust those networks again. Returning to the story of the failure of Google+ from the introduction of this book, the conclusion of that story is not that privacy did not matter or that users did not care, but that they did care, and that changing their use of social media (by sharing less) was more convenient than using Google’s contrived interface. This does not stop optimistic entrepreneurs from trying to make 2006 happen all over again. New networks come in waves. This does not mean that the feelings of users will not change over time, or that more specialized networks might not appear that map onto other relational functions. A single network that would take on all the relational roles of Facebook is not coming; Facebook may have a role as an ambient kin-keeper, an aspect of infrastructure. Pinterest, Yik Yak,

Conclusion

163

Startup Conventional Monetization Metaphor for the actual business process

Unicorn Alchemy

Arbitrage extraction

Peter Pan Cycle

Securitization The firm’s description of their position on design, scale, and planning for both operations and valuation

Disruption

Will the firm tighten the initial business or move into a new sector?

Litigation

How will the firm engage legal processes?

Dissemination strategic

Dialog tactical

IPO Refine business, cut costs

Accede to legal norms, begin mature corporate strategy voluntarily or as a result of market demands

Enter new sector

Successfully “laugh” at the institutions that enable the market Encounter legal restraint

Maturity

Figure C.1  Industry life cycle. In order to remain in the bubble, firms must find ways to return to alchemy, or, as it is described here, the Peter Pan Cycle. As firms make choices that bring them down the conventional, rather than the unicorn, path, they will mature and be judged as companies, rather than magical apparitions.

Snapchat, Kik, WeChat, and many others will surely come, each with a different selection of affordances. Firms that have ascended the dream logic to become the unicorns, the rightful inheritors of the pure networks of the past likely, will rely increasingly on the

164

Selling Social Media

discourse of disruption rather than pure monetization. Not surprisingly, these new services will use Facebook network integration to facilitate social tracking and authentication. These services may claim that they will be the replacement for Facebook—yet for all their possibility has little chance to be anything aside from niche businesses. The legal logic of the API and the patent thicket favor the incumbents. Business-to-business service is a very different industry than primary social network service. Managing a social network is difficult; providing the backbone that allows other social networks to more efficiently manage themselves is a much more promising business. Facebook will not disappear; it will transform. The network effects that have driven Facebook position it as the Comcast of the future. Social giants are building oceanic infrastructure.18 Logistics: the unsung hero of business melodrama. Digging ditches isn’t interesting; paired with radio-controlled helicopter delivered lattes, and you might have a chance. The most important strategy for an established social media company: run like a unicorn. Just as politics in the United States are melodramatic, so is the economy: big stakes, loud theater, hypertrophied agency. This is an economy of winners and losers, dreams and ruins. Selling social media highlights the important, unique, special individual along with a model for a micro-transactional economy to a public buffeted by austerity and financialization. Just as the future was the central point of the economy in the past, the possibility of the self and potential are now bound up in the theory of the value of the attention of every individual. The story of social media—built around monetization, securitization, disruption, and litigation—is a magical story that makes sense of the entire economy. Selling social media is a disavowal of the processes of the past, the presentation of a suspiciously old new economy, and the promise that you are worth a fortune.

Notes Introduction 1

Vauhini Vara, “Twitter and the Evolution of the S-1,” The New Yorker Blogs, October 8, 2013, http://www.newyorker.com/online/blogs/currency/2013/10/ twitter-and-the-evolution-of-the-s-1.html

2

Facebook, “Form S-1 Registration Document” (Securities and Exchange Commission, February 1, 2012), http://www.sec.gov/Archives/edgar/ data/1326801/000119312512034517/d287954ds1.htm

3

Donna Tam, “Facebook by the Numbers: 1.06 Billion Monthly Active Users,” CNET, January 30, 2013, http://news.cnet.com/8301-1023_3-57566550-93/ facebook-by-the-numbers-1.06-billion-monthly-active-users/

4

Inc Facebook, The Things That Connect Us, Facebook Video, 2012, https://www​ .facebook.com/photo.php?v=3802752155040

5 Ibid. 6

Ryan Dzember, David Benoit, and Shayndi Raice, “When Facebook Met Wall Street,” Wall Street Journal, May 8, 2012, sec. Tech, http://online.wsj.com/news/ articles/SB10001424052702303630404577390494205359660

7 Facebook, Facebook Investment Roadshow Presentation, YouTube (Menlo Park, CA, 2012), https://www.youtube.com/watch?v=TyF2UAaMe_E 8

Katy Bachman, “Facebook Settles Class Action Lawsuit over Sponsored Stories,” AdWeek, August 27, 2013, http://www.adweek.com/news/technology/facebook​ -settles-class-action-lawsuit-over-sponsored-stories-152054

9 Facebook, Facebook Investment Roadshow Presentation. 10 John Durham Peters, “Broadcasting and Schizophrenia,” Media, Culture, and Society 32 (2010): 123–40. 11 “Twttr.png,” CloudApp, accessed October 27, 2016, https://cl.ly/3W2E1P0I2x090Q 2b1k3B. 12 Attention as the temporal slice of circulation is the key point today. Warner’s work is particularly important in emphasizing the time “slice.” Michael Warner, “Publics and Counter-Publics,” Quarterly Journal of Speech 88 (2002): 413–25. 13 Louis Brandeis, Whitney v. California (United States Supreme Court, May 16, 1927).

166

Notes

14 “Introducing the Google+ Project: Real-Life Sharing, Rethought for the Web,” Official Google Blog, accessed August 29, 2016, https://googleblog.blogspot​ .com/2011/06/introducing-google-project-real-life.html 15 Ibid. 16 Victoria Woollaston, “Facebook Users Are Committing ‘Virtual Identity Suicide’ in Droves and Quitting the Site over Privacy and Addiction Fears,” Daily Mail, September 17, 2013, http://www.dailymail.co.uk/sciencetech/article-2423713/ Facebook-users-committing-virtual-identity-suicide-quitting-site-droves-privacy​ -addiction-fears.html 17 Katie Rogers, “Facebook Users Raise Privacy Concerns as Company Tweaks Security Settings,” The Guardian, October 15, 2012, sec. Technology, https://www​ .theguardian.com/technology/2012/oct/15/facebook-users-privacy-concerns​ -security 18 Dan Tynan, “Hey, Facebook: You Have Some Serious Privacy and Security Problems,” PCWorld, May 6, 2010, http://www.pcworld.com/article/195722/ facebook_privacy_security.html 19 danah boyd, “Facebook’s ‘Privacy Trainwreck’: Exposure, Invasion, and Drama,” September 8, 2006, http://www.danah.org/papers/FacebookAndPrivacy.html 20 Andrew Orlowski, “Avoid Friendster and Its Clones, Warns Security Expert • The Register,” The Register, February 10, 2004, http://www.theregister .co.uk/2004/02/10/avoid_friendster_and_its_clones/ 21 “What Is Engineering Problem Solving?,” Dartmouth Project for Teaching Engineering Problem Solving, 2014, http://thayer.dartmouth.edu/teps/what.html 22 Ashwini Nadkarni and Stefan G. Hofmann, “Why Do People Use Facebook?,” Personality and Individual Differences 52, no. 3 (February 2012): 243–49, doi:10.1016/j.paid.2011.11.007. 23 Susan B. Barnes, “A Privacy Paradox: Social Networking in the United States,” First Monday 11, no. 9 (September 4, 2006), http://firstmonday.org/ojs/index.php/fm/ article/view/1394 24 Sandra Petronio and Jeff Child, “Unpacking the Paradoxes of Privacy in CMC Relationships: The Challenges of Blogging and Relational Communication on the Internet,” in Computer-Mediated Communication in Personal Relationships, eds. K.B. Wright and L.M. Webb (New York: Peter Lang, 2009), 21–40. 25 Google’s moonshots are an ambitious effort to counter stagnation in a single sector, but they often seem to be attempts to enter entirely new sectors of the economy. Many of the moonshots are based around impossible premises, like immortality. Barb Darrow, “Google Moonshots Are Becoming a Massive Pain,” Fortune, March 29, 2016, http://fortune.com/2016/03/29/googles-moonshot​ -projects-massive-pain/

Notes

167

26 “Introducing the Google+ Project.” 27 The homepage as the center of the user experience was the central business projection of the 1990s. 28 Taylor Casti, “The Evolution of Facebook Mobile,” Mashable, accessed October 27, 2016, http://mashable.com/2013/08/01/facebook-mobile-evolution/ 29 Ana Levordashka and Sonja Utz, “Ambient Awareness: From Random Noise to Digital Closeness in Online Social Networks,” Computers in Human Behavior 60 (July 2016): 147–54, doi:10.1016/j.chb.2016.02.037. 30 Paul Leonardi and Samantha Meyer, “Social Media as Social Lubricant: How Ambient Awareness Eases Knowledge Transfer,” American Behavioral Scientist 59, no. 1 (2014): 10–34. 31 Joseph B. Walther, “Computer-Mediated Communication Impersonal, Interpersonal, and Hyperpersonal Interaction,” Communication Research 23, no. 1 (February 1, 1996): 3–43, doi:10.1177/009365096023001001. 32 Craig Bida, “Why Pepsi Canned The Refresh Project,” MediaPost, October 29, 2012, http://www.mediapost.com/publications/article/186127/why-pepsi-canned​ -the-refresh-project.html 33 Promising results regarding the 2010 midterms, Robert Bond et al., “A 61-Million​ -Person Experiment in Social Influence and Political Mobilization : Nature,” Nature 489 (2012): 295–98. Youth participation flat despite social media use, Cathy Cohen et al., “Participatory Politics: New Media and Youth Political Action” (MacArthur Research Network, 2014), http://dmlcentral.net/wp-content/uploads/ files/ypp_survey_body_cover.pdf. Null hypothesis found in experiment involving Facebook follows and election Natalie Pennington et al., “Liking Obama and Romney (on Facebook): An Experimental Evaluation of Political Engagement and Efficacy during the 2012 General Election,” Computers in Human Behavior 44 (2015): 279–83. 34 Hans Noel and Brendan Nyhan, “The ‘unfriending’ Problem: The Consequences of Homophily in Friendship Retention for Causal Estimates of Social Influence,” Social Networks 33, no. 3 (July 2011): 211–18, doi:10.1016/j.socnet.2011.05.003. 35 Jenkins’ work, driven by deCerteau, has inspired many scholars to pay attention to everyday life as a key source for understanding society in general. 36 Jodi Dean, Publicity’s Secret (Ithaca, NY: Cornell University Press, 2002). 37 Paul du Gayet al., Doing Cultural Studies: The Story of the Sony Walkman (Thousand Oaks, CA: Sage, 1997), 4. 38 Benjamin Graham and Jason Zweig, The Intelligent Investor, Revised edition (New York: Collins Business, 2003). 39 Ibid.

168

Notes

40 Warren Buffett and Randall Lane, “Warren Buffett’s $50 Billion Decision,” Forbes, March 26, 2012, http://www.forbes.com/sites/randalllane/2012/03/26/warren​ -buffetts-50-billion-decision/ 41 Burton Gordon Malkiel, A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (New York: W.W. Norton, 2012), 24. 42 Paul Samuelson, “Consumption Theory: In Terms of Revealed Preference,” in The Collected Scientific Papers of Paul Samuelson, ed. Joseph Stiglitz, vol. 1 (Cambridge, MA: MIT Press, 1966), 66. 43 John Caldwell, Production Culture (Durham, NC: Duke University Press, 2008), 15. 44 Malkiel, A Random Walk Down Wall Street, 151. 45 Malkiel, A Random Walk Down Wall Street. 46 This is the inauguration point of the field, key works cited in a number of chapters. Diedre McCloskey, The Rhetoric of Economics (Chicago: University of Chicago Press, 1994). 47 Amanda Lotz, The Television Will Be Revolutionized (New York: New York University Press, 2007). 48 Caldwell, Production Culture; Vicki Mayer, Miranda J. Banks, and John T. Caldwell, eds., Production Studies: Cultural Studies of Media Industries, 1st edn. (New York: Routledge, 2009). 49 Timothy Havens, Global Television Marketplace (London: British Film Institute, 2008). 50 Serra Tinic, On Location: Canada’s Television Industry in a Global Market (Buffalo: University of Toronto Press, Scholarly Publishing Division, 2005). 51 Further, Buck-Morss argues that it is the escape from the traditional humanistic text that allows this form of research to have provocative power: “It experiments with an alternative hermeneutic strategy more appropriate to his ‘dialectics of seeing,’ one that relies, rather, on the interpretive power of images that make conceptual points concretely, with reference to the world outside the text.” Susan Buck-Morss, The Dialectics of Seeing: Walter Benjamin and the Arcades Project (Cambridge: MIT Press, 1991), 6. 52 Ibid., 338. 53 Walter Benjamin, The Arcades Project, ed. Rolf Tiedemann, trans. Howard Eiland and Kevin McLaughin (Cambridge, MA: Belknap Press of Harvard University Press, 2002), 416, 427. Convolutes M5,6 and M1a,1. 54 Thomas Streeter, The Net Effect: Romanticism, Capitalism, and the Internet (New York: New York University Press, 2011). 55 Ibid., 182.

Notes

169

56 Elisabeth R. Anker, Orgies of Feeling: Melodrama and the Politics of Freedom (Durham, NC: Duke University Press, 2014). 57 Ibid., 222. 58 Ibid., 8. 59 Ibid., 11. 60 Julie Cohen, Configuring the Networked Self: Law, Code, and the Play of Everyday Practice (New Haven, CT: Yale University Press, 2012), 20. 61 Christian Fuchs, “Social Media and the Public Sphere,” tripleC: Communication, Capitalism & Critique. Open Access Journal for a Global Sustainable Information Society 12, no. 1 (February 19, 2014): 57–101. 62 Christian Fuchs, Culture and Economy in the Age of Social Media (London: Routledge, 2015). 63 Robert Gehl, Reverse Engineering Social Media (Philadelphia, PA: Temple University Press, 2014). 64 Jose Van Dijck, The Culture of Connectivity: A Critical History of Social Media (Oxford: Oxford University Press, 2013). 65 Ibid., 174.

Chapter 1 1

Twitter, “Form S-1 for Twitter, Inc.” (Securities and Exchange Commission, October 3, 2013), http://www.sec.gov/Archives/edgar/ data/1418091/000119312513390321/d564001ds1.htm

2

James Surowiecki, “A Brief History of Money,” May 30, 2012, http://spectrum.ieee​ .org/at-work/innovation/a-brief-history-of-money

3

David Schaps, The Invention of Coinage and the Monetization of Ancient Greece (Ann Arbor: University of Michigan Press, 2004).

4

Ibid., 34.

5

Ibid., 44.

6

Ibid., 2.

7

Surowiecki, “A Brief History of Money.”

8

Minneapolis Federal Reserve, “The History of Money,” Educational Material, The Federal Reserve Bank of Minneapolis (1996), http://www.minneapolisfed.org/ community_education/teacher/history.cfm Gerald Dwyer, “Wildcat Banking, Banking Panics, and Free Banking in the United States,” Economic Review, December 1996, 1–20.

Notes

170 9

James Carey, Communication as Culture (New York: Routledge, 1992).

10 Noam Yuran, What Money Wants: An Economy of Desire (Stanford, CA: Stanford University Press, 2014). 11 Searle’s argument described, ibid., 40. 12 Ibid., 44. 13 Ibid., 46. 14 Ibid., 140. 15 The Lacanian Real. I elected not to use the terminology so as not to appear overly complicated. Yannis Stavrakakis, Lacan and the Political (London; New York: Routledge, 1999). 16 Barbara Zelizer, The Social Meaning of Money: Pin Money, Paychecks, Poor Relief, and Other Currencies, First edition, First Printing edition (Princeton, NJ: Princeton University Press, 1997), 15. 17 Ibid., 6. 18 Ibid. 19 Ibid., 13. 20 This book would be problematic in the context of a critique of liberalism or any theories that assume a deontic opposition to power as it stands. Aside from the problems with duty-based conceptions of ethics and their inability to meaningfully form a strategy, theories that call for the refusal of the world and the abandonment of all institutions are counterproductive as they fetishize the heuristic of critique over the legitimation of the cultural field they intend to enter. These theories thus retreat to a position of telling people how to feel and asserting their power over other positions arbitrarily. Once these grounds are revealed the game changes and conservative social forces will take power more aggressively than before. Social facts are produced through contingent processes that are legitimated out in the communicative world; protecting these foundations is imperative. Retreating into an ontology game is a strategic disaster. 21 Peter Hadreas, “Money: A Speech Act Analysis,” Journal of Social Philosophy 20, no. 3 (1989): 115–29. 22 It is clear with minor Google nGram analysis that monetization as something other than a currency producing force or as the creation of wage labor was the dominant meaning until quite recently. Anthony Giddens, The Nation-State and Violence (Berkeley: University of California Press, 1985), 158. Clifford Geertz, Interpretation of Cultures (New York: Basic Books, 1973), 184. 23 Karl Marx, Capital: A Critique of Political Economy, Vol. II. The Process of Circulation of Capital, ed. Friedrich Engles, trans. Ernest Untermann, 2nd edn. (Chicago: Charles H. Kerr, 1885), III XX 94, http://www.econlib.org/library/YPDBooks/ Marx/mrxCpB20.html. The new edition on Marxists.org does not use the term

Notes

171

“monetization.” I would take this as evidence that the term has slipped so far from its use as rationalization that it is beyond use for a general audience to mean anything. 24 Karl Marx, “The Power of Money,” in Economic and Philosophic Manuscripts of 1844, trans. Martin Mulligan (Moscow: Progress Publishers, 1959). 25 John Durham Peters, Speaking into the Air: A History of the Idea of Communication (Chicago: University of Chicago Press, 2001), 120. 26 Ibid., 127. 27 David Graeber, Debt: The First 5,000 Years, Reprint edition (Brooklyn, NY: Melville House, 2012), 365. 28 Ibid., 366. 29 Ibid., 136. 30 This concept clearly was not intended to apply to centralized clearing houses for apartments as hotel rooms. Arjun Appadurai, The Social Life of Things: Commodities in Cultural Perspective (New York: Cambridge University Press, 1988). 31 George Gilder, Wealth and Poverty (New York: Basic Books, 1981). 32 Graeber, Debt: The First 5,000 Years 377. 33 Simone Foxman, “Once Again the Winklevoss Twins Get Beaten Launching Their Big Idea: A Bitcoin Trust,” Quartz, September 26, 2013, http://qz.com/128442/ once-again-the-winklevoss-twins-get-beaten-to-launching-their-big-idea-a​ -bitcoin-trust/ 34 Financialization depends on established network effects. Giovanni Arrighi, The Long Twentieth Century: Money, Power, and the Origins of Our Times (London; New York: Verso, 1994). 35 This link is now defunct; it will still offer to “grind socially” with you, however. Ryan Gray, “How to Monetize Mobile Offers to Make Bank,” Internet Marketing Badassery, accessed February 10, 2014, https://www.imgrind.com/wap​ -targeting/ 36 Carey, Communication as Culture, 219. 37 Alissa Hamilton, Squeezed: What You Don’t Know about Orange Juice (New Haven, CT: Yale University Press, 2010). 38 Justin Rohrlich, “End of an Era: R.I.P. Pork Belly Futures,” Minyanville, July 18, 2011, http://www.minyanville.com/businessmarkets/articles/pork-bellies-pork​ -belly-futures-pork/7/18/2011/id/35803 39 Ultramoney, “Banner Arbitrage Formula. Do Things the Right Way,” Forum Post, BlackHat World, February 4, 2013, http://www.blackhatworld.com/blackhat-seo/ making-money/529274-banner-arbitrage-formula-do-things-right-way.html

172

Notes

40 When someone is selling traffic they have either solved the riddle of advertising (in which case they wouldn’t be selling them to you anyway), they are selling sock puppets (non-human actors), or they are selling redirected traffic by illegal means. Sean Gallagher, “Massive Search Fraud Botnet Seized by Microsoft and Symantec,” Ars Technica, February 7, 2013, http://arstechnica.com/security/2013/02/massive​ -search-fraud-botnet-siezed-by-microsoft-and-symantec/ 41 Cormac Herley, “Why Do Nigerian Scammers Say They Are from Nigeria?” (Redmond, WA: Microsoft Research, 2012), http://research.microsoft.com/ pubs/167719/WhyFromNigeria.pdf 42 The sure number of different kinds of scams is staggering. Consider this example using a content farm: Jack Marshall, “Fraudulent Traffic: Adventures in Ad Farming,” Digiday, March 4, 2014, http://digiday.com/publishers/ad-farming​ -adventures/ 43 The Syrian Electronic Army is a fascinating form of information diffusion, worthy of substantially greater attention than I can provide here. Don Reisinger, “Syrian Electronic Army Hacks Forbes, Steals User Data,” CNET, February 24, 2014, http://news.cnet.com/8301-1009_3-57618945-83/syrian-electronic-army-hacks​ -forbes-steals-user-data/ 44 “Rise of the Publisher Arbitrage Model,” Yieldbot, September 15, 2011, https:// www.yieldbot.com/blog/rise-of-the-publisher-arbitrage-model/ 45 Michael Johnston, “CPC Arbitrage: What It Is and How to Pull It Off,” MonetizePros, April 15, 2014, http://monetizepros.com/display-advertising/cpc​ -arbitrage-what-it-is-and-how-to-pull-it-off/ 46 Brad, “The Business of Display Part 2: Viral Quiz Sites and Click Arbitrage,” Ad Beat, November 2014, https://www.adbeat.com/blog/the-business-of-display-part​ -2-viral-quiz-sites-and-click-arbitrage/ 47 Brennan Brooks, “How to Run a Facebook CPC Arbitrage Campaign,” Blog, October 22, 2015, http://brennan-brooks.com/blog/2014/06/how-to-run​ -facebook-cpc-arbitrage/ 48 For a basic reading of the convergence concept, see: Henry Jenkins, Convergence Culture (New York: NYU Press, 2006). 49 Hunter Schwartz, “How Much Beanie Babies Were Predicted to Be Worth Vs. How Much They’re Really Worth,” BuzzFeed, June 22, 2013, http://www.buzzfeed​ .com/hunterschwarz/how-much-beanie-babies-were-predicted-to-be-worth-vs​ -how-muc 50 Traffic side: Josh Constine, “Initial Trials Show Facebook Exchange Retargeted Ads Deliver Massive Return on Investment, Up To 16X,” TechCrunch, September 13, 2012, http://techcrunch.com/2012/09/13/facebook-exchange-results/. Revenue side: Nicholas Carlson, “It’s Become Tragically Clear That Facebook Chased the

Notes

173

Wrong Business for Years,” Business Insider, September 25, 2012, http://www​ .businessinsider.com/facebook-fbx-2012-9 51 Peter Schlegel, “Facebook Exchange: A New Dog Doing Old Retargeting Tricks,” Econsultancy, October 8, 2012, https://econsultancy.com/blog/10824​-facebookexchange-a-new-dog-doing-old-retargeting-tricks?utm _campaign=bloglikes&utm_medium=socialnetwork&utm_source=facebook. 52 Amanda Lotz, “How to Spend $9.3 Billion in Three Days: Examining the Upfront Buying Process in the Production of US Television Culture,” Media, Culture & Society 29, no. 4 (2007): 549–67. 53 Richard E. Caves, Creative Industries: Contracts Between Art and Commerce (Cambridge, MA; London: Harvard University Press, 2002). 54 Mike Reyes, “Sony’s Hacked Emails Are a Nightmare Scenario for Adam Sandler,” December 3, 2014, http://www.cinemablend.com/new/Sony-Hacked-Emails​ -Nightmare-Scenario-Adam-Sandler-68501.html 55 Chris Anderson, The Long Tail, 2nd edn. (New York: Hyperion, 2008). 56 Anderson and Elberse debated this in the Harvard Business Review in 2008. Anderson has an important point, although the claim to long-running selfsimilarity down the tail is a bit much. Anita Elberse, “The Long Tail Debate: A Response to Chris Anderson,” Harvard Business Review, July 2, 2008, https://hbr​ .org/2008/07/the-long-tail-debate-a-respons 57 Justin Cheng et al., “Do Cascades Recur?,” arXiv:1602.01107 [Physics, Stat], February 2, 2016, http://arxiv.org/abs/1602.01107 58 danah boyd, “None of This Is Real: Identity and Participation in Friendster,” in Structures of Participation in Digital Culture, ed. Joe Karagains (New York: Social Science Research Council, 2008). 59 Sarah Frier and Adam Satariano, “Facebook Says It Gave Advertisers Inflated Video Metrics,” Bloomberg.com, September 22, 2016, https://www.bloomberg​ .com/news/articles/2016-09-23/facebook-says-it-gave-advertisers-inflated-video​ -view-metrics 60 Media industries theory depends on a model of the firm that accounts for the affective investment of decision makers and workers. Caldwell, Production Culture. 61 Mike Shields, “IPG Reorganizes Trading Desk Operations as Company Tries Automation,” AdWeek, April 10, 2013, http://www.adweek.com/news/ advertising-branding/ipg-reorganizes-trading-desk-operations-company-tries​ -automation-147572 62 Ibid. 63 Ibid.

174

Notes

64 Jack Neff, “As Marketers Take Control of Ad Tech, Complexity Follows,” Advertising Age, April 5, 2016, http://adage.com/article/cmo-strategy/house​ -trading-desks-make-suppliers-buyers/303382/ 65 Jim Edwards, “Facebook Has Banned Ad Price ‘Arbitrage,’” Business Insider, July 10, 2013, http://www.businessinsider.com/facebook-has-banned-ad-price​ -arbitrage-2013-7 66 John Winsor, “5 Reasons Why Brands Are Cutting out Agencies,” Digiday, February 20, 2014, http://digiday.com/agencies/pulsepointes-5-reasons-brands​ -cutting-agencies/ 67 Alex Kantrowitz, “Vivaki Overhauls Its Trading Desk,” Advertising Age, February 13, 2015, http://adage.com/article/digital/vivaki-overhauls-trading-desk/297170/ 68 Jim Edwards, “WPP Admits Ad Price Arbitrage,” Business Insider, March 18, 2013, http://www.businessinsider.com/wpp-admits-ad-price-arbitrage-the​ -brief-2013-3 69 Lara O’Reilly, “The CEO of WPP’s Massive Advertising Trading Desk Xaxis Explains the 3 Biggest Myths about His Company (First up—It’s ‘Not a Trading Desk’),” Business Insider, July 22, 2015, http://www.businessinsider.com/xaxis-ceo​ -brian-lesser-interview-2015-7 70 Emily Siegel, “Agency Survival in a Post-Trade Desk World,” March 3, 2015, http:// www.imediaconnection.com/article/230256/160502-summit-coverage-dustinengel-agency-survival-in-a-post-trade-desk-world 71 Ross Benes, “How Second-Price Auctioning Can Create Headaches for Publishers,” Digiday, January 16, 2017, http://digiday.com/publishers/header​ -auction-styles/ 72 Tom Herman, “Header Bidding Is Just Waterfalling by a Different Name,” AdExchanger, February 26, 2016, https://adexchanger.com/the-sell-sider/header​ -bidding-is-just-waterfalling-by-a-different-name/ 73 Benes, “How Second-Price Auctioning Can Create Headaches for Publishers.” 74 Ross Benes, “Why the Publisher Waterfall Isn’t Dead Yet,” Digiday, December 15, 2016, http://digiday.com/publishers/waterfall-death/ 75 Mike Shields, “IPG’s Cadreon Developing TV Buying Software with Video Ad Tech Firm TubeMogul,” Wall Street Journal, May 11, 2015, http://blogs.wsj.com/ cmo/2015/05/11/ipgs-cadreon-developing-tv-buying-software-with-video-ad​ -tech-firm-tubemogul/ 76 Doni Bloomfield, “High-Speed Ad Traders Profit by Arbitraging Your Eyeballs— Bloomberg Business,” BloombergBusiness, November 7, 2014, http://www​ .bloomberg.com/news/articles/2014-11-07/high-speed-ad-traders-profit-by​ -arbitraging-your-eyeballs

Notes

175

77 Ibid. 78 Jack Marshall, “Why Advertisers Are Questioning How Agency Trading Desks Work,” CMO Today—Wall Street Journal Blog, July 25, 2014, http://blogs.wsj.com/ cmo/2014/07/25/why-advertisers-are-questioning-how-agency-trading-desks-work/ 79 Sarah Sluis, “PubMatic CEO: ‘Media Arbitrage Models Aren’t Profitable,’” AdExchanger, February 10, 2015, https://adexchanger.com/ad-exchange-news/ pubmatic-ceo-media-arbitrage-models-arent-profitable/ 80 Alexandra Bruell, “Facebook Shuttering Ad Exchange FBX,” Advertising Age, May 25, 2016, http://adage.com/article/digital/facebook-shuttering-fbx-dollars-move​ -desktop-mobile/304169/ 81 Unfortunately, this site is now defunct. SuperGlossary, “Monetize: Business and Search Engine Optimization (SEO) Definition,” SuperGlossary, accessed February 10, 2014, http://www.superglossary.com/Glossary/Business/Search_Engine​ _Optimization_(SEO)/Monetize.html. In the context of patent monetization used as a term of art, see Dean Alderucci, “Monetization of Business Model and Business Method Patents” (Center for Advanced Study & Research on Intellectual Property, High Technology Summit Conference, Seattle, 2001), http://www.law​ .washington.edu/casrip/symposium/Number7/3A-Alderucci.pdf 82 An advertisement for an advertising conference put on by Microsoft in Chicago in 2012. 83 Goldenfeeds, “Affiliate Networks,” Sales/Promotional, Goldenfeeds (2012), http:// www.goldenfeeds.com/affilate_networks.html 84 Paul Krugman, “The Narrow Moving Band, the Dutch Disease, and the Competitive Consequences of Mrs. Thatcher,” Journal of Development Economics 27, no. 1 (1987): 41–55. 85 The idea of the story as good public policy was, of course, omitted from most popular representations of the story. Matthew Yglesias, “The Norwegian Butter Crisis,” Slate, December 14, 2011, http://www.slate.com/articles/business/ moneybox/2011/12/norwegian_butter_battle_an_absurd_dairy_shortage_and​ _its_very_valuable_economic_lessons_.html 86 The idea of a land of plenty recurs quite often. The cultural power of stories of searching for lost money or finding treasure should be read in that context. Michael Pretes, “Development and Infinity,” World Development 25, no. 9 (1997): 1421–30. 87 “The Economics of Evil Google,” Paul Krugman Blog, 1364042131, http:// krugman.blogs.nytimes.com/2013/03/23/the-economics-of-evil-google/ 88 “Skip the Line with Tinder Boost,” Tinder, September 27, 2016, http://blog​ .gotinder.com/skip-the-line-with-tinder-boost/

176

Notes

89 Drew Harwell, “Online Dating’s Age Wars: Inside Tinder and eHarmony’s Fight for Our Love Lives—The Washington Post,” Washington Post, April 6, 2015, https://www.washingtonpost.com/news/business/wp/2015/04/06/online​ -datings-age-wars-inside-tinder-and-eharmonys-fight-for-our-love-lives/?utm​ _term=.965114874fa9 90 Lee Humphreys, “Mobile Social Networks and Social Practice: A Case Study of Dodgeball,” Journal of Computer-Mediated Communication 13, no. 1 (October 1, 2007): 341–60, doi:10.1111/j.1083-6101.2007.00399.x. 91 Ibid. 92 As of this writing, Foursquare now allows sign-on via Facebook. This is merely a feature. Taylor Lorenz, “Foursquare’s Revenue Is at Least Doubling Every Year, Says Its Sales Boss,” Business Insider, March 18, 2015, http://www.businessinsider​ .com/foursquare-revenue-doubling-2015-3 93 Henry Jenkins, Mizuko Ito, and danah boyd, Participatory Culture in a Networked Era: A Conversation on Youth, Learning, Commerce, and Politics (Malden, MA: John Wiley & Sons, 2015). 94 John Lucker, “Big Data Alchemy: Turn Info into Money,” InformationWeek, May 13, 2013, http://www.informationweek.com/big-data/big-data-analytics/big-data​ -alchemy-turn-info-into-money/d/d-id/1109933? 95 The actual number of paying players is unclear. The Securities and Exchange Commission has taken exception to Zynga’s lack of clear numbers. We know that less than 5 percent of players pay, the number may be much smaller. Dave Strietfield, “At Zynga, Keeping It Virtual and Vague,” Bits Blog, January 26, 2012, http://bits.blogs.nytimes.com/2012/01/26/at-zynga-keeping-it-virtual-and-vague/ 96 Alchemy was a discussion forum in the now long-defunct Financial Times Wealth Management section. This section was discontinued in 2010. “FTfm Alchemy,” Discussion Forum, Financial Times, 2010, http://blogs.ft.com/ftfmblog/ files/2010/10/und_alchemy.jpg 97 “Data Alchemy,” Mo-Data, August 12, 2013, http://www.mo-data.com/data​ -alchemy/ 98 Peter Munro, “How High Rollers Roll: The Whales Packer Is Fishing For,” The Sydney Morning Herald, October 25, 2012, http://www.smh.com.au/national/ how-high-rollers-roll-the-whales-packer-is-fishing-for-20121025-287p4.html. Gambling terminology has been common in investing for centuries. The basic affinity between these industries, and others, is a major topic of The Arcades Project. 99 Zynga, “Zynga—Annual Report,” 10-K, February 21, 2014, http://investor.zynga​ .com/secfiling.cfm?filingID=1193125-14-62902&CIK=1439404 100 Ibid., 48.

Notes

177

101 Emil Protalinski, “15 Million Used Facebook Credits to Buy Virtual Goods in 2011,” ZDNet, March 8, 2012, http://www.zdnet.com/blog/facebook/15-million​ -used-facebook-credits-to-buy-virtual-goods-in-2011/10229 102 Lawrence Principe, and William Newman, “Some Problems with the Historiography of Alchemy,” in Secrets of Nature: Astrology and Alchemy in Early Modern Europe (Cambridge, MA: MIT Press, 2001). 103 Louis More, “Boyle as Alchemist,” Journal of the History of Ideas 2, no. 1 (1941): 61–76. 104 Principe, and Newman, “Some Problems with the Historiography of Alchemy,” 388. 105 This is a reference to the idea of seduction as the perlocutionary context for the speech act in Felman’s reading of Austin; force comes from the context, not from the act itself. The differential locations of this sort of thinking explain the contextual nature of Microsoft Research’s perspective on scams. Shoshana Felman, The Scandal of the Speaking Body, 2nd edn. (Stanford, CA: Stanford University Press, 2002). For the scams, see: Herley, “Why Do Nigerian Scammers Say They Are from Nigeria?” 106 danah boyd, It’s Complicated: The Social Lives of Networked Teens (New Haven, CT: Yale University Press, 2014). 107 Alexander Monea, “Graph Force: Rhetorical Machines and the N-Arization of Knowledge : Computational Culture,” Computational Culture, accessed November 18, 2016, http://computationalculture.net/article/graph-force-rhetorical​ -machines-and-the-n-arization-of-knowledge 108 These are common offerings for someone with my demographic positioning on Facebook. 109 There is a sizable literature base on program flow and framing of political advertisements. Frank Biocca, University of North Carolina at Chapel Hill, and Center for Research in Journalism and Mass Communication, Television and Political Advertising (Hillsdale, NJ: L. Erlbaum Associates, 1991). 110 Lousia Ada Seltzer, “The Dirty Dozen: Shows Advertisers Avoid,” MediaLife, September 2009, http://www.medialifemagazine.com/the-dirty-dozen-shows​ -advertisers-avoid/ 111 These advertisements were in my feed in 2012; it was clear that a mayoral race in Georgia wasn’t relevant to someone living in Oregon. 112 Matt McGee, “EdgeRank Is Dead: Facebook’s News Feed Algorithm Now Has Close to 100K Weight Factors,” Marketing Land, August 16, 2013, http:// marketingland.com/edgerank-is-dead-facebooks-news-feed-algorithm-now-has​ -close-to-100k-weight-factors-55908

178

Notes

113 Kevin Smith, “Here’s Mark Cuban’s Plan to Fix Facebook for Advertisers,” Business Insider, November 14, 2012, http://www.businessinsider.com/mark-cuban-is-fed​ -up-with-facebook-2012-11 114 John Berger, Ways of Seeing, Reprint edition (New York: Penguin, 1990). 115 For ease of search I used an online version provided by activists. Edward Bernays, Propaganda, First Paperback edition (New York: Ig Publishing, 2004), http://www​ .historyisaweapon.com/defcon1/bernprop.html 116 Ibid. 117 Ibid. This quote comes from the conclusion of section eleven. 118 Warner’s approach to publicity and counter-publicity is important and accurate. Moving beyond awareness, toward the possibility of action, is also important, especially when attention becomes the basis of the economic model of neoliberalism. Michael, “Publics and Counter-Publics.” 119 Michael Hiestand, “ESPN’s Jay Bilas: A Social Media Butterfly Who Doesn’t Follow Anybody on Twitter,” March 8, 2013, http://www.usatoday.com/story/sports/ ncaab/2013/03/07/jay-bilas-espn-duke/1972371/ 120 Twitter, “Form S-1 for Twitter, Inc.” 121 Scout Tufankjian, Four More Years, Photograph, November 8, 2012, https://2012​ .twitter.com/en/golden-tweets.html 122 Alex Kantrowitz, “Twitter Disbands Commerce Team, Ceases Product Development on ‘Buy’ Button,” BuzzFeed, May 25, 2016, https://www.buzzfeed​ .com/alexkantrowitz/twitter-disbands-commerce-team-ceases-productdevelopment-on 123 This is really quite similar to the end of history from Chapter 1 in as much as this innovation is posed as the end of history. 124 Twitter, “Form S-1 for Twitter, Inc.,” 4. 125 Ibid., 1. 126 “High Scalability—High Scalability—The Architecture Twitter Uses to Deal with 150M Active Users, 300K QPS, a 22 MB/S Firehose, and Send Tweets in under 5 Seconds,” High Scalability, July 8, 2013, http://highscalability.com/blog/2013/7/8/ the-architecture-twitter-uses-to-deal-with-150m-active-users.html 127 Twitter, “Form S-1 for Twitter, Inc.,” 2. 128 Raymond Williams, Television, Routledge Classics (London: Routledge, 2003). 129 This phrasing appears in multiple places to explain the potential alchemy of the tweet. Twitter, “Form S-1 for Twitter, Inc.,” 2, 53, 93. 130 Andrew Beaujon, “Whose Fault Is It That ‘Comfortably Smug’ Lies about Hurricane Sandy Spread?,” Poynter, November 1, 2012, http://www.poynter.org/

Notes

179

latest-news/mediawire/193865/whose-fault-is-it-that-shashank-tripathis-lies​ -about-hurricane-sandy-spread/ 131 This quote was discovered through the Oxford English Dictionary. De Quincey T, “Ceylon,” Blackwood’s Edinbourgh Magazine, November 1843. 132 danah boyd and Nicole Ellison, “Social Network Sites: Definition, History, and Scholarship,” Journal of Computer Mediated Communication 13, no. 4 (2008): 210–30. 133 The approximate value of the industry is $16bn; Uber as of this writing is somewhere above $60bn. “Taxi & Limousine Services in the US Market Research,” IBIS World (August 2015), http://www.ibisworld.com/industry/default​ .aspx?indid=1951 134 “No Buy Button in Pinterest’s Future,” PYMNTS, May 13, 2015, http://www​ .pymnts.com/news/social-commerce/2015/no-buy-button-in-pinterests-future/#​ .ViqujqQTNGw 135 Patricia Lange, “Pinterest: Fear of the ‘Female Ghetto,’” New Yorker, June 12, 2012, http://www.newyorker.com/culture/culture-desk/pinterest-fear-of-the-female-ghetto 136 Yoree Koh, “Pinterest’s Problem: Getting Men to Commit,” Wall Street Journal, January 22, 2015, sec. Tech, http://www.wsj.com/articles/pinterests-problem​ -getting-men-to-commit-1421944331 137 David Cohen, “INFOGRAPHIC: Explosive Active User Growth for Pinterest, Tumblr,” Social Times, May 11, 2015, http://www.adweek.com/socialtimes/ infographic-gwi-pinterest-tumblr/620098. 138 Malcolm Stewart, “The ‘Tech Bubble’ Is Only a B2C Problem,” TNW News, October 11, 2015, http://thenextweb.com/insider/2015/10/09/the-tech-bubble-is​ -only-a-b2c-problem/ 139 Harry Kobrak, “How to Avoid Five Common Mistakes in Market Segmentation,” Advertising Age, February 20, 2012, http://adage.com/article/cmo-strategy/avoid​ -common-mistakes-market-segmentation/232796/ 140 Paddy Scannell, “For-Anyone-as-Someone Structures,” Media, Culture, and Society 22, no. 1 (2000): 5–24. 141 Adelin Cai, “Affiliate Links Are Now Allowed on Pinterest!,” Official Pinterest Blog, Pinterest for Business Blog, May 12, 2016, https://business.pinterest.com/en/ blog/affiliate-links-are-now-allowed-pinterest 142 Andrew Nusca, “Pinterest CEO Ben Silbermann: We’re Not a Social Network,” Fortune, July 23, 2015, http://fortune.com/2015/07/13/pinterest-ceo-ben​ -silbermann/ 143 John McDermott, “Pinterest’s New Monetization Rules Inflict Pain on ‘Pinfluencers,’” Digiday, February 27, 2015, http://digiday.com/platforms/

180

Notes pinterests-new-monetization-rules-inflict-pain-pinfluencers/. this is echoed in the prior note.

144 Nusca, “Pinterest CEO Ben Silbermann: We’re Not a Social Network.”

Chapter 2 1

As of the writing of this book, Candy Crush is the most popular game app of all time, with over 500 million players. Daniel Binns, “Life Is Sweet as Rival Apps Are Crushed,” Metro, January 30, 2014, http://metro.co.uk/2014/01/30/candy-crush​ -saga-most-popular-game-app-on-the-planet-4284559/

2

Stuart Dredge, “Candy Crush Saga Maker King’s Parent Company Reveals 2012 Financial Results,” The Guardian, January 25, 2014, sec. Technology, http://www​ .theguardian.com/technology/2014/jan/25/candy-crush-saga-king-financial​ -results-2012

3

Robert Cyran, “Venture Capital’s Sluggish Performance,” DealBook, February 4, 2013, http://dealbook.nytimes.com/2013/02/04/venture-capitals-sluggish​ -performance/

4

James Surowiecki, “One-Hit Wonders,” The New Yorker, March 17, 2014, http:// www.newyorker.com/magazine/2014/03/17/one-hit-wonders

5

Jim Edwards, “The Most Brutal Quotes from the New Yorker’s Takedown of the Candy Crush IPO,” Business Insider, March 11, 2014, http://www.businessinsider​ .com/the-new-yorker-on-king-candy-crush-ipo-2014-3

6

Aggregated by Huffington Post. Nicola Leske, “Candy Crush Brings Inflated IPO Market Back to Earth,” May 29, 2014, http://www.huffingtonpost.com/2014/03/29/ candy-crush-ipo_n_5052712.html

7

Leo Sun, “Did Activision Blizzard Inc. Overpay for King Digital Entertainment PLC?,” The Motley Fool, November 11, 2015, http://www.fool.com/investing/ general/2015/11/11/did-activision-blizzard-inc-overpay-for-king-digit.aspx

8

The ICE purchase of NYSE may not matter for the public reception of stock buying, but it does represent more fundamental shifts in the structure of the economy. “The End of the Street,” The Economist, November 16, 2013, http://www​ .economist.com/news/finance-and-economics/21589913-improbable-takeover​ -highlights-uncertain-future-share-trading-end

9

This is considered to be general knowledge; Investopedia, while not being the best source, does provide a fine overview of this point. “The NYSE and Nasdaq: How They Work,” Investopedia, accessed December 4, 2015, http://www.investopedia​ .com/articles/basics/03/103103.asp

Notes

181

10 “Securitization, N.,” Oxford English Dictionary Online (Oxford University Press, June 2017), accessed November 28, 2017, http://www.oed.com/view/Entry/298048 ?redirectedFrom=securitization 11 August 30, to be specific. Lodewijk Petram, The World’s First Stock Exchange, Columbia Business School Publishing (New York: Columbia University Press, 2014), 7. Malmender argues for a Roman origin, although this elides all potential revenue stream transactions with the performance of securitization. Ulrike Malemndier, “Romand Law and the Law-Finance Debate,” in Festscrhift Für Rolf Knütel, eds. Holger Altmeppen Ingo Reichard and Martin Schemaier (Vienna: Boehlau Verlag, 2010). 12 Petram, The World’s First Stock Exchange. 13 Ibid., 4. 14 Ibid., 43. 15 Several chapters of this book detail the strategies used by the company to survive. 16 Charles Geisst, Wall Street: A History, Updated Edition, Updated edition (Oxford and New York: Oxford University Press, 2012). 17 NASDAQ offers an alternative to the NYSE, although the imaginary of the market is articulated to the New York Exchange. 18 The Panic lead to new trading norms and likely strengthened Hamilton. David Cowen, Richard Sylla, and Robert Wright, “The U.S. Panic of 1792: Financial Crisis Management and the Lender of Last Resort” (NBER DAE Summer Institute, Helsinki: NBER, 2006), http://www.helsinki.fi/iehc2006/papers1/Sylla.pdf 19 Peters, Speaking into the Air, 62. 20 Ron Chernow, Alexander Hamilton (New York: Penguin, 2005), 381. 21 New York Stock Exchange, “American Stock Exchange Historical Timeline” (New York Stock Exchange, 2008), http://www.nyse.com/pdfs/AmexTimeline.pdf 22 Ibid. 23 Ibid. 24 Ibid. 25 Robert Sobel, The Big Board: A History of the New York Stock Market (New York: Free Press, 1968). 26 James E. Buck, The New York Stock Exchange: The First 200 Years (Essex, CT: Greenwich Pub. Group, 1992). 27 Steven Wheeler, “Happy Birthday, NYSE,” Professional/Promotional, NYSE History Blog, May 17, 2013, https://exchanges.nyx.com/en/steven-wheeler/happy​ -birthday-nyse 28 Buck, The New York Stock Exchange, 36.

182

Notes

29 Ibid., 85. 30 Ibid., 95. 31 Ibid., 115. 32 Peter Edmonston, “Where Wall Street Meets to Eat, the Last Lunch,” The New York Times, April 28, 2006, sec. Business, http://www.nytimes.com/2006/04/28/ business/28lunch.html 33 It is unclear what preventing tourists from walking through a Lucite encased corridor would do to increase security. It is also important to note that the creature comforts of the exchange building were of interest to the official visual history of the market with images appearing on Buck, The New York Stock Exchange, 127, of both the hair salon and the kitchen. 34 Duncan Niederauer and Steve Forbes, “Transcript: Duncan Niederauer,” Forbes, August 3, 2009, http://www.forbes.com/2009/07/31/niederauer-technology​ -exchange-intelligent-investing-naked-shorts.html 35 Jeremy Olshan, “This Is the Last Photo We’ll Ever Run of the NYSE Trading Floor”, MarketWatch, October 1, 2014, http://www.marketwatch.com/story/this-is-the​ -last-photo-well-ever-run-of-the-nyse-trading-floor-2014-10-01 36 Martin Scorsese, The Wolf of Wall Street, Biography, Comedy, Crime (2013). http:// www.imdb.com/title/tt0993846/?ref_=nv_sr_1 37 Conspiracy theories often protect ideological formations by contending that there are people who know the operation of the conspiracy who are the agents of ideology. Dean, Publicity’s Secret. 38 This sentence uses the word “person,” when it could also use man. The culture of masculinity around finance is an important topic that also requires substantial critique. 39 This phrase does not appear in this book; it has been a key phrase used by Nielsen in his research, a field defined in this book. Jakob Nielsen, Usability Engineering (Boston, MA: Academic Press, 1993). 40 Mae Anderson, “Boom! E-Trade Retires Its Wiseguy Spokesbaby 6 Years after His Super Bowl Debut,” US News & World Report, March 21, 2014, http://www. usnews.com/news/business/articles/2014/03/21/e-trades-talking-baby-goes-bye​ -bye 41 Ian Bogost, “The Rhetoric of Video Games,” in The Ecology of Games, ed. Katie Salen (Cambridge, MA: The MIT Press, 2008). 42 Ian Bogost, “Video Games Are Better Without Characters,” The Atlantic, March 13, 2015, http://www.theatlantic.com/technology/archive/2015/03/video-games​ -are-better-without-characters/387556/

Notes

183

43 John Seabrook, “Game Master,” The New Yorker, November 6, 2006, http://www​ .newyorker.com/magazine/2006/11/06/game-master 44 This is the central point of the critique of acceleration. No system is without design flaws; when acceleration is deployed as a self-evident design good these problems become worse. Paul Virilio, Unknown Quantity (London; New York; Paris: Thames & Hudson, 2003). 45 Jacques Rancière, Disagreement: Politics and Philosophy, trans. Julie Rose (Minneapolis: University of Minnesota Press, 2004). 46 Peters, Speaking into the Air, 62. 47 Peters invokes the Christian tradition, particularly the gospels at this point. It should not be understated the degree to which asymmetric hospitality informs western culture and tradition. Ibid., 61. 48 James C. Scott, Seeing Like a State (New Haven, CT: Yale University Press, 1998). 49 Ibid., 113. 50 boyd and Ellison, “Social Network Sites.” 51 As of January 2017, this interface is available at: www.facebook.com/ads/manage/ powereditor/. I want to be sure to temper my critique of the A/B test. Testing an A versus a B can be a powerful choice; it can be abused. 52 Everyday life as a starting point has become popular both in media industry of everyday objects and in the rhetorical tradition. I see this as the evolution of the relationship between the lifeworld and the public sphere—the lifeworld was always there, providing the affective material that constitutes public culture. The key source between everyday life trajectories: De Certeau, Micheal, The Practice of Everyday Life, 2nd edn. (Berkley: University of California Press, 2002). 53 Evgeny Morozov, The Net Delusion the Dark Side of Internet Freedom (New York: PublicAffairs, 2011). 54 James Madison, “The Utility of Union as a Safeguard Against Domestic Faction and Insurrection,” Daily Advertiser, November 22, 1787. 55 Morozov, The Net Delusion the Dark Side of Internet Freedom, 194. 56 Be wary of how often concealed human intelligence tasks appear and are treated as algorithmic labor. 57 Oxford English Dictionary, “Scalable, Adj.,” Oxford English Dictionary Online (Oxford University Press, 2016). 58 The URL provided in the citation will provide an up-to-date version of this resource at least as long as Google’s system continues to parse URLs in this fashion. “Google Ngram: Scalability,” Google Books, accessed January 24, 2017, https://books.google.com/ngrams/graph?content=scalability&year​

184

Notes _start=1800&year_end=2000&corpus=15&smoothing=3&share=&direct_url=t1 %3B%2Cscalability%3B%2Cc0

59 John Durham Peters, “Calendar, Clock, Tower” (Media in Transition 6, Massachusetts Institute of Technology, 2009), http://web.mit.edu/comm-forum/ mit6/papers/peters.pdf 60 If you are reading this endnote, it seems likely that I was right. For a time in November 2015, ostensibly Christian objections to the Starbucks coffee cup lacking imagery was covered as a news story. Mary Bowerman, “#ItsJustACup Mocks Starbucks’ Red Cup Controversy,” USA Today, November 11, 2015, http:// www.usatoday.com/story/money/nation-now/2015/11/11/itsjustacup-mocks​ -starbucks-red-cup-controversy/75563876/ 61 Sean Gallagher, “How Facebook Puts Petabytes of Old Cat Pix on Ice in the Name of Sustainability,” Ars Technica, November 9, 2015, http://arstechnica.com/ information-technology/2015/11/to-go-green-facebook-puts-petabytes-of-cat​ -pics-on-ice-and-likes-windfarming/ 62 David Fincher, The Social Network, Biography, Drama (2010) http://www.imdb​ .com/title/tt1285016/?ref_=nv_sr_1. 63 The criticism of the film I am referring to is from Zuckerberg himself. David Batty and Chris Johnston, “Social Network ‘made up Stuff That Was Hurtful’, Says Mark Zuckerberg,” The Guardian, November 8, 2014, http://www.theguardian.com/ technology/2014/nov/08/mark-zuckerberg-social-network-made-stuff-up-hurtful 64 John Cochrane, Asset Pricing (Princeton, NJ: Princeton University Press, 2005), xiv. 65 Ian Giddy, “Giddy: Methods of Corporate Valuation,” Methods in Corporate Valuation, 2006, http://people.stern.nyu.edu/igiddy/valuationmethods.htm 66 John H. Cochrane, “The Risk and Return of Venture Capital,” Journal of Financial Economics 75, no. 1 (2005): 3–52, doi:http://dx.doi.org/10.1016/j​ .jfineco.2004.03.006 67 David H. Goldenberg and Michael D. Goldenberg, “Why Entrepreneurs and VCs Disagree in Valuing Start-up Firms: Imputing the Target Rate of Return Using DCF vs. Option-Based Approaches,” Journal of Private Equity 13, no. 1 (Winter 2009): 73–79. They agree in their literature review that the peer-reviewed literature on startup valuation is sparse. 68 The idea of positive value addition at each stage of abstraction is fascinating as it implies that the mere process of abstraction alone is valuable. If anything the commissions taken at each stage for facilitating the option should eat away at the underlying principle. The reflexive loop of valuation forms a positive feedback loop that amplifies the value of all things.

Notes

185

69 Benjamin, The Arcades Project, 513. Convolute 013, 1 and 2. 70 François Vatin, “Valuation as Evaluating and Valorizing,” Valuation Studies 1, no. 1 (2013): 31–50. 71 Luc Boltanski and Laurent Thévenot, On Justification: Economies of Worth, trans. Catherine Porter (Princeton, NJ: Princeton University Press, 2006). 72 Aswath Damodaran, “Valuation Approaches and Metrics: A Survey of the Theory and Evidence,” November 2006, http://people.stern.nyu.edu/adamodar/pdfiles/ papers/valuesurvey.pdf 73 Ibid., 6. This is also a fundamental issue in the work of George Gilder. 74 Daniel Faltesek, “Big Argumentation?,” tripleC: Communication, Capitalism & Critique. Open Access Journal for a Global Sustainable Information Society 11, no. 2 (August 15, 2013): 402–11. 75 Cochrane, Asset Pricing, xvii. 76 Jeff Bussgang, “Scaling the Chasm,” Seeing Both Sides, January 13, 2015, http:// bostonvcblog.typepad.com/vc/2015/01/scaling-the-chasm.html 77 Larry Neumeister, “Twitter Used International Roadshow to Boost IPO Valuation: N.Y. Lawsuit,” CTVNews, October 31, 2013, http://www.ctvnews​ .ca/business/twitter-used-international-roadshow-to-boost-ipo-valuation-n-y​ -lawsuit-1.1521639 78 Rick Ungar, “Papa John’s, Applebee’s and Others Pay Huge Price for AntiObamacare Politicking,” Forbes, December 4, 2012, http://www.forbes.com/sites/ rickungar/2012/12/04/papa-johns-applebees-and-others-pay-huge-price-for-anti​ -obamacare-politicking/ 79 “Take Me Home,” Nylon, November 2013, pp. 68–74. 80 The video has since been removed. Commercial—Introducing the iShares Core, 2012, http://www.youtube.com/watch?v=BG1FlkSyXwQ&feature=youtube_gdata​ _player. 81 There are reasons why someone might want to hold an ETF or other sort of index fund. 82 Itzhak Ben-David, “ETFs, Arbitrage, and Contagion,” December 2011. 83 “NYSE Matched Volume Drops to New Decade Low in February,” Zero Hedge, January 7, 2013, http://www.zerohedge.com/news/2013-03-11/nyse-matched​ -volume-drops-new-decade-low-february 84 Peter Sloterdijk, Critique of Cynical Reason (Minneapolis: University of Minnesota Press, 1987). 85 Ylan Q. Mui, “Americans Saw Wealth Plummet 40 Percent from 2007 to 2010, Federal Reserve Says,” The Washington Post, June 11, 2012, https://www​

Notes

186

.washingtonpost.com/business/economy/fed-americans-wealth-dropped-40​ -percent/2012/06/11/gJQAlIsCVV_story.html 86 Paul Krugman, “Fairy Tales,” The Conscience of a Liberal, August 21, 2015, http:// krugman.blogs.nytimes.com/2015/08/21/fairy-tales-2/ 87 This was a title used to describe Dick Grasso in the late 1990s. The story of Grasso’s downfall in The Economist is closely tied to the story of this chapter. Grasso held the line against electronic trading and inter-market competition to maintain the prestige of the NYSE. The trappings necessary to build prestige can run against the efficient operation of the market. “Taking Stock of Dick Grasso,” The Economist, September 18, 2003, http://www.economist.com/node/2071704 88 This site has since been removed. New York Stock Exchange, NYSE, “Investing in the Currency of Trust,” Public Relations (2008), http://www.forbes.com/sites/ randalllane/2012/03/26/warren-buffetts-50-billion-decision/ 89 Ibid. 90 Ibid. 91 Ibid. 92 Ibid. 93 Robert Hariman and John Louis Lucaites, No Caption Needed: Iconic Photographs, Public Culture, and Liberal Democracy (Chicago: University of Chicago Press, 2007). 94 New York Stock Exchange, “Investing in the Currency of Trust.” 95 Ibid. 96 Ibid. 97 Virilio, Unknown Quantity. 98 This quote is described in context above. Ibid. 99 Lisa Gitelman and Geoffrey Pingree, “What’s New about New Media?,” in New Media 1740–1915 (Cambridge, MA: MIT Press, 2004), xi–xxiii. 100 Jeremey Grant, “Banks Defend ‘Dark Pool’ Trading,” Financial Times, October 5, 2009, http://www.ft.com/cms/s/0/2ce55f48-b15a-11de-b06b-00144feabdc0.html 101 Emily Lambert, “RIP New York Stock Exchange,” Forbes, February 11, 2011, http:// www.forbes.com/sites/emilylambert/2011/02/15/rip-new-york-stock-exchange/ 102 Felix Salmon, “Wall Street’s Dead End,” The New York Times, February 13, 2011, http://www.nytimes.com/2011/02/14/opinion/14Salmon.html 103 Arash Massoudi and Tracy Alloway, “End of Goldman Era on the NYSE Floor,” Financial Times, April 1, 2014, http://www.ft.com/cms/s/0/22431a3c-b9af-11e3​ -a3ef-00144feabdc0.html

Notes

187

104 Michael Hiltzik, “End of an Era: The NYSE Floor Isn’t Even Good for PR Photos Anymore,” Los Angeles Times, October 7, 2014, http://www.latimes.com/business/ hiltzik/la-fi-mh-the-nyse-floor-20141007-column.html

Chapter 3 1

This is a reference to the entry gateway for the site advertising the hackathon concept. The key here is not the content of this site but the idea of the site. TechCrunch, “Events,” TechCrunch, accessed March 3, 2014, http://techcrunch.com

2

This history is Facebook-specific. Most histories seem to depend on linking the hackathon to a historical phenomenon like LAN parties. The history of the hackathon is less important than the social function of the hackathon today that is really more closely tied to the needs of capital than to those of an alternative lifestyle community. This tie can be seen in the development of the idea of technoromanticism. Drew Olanoff, “Facebook Shares the History of Its ‘hackathon’,” The Next Web, 2013, http://thenextweb.com/facebook/2012/05/23/facebook-shares​ -the-history-of-its-hackathon/

3

Jon Evans, “Wait, When Did Software Become So Boring?,” TechCrunch, September 14, 2013, http://techcrunch.com/2013/09/14/when-did-software​ -become-so-boring/

4

Song Zheng, “The Fundamentals Behind a Successful Hackathon,” TokBox Blog, January 24, 2013, http://www.tokbox.com/blog/the-fundamentals-behind-a​ -successful-hackathon/

5

David Zax, “Secrets of Facebook’s Legendary Hackathons Revealed,” Fast Company, November 9, 2012, http://www.fastcompany.com/3002845/secrets​ -facebooks-legendary-hackathons-revealed

6

Agamben’s reading of Bakthin is particularly strong in this regard. Giorgio Agamben, State of Exception, trans. Kevin Atell (Chicago: University of Chicago Press, 2008).

7

This is Agamben’s critique of the Carnivalesque that closely follows Bakthin. Ibid., 71.

8

Adrianne Jeffries, “Rumors & Acquisitions: Sex, Sweat and Hackathons,” Betabeat, April 11, 2011, http://betabeat.com/2011/04/rumors-acquisitions-sex-sweat-and​ -hackathons/

9

Pierre Levy, “Collective Intelligence,” in Reading Digital Culture, ed. David Trend (Malden, MA: Blackwell, 2001).

10 Philip Rosen, Change Mummified: Cinema, Historicity, Theory (Minneapolis: University of Minnesota Press, 2001).

188

Notes

11 This approach to reading is inspired by the research on the analysis of the ideograph as proposed by Michael Calvin McGee—key to his approach is the comparison between the synchronic and diachronic use of a key term that interpolates a field of discourse. This chapter does not position disruption as an ideograph, a key axiological term in a discourse system that operates as an empty positivity which organizes other terms, but as something more concrete that allows the import of indexical relationships between elements of systems. Michael Calvin McGee, “The ‘Ideograph’ a Link Between Rhetoric and Ideology,” Quarterly Journal of Speech 66, no. 1 (1980): 1–16. 12 “Disrupt,” in American Heritage Dictionary (New York: Houghton Mifflin Harcourt, 2015). Prior versions of this chapter included an epigraph on the shifting meaning of disruption that emphasized church conflict and classroom disruption as common meanings for disruption. Disruption as magical force is a truly unique shift in meaning. 13 Joseph Schumpeter, Capitalism, Socialism and Democracy, Reprint edition (New York; London: Harper, 1975). 14 “Disruptive Innovation,” Clayton Christensen, accessed February 10, 2014, http:// www.claytonchristensen.com/key-concepts/ 15 Richard N. Foster, Innovation: The Attacker’s Advantage (New York: Simon & Schuster, 1988). 16 Jean-Marie Dru, Disruption: Overturning Conventions and Shaking up the Marketplace (New York: John Wiley & Sons, 1996). 17 Jim Collins, Good to Great: Why Some Companies Make the Leap … And Others Don’t, First (New York: HarperBusiness, 2001). 18 Clayton M. Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Boston, MA: Harvard Business Press, 1997), 107. 19 Ibid., 103. 20 John Holusha, “Steel Mini-Mills Could Bring Boon or Blood Bath,” The New York Times, May 30, 1995, sec. Business, http://www.nytimes.com/1995/05/30/business/ steel-mini-mills-could-bring-boon-or-blood-bath.html 21 There are major issues with overproduction and deception in the Chinese steel industry; steel is too easy to manufacture in volume to sustain the industry in anything more than a basic material supply role. This is the definition of a glut. Gordon Chang, “As Goes Steel, So Goes China,” Forbes, September 16, 2012, http://www.forbes.com/sites/gordonchang/2012/09/16/as-goes-steel-so-goes​ -china/.Worse there is a global glut of steel. Imported tubular products in particular are destabilizing. John Miller, “U.S. Steel’s $1.8 Billion Writedown: A Tough Economy and a Global Glut,” Corporate Intelligence (Wall Street Journal),

Notes

189

October 21, 2013, http://blogs.wsj.com/corporate-intelligence/2013/10/21/u-s​ -steels-1-8-billion-writedown-a-tough-economy-and-a-global-glut/ 22 Christensen, The Innovator’s Dilemma, 184. 23 James K. Glassman and Kevin A. Hassett, Dow 36, 000: The New Strategy for Profiting from the Coming Rise in the Stock Market (New York: Three Rivers Press, 2000). 24 Lepore and many others get the diagnosis of Christensen right; more interesting is why he continues to have so much sway. Jill Lepore, “The Disruption Machine,” The New Yorker, June 23, 2014, http://www.newyorker.com/magazine/2014/06/23/ the-disruption-machine 25 This is a key reason why companies cite their age as a factor for credibility. The case study method becomes especially troubling in communication research when novelty becomes a more important factor for object selection than duration. Cultural critique of a boutique cable television show means less than critique of a popular program or a long-standing discourse. 26 Lepore, “The Disruption Machine.” 27 Larry Downes and Chunka Mui, Unleashing the Killer App: Digital Strategies for Market Dominance (Boston, MA: Harvard Business Press, 2000), 33. 28 Ibid., 30. 29 Ibid., 41. 30 Ibid., 33. 31 Consult pages 30–40 for their use of Coase. The reason why firms would form in the first place is the efficiency provided by connecting the parts of the supply chain—this theme will be developed at length in Chapter 5 as the figures of the market for new media firms are clearly disarticulated from those of commerce or actually existing business. The original material they are citing is from: Ronald Coase, “The Nature of the Firm,” Economica 4, no. 16 (1937): 368–405. Ronald Coase, “The Problem of Social Cost,” Journal of Law and Economics 3, no. 1 (1960): 1–44. 32 Pierre Schlag, “The Problem of Transaction Costs,” Southern California Law Review 62 (1989): 1661–700. 33 References to mental illness, particularly under older names, would not be done today. Downes and Mui, Unleashing the Killer App, 41. 34 Ibid., 140. 35 Yes, this is a key normative prescription from this book. Ibid., 109. 36 Jean-Marie Dru, How Disruption Brought Order: The Story of a Winning Strategy in the World of Advertising (New York: St. Martins, 2007).

190

Notes

37 Dru, How Disruption Brought Order, 15. 38 Ibid. 39 Ibid., 17. 40 Ibid., 203. 41 Rosen, Change Mummified, 20–24. 42 Ibid., 21. 43 Ibid., 345. 44 Ibid., 326–27. 45 Gordon Moore originally published the idea for the law in an electronics magazine in 1965. R.R. Schaller, “Moore’s Law: Past, Present and Future,” IEEE Spectrum 34, no. 6 (June 1997): 52–59, doi:10.1109/6.591665. 46 Angelo DePalma, “Beating the Heat—ASME,” February 2012, https://www.asme​ .org/engineering-topics/articles/heat-transfer/beating-the-heat?cm_sp=Heat%20 Transfer-_-Feataured%20Articles-_-Beating%20the%20Heat Ryan W. Neal, “Secret Chinese Bitcoin Mine,” International Business Times, December 2, 2013, http://www.ibtimes.com/secret-bitcoin-mine-chinese-facility-uses-boiling-liquid​ -cool-massive-computers-generate-bitcoins 47 Dan Woods, “How Adaptive Planning Creates a Moore’s Law for Data,” Forbes, January 28, 2014, http://www.forbes.com/sites/danwoods/2014/01/28/how​ -adaptive-planning-creates-a-moores-law-for-data/ 48 Christopher Mims, “Moore’s Law Over, Supercomputing ‘In Triage,’ Says Expert,” MIT Technology Review, May 9, 2012, http://www.technologyreview.com/ view/427891/moores-law-over-supercomputing-in-triage-says-expert/ 49 Bob Briscoe, Andrew Odlyzko, and Benjamin Tilly, “Metcalfe’s Law Is Wrong,” IEEE Spectrum, July 1, 2006, http://spectrum.ieee.org/computing/networks/ metcalfes-law-is-wrong 50 Steve Borgatti, “Centrality and Network Flow,” Social Networks 27, no. 1 (2005): 55–71. 51 Evgeny Morozov, “Why Social Movements Should Ignore the Internet,” New Republic, February 5, 2013, https://newrepublic.com/article/112189/social-media​ -doesnt-always-help-social-movements 52 “Information wants to be free” is detailed by, Steven Levy, “The Definitive Story of ‘Information Wants to Be Free’—Backchannel,” Medium, November 21, 2014, https://backchannel.com/the-definitive-story-of-information-wants-to-be-free​ -a8d95427641c As for Zuckerberg’s claim see: Marshall Kirkpatrick, “Facebook’s Zuckerberg Says the Age of Privacy Is Over,” ReadWrite, January 9, 2010, http:// readwrite.com/2010/01/09/facebooks_zuckerberg_says_the_age_of_privacy_is_ov

Notes

191

53 Daniel Faltesek, “Offentlichkeit and Disclosure,” (MiT 8, Massachusetts Institute of Technology, 2013), http://www.academia.edu/5456834/Offentlichkeit_and​ _Disclosure. 54 Accessible: http://techcrunch.com/unicorn-leaderboard/ 55 Accessible: http://fortune.com/unicorns/ 56 “Bloomberg Businessweek (US) Cover December 2015,” Cover Junkie, accessed January 5, 2016, http://www.coverjunkie.com/blog/bloomberg-businessweek​ -us/3/17856 57

Willard Foxton, “Facebook Is Turning into Facebank—and Could Be the Biggest Financial Institution in the World,” Technology—Telegraph Blogs, April 23, 2014, http://blogs.telegraph.co.uk/technology/willardfoxton2/100013340/facebook-is​ -turning-into-facebank-and-could-be-the-biggest-financial-institution-in-the-world/

58 Excellent coverage of the decision to add grocery: Stephanie Clifford, “Stores Like Target and CVS Add Groceries to Attract Shoppers,” The New York Times, January 16, 2011, http://www.nytimes.com/2011/01/17/business/17grocery.html 59 Robert Byrne and Jason Hanson, “Innovation and Disruption in U.S. Merchant Payments,” McKinsey on Payments, May 2014, http://www.mckinsey.com/~/ media/mckinsey/dotcom/client_service/Financial%20Services/Latest%20 thinking/Payments/MoP19Innovation%20and%20disruption%20in%20US%20 merchant%20payments.ashx 60 Darrow, “Google Moonshots Are Becoming a Massive Pain.” 61 Anthony Sebastian, “IBM Builds Graphene Chip That’s 10,000 Times Faster, Using Standard CMOS Processes,” ExtremeTech, January 30, 2014, http://www​ .extremetech.com/extreme/175727-ibm-builds-graphene-chip-thats-10000-times​ -faster-using-standard-cmos-processes 62 Faltesek, “Big Argumentation?” 63 Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York; London: Free Press; Collier Macmillan, 1985). 64 Tess Townsend, “Google Has Banned 200 Publishers since It Passed a New Policy against Fake News—Recode,” Recode, January 25, 2017, http://www.recode​ .net/2017/1/25/14375750/google-adsense-advertisers-publishers-fake-news

Chapter 4 1

Daniel Faltesek, “TV Everywhere? The Old Spatial Politics of New Media,” Communication, Culture & Critique 4, no. 4 (2011): 401–18.

2 Streeter, The Net Effect.

192

Notes

3

James Boyle, The Public Domain: Enclosing the Commons of the Mind (New Haven, CT; London: Yale University Press, 2008).

4

Siva Vaidhyanathan, Copyrights and Copywrongs: The Rise of Intellectual Property and How It Threatens Creativity (New York: New York University Press, 2003), 116.

5

Pierre Schlag, “The Aesthetics of American Law,” Harvard Law Review 115, no. 4 (2002): 07–08.

6

There is no statutory damage for loss of reputation. Calculating actual damages requires some reputation to have existed in the first place. T. Baron Carter, Mark A. Franklin, and Jay B. Wright, The First Amendment and the Fourth Estate (Minneapolis: Foundation Press, 1994), 928–29.

7

Pamela Samuelson and Tara Wheatland, “Statutory Damages in Copyright Law: A Remedy in Need of Reform,” SSRN Scholarly Paper (Rochester, NY: Social Science Research Network, August 1, 2009), http://papers.ssrn.com/abstract=1375604

8

Ben Sisario, “Clyde Stubblefield, a Drummer, Aims for Royalties,” The New York Times, March 29, 2011, sec. Arts / Music, http://www.nytimes.com/2011/03/30/ arts/music/clyde-stubblefield-a-drummer-aims-for-royalties.html

9

Rosemary J. Coombe, The Cultural Life of Intellectual Properties: Authorship, Appropriation, and the Law (Durham, NC: Duke University Press, 1998).

10 David Edgar, “You Can’t Use the O-Word,” The Guardian, October 7, 2007, sec. Comment is free, http://www.theguardian.com/commentisfree/2007/oct/08/ comment.olympics2012 11 Neil Gupta, “How Apple Adopted the Kleenex Problem,” Metamorphium, December 16, 2011, http://blog.metamorphium.com/2011/12/16/how-apple​ -adopted-the-kleenex-problem/ 12 Coombe, The Cultural Life of Intellectual Properties, 57. 13 These advertisements were common in Advertising Age in 2009. 14 The patents asserted by repeat litigants are often some of the weakest. John R. Allison, Joshua H. Walker, and Mark A. Lemley, “Patent Quality and Settlement among Repeat Patent Litigants,” SSRN Scholarly Paper (Rochester, NY: Social Science Research Network, September 16, 2010), http://papers.ssrn.com/ abstract=1677785. In terms of a discussion of patent troll impacts: Kris Frieswick, “The Real Toll of Patent Trolls,” Inc.com, December 13, 2012, http://www.inc.com/ magazine/201202/kris-frieswick/patent-troll-toll-on-businesses.html. At the same time, we should be clear that a lack of clarity about total damages does not amount to a strong position defending these business practices. 15 United States Patent Office, “General Information Concerning Patents,” accessed February 5, 2014, http://www.uspto.gov/patents/resources/general_info​ _concerning_patents.jsp

Notes

193

16 USPTO, “MPEP,” Manual of Patent Examining, Chapter 2100, Section 2106, accessed March 6, 2014, http://www.uspto.gov/web/offices/pac/mpep/s2106.html 17 Leonid Kravets, “Kelora Patent Found Obvious: Are Other ‘Obvious’ Software Patents in Danger?” TechCrunch, May 26, 2015, http://techcrunch​ .com/2012/05/26/kelora-obvious-software-patents/ 18 Dennis Crouch, “Amazon Patent Slides Through Reexamination,” Patentlyo, March 10, 2010, http://patentlyo.com/patent/2010/03/amazon-one-click-patent​ -slides-through-reexamination.html 19 The definition of useful is really quite tricky and a great introduction to the idea of changing the supposed audience of real of patent law. Mark D. Janis and Timothy R. Holbrook, “Patent Law’s Audience,” SSRN Scholarly Paper (Rochester, NY: Social Science Research Network, 2012), http://papers.ssrn.com/ abstract=2137014 20 This is a fantastic dissertation that has a wealth of primary analysis. It is a must read. Oren Bracha, “Owning Ideas: A History of Anglo-American Intellectual Property” (Dissertation, Harvard University, 2005). 21 Bracha provides an extensive history on this point, especially with regard to the history of the assignability of patents. 22 Scott Allen, “‘Justifying’ The Public Interest in Patent Litigation,” 88 Indiana Law Journal 1047 (2013) 88, no. 3 (July 1, 2013), http://www.repository.law.indiana​ .edu/ilj/vol88/iss3/6. 23 National Research Council, Patents in the Knowledge-Based Economy (Washington, DC: National Academies Press, 2004), 187. 24 The key here is not just the quote, but the depth of Janis and Holbrook’s history of attempts at patent abolitionism. Janis and Holbrook, “Patent Law’s Audience,” at footnote 211. 25 National Research Council, Patents in the Knowledge-Based Economy, 190. 26 Gene Quinn and Steve Brachmann, “Facebook and Twitter: Patent Strategies for Social Media,” Ipwatchdog, February 1, 2014, http://www.ipwatchdog​ .com/2014/02/14/facebook-and-twitter-patent-strategies-for-social-media/ id=48004/ 27 Adam B. Jaffe, Josh Lerner, and Scott Stern, “Introduction,” in Innovation Policy and the Economy, Volume 1 (Cambridge, MA: MIT Press, 2001), http://papers​ .nber.org/books/jaff01-1. 28 This is the counterfactual that drives chapter ten. Boyle, The Public Domain, 246. 29 Schlag, “The Aesthetics of American Law.” 30 Constitutional originalism often falls into this category. The judges move authority in a grid-like way based on meanings from an alternative place.

194

Notes

31 Schlag tends to believe that the dissociative aesthetic could be a foundation for an alternative legal theory; it is clear that multiperspectival dissociations are common in corporate and intellectual property law. 32 Daniel Nazer and Vera Ranieri, “Why Do Patent Trolls Go to Texas? It’s Not for the BBQ,” Electronic Frontier Foundation, July 9, 2014, https://www.eff.org/ deeplinks/2014/07/why-do-patent-trolls-go-texas-its-not-bbq 33 Schlag, “The Aesthetics of American Law,” 1094. 34 State Street Bank & Trust Co. v. Signature Financial Group, Inc. (United States Court of Appeals for the Federal Circuit July 23, 1998). It is interesting that this is a financial products case. 35 Bilski v. Kappos, No. 08–964 (United States Supreme Court June 28, 2010). 36 The underlying structure in American intellectual property law modified in Bilski is known as the trilogy, including: Gottshalk v. Benson, Parker v. Flook, and Diehr v. Diamond which limited patentability until the decision in State Street Bank. 37 Stevens Concurrence, 1–2. Bilski v. Kappos. 38 Ibid., majority opinion. 39 Ibid., 13. 40 Bilski v. Kappos, Stevens, 12. 41 Ibid., 31. 42 Ibid., 36. 43 Breyer, 2. 44 Alice Corp v. CLS Bank International, No. 13–298 (United States Supreme Court June 19, 2014). Association for Molecular Pathology v. Myriad Genetics, No. 12–398 (United States Supreme Court June 13, 2013). Mayo Collaborative Services v. Prometheus Laboratories, No. 10–1150 (United States Supreme Court March 20, 2012). 45 Mayo Collaborative Services v. Prometheus Laboratories. 46 Adam Liptak, “Justices Deny Patent to Business Methods,” The New York Times, June 19, 2014, http://www.nytimes.com/2014/06/20/technology/supreme-court​ -rules-against-alice-corp-in-patent-case.html 47 The Court is quite clear that merely using a computer is not enough to justify patent protection, Justice Thomas was clear that only something that could improve the working of the computer could potentially be patentable. The use of the term “hardware” is also not enough to justify patent protection: the hardware must be substantially inventive. Thomas is clear that claims about using the computer are “beside the point.” 48 Alice Corp v. CLS Bank International at 13.

Notes

195

49 Nautilus Inc. v. Biosig Instruments Inc., No. 13–369 (United States Supreme Court June 2, 2014). 50 Matthew Prosen, “Dismissed Out of Hand: The Rise of Successful Motions to Dismiss under 35 U.S.C. § 101 in the Wake of Alice,” IP Reports (Baker Botts, May 6, 2015), http://www.bakerbotts.com/ideas/publications/2015/4/ip-report 51 Peter Brody and Jennifer Kwon, “Social Media and Patent Eligibility,” BloombergBNA, Social Media Law & Policy Report (The Bureau of National Affairs (Bloomberg), March 24, 2015), https://www.ropesgray.com/~/media/Files/ articles/2015/March/20150331-Brody-and-Kwon-in-Bloomberg-BNA.PDF 52 The Original Patent Troll, 2007, http://www.youtube.com/watch?v=lOGoZFzHkhs &feature=youtube_gdata_player 53 This suit was an important starting point in the litigation chain. David Morgenstern, “30 Years before Samsung: When Apple Sued Microsoft,” ZDNet, August 27, 2012, http://www.zdnet.com/30-years-before-samsung-when-apple​ -sued-microsoft-7000003202/ 54 Nathan Hurst, “How the America Invents Act Will Change Patenting Forever | Wired Design | Wired.com,” Wired Design, March 15, 2013, http://www.wired​ .com/design/2013/03/america-invents-act/ 55 Daniel Faltesek, “The Structural Transformation of the Televisual Public Sphere,” (Dissertation, Iowa City, Iowa, November 10, 2011), 124. 56 Ibid. 57 Jim Kerstetter and Josh Lowensohn, “Inside Intellectual Ventures, the Most Hated Company in Tech,” CNET, August 21, 2012, http://news.cnet.com/8301-13578_3​ -57496641-38/inside-intellectual-ventures-the-most-hated-company-in-tech/ 58 Peter Detkin, “Are Patents Crushing Entrepreneurs? Another Myth Busted,” September 12, 2013, http://www.intellectualventures.com/insights/archives/are​ -patents-crushing-entrepreneurs-another-myth-busted/ 59 The map in this article is especially provocative. The imaginary geography of the Silicon Valley economy hinges on this short connecter between roads. “Venture Capital: Sand Hill Road Rules the Valley,” BloombergView, December 4, 2014, http://www.bloomberg.com/bw/articles/2014-12-04/venture-capital-sand-hill​ -road-rules-silicon-valley 60 Reconciling intellectual property studies discourses with rhetoric of science and technology is an interesting task, but beyond the scope of this book. Avoiding problematic theories of innovation or science would seem important for future work in critical information studies. 61 Nathan Myhrvold, “The Big Idea: Funding Eureka!” Harvard Business Review, March 2010, http://hbr.org/2010/03/the-big-idea-funding-eureka/ar/1

196

Notes

62 Ibid., 43. 63 Ibid., 46. 64 Mark Lemley and Nathan Myhrvold, “How to Make a Patent Market,” Hofstra Law Review 36, no. 2 (2007): 257–59. 65 Myhrvold, “The Big Idea,” 50. 66 Adam Messenger, “Introducing the Innovator’s Patent Agreement,” Twitter Blogs, April 17, 2012, https://blog.twitter.com/2012/introducing-innovators-patent​ -agreement. additional detail, Daniel Nazer, “Twitter Launches Innovator’s Patent Agreement,” Electronic Frontier Foundation, May 21, 2013, https://www.eff.org/ deeplinks/2013/05/twitter-launches-innovators-patent-agreement 67 Jacques Derrida, The Work of Mourning, trans. Pascale-Anne Brault, 1st edn. (Chicago: University of Chicago Press, 2001). 68 Quinn and Brachmann, “Facebook and Twitter: Patent Strategies for Social Media.” 69 Data Verified as of February 25, 2017. 70 Klint Finley, “Twitter Pays $36 Million to Avoid IBM Patent Suit,” WIRED, March 7, 2014, http://www.wired.com/2014/03/twitter-ibm/ 71 Julianne Pepitone, “Yahoo and Facebook Settle Patent Brawl,” CNNMoney, July 6, 2012, http://money.cnn.com/2012/07/06/technology/yahoo-facebook-patent​ -settle/index.htm 72 Leslie Horn, “That Facebook Copyright Notice Is Worthless,” Gizmodo, November 26, 2012, http://gizmodo.com/5963210/that-facebook-copyright-notice-is​ -worthless 73 Faltesek, “Offentlichkeit and Disclosure.” 74 There are many possible attacks that could be waged to disrupt either infrastructure or operational continuity of target countries. Kim Zetter, “Infoporn: Cyberattacks Have Created an Invisible but Vast War Zone (Wired UK),” Wired UK, September 29, 2015, http://www.wired.co.uk/magazine/archive/2015/10/start/ infoporn-cyberattacks-state-sponsored-hacking 75 Stephanie Bodoni, “Data and Privacy: Why Is the U.S. Harbor No Longer Safe?” BloombergTechnology, October 6, 2015, http://www.bloomberg.com/news/ articles/2015-10-06/the-safe-harbor-facebook-privacy-ruling-explained 76 Richard Peltz-Steele, “The Pond Betwixt: Differences in the US-EU Data Protection/Safe Harbor Negotiation,” Journal of Internet Law 19, no. 1 (July 2015). 77 Anna-Maria Osula, “Transborder Access and Territorial Sovereignty,” Computer Law & Security Review 31, no. 6 (December 2015): 719–35. 78 Petronio and Child, “Unpacking the Paradoxes of Privacy in CMC Relationships.”

Notes

197

79 Mike Ettling, “The Cloud’s Biggest Threat Are Data Sovereignty Laws,” TechCrunch, December 26, 2015, http://social.techcrunch.com/2015/12/26/the​ -clouds-biggest-threat-are-data-sovereignty-laws/ 80 Rita Zajácz, “WikiLeaks and the Problem of Anonymity: A Network Control Perspective,” Media, Culture & Society 35, no. 4 (May 1, 2013): 489–505, doi:10.1177/0163443713483793. 81 Archana Venkatraman, “Cloud Firms Race to Build EU Facilities and Ease Data Sovereignty Concerns,” Computer Weekly, November 18, 2014. 82 Alexander Savelyev, “Russia’s New Personal Data Localization Regulations: A Step Forward or a Self-Imposed Sanction?,” Computer Law & Society Review 32, no. 1 (February 2016): 128–45. 83 Alex Hawkes, “Can Carriers Balance Data Sovereignty?” Capacity Magazine, March 2016. 84 Brad Stone and Vernon Silver, “Google’s $6 Billion Miscalculation on the EU,” Bloomberg.com, August 6, 2015, http://www.bloomberg.com/news/ features/2015-08-06/google-s-6-billion-miscalculation-on-the-eu 85 Vauhini Vara, “Is Amazon Creating a Cultural Monopoly?” The New Yorker, August 23, 2015, http://www.newyorker.com/business/currency/is-amazon​ -creating-a-cultural-monopoly 86 Stone and Silver, “Google’s $6 Billion Miscalculation on the EU.” 87 Farhad Manjoo, “Why the World Is Drawing Battle Lines Against American Tech Giants,” The New York Times, June 1, 2016, http://www.nytimes.com/2016/06/02/ technology/why-the-world-is-drawing-battle-lines-against-american-tech-giants​ .html 88 Mark Scott, “Facebook Faces German Antitrust Investigation,” The New York Times, March 2, 2016, http://www.nytimes.com/2016/03/03/business/ international/facebook-faces-german-antitrust-investigation.html 89 Kevin McGillivray, “Conflicts in the Cloud: Contracts and Compliance with Data Protection Law in the EU,” Tulane Journal of Technology and Intellectual Property 17 (2014): 217. 90 There are any number of sources that could be invoked here; Zajacz was well connected to the topics in this section; there would surely be hundreds of possible citations. 91 Steve Rubin, “Hooray for the Patent Troll!,” IEEE Spectrum, March 1, 2007, http:// spectrum.ieee.org/consumer-electronics/gaming/hooray-for-the-patent-troll 92 James Pethokouis, “Why Does Silicon Valley Seem to Love Democrats and Dismiss the GOP? A Q&A with Journalist Greg Ferenstein,” AEIdeas, May 25,

Notes

198

2016, http://www.aei.org/publication/what-does-silicon-valley-seem-to-love​ -democrats-and-dimiss-the-gop-a-qa-with-journalist-greg-ferenstein/ 93 Richard Barbrook and Andy Cameron, “The Californian Ideology,” Science as Culture 6, no. 1 (1995): 44–72. 94 Klint Finley, “The Oracle-Google Case Will Decide the Future of Software,” WIRED, May 23, 2016, http://www.wired.com/2016/05/oracle-google-case-will​ -decide-future-software/ 95 Hurst’s analysis emphasizes the idea that there could be scenarios where the lack of the provision of API access will be a key point in future API gatekeeping; on the larger question of Oracle vs. Google, this book will be in print long before there is adequate clarity to comment on this issue. Annette Hurst, “Op-Ed: Oracle Attorney Says Google’s Court Victory Might Kill the GPL,” Ars Technica, May 27, 2016, http://arstechnica.com/tech-policy/2016/05/op-ed-oracle-attorney-says​ -googles-court-victory-might-kill-the-gpl/

Conclusion 1

Max Chafkin and Mark Bergen, “Google Makes So Much Money, It Never Had to Worry about Financial Discipline—Until Now,” BloombergBusinessWeek, December 8, 2016, https://www.bloomberg.com/news/features/2016-12-08/ google-makes-so-much-money-it-never-had-to-worry-about-financialdiscipline

2

Inc. Snap, “S-1” (Snap, Inc., February 2, 2017), https://www.sec.gov/Archives/ edgar/data/1564408/000119312517029199/d270216ds1.htm

3 Ibid. 4

Josh Constine, “Instagram Stories Is Stealing Snapchat’s Users | TechCrunch,” TechCrunch, January 30, 2017, https://techcrunch.com/2017/01/30/attack-of-the-clone/

5

Kevin Maney, “Snapchat’s IPO May Be a Huge Vote for Privacy,” Newsweek, February 13, 2017, http://www.newsweek.com/2017/02/24/snapchat-snap-ipo​ -privacy-555764.html

6

Threse Poletti, “The Two Views of Snapchat: An App That Has Peaked or a Platform Set to Blossom,” CBSMarketWatch, February 13, 2017, http://www​ .marketwatch.com/story/the-two-views-of-snapchat-an-app-that-has-peaked-or​ -a-platform-set-to-blossom-2017-02-11

7

Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009).

Notes

199

8

George Akerlof and Robert Shiller, Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism (Princeton, NJ: Princeton University Press, 2009).

9

Peter Garber, “Famous First Bubbles,” Journal of Economic Perspectives 4, no. 2 (1990): 35–54.

10 This is a critically important paper; the underlying assumption that firm structure and behavior are tied is essential to any meaningful theory of the economy and media industries. Hyman Minsky, “The Financial Instability Hypothesis” (Bard College, May 1992), Working Paper no. 74, http://www.levyinstitute.org/pubs/ wp74.pdf 11 There are theories that suppose that bubble is not a useful construct; these tend to be associated with advocates of the efficient market hypothesis. Gatekeeping is accomplished by arguing that bubbles cannot be quantitatively diagnosed and thus are not a rigorous category. Methods hawks can only protect a theory for so long. 12 G. Thomas Goodnight and Sandy Green. “Rhetoric, Risk, and Markets: The DotCom Bubble.” Quarterly Journal of Speech 96, no. 2 (2010): 115–40. 13 Investor psychology is a fascinating topic; often research in this area deploys survey methods to inquire as to what individuals thought at any given time. Individuals will buy stocks they know to be overvalued and investors at these junctures tend to overreact. Ravi Dhar and William Goetzmann, “Bubble Investors: What Were They Thinking?” (Yale School of Management Working Paper, New Haven, CT, August 17, 2016), https://papers.ssrn.com/sol3/papers​ .cfm?abstract_id=683366&rec=1&srcabs=459803&alg=1&pos=1 14 John Cannarella and Joshua Spechler, “Epidemiological Modeling of Online Social Network Dynamics,” arXiv, January 2014, https://arxiv.org/ pdf/1401.4208v1.pdf 15 Issie Lapowsky, “The Republican Debate Was Full of Crazy Ideas about the Internet,” WIRED, December 16, 2015, http://www.wired.com/2015/12/gop​ -debate-internet/ 16 Without belaboring the point, any explanation of the 1990s that hinges on a single factor is a counterfactual that does little good. Alan Blinder and Janet Yellen, The Fabulous Decade: Macroeconomic Lessons from the 1990s (New York: The Century Foundation, 2001). 17 Erin Griffith, “Facebook Users Are Sharing Less—Fortune,” Fortune, April 7, 2016, http://fortune.com/2016/04/07/facebook-sharing-decline/ 18 Elizabeth Weise, “Microsoft, Facebook to Lay Massive Undersea Cable,” USA TODAY, May 30, 2016, http://www.usatoday.com/story/experience/2016/05/26/ microsoft-facebook-undersea-cable-google-marea-amazon/84984882/

Bibliography Agamben, Giorgio. State of Exception. Translated by Kevin Atell. Chicago: University of Chicago Press, 2008. Agamben, G. and K. Attell. The Open: Man and Animal. Stanford, CA: Stanford University Press, 2004. http://www.scielo.br/pdf/ss/v6n2/09.pdf. Akerlof, George and Robert Shiller. Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism. Princeton, NJ: Princeton University Press, 2009. Alderucci, Dean. “Monetization of Business Model and Business Method Patents.” Center for Advanced Study & Research on Intellectual Property presented at the High Technology Summit Conference, Seattle, 2001. http://www.law.washington​ .edu/casrip/symposium/Number7/3A-Alderucci.pdf. Alice Corp v. CLS Bank International, No. 13–298 (United States Supreme Court June 19, 2014). Allen, Scott. “‘Justifying’ The Public Interest in Patent Litigation.” 88 Indiana Law Journal 1047 (2013) 88, no. 3 (July 1, 2013). http://www.repository.law.indiana.edu/ ilj/vol88/iss3/6. Allison, John R., Joshua H. Walker, and Mark A. Lemley. “Patent Quality and Settlement among Repeat Patent Litigants.” SSRN Scholarly Paper. Rochester, NY: Social Science Research Network, September 16, 2010. http://papers.ssrn.com/abstract=1677785. Anderson, Chris. The Long Tail, 2nd edn. New York: Hyperion, 2008. Anderson, Mae. “Boom! E-Trade Retires Its Wiseguy Spokesbaby 6 Years after His Super Bowl Debut.” US News & World Report, March 21, 2014. http://www.usnews​ .com/news/business/articles/2014/03/21/e-trades-talking-baby-goes-bye-bye. Anker, Elisabeth R. Orgies of Feeling: Melodrama and the Politics of Freedom. Durham, NC: Duke University Press, 2014. Appadurai, Arjun. The Social Life of Things: Commodities in Cultural Perspective. New York: Cambridge University Press, 1988. Arrighi, Giovanni. The Long Twentieth Century: Money, Power, and the Origins of Our Times. London; New York: Verso, 1994. Association for Molecular Pathology v. Myriad Genetics, No. 12–398 (United States Supreme Court June 13, 2013). Bachman, Katy. “Facebook Settles Class Action Lawsuit over Sponsored Stories.” AdWeek, August 27, 2013. http://www.adweek.com/news/technology/facebook​ -settles-class-action-lawsuit-over-sponsored-stories-152054. Barbrook, Richard and Andy Cameron. “The Californian Ideology.” Science as Culture 6, no. 1 (1995): 44–72.

Bibliography

201

Barnes, Susan B. “A Privacy Paradox: Social Networking in the United States.” First Monday 11, no. 9 (September 4, 2006). http://firstmonday.org/ojs/index.php/fm/ article/view/1394. Batty, David and Chris Johnston. “Social Network ‘made up Stuff That Was Hurtful’, Says Mark Zuckerberg.” The Guardian, November 8, 2014. http://www.theguardian.com/ technology/2014/nov/08/mark-zuckerberg-social-network-made-stuff-up-hurtful. Beaujon, Andrew. “Whose Fault Is It That ‘Comfortably Smug’ Lies about Hurricane Sandy Spread?” Poynter, November 1, 2012. http://www.poynter.org/latest-news/ mediawire/193865/whose-fault-is-it-that-shashank-tripathis-lies-about-hurricane​ -sandy-spread/. Ben-David, Itzhak. “ETFs, Arbitrage, and Contagion,” December 2011. Benes, Ross. “How Second-Price Auctioning Can Create Headaches for Publishers.” Digiday, January 16, 2017. http://digiday.com/publishers/header-auction-styles/. Benes, Ross. “Why the Publisher Waterfall Isn’t Dead Yet.” Digiday, December 15, 2016. http://digiday.com/publishers/waterfall-death/. Benjamin, Walter. The Arcades Project. Edited by Rolf Tiedemann. Translated by Howard Eiland and Kevin McLaughin. Cambridge, MA: Belknap Press of Harvard University Press, 2002. Berger, John. Ways of Seeing, Reprint edition. New York: Penguin, 1990. Bernays, Edward. Propaganda, First Paperback edition. New York: Ig Publishing, 2004. http://www.historyisaweapon.com/defcon1/bernprop.html. Bida, Craig. “Why Pepsi Canned The Refresh Project.” MediaPost, October 29, 2012. http://www.mediapost.com/publications/article/186127/why-pepsi-canned-the​ -refresh-project.html. Bilski v. Kappos, No. 08–964 (United States Supreme Court June 28, 2010). Binns, Daniel. “Life Is Sweet as Rival Apps Are Crushed.” Metro, January 30, 2014. http://metro.co.uk/2014/01/30/candy-crush-saga-most-popular-game-app-on-the​ -planet-4284559/. Blinder, Alan and Janet Yellen. The Fabulous Decade: Macroeconomic Lessons from the 1990s. New York: The Century Foundation, 2001. “Bloomberg Businessweek (US) Cover December 2015.” Cover Junkie. Accessed January 5, 2016. http://www.coverjunkie.com/blog/bloomberg-businessweek-us/3/17856. Bloomfield, Doni. “High-Speed Ad Traders Profit by Arbitraging Your Eyeballs— Bloomberg Business.” BloombergBusiness, November 7, 2014. http://www​ .bloomberg.com/news/articles/2014-11-07/high-speed-ad-traders-profit-by​ -arbitraging-your-eyeballs. Bodoni, Stephanie. “Data and Privacy: Why Is the U.S. Harbor No Longer Safe?” BloombergTechnology, October 6, 2015. http://www.bloomberg.com/news/ articles/2015-10-06/the-safe-harbor-facebook-privacy-ruling-explained. Bogost, Ian. “The Rhetoric of Video Games.” In The Ecology of Games, edited by Katie Salen. Cambridge, MA: The MIT Press, 2008.

202

Bibliography

Bogost, Ian. “Video Games Are Better Without Characters.” The Atlantic, March 13, 2015. http://www.theatlantic.com/technology/archive/2015/03/video-games-are​ -better-without-characters/387556/. Boltanski, Luc and Laurent Thévenot. On Justification: Economies of Worth. Translated by Catherine Porter. Princeton, NJ: Princeton University Press, 2006. Bond, Robert, Christopher Fariss, Jason Jones, Adam Kramer, Cameron Marlow, Jamie Settle, and James Fowler. “A 61-Million-Person Experiment in Social Influence and Political Mobilization: Nature.” Nature 489 (2012): 295–98. Borgatti, Steve. “Centrality and Network Flow.” Social Networks 27, no. 1 (2005): 55–71. Bowerman, Mary. “#ItsJustACup Mocks Starbucks’ Red Cup Controversy.” USA Today, November 11, 2015. http://www.usatoday.com/story/money/nation​ -now/2015/11/11/itsjustacup-mocks-starbucks-red-cup-controversy/75563876/. boyd, danah. “Facebook’s ‘Privacy Trainwreck’: Exposure, Invasion, and Drama,” September 8, 2006. http://www.danah.org/papers/FacebookAndPrivacy.html. boyd, danah. It’s Complicated: The Social Lives of Networked Teens. New Haven, CT: Yale University Press, 2014. boyd, danah. “None of This Is Real: Identity and Participation in Friendster.” In Structures of Participation in Digital Culture, edited by Joe Karagains. New York: Social Science Research Council, 2008. boyd, danah and Nicole Ellison. “Social Network Sites: Definition, History, and Scholarship.” Journal of Computer Mediated Communication 13, no. 4 (2008): 210–30. Boyle, James. The Public Domain: Enclosing the Commons of the Mind. New Haven, CT; London: Yale University Press, 2008. Bracha, Oren. “Owning Ideas: A History of Anglo-American Intellectual Property.” Dissertation, Cambridge, MA, Harvard University, 2005. Brad. “The Business of Display Part 2: Viral Quiz Sites and Click Arbitrage.” Ad Beat, November 2014. https://www.adbeat.com/blog/the-business-of-display-part-2-viral​ -quiz-sites-and-click-arbitrage/. Brandeis, Louis. Whitney v. California (United States Supreme Court May 16, 1927). Briscoe, Bob, Andrew Odlyzko, and Benjamin Tilly. “Metcalfe’s Law Is Wrong.” IEEE Spectrum, July 1, 2006. http://spectrum.ieee.org/computing/networks/metcalfes-law​ -is-wrong. Brody, Peter, and Jennifer Kwon. “Social Media and Patent Eligibility.” BloombergBNA. Social Media Law & Policy Report. The Bureau of National Affairs (Bloomberg), March 24, 2015. https://www.ropesgray.com/~/media/Files/articles/2015/ March/20150331-Brody-and-Kwon-in-Bloomberg-BNA.PDF. Brooks, Brennan. “How to Run a Facebook CPC Arbitrage Campaign.” Blog, October 22, 2015. http://brennan-brooks.com/blog/2014/06/how-to-run-facebook-cpc​ -arbitrage/. Bruell, Alexandra. “Facebook Shuttering Ad Exchange FBX.” Advertising Age, May 25, 2016. http://adage.com/article/digital/facebook-shuttering-fbx-dollars-move​ -desktop-mobile/304169/.

Bibliography

203

Buck, James E. The New York Stock Exchange: The First 200 Years. Essex, CT: Greenwich Pub. Group, 1992. Buck-Morss, Susan. The Dialectics of Seeing: Walter Benjamin and the Arcades Project. Cambridge, MA: MIT Press, 1991. Buffett, Warren, and Randall Lane. “Warren Buffett’s $50 Billion Decision.” Forbes, March 26, 2012. http://www.forbes.com/sites/randalllane/2012/03/26/warren​ -buffetts-50-billion-decision/. Bussgang, Jeff. “Scaling the Chasm.” Seeing Both Sides, January 13, 2015. http:// bostonvcblog.typepad.com/vc/2015/01/scaling-the-chasm.html. Byrne, Robert and Jason Hanson. “Innovation and Disruption in U.S. Merchant Payments.” McKinsey on Payments, May 2014. http://www.mckinsey.com/~/media/ mckinsey/dotcom/client_service/Financial%20Services/Latest%20thinking/ Payments/MoP19Innovation%20and%20disruption%20in%20US%20merchant%20 payments.ashx. Cai, Adelin. “Affiliate Links Are Now Allowed on Pinterest !” Official Pinterest Blog. Pinterest for Business Blog, May 12, 2016. https://business.pinterest.com/en/blog/ affiliate-links-are-now-allowed-pinterest. Caldwell, John. Production Culture. Durham, NC: Duke University Press, 2008. Cannarella, John and Joshua Spechler. “Epidemiological Modeling of Online Social Network Dynamics.” arXiv, January 2014. https://arxiv.org/pdf/1401.4208v1.pdf. Carey, James. Communication as Culture. New York: Routledge, 1992. Carlson, Nicholas. “It’s Become Tragically Clear That Facebook Chased the Wrong Business for Years.” Business Insider, September 25, 2012. http://www​ .businessinsider.com/facebook-fbx-2012-9. Carter, Baron T., Mark A. Franklin, and Jay B. Wright. The First Amendment and the Fourth Estate. Minneapolis: Foundation Press, 1994. Casti, Taylor. “The Evolution of Facebook Mobile.” Mashable. Accessed October 27, 2016. http://mashable.com/2013/08/01/facebook-mobile-evolution/. Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge, MA; London: Harvard University Press, 2002. Chafkin, Max and Mark Bergen. “Google Makes So Much Money, It Never Had to Worry about Financial Discipline—Until Now.” BloombergBusinessWeek, December 8, 2016. https://www.bloomberg.com/news/features/2016-12-08/google-makes-so​ -much-money-it-never-had-to-worry-about-financial-discipline. Chang, Gordon. “As Goes Steel, So Goes China.” Forbes, September 16, 2012. http:// www.forbes.com/sites/gordonchang/2012/09/16/as-goes-steel-so-goes-china/. Cheng, Justin, Lada A. Adamic, Jon Kleinberg, and Jure Leskovec. “Do Cascades Recur?” arXiv:1602.01107 [Physics, Stat], February 2, 2016. http://arxiv.org/ abs/1602.01107. Chernow, Ron. Alexander Hamilton. New York: Penguin, 2005. Christensen, Clayton M. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business Press, 1997.

204

Bibliography

Clifford, Stephanie. “Stores Like Target and CVS Add Groceries to Attract Shoppers.” The New York Times, January 16, 2011. http://www.nytimes.com/2011/01/17/ business/17grocery.html. Coase, Ronald. “The Nature of the Firm.” Economica 4, no. 16 (1937): 368–405. Coase, Ronald. “The Problem of Social Cost.” Journal of Law and Economics 3, no. 1 (1960): 1–44. Cochrane, John. Asset Pricing. Princeton, NJ: Princeton University Press, 2005. Cochrane, John H. “The Risk and Return of Venture Capital.” Journal of Financial Economics 75, no. 1 (2005): 3–52. doi:http://dx.doi.org/10.1016/jjfineco.2004.03.006. Cohen, Cathy, Joseph Kahne, Benjamin Bowyer, Ellen Middaugh, and Jon Rogowski. “Participatory Politics: New Media and Youth Political Action.” MacArthur Research Network, 2014. http://dmlcentral.net/wp-content/uploads/files/ypp_survey_body​ _cover.pdf. Cohen, David. “INFOGRAPHIC: Explosive Active User Growth for Pinterest, Tumblr.” Social Times, May 11, 2015. http://www.adweek.com/socialtimes/infographic-gwipinterest-tumblr/620098. Cohen, Julie. Configuring the Networked Self: Law, Code, and the Play of Everyday Practice. New Haven, CT: Yale University Press, 2012. Collins, Jim. Good to Great: Why Some Companies Make the Leap … And Others Don’t. First. New York: HarperBusiness, 2001. Commercial—Introducing the iShares Core, 2012. http://www.youtube.com/watch?v=BG 1FlkSyXwQ&feature=youtube_gdata_player. Constine, Josh. “Initial Trials Show Facebook Exchange Retargeted Ads Deliver Massive Return on Investment, Up To 16X.” TechCrunch, September 13, 2012. http:// techcrunch.com/2012/09/13/facebook-exchange-results/. Constine, Josh. “Instagram Stories Is Stealing Snapchat’s Users | TechCrunch.” TechCrunch, January 30, 2017. https://techcrunch.com/2017/01/30/attack-of-the-clone/. Coombe, Rosemary J. The Cultural Life of Intellectual Properties: Authorship, Appropriation, and the Law. Durham, NC: Duke University Press, 1998. Cowen, David, Richard Sylla, and Robert Wright. “The U.S. Panic of 1792: Financial Crisis Management and the Lender of Last Resort.” Helsinki: NBER, 2006. http:// www.helsinki.fi/iehc2006/papers1/Sylla.pdf. Crouch, Dennis. “Amazon Patent Slides Through Reexamination.” Patentlyo, March 10, 2010. http://patentlyo.com/patent/2010/03/amazon-one-click-patent-slides​ -through-reexamination.html. Cyran, Robert. “Venture Capital’s Sluggish Performance.” DealBook, February 4, 2013. http://dealbook.nytimes.com/2013/02/04/venture-capitals-sluggish-performance/. Damodaran, Aswath. “Valuation Approaches and Metrics: A Survey of the Theory and Evidence,” November 2006. http://people.stern.nyu.edu/adamodar/pdfiles/papers/ valuesurvey.pdf.

Bibliography

205

Darrow, Barb. “Google Moonshots Are Becoming a Massive Pain.” Fortune, March 29, 2016. http://fortune.com/2016/03/29/googles-moonshot-projects-massive-pain/. “Data Alchemy.” Mo-Data, August 12, 2013. http://www.mo-data.com/data-alchemy/. De Certeau, Micheal. The Practice of Everyday Life, 2nd edn. Berkley: University of California Press, 2002. De Quincey, T. “Ceylon.” Blackwood’s Edinbourgh Magazine, November 1843. Dean, Jodi. Publicity’s Secret. Ithaca, NY: Cornell University Press, 2002. DePalma, Angelo. “Beating the Heat—ASME,” February 2012. https://www.asme​ .org/engineering-topics/articles/heat-transfer/beating-the-heat?cm_sp=Heat%20 Transfer-_-Feataured%20Articles-_-Beating%20the%20Heat. Derrida, Jacques. The Work of Mourning. Translated by Pascale-Anne Brault, 1st edn. Chicago: University of Chicago Press, 2001. Detkin, Peter. “Are Patents Crushing Entrepreneurs? Another Myth Busted,” September 12, 2013. http://www.intellectualventures.com/insights/archives/are-patents​ -crushing-entrepreneurs-another-myth-busted/. Dhar, Ravi and William Goetzmann. “Bubble Investors: What Were They Thinking?” Yale School of Management Working Paper. New Haven, CT, August 17, 2016. https://papers​ .ssrn.com/sol3/papers.cfm?abstract_id=683366&rec=1&srcabs=459803&alg=1&pos=1. Dijck, Jose van. The Culture of Connectivity: A Critical History of Social Media. Oxford: Oxford University Press, 2013. “Disrupt.” American Heritage Dictionary. New York: Houghton Mifflin Harcourt, 2015. “Disruptive Innovation.” Clayton Christensen. Accessed February 10, 2014. http://www​ .claytonchristensen.com/key-concepts/. Downes, Larry and Chunka Mui. Unleashing the Killer App: Digital Strategies for Market Dominance. Boston, MA: Harvard Business Press, 2000. Dredge, Stuart. “Candy Crush Saga Maker King’s Parent Company Reveals 2012 Financial Results.” The Guardian, January 25, 2014, sec. Technology. http://www​ .theguardian.com/technology/2014/jan/25/candy-crush-saga-king-financial​ -results-2012. Dru, Jean-Marie. Disruption: Overturning Conventions and Shaking up the Marketplace. New York: John Wiley & Sons, 1996. Dru, Jean-Marie. How Disruption Brought Order: The Story of a Winning Strategy in the World of Advertising. New York: St. Martins, 2007. Dwyer, Gerald. “Wildcat Banking, Banking Panics, and Free Banking in the United States.” Economic Review, December 1996, 1–20. Dzember, Ryan, David Benoit, and Shayndi Raice. “When Facebook Met Wall Street.” Wall Street Journal, May 8, 2012, sec. Tech. http://online.wsj.com/news/articles/SB10 001424052702303630404577390494205359660. Edgar, David. “You Can’t Use the O-Word.” The Guardian, October 7, 2007, sec. Comment is free. http://www.theguardian.com/commentisfree/2007/oct/08/ comment.olympics2012.

206

Bibliography

Edmonston, Peter. “Where Wall Street Meets to Eat, the Last Lunch.” The New York Times, April 28, 2006, sec. Business. http://www.nytimes.com/2006/04/28/ business/28lunch.html. Edwards, Jim. “Facebook Has Banned Ad Price ‘Arbitrage.’” Business Insider, July 10, 2013. http://www.businessinsider.com/facebook-has-banned-ad-price​ -arbitrage-2013-7. Edwards, Jim. “The Most Brutal Quotes from the New Yorker’s Takedown of the Candy Crush IPO.” Business Insider, March 11, 2014. http://www.businessinsider​ .com/the-new-yorker-on-king-candy-crush-ipo-2014-3. Edwards, Jim. “WPP Admits Ad Price Arbitrage.” Business Insider, March 18, 2013. http://www.businessinsider.com/wpp-admits-ad-price-arbitrage-the-brief-2013-3. Elberse, Anita. “The Long Tail Debate: A Response to Chris Anderson.” Harvard Business Review, July 2, 2008. https://hbr.org/2008/07/the-long-tail-debate-a​ -respons. Ettling, Mike. “The Cloud’s Biggest Threat Are Data Sovereignty Laws.” TechCrunch, December 26, 2015. http://social.techcrunch.com/2015/12/26/the-clouds-biggest​ -threat-are-data-sovereignty-laws/. Evans, Jon. “Wait, When Did Software Become So Boring?” TechCrunch, September 14, 2013. http://techcrunch.com/2013/09/14/when-did-software-become-so-boring/. Facebook. Facebook Investment Roadshow Presentation. YouTube. Menlo Park, CA, 2012. https://www.youtube.com/watch?v=TyF2UAaMe_E. Facebook. “Form S-1 Registration Document.” Securities and Exchange Commission, February 1, 2012. http://www.sec.gov/Archives/edgar/ data/1326801/000119312512034517/d287954ds1.htm. Facebook, Inc. The Things That Connect Us. Facebook Video, 2012. https://www​ .facebook.com/photo.php?v=3802752155040. Faltesek, Daniel. “Big Argumentation?” tripleC: Communication, Capitalism & Critique. Open Access Journal for a Global Sustainable Information Society 11, no. 2 (August 15, 2013): 402–11. Faltesek, Daniel. “Offentlichkeit and Disclosure.” Massachusetts Institute of Technology, 2013. http://www.academia.edu/5456834/Offentlichkeit_and_Disclosure. Faltesek, Daniel. “The Structural Transformation of the Televisual Public Sphere.” Dissertation. Iowa City, Iowa, November 10, 2011. Faltesek, Daniel. “TV Everywhere? The Old Spatial Politics of New Media.” Communication, Culture & Critique 4, no. 4 (2011): 401–18. Felman, Shoshana. The Scandal of the Speaking Body, 2nd edn. Stanford, CA: Stanford University Press, 2002. Fincher, David. The Social Network. Biography, Drama, 2010. Finley, Klint. “The Oracle-Google Case Will Decide the Future of Software.” WIRED, May 23, 2016. http://www.wired.com/2016/05/oracle-google-case-will-decide​ -future-software/.

Bibliography

207

Finley, Klint. “Twitter Pays $36 Million to Avoid IBM Patent Suit.” WIRED, March 7, 2014. http://www.wired.com/2014/03/twitter-ibm/. Foley, Megan. “From Infantile Citizens to Infantile Institutions: The Metaphoric Transformation of Political Economy in the 2008 Housing Market Crisis.” Quarterly Journal of Speech 98, no. 4 (November 1, 2012): 386–410. doi:10.1080/00335630.201 2.714898. Foster, Richard N. Innovation: The Attacker’s Advantage. New York: Simon & Schuster, 1988. Foxman, Simone. “Once Again the Winklevoss Twins Get Beaten Launching Their Big Idea: A Bitcoin Trust.” Quartz, September 26, 2013. http://qz.com/128442/once​ -again-the-winklevoss-twins-get-beaten-to-launching-their-big-idea-a-bitcoin-trust/. Foxton, Willard. “Facebook Is Turning into Facebank—and Could Be the Biggest Financial Institution in the World.” Technology—Telegraph Blogs, April 23, 2014. http://blogs.telegraph.co.uk/technology/willardfoxton2/100013340/facebook-is​ -turning-into-facebank-and-could-be-the-biggest-financial-institution-in-the-world/. Frier, Sarah and Adam Satariano. “Facebook Says It Gave Advertisers Inflated Video Metrics.” Bloomberg.com, September 22, 2016. https://www.bloomberg.com/news/ articles/2016-09-23/facebook-says-it-gave-advertisers-inflated-video-view-metrics. Frieswick, Kris. “The Real Toll of Patent Trolls.” Inc.com, December 13, 2012. http:// www.inc.com/magazine/201202/kris-frieswick/patent-troll-toll-on-businesses.html. “FTfm Alchemy.” Discussion Forum. Financial Times, 2010. http://blogs.ft.com/ ftfmblog/files/2010/10/und_alchemy.jpg. Fuchs, Christian. Culture and Economy in the Age of Social Media. London: Routledge, 2015. Fuchs, Christian. “Social Media and the Public Sphere.” tripleC: Communication, Capitalism & Critique. Open Access Journal for a Global Sustainable Information Society 12, no. 1 (February 19, 2014): 57–101. Gallagher, Sean. “How Facebook Puts Petabytes of Old Cat Pix on Ice in the Name of Sustainability.” Ars Technica, November 9, 2015. http://arstechnica.com/information​ -technology/2015/11/to-go-green-facebook-puts-petabytes-of-cat-pics-on-ice-and​ -likes-windfarming/. Gallagher, Sean. “Massive Search Fraud Botnet Seized by Microsoft and Symantec.” Ars Technica, February 7, 2013. http://arstechnica.com/security/2013/02/massive​ -search-fraud-botnet-siezed-by-microsoft-and-symantec/. Garber, Peter. “Famous First Bubbles.” Journal of Economic Perspectives 4, no. 2 (1990): 35–54. Gay, Paul du, Stuart Hall, Linda Janes, Hugh Mackay, and Kieth Negus. Doing Cultural Studies: The Story of the Sony Walkman. Thousand Oaks, CA: SAGE, 1997. Geertz, Clifford. Interpretation of Cultures. New York: Basic Books, 1973. Gehl, Robert. Reverse Engineering Social Media. Philadelphia, PA: Temple University Press, 2014.

208

Bibliography

Geisst, Charles. Wall Street: A History, Updated Edition, Updated edition. Oxford; New York: Oxford University Press, 2012. Giddens, Anthony. The Nation-State and Violence. Berkeley: University of California Press, 1985. Giddy, Ian. “Giddy: Methods of Corporate Valuation.” Methods in Corporate Valuation, 2006. http://people.stern.nyu.edu/igiddy/valuationmethods.htm. Gilder, George. Wealth and Poverty. New York: Basic Books, 1981. Gitelman, Lisa and Geoffrey Pingree. “What’s New about New Media?” In New Media 1740–1915, xi–xxiii. Cambridge, MA: MIT Press, 2004. Glassman, James K. and Kevin A Hassett. Dow 36, 000: The New Strategy for Profiting from the Coming Rise in the Stock Market. New York: Three Rivers Press, 2000. Goldenberg, David H. and Michael D. Goldenberg. “Why Entrepreneurs and VCs Disagree in Valuing Start-up Firms: Imputing the Target Rate of Return Using DCF vs. Option-Based Approaches.” Journal of Private Equity 13, no. 1 (Winter 2009): 73–79. Goldenfeeds. “Affiliate Networks.” Sales/Promotional. Goldenfeeds, 2012. http://www​ .goldenfeeds.com/affilate_networks.html. Goodnight, G. Thomas and Green, Sandy. “Rhetoric, Risk, and Markets: The Dot-Com Bubble.” Quarterly Journal of Speech 96, no. 2 (2010): 115–40. Goodnight, G. Thomas, David Hingstman, and Sandy Green. “The Student Debt Bubble.” Journal of Cultural Economy 8, no. 1 (January 2, 2015): 75–100. doi:10.1080/ 17530350.2014.947307. “Google Ngram: Scalability.” Google Books. Accessed January 24, 2017. https://books​ .google.com/ngrams/graph?content=scalability&year_start=1800&year_end=2000& corpus=15&smoothing=3&share=&direct_url=t1%3B%2Cscalability%3B%2Cc0. Graeber, David. Debt: The First 5,000 Years, Reprint edition. Brooklyn, NY: Melville House, 2012. Graham, Benjamin and Jason Zweig. The Intelligent Investor, Revised edition. New York: Collins Business, 2003. Grant, Jeremey. “Banks Defend ‘dark Pool’ Trading.” Financial Times, October 5, 2009. http://www.ft.com/cms/s/0/2ce55f48-b15a-11de-b06b-00144feabdc0.html. Gray, Ryan. “How to Monetize Mobile Offers to Make Bank.” Internet Marketing Badassery. Accessed February 10, 2014. https://www.imgrind.com/wap​ -targeting/. Griffith, Erin. “Facebook Users Are Sharing Less—Fortune.” Fortune, April 7, 2016. http://fortune.com/2016/04/07/facebook-sharing-decline/. Gupta, Neil. “How Apple Adopted the Kleenex Problem.” Metamorphium, December 16, 2011. http://blog.metamorphium.com/2011/12/16/how-apple-adopted-the​ -kleenex-problem/. Hadreas, Peter. “Money: A Speech Act Analysis.” Journal of Social Philosophy 20, no. 3 (1989): 115–29.

Bibliography

209

Hamilton, Alissa. Squeezed: What You Don’t Know about Orange Juice. New Haven, CT: Yale University Press, 2010. Hariman, Robert and John Louis Lucaites. No Caption Needed: Iconic Photographs, Public Culture, and Liberal Democracy. Chicago: University of Chicago Press, 2007. Harwell, Drew. “Online Dating’s Age Wars: Inside Tinder and eHarmony’s Fight for Our Love Lives—The Washington Post.” Washington Post, April 6, 2015. https:// www.washingtonpost.com/news/business/wp/2015/04/06/online-datings-age-wars​ -inside-tinder-and-eharmonys-fight-for-our-love-lives/?utm_term=.965114874fa9. Havens, Timothy. Global Television Marketplace. London: British Film Institute, 2008. Hawkes, Alex. “Can Carriers Balance Data Sovereignty?” Capacity Magazine, March 2016. Herley, Cormac. “Why Do Nigerian Scammers Say They Are from Nigeria?” Redmond, WA: Microsoft Research, 2012. http://research.microsoft.com/pubs/167719/ WhyFromNigeria.pdf. Herman, Tom. “Header Bidding Is Just Waterfalling by a Different Name.” AdExchanger, February 26, 2016. https://adexchanger.com/the-sell-sider/header​ -bidding-is-just-waterfalling-by-a-different-name/. Hiestand, Michael. “ESPN’s Jay Bilas: A Social Media Butterfly Who Doesn’t Follow Anybody on Twitter,” March 8, 2013. http://www.usatoday.com/story/sports/ ncaab/2013/03/07/jay-bilas-espn-duke/1972371/. “High Scalability—High Scalability—The Architecture Twitter Uses to Deal with 150M Active Users, 300K QPS, a 22 MB/S Firehose, and Send Tweets in under 5 Seconds.” High Scalability, July 8, 2013. http://highscalability.com/blog/2013/7/8/ the-architecture-twitter-uses-to-deal-with-150m-active-users.html. Hiltzik, Michael. “End of an Era: The NYSE Floor Isn’t Even Good for PR Photos Anymore.” Los Angeles Times, October 7, 2014. http://www.latimes.com/business/ hiltzik/la-fi-mh-the-nyse-floor-20141007-column.html. Holusha, John. “Steel Mini-Mills Could Bring Boon or Blood Bath.” The New York Times, May 30, 1995, sec. Business. http://www.nytimes.com/1995/05/30/business/ steel-mini-mills-could-bring-boon-or-blood-bath.html. Horn, Leslie. “That Facebook Copyright Notice Is Worthless.” Gizmodo, November 26, 2012. http://gizmodo.com/5963210/that-facebook-copyright-notice-is-worthless. Humphreys, Lee. “Mobile Social Networks and Social Practice: A Case Study of Dodgeball.” Journal of Computer-Mediated Communication 13, no. 1 (October 1, 2007): 341–60. doi:10.1111/j.1083-6101.2007.00399.x. Hurst, Annette. “Op-Ed: Oracle Attorney Says Google’s Court Victory Might Kill the GPL.” Ars Technica, May 27, 2016. http://arstechnica.com/tech-policy/2016/05/op​ -ed-oracle-attorney-says-googles-court-victory-might-kill-the-gpl/. Hurst, Nathan. “How the America Invents Act Will Change Patenting Forever | Wired Design | Wired.com.” Wired Design, March 15, 2013. http://www.wired.com/ design/2013/03/america-invents-act/.

210

Bibliography

“Introducing the Google+ Project: Real-Life Sharing, Rethought for the Web.” Official Google Blog. Accessed August 29, 2016. https://googleblog.blogspot.com/2011/06/ introducing-google-project-real-life.html. Jaffe, Adam B., Josh Lerner, and Scott Stern. “Introduction.” In Innovation Policy and the Economy, Volume 1. Cambridge, MA: MIT Press, 2001. http://papers.nber.org/ books/jaff01-1. Janis, Mark D. and Timothy R. Holbrook. “Patent Law’s Audience.” SSRN Scholarly Paper. Rochester, NY: Social Science Research Network, 2012. http://papers.ssrn​ .com/abstract=2137014. Jeffries, Adrianne. “Rumors & Acquisitions: Sex, Sweat and Hackathons.” Betabeat, April 11, 2011. http://betabeat.com/2011/04/rumors-acquisitions-sex-sweat-and​-hackathons/. Jenkins, Henry. Convergence Culture. New York: NYU Press, 2006. Jenkins, Henry, Mizuko Ito, and danah boyd. Participatory Culture in a Networked Era: A Conversation on Youth, Learning, Commerce, and Politics. Malden, MA: John Wiley & Sons, 2015. Johnston, Michael. “CPC Arbitrage: What It Is and How to Pull It Off.” MonetizePros, April 15, 2014. http://monetizepros.com/display-advertising/cpc-arbitrage-what-it​ -is-and-how-to-pull-it-off/. Kantrowitz, Alex. “Twitter Disbands Commerce Team, Ceases Product Development on ‘Buy’ Button.” BuzzFeed, May 25, 2016. https://www.buzzfeed.com/alexkantrowitz/ twitter-disbands-commerce-team-ceases-product-development-on. Kantrowitz, Alex. “Vivaki Overhauls Its Trading Desk.” Advertising Age, February 13, 2015. http://adage.com/article/digital/vivaki-overhauls-trading-desk/297170/. Kerstetter, Jim and Josh Lowensohn. “Inside Intellectual Ventures, the Most Hated Company in Tech.” CNET, August 21, 2012. http://news.cnet.com/8301-13578_3​ -57496641-38/inside-intellectual-ventures-the-most-hated-company-in-tech/. Kobrak, Harry. “How to Avoid Five Common Mistakes in Market Segmentation.” Advertising Age, February 20, 2012. http://adage.com/article/cmo-strategy/avoid​ -common-mistakes-market-segmentation/232796/. Koh, Yoree. “Pinterest’s Problem: Getting Men to Commit.” Wall Street Journal, January 22, 2015, sec. Tech. http://www.wsj.com/articles/pinterests-problem-getting-men-to​ -commit-1421944331. Kravets, Leonid. “Kelora Patent Found Obvious: Are Other ‘Obvious’ Software Patents in Danger?” TechCrunch, May 26, 2015. http://techcrunch.com/2012/05/26/kelora​ -obvious-software-patents/. Krugman, Paul. “Fairy Tales.” The Conscience of a Liberal, August 21, 2015. http:// krugman.blogs.nytimes.com/2015/08/21/fairy-tales-2/. Krugman, Paul “The Economics of Evil Google.” Blog, 1364042131. http://krugman. blogs.nytimes.com/2013/03/23/the-economics-of-evil-google/. Krugman, Paul. “The Narrow Moving Band, The Dutch Disease, and the Competitive Consequences of Mrs. Thatcher.” Journal of Development Economics 27, no. 1 (1987): 41–55.

Bibliography

211

Lambert, Emily. “RIP New York Stock Exchange.” Forbes, February 11, 2011. http:// www.forbes.com/sites/emilylambert/2011/02/15/rip-new-york-stock-exchange/. Lange, Patricia. “Pinterest: Fear of the ‘Female Ghetto.’” New Yorker, June 12, 2012. http://www.newyorker.com/culture/culture-desk/pinterest-fear-of-the-female-ghetto. Lapowsky, Issie. “The Republican Debate Was Full of Crazy Ideas about the Internet.” WIRED, December 16, 2015. http://www.wired.com/2015/12/gop-debate-internet/. Lemley, Mark and Nathan Myhrvold. “How to Make a Patent Market.” Hofstra Law Review 36, no. 2 (2007): 257–59. Leonardi, Paul and Samantha Meyer. “Social Media as Social Lubricant: How Ambient Awareness Eases Knowledge Transfer.” American Behavioral Scientist 59, no. 1 (2014): 10–34. Lepore, Jill. “The Disruption Machine.” The New Yorker, June 23, 2014. http://www​ .newyorker.com/magazine/2014/06/23/the-disruption-machine. Leske, Nicola. “Candy Crush Brings Inflated IPO Market Back to Earth,” May 29, 2014. http://www.huffingtonpost.com/2014/03/29/candy-crush-ipo_n_5052712.html. Levordashka, Ana and Sonja Utz. “Ambient Awareness: From Random Noise to Digital Closeness in Online Social Networks.” Computers in Human Behavior 60 (July 2016): 147–54. doi:10.1016/j.chb.2016.02.037. Levy, Pierre. “Collective Intelligence.” In Reading Digital Culture, edited by David Trend. Malden, MA: Blackwell, 2001. Levy, Steven. “The Definitive Story of ‘Information Wants to Be Free’—Backchannel.” Medium, November 21, 2014. https://backchannel.com/the-definitive-story-of​ -information-wants-to-be-free-a8d95427641c. Liptak, Adam. “Justices Deny Patent to Business Methods.” The New York Times, June 19, 2014. http://www.nytimes.com/2014/06/20/technology/supreme-court-rules​ -against-alice-corp-in-patent-case.html. Lorenz, Taylor. “Foursquare’s Revenue Is at Least Doubling Every Year, Says Its Sales Boss.” Business Insider, March 18, 2015. http://www.businessinsider.com/foursquare​ -revenue-doubling-2015-3. Lotz, Amanda. “How to Spend $9.3 Billion in Three Days: Examining the Upfront Buying Process in the Production of US Television Culture.” Media, Culture & Society 29, no. 4 (2007): 549–67. Lotz, Amanda. The Television Will Be Revolutionized. New York: New York University Press, 2007. Lucker, John. “Big Data Alchemy: Turn Info into Money.” InformationWeek, May 13, 2013. http://www.informationweek.com/big-data/big-data-analytics/big-data​ -alchemy-turn-info-into-money/d/d-id/1109933? Madison, James. “The Utility of Union as a Safeguard Against Domestic Faction and Insurrection.” Daily Advertiser, November 22, 1787. Malemndier, Ulrike. “Romand Law and the Law-Finance Debate.” In Festscrhift Für Rolf Knütel, edited by Reichard and Schemaier. Vienna: Boehlau Verlag, 2010.

212

Bibliography

Malkiel, Burton Gordon. A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing. New York: W.W. Norton, 2012. Maney, Kevin. “Snapchat’s IPO May Be a Huge Vote for Privacy.” Newsweek, February 13, 2017. http://www.newsweek.com/2017/02/24/snapchat-snap-ipo​ -privacy-555764.html. Manjoo, Farhad. “Why the World Is Drawing Battle Lines Against American Tech Giants.” The New York Times, June 1, 2016. http://www.nytimes.com/2016/06/02/ technology/why-the-world-is-drawing-battle-lines-against-american-tech-giants​ .html. Marshall, Jack. “Fraudulent Traffic: Adventures in Ad Farming.” Digiday, March 4, 2014. http://digiday.com/publishers/ad-farming-adventures/. Marshall, Jack. “Why Advertisers Are Questioning How Agency Trading Desks Work.” Wall Street Journal, July 25, 2014. http://blogs.wsj.com/cmo/2014/07/25/why​ -advertisers-are-questioning-how-agency-trading-desks-work/. Marshall, Jack. “Why Advertisers Are Questioning How Agency Trading Desks Work.” CMO Today—Wall Street Journal Blog, July 25, 2014. http://blogs.wsj.com/ cmo/2014/07/25/why-advertisers-are-questioning-how-agency-trading-desks-work/. Marx, Karl. Capital: A Critique of Political Economy, Vol. II. The Process of Circulation of Capital. Edited by Friedrich Engles. Translated by Ernest Untermann, 2nd edn. Chicago: Charles H. Kerr, 1885. http://www.econlib.org/library/YPDBooks/Marx/ mrxCpB20.html. Marx, Karl. “The Power of Money.” In Economic and Philosophic Manuscripts of 1844, translated by Martin Mulligan. Moscow: Progress Publishers, 1959. Massoudi, Arash and Tracy Alloway. “End of Goldman Era on the NYSE Floor.” Financial Times, April 1, 2014. http://www.ft.com/cms/s/0/22431a3c-b9af-11e3-a3ef​ -00144feabdc0.html. Mayer, Vicki, Miranda J. Banks, and John T. Caldwell, eds. Production Studies: Cultural Studies of Media Industries, 1st edn. New York: Routledge, 2009. Mayo Collaborative Services v. Prometheus Laboratories, No. 10–1150 (United States Supreme Court March 20, 2012). McCloskey, Diedre. The Rhetoric of Economics. Chicago: University of Chicago Press, 1994. McDermott, John. “Pinterest’s New Monetization Rules Inflict Pain on ‘Pinfluencers.’” Digiday, February 27, 2015. http://digiday.com/platforms/pinterests-new​ -monetization-rules-inflict-pain-pinfluencers/. McGee, Matt. “EdgeRank Is Dead: Facebook’s News Feed Algorithm Now Has Close to 100K Weight Factors.” Marketing Land, August 16, 2013. http://marketingland.com/ edgerank-is-dead-facebooks-news-feed-algorithm-now-has-close-to-100k-weight​ -factors-55908. McGee, Michael Calvin. “The ‘Ideograph’ a Link Between Rhetoric and Ideology.” Quarterly Journal of Speech 66, no. 1 (1980): 1–16.

Bibliography

213

McGillivray, Kevin. “Conflicts in the Cloud: Contracts and Compliance with Data Protection Law in the EU.” Tulane Journal of Technology and Intellectual Property 17 (2014): 217. Messenger, Adam. “Introducing the Innovator’s Patent Agreement.” Twitter Blogs, April 17, 2012. https://blog.twitter.com/2012/introducing-innovators-patent​ -agreement. Michael, Warner. “Publics and Counter-Publics.” Quarterly Journal of Speech 88 (2002): 413–25. Miller, John. “U.S. Steel’s $1.8 Billion Writedown: A Tough Economy and a Global Glut.” Corporate Intelligence (Wall Street Journal), October 21, 2013. http://blogs.wsj​ .com/corporate-intelligence/2013/10/21/u-s-steels-1-8-billion-writedown-a-tough​ -economy-and-a-global-glut/. Mims, Christopher. “Moore’s Law Over, Supercomputing ‘In Triage,’ Says Expert.” MIT Technology Review, May 9, 2012. http://www.technologyreview.com/view/427891/ moores-law-over-supercomputing-in-triage-says-expert/. Minneapolis Federal Reserve. “The History of Money.” Educational Material. The Federal Reserve Bank of Minneapolis, 1996. http://www.minneapolisfed.org/ community_education/teacher/history.cfm. Minsky, Hyman. “The Financial Instability Hypothesis.” Bard College, May 1992. Working Paper no. 74. http://www.levyinstitute.org/pubs/wp74.pdf. Monea, Alexander. “Graph Force: Rhetorical Machines and the N-Arization of Knowledge : Computational Culture.” Computational Culture. Accessed November 18, 2016. http://computationalculture.net/article/graph-force-rhetorical-machines​ -and-the-n-arization-of-knowledge. More, Louis. “Boyle as Alchemist.” Journal of the History of Ideas 2, no. 1 (1941): 61–76. Morgenstern, David. “30 Years before Samsung: When Apple Sued Microsoft.” ZDNet, August 27, 2012. http://www.zdnet.com/30-years-before-samsung-when-apple​ -sued-microsoft-7000003202/. Morozov, Evgeny. The Net Delusion the Dark Side of Internet Freedom. New York: PublicAffairs, 2011. Morozov, Evgeny. “Why Social Movements Should Ignore the Internet.” New Republic, February 5, 2013. https://newrepublic.com/article/112189/social-media-doesnt​ -always-help-social-movements. Mui, Ylan Q. “Americans Saw Wealth Plummet 40 Percent from 2007 to 2010, Federal Reserve Says.” The Washington Post, June 11, 2012. https://www.washingtonpost​ .com/business/economy/fed-americans-wealth-dropped-40-percent/2012/06/11/ gJQAlIsCVV_story.html. Munro, Peter. “How High Rollers Roll: The Whales Packer Is Fishing For.” The Sydney Morning Herald, October 25, 2012. http://www.smh.com.au/national/how-high​ -rollers-roll-the-whales-packer-is-fishing-for-20121025-287p4.html.

214

Bibliography

Myhrvold, Nathan. “The Big Idea: Funding Eureka!” Harvard Business Review, March 2010. http://hbr.org/2010/03/the-big-idea-funding-eureka/ar/1. Nadkarni, Ashwini and Stefan G. Hofmann. “Why Do People Use Facebook?” Personality and Individual Differences 52, no. 3 (February 2012): 243–49. doi:10.1016/j.paid.2011.11.007. National Research Council. Patents in the Knowledge-Based Economy. Washington, DC: National Academies Press, 2004. Nautilus Inc. v. Biosig Instruments Inc., No. 13–369 (United States Supreme Court June 2, 2014). Nazer, Daniel. “Twitter Launches Innovator’s Patent Agreement.” Electronic Frontier Foundation, May 21, 2013. https://www.eff.org/deeplinks/2013/05/twitter-launches​ -innovators-patent-agreement. Nazer, Daniel and Vera Ranieri. “Why Do Patent Trolls Go to Texas? It’s Not for the BBQ.” Electronic Frontier Foundation, July 9, 2014. https://www.eff.org/ deeplinks/2014/07/why-do-patent-trolls-go-texas-its-not-bbq. Neal, Ryan W. “Secret Chinese Bitcoin Mine.” International Business Times, December 2, 2013. http://www.ibtimes.com/secret-bitcoin-mine-chinese-facility-uses-boiling​ -liquid-cool-massive-computers-generate-bitcoins. Neff, Jack. “As Marketers Take Control of Ad Tech, Complexity Follows.” Advertising Age, April 5, 2016. http://adage.com/article/cmo-strategy/house-trading-desks​ -make-suppliers-buyers/303382/. Neumeister, Larry. “Twitter Used International Roadshow to Boost IPO Valuation: N.Y. Lawsuit.” CTVNews, October 31, 2013. http://www.ctvnews.ca/business/twitter​ -used-international-roadshow-to-boost-ipo-valuation-n-y-lawsuit-1.1521639. New York Stock Exchange. “American Stock Exchange Historical Timeline.” New York Stock Exchange, 2008. http://www.nyse.com/pdfs/AmexTimeline.pdf. New York Stock Exchange. “Investing in the Currency of Trust.” Public Relations, 2008. http://www.forbes.com/sites/randalllane/2012/03/26/warren-buffetts-50-billion​ -decision/. Niederauer, Duncan and Steve Forbes. “Transcript: Duncan Niederauer.” Forbes, August 3, 2009. http://www.forbes.com/2009/07/31/niederauer-technology-exchange​ -intelligent-investing-naked-shorts.html. Nielsen, Jakob. Usability Engineering. Boston, MA: Academic Press, 1993. “No Buy Button in Pinterest’s Future.” PYMNTS, May 13, 2015. http://www.pymnts.com/ news/social-commerce/2015/no-buy-button-in-pinterests-future/#.ViqujqQTNGw. Noel, Hans and Brendan Nyhan. “The ‘unfriending’ Problem: The Consequences of Homophily in Friendship Retention for Causal Estimates of Social Influence.” Social Networks 33, no. 3 (July 2011): 211–18. doi:10.1016/j.socnet.2011.05.003. Nusca, Andrew. “Pinterest CEO Ben Silbermann: We’re Not a Social Network.” Fortune, July 23, 2015. http://fortune.com/2015/07/13/pinterest-ceo-ben-silbermann/.

Bibliography

215

“NYSE Matched Volume Drops to New Decade Low in February.” Zero Hedge, January 7, 2013. http://www.zerohedge.com/news/2013-03-11/nyse-matched-volume-drops​ -new-decade-low-february. Olanoff, Drew. “Facebook Shares the History of Its ‘hackathon.’” The Next Web, 2013. http://thenextweb.com/facebook/2012/05/23/facebook-shares-the-history-of-its​ -hackathon/. Olshan, Jeremy. “This Is the Last Photo We’ll Ever Run of the NYSE Trading Floor.” MarketWatch, October 1, 2014. http://www.marketwatch.com/story/this-is-the-last​ -photo-well-ever-run-of-the-nyse-trading-floor-2014-10-01. O’Reilly, Lara. “The CEO of WPP’s Massive Advertising Trading Desk Xaxis Explains the 3 Biggest Myths about His Company (First up—It’s ‘Not a Trading Desk’).” Business Insider, July 22, 2015. http://www.businessinsider.com/xaxis-ceo-brian​ -lesser-interview-2015-7. Orlowski, Andrew. “Avoid Friendster and Its Clones, Warns Security Expert • The Register.” The Register, February 10, 2004. http://www.theregister.co.uk/2004/02/10/ avoid_friendster_and_its_clones/. Osula, Anna-Maria. “Transborder Access and Territorial Sovereignty.” Computer Law & Security Review 31, no. 6 (December 2015): 719–35. Peltz-Steele, Richard. “The Pond Betwixt: Differences in the US-EU Data Protection/ Safe Harbor Negotiation.” Journal of Internet Law 19, no. 1 (July 2015): 14–29. Pennington, Natalie, Kelly Winfrey, Benjamin Warner, and Michael Kearney. “Liking Obama and Romney (on Facebook): An Experimental Evaluation of Political Engagement and Efficacy during the 2012 General Election.” Computers in Human Behavior 44 (2015): 279–83. Pepitone, Julianne. “Yahoo and Facebook Settle Patent Brawl.” CNNMoney, July 6, 2012. http://money.cnn.com/2012/07/06/technology/yahoo-facebook-patent-settle/index​ .htm. Peters, John Durham. “Broadcasting and Schizophrenia.” Media, Culture, and Society 32 (2010): 123–40. Peters, John Durham. “Calendar, Clock, Tower.” Massachusetts Institute of Technology, 2009. http://web.mit.edu/comm-forum/mit6/papers/peters.pdf. Peters, John Durham. Speaking into the Air: A History of the Idea of Communication. Chicago: University of Chicago Press, 2001. Pethokouis, James. “Why Does Silicon Valley Seem to Love Democrats and Dismiss the GOP? A Q&A with Journalist Greg Ferenstein.” AEIdeas, May 25, 2016. http://www​ .aei.org/publication/what-does-silicon-valley-seem-to-love-democrats-and-dimiss​ -the-gop-a-qa-with-journalist-greg-ferenstein/. Petram, Lodewijk. The World’s First Stock Exchange. Columbia Business School Publishing. New York: Columbia University Press, 2014. Petronio, Sandra and Jeff Child. “Unpacking the Paradoxes of Privacy in CMC Relationships: The Challenges of Blogging and Relational Communication on the

216

Bibliography

Internet.” In Computer-Mediated Communication in Personal Relationships, edited by K.B. Wright and L.M. Webb, 21–40. New York: Peter Lang, 2009. Poletti, Threse. “The Two Views of Snapchat: An App That Has Peaked or a Platform Set to Blossom.” CBSMarketWatch, February 13, 2017. http://www.marketwatch. com/story/the-two-views-of-snapchat-an-app-that-has-peaked-or-a-platform-set-to​ -blossom-2017-02-11. Porter, Michael E. Competitive Advantage: Creating and Sustaining Superior Performance. New York; London: Free Press; Collier Macmillan, 1985. Pretes, Michael. “Development and Infinity.” World Development 25, no. 9 (1997): 1421–30. Principe, Lawerence and William Newman. “Some Problems with the Historiography of Alchemy.” In Secrets of Nature: Astrology and Alchemy in Early Modern Europe. Cambridge, MA: MIT Press, 2001. Prosen, Matthew. “Dismissed Out of Hand: The Rise of Successful Motions to Dismiss under 35 U.S.C. § 101 in the Wake of Alice.” IP Reports. Baker Botts, May 6, 2015. http://www.bakerbotts.com/ideas/publications/2015/4/ip-report. Protalinski, Emil. “15 Million Used Facebook Credits to Buy Virtual Goods in 2011.” ZDNet, March 8, 2012. http://www.zdnet.com/blog/facebook/15-million-used​ -facebook-credits-to-buy-virtual-goods-in-2011/10229. Quinn, Gene and Steve Brachmann. “Facebook and Twitter: Patent Strategies for Social Media.” Ipwatchdog, February 1, 2014. http://www.ipwatchdog.com/2014/02/14/ facebook-and-twitter-patent-strategies-for-social-media/id=48004/. Rancière, Jacques. Disagreement: Politics and Philosophy. Translated by Julie Rose. Minneapolis: University of Minnesota Press, 2004. Reinhart, Carmen M. and Kenneth S. Rogoff. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press, 2009. Reisinger, Don. “Syrian Electronic Army Hacks Forbes, Steals User Data.” CNET, February 24, 2014. http://news.cnet.com/8301-1009_3-57618945-83/syrian​ -electronic-army-hacks-forbes-steals-user-data/. Reyes, Mike. “Sony’s Hacked Emails Are a Nightmare Scenario for Adam Sandler,” December 3, 2014. http://www.cinemablend.com/new/Sony-Hacked-Emails​ -Nightmare-Scenario-Adam-Sandler-68501.html. “Rise of the Publisher Arbitrage Model.” Yieldbot, September 15, 2011. https://www​ .yieldbot.com/blog/rise-of-the-publisher-arbitrage-model/. Rogers, Katie. “Facebook Users Raise Privacy Concerns as Company Tweaks Security Settings.” The Guardian, October 15, 2012, sec. Technology. https://www.theguardian​ .com/technology/2012/oct/15/facebook-users-privacy-concerns-security. Rohrlich, Justin. “End of an Era: R.I.P. Pork Belly Futures.” Minyanville, July 18, 2011. http://www.minyanville.com/businessmarkets/articles/pork-bellies-pork-bellyfutures-pork/7/18/2011/id/35803. Rosen, Philip. Change Mummified: Cinema, Historicity, Theory. Minneapolis: University of Minnesota Press, 2001.

Bibliography

217

Rubin, Steve. “Hooray for the Patent Troll!” IEEE Spectrum, March 1, 2007. http:// spectrum.ieee.org/consumer-electronics/gaming/hooray-for-the-patent-troll. Salmon, Felix. “Wall Street’s Dead End.” The New York Times, February 13, 2011. http:// www.nytimes.com/2011/02/14/opinion/14Salmon.html. Samuelson, Pamela and Tara Wheatland. “Statutory Damages in Copyright Law: A Remedy in Need of Reform.” SSRN Scholarly Paper. Rochester, NY: Social Science Research Network, August 1, 2009. http://papers.ssrn.com/abstract=1375604. Samuelson, Paul. “Consumption Theory: In Terms of Revealed Preference.” In The Collected Scientific Papers of Paul Samuelson, edited by Joseph Stiglitz, Vol. 1. Cambridge, MA: MIT Press, 1966. Savelyev, Alexander. “Russia’s New Personal Data Localization Regulations: A Step Forward or a Self-Imposed Sanction?” Computer Law & Society Review 32, no. 1 (February 2016): 128–45. “Scalable, Adj.” Oxford English Dictionary Online. Oxford University Press, 2016. Scannell, Paddy. “For-Anyone-as-Someone Structures.” Media, Culture, and Society 22, no. 1 (2000): 5–24. Schaller, R.R. “Moore’s Law: Past, Present and Future.” IEEE Spectrum 34, no. 6 (June 1997): 52–59. doi:10.1109/6.591665. Schaps, David. The Invention of Coinage and the Monetization of Ancient Greece. Ann Arbor: University of Michigan Press, 2004. Schlag, Pierre. “The Aesthetics of American Law.” Harvard Law Review 115, no. 4 (2002): 07–08. Schlag, Pierre. “The Problem of Transaction Costs.” Southern California Law Review 62 (1989): 1661–1700. Schlegel, Peter. “Facebook Exchange: A New Dog Doing Old Retargeting Tricks.” Econsultancy, October 8, 2012. https://econsultancy.com/blog/10824-facebook​ -exchange-a-new-dog-doing-old-retargeting-tricks?utm_campaign=bloglikes&utm​ _medium=socialnetwork&utm_source=facebook. Schumpeter, Joseph. Capitalism, Socialism and Democracy, Reprint edition. New York: Harper, 1975. Schwartz, Hunter. “How Much Beanie Babies Were Predicted to Be Worth Vs. How Much They’re Really Worth.” BuzzFeed, June 22, 2013. http://www.buzzfeed.com/ hunterschwarz/how-much-beanie-babies-were-predicted-to-be-worth-vs-how-muc. Scorsese, Martin. The Wolf of Wall Street. Biography, Comedy, Crime, 2013. Scott, James C. Seeing Like a State. New Haven, CT: Yale University Press, 1998. Scott, Mark. “Facebook Faces German Antitrust Investigation.” The New York Times, March 2, 2016. http://www.nytimes.com/2016/03/03/business/international/ facebook-faces-german-antitrust-investigation.html. Seabrook, John. “Game Master.” The New Yorker, November 6, 2006. http://www​ .newyorker.com/magazine/2006/11/06/game-master.

218

Bibliography

Sebastian, Anthony. “IBM Builds Graphene Chip That’s 10,000 Times Faster, Using Standard CMOS Processes.” ExtremeTech, January 30, 2014. http://www​ .extremetech.com/extreme/175727-ibm-builds-graphene-chip-thats-10000-times​ -faster-using-standard-cmos-processes. “Securitization, N.” Oxford English Dictionary Online. Oxford University Press, March 2016. Seltzer, Lousia Ada. “The Dirty Dozen: Shows Advertisers Avoid.” MediaLife, September 2009. http://www.medialifemagazine.com/the-dirty-dozen-shows-advertisers-avoid/. Shields, Mike. “IPG Reorganizes Trading Desk Operations as Company Tries Automation.” AdWeek. Accessed October 22, 2015. http://www.adweek.com/news/ advertising-branding/ipg-reorganizes-trading-desk-operations-company-triesautomation-147572. Shields, Mike. “IPG’s Cadreon Developing TV Buying Software with Video Ad Tech Firm TubeMogul.” Wall Street Journal, May 11, 2015. http://blogs.wsj.com/ cmo/2015/05/11/ipgs-cadreon-developing-tv-buying-software-with-video-ad-tech​ -firm-tubemogul/. Siegel, Emily. “Agency Survival in a Post-Trade Desk World,” March 3, 2015. http:// www.imediaconnection.com/article/230256/160502-summit-coverage-dustin-engel​ -agency-survival-in-a-post-trade-desk-world. Sisario, Ben. “Clyde Stubblefield, a Drummer, Aims for Royalties.” The New York Times, March 29, 2011, sec. Arts/Music. http://www.nytimes.com/2011/03/30/arts/music/ clyde-stubblefield-a-drummer-aims-for-royalties.html. “Skip the Line with Tinder Boost.” Tinder, September 27, 2016. http://blog.gotinder​ .com/skip-the-line-with-tinder-boost/. Sloterdijk, Peter. Critique of Cynical Reason. Minneapolis: University of Minnesota Press, 1987. Sluis, Sarah. “PubMatic CEO: ‘Media Arbitrage Models Aren’t Profitable.’” AdExchanger, February 10, 2015. https://adexchanger.com/ad-exchange-news/pubmatic-ceo​ -media-arbitrage-models-arent-profitable/. Smith, Kevin. “Here’s Mark Cuban’s Plan to Fix Facebook for Advertisers.” Business Insider, November 14, 2012. http://www.businessinsider.com/mark-cuban-is-fed-up​ -with-facebook-2012-11. Snap, Inc. “S-1.” Snap, Inc., February 2, 2017. https://www.sec.gov/Archives/edgar/ data/1564408/000119312517029199/d270216ds1.htm. Sobel, Robert. The Big Board: A History of the New York Stock Market. New York: Free Press, 1968. State Street Bank & Trust Co. v. Signature Financial Group, Inc. (United States Court of Appeals for the Federal Circuit July 23, 1998). Stavrakakis, Yannis. Lacan and the Political. London; New York: Routledge, 1999. Stewart, Malcolm. “The ‘tech Bubble’ Is Only a B2C Problem.” TNW News, October 11, 2015. http://thenextweb.com/insider/2015/10/09/the-tech-bubble-is-only-a-b2c​ -problem/.

Bibliography

219

Stone, Brad and Vernon Silver. “Google’s $6 Billion Miscalculation on the EU.” Bloomberg.com, August 6, 2015. http://www.bloomberg.com/news/ features/2015-08-06/google-s-6-billion-miscalculation-on-the-eu. Streeter, Thomas. The Net Effect: Romanticism, Capitalism, and the Internet. New York: New York University Press, 2011. Strietfield, Dave. “At Zynga, Keeping It Virtual and Vague.” Bits Blog, January 26, 2012. http://bits.blogs.nytimes.com/2012/01/26/at-zynga-keeping-it-virtual-and​ -vague/. Sun, Leo. “Did Activision Blizzard Inc. Overpay for King Digital Entertainment PLC?” The Motley Fool, November 11, 2015. http://www.fool.com/investing/ general/2015/11/11/did-activision-blizzard-inc-overpay-for-king-digit.aspx. SuperGlossary. “Monetize: Business and Search Engine Optimization (SEO) Definition.” Super Glossary. Accessed February 10, 2014. http://www.superglossary.com/ Glossary/Business/Search_Engine_Optimization_(SEO)/Monetize.html. Surowiecki, James. “A Brief History of Money,” May 30, 2012. http://spectrum.ieee.org/ at-work/innovation/a-brief-history-of-money. Surowiecki, James. “One-Hit Wonders.” The New Yorker, March 17, 2014. http://www​ .newyorker.com/magazine/2014/03/17/one-hit-wonders. “Take Me Home.” Nylon, November 2013. “Taking Stock of Dick Grasso.” The Economist, September 18, 2003. http://www​ .economist.com/node/2071704. Tam, Donna. “Facebook by the Numbers: 1.06 Billion Monthly Active Users.” CNET, January 30, 2013. http://news.cnet.com/8301-1023_3-57566550-93/facebook-by​ -the-numbers-1.06-billion-monthly-active-users/. “Taxi & Limousine Services in the US Market Research.” IBIS World, August 2015. http://www.ibisworld.com/industry/default.aspx?indid=1951. TechCrunch. “Events.” TechCrunch. Accessed March 3, 2014. http://techcrunch.com. “The End of the Street.” The Economist, November 16, 2013. http://www.economist​ .com/news/finance-and-economics/21589913-improbable-takeover-highlights​ -uncertain-future-share-trading-end. “The NYSE and Nasdaq: How They Work.” Investopedia. Accessed December 4, 2015. http://www.investopedia.com/articles/basics/03/103103.asp. The Original Patent Troll, 2007. http://www.youtube.com/watch?v=lOGoZFzHkhs&feat ure=youtube_gdata_player. Tinic, Serra. On Location: Canada’s Television Industry in a Global Market. Buffalo: University of Toronto Press, Scholarly Publishing Division, 2005. Townsend, Tess. “Google Has Banned 200 Publishers since It Passed a New Policy against Fake News—Recode.” Recode, January 25, 2017. http://www.recode​ .net/2017/1/25/14375750/google-adsense-advertisers-publishers-fake-news. Tufankjian, Scout. Four More Years. Photograph, November 8, 2012. https://2012​ .twitter.com/en/golden-tweets.html.

220

Bibliography

Twitter. “Form S-1 for Twitter, Inc.” Securities and Exchange Commission, October 3, 2013. http://www.sec.gov/Archives/edgar/data/1418091/000119312513390321/ d564001ds1.htm. “Twttr.png.” CloudApp. Accessed October 27, 2016. https://cl.ly/3W2E1P0I2x090Q2b1k3B. Tynan, Dan. “Hey, Facebook: You Have Some Serious Privacy and Security Problems.” PCWorld, May 6, 2010. http://www.pcworld.com/article/195722/facebook_privacy​ _security.html. Ultramoney. “Banner Arbitrage Formula. Do Things the Right Way.” Forum Post. BlackHat World, February 4, 2013. http://www.blackhatworld.com/blackhat-seo/ making-money/529274-banner-arbitrage-formula-do-things-right-way.html. Ungar, Rick. “Papa John’s, Applebee’s and Others Pay Huge Price for AntiObamacare Politicking.” Forbes, December 4, 2012. http://www.forbes.com/sites/ rickungar/2012/12/04/papa-johns-applebees-and-others-pay-huge-price-for-anti​ -obamacare-politicking/. United States Patent Office. “General Information Concerning Patents.” Accessed February 5, 2014. http://www.uspto.gov/patents/resources/general_info _concerning_patents.jsp. USPTO. “MPEP.” Manual of Patent Examining, Chapter 2100, Section 2106. Accessed March 6, 2014. http://www.uspto.gov/web/offices/pac/mpep/s2106.html. Vaidhyanathan, Siva. Copyrights and Copywrongs: The Rise of Intellectual Property and How It Threatens Creativity. New York: New York University Press, 2003. Vara, Vauhini. “Is Amazon Creating a Cultural Monopoly?” The New Yorker, August 23, 2015. http://www.newyorker.com/business/currency/is-amazon-creating-a-cultural​ -monopoly. Vara, Vauhini. “Twitter and the Evolution of the S-1.” The New Yorker Blogs, October 8, 2013. http://www.newyorker.com/online/blogs/currency/2013/10/twitter-and-the​ -evolution-of-the-s-1.html. Vatin, François. “Valuation as Evaluating and Valorizing.” Valuation Studies 1, no. 1 (2013): 31–50. Venkatraman, Archana. “Cloud Firms Race to Build EU Facilities and Ease Data Sovereignty Concerns.” Computer Weekly, November 18, 2014. “Venture Capital: Sand Hill Road Rules the Valley.” BloombergView, December 4, 2014. http://www.bloomberg.com/bw/articles/2014-12-04/venture-capital-sand-hill-road​ -rules-silicon-valley. Virilio, Paul. Unknown Quantity. London; New York; Paris: Thames & Hudson, 2003. Walther, Joseph B. “Computer-Mediated Communication Impersonal, Interpersonal, and Hyperpersonal Interaction.” Communication Research 23, no. 1 (February 1, 1996): 3–43. doi:10.1177/009365096023001001. Weise, Elizabeth. “Microsoft, Facebook to Lay Massive Undersea Cable.” USA TODAY, May 30, 2016. http://www.usatoday.com/story/experience/2016/05/26/microsoft​ -facebook-undersea-cable-google-marea-amazon/84984882/.

Bibliography

221

“What Is Engineering Problem Solving?” Dartmouth Project for Teaching Engineering Problem Solving, 2014. http://thayer.dartmouth.edu/teps/what.html. Wheeler, Steven. “Happy Birthday, NYSE.” Professional/Promotional. NYSE History Blog, May 17, 2013. https://exchanges.nyx.com/en/steven-wheeler/happy-birthday​ -nyse. Williams, Raymond. Television. Routledge Classics. London: Routledge, 2003. Winsor, John. “5 Reasons Why Brands Are Cutting out Agencies.” Digiday, February 20, 2014. http://digiday.com/agencies/pulsepointes-5-reasons-brands-cutting-agencies/. Woods, Dan. “How Adaptive Planning Creates a Moore’s Law for Data.” Forbes, January 28, 2014. http://www.forbes.com/sites/danwoods/2014/01/28/how-adaptive​ -planning-creates-a-moores-law-for-data/. Woollaston, Victoria. “Facebook Users Are Committing ‘Virtual Identity Suicide’ in Droves and Quitting the Site over Privacy and Addiction Fears.” Daily Mail, September 17, 2013. http://www.dailymail.co.uk/sciencetech/article-2423713/ Facebook-users-committing-virtual-identity-suicide-quitting-site-droves-privacy​ -addiction-fears.html. Yglesias, Matthew. “The Norwegian Butter Crisis.” Slate, December 14, 2011. http:// www.slate.com/articles/business/moneybox/2011/12/norwegian_butter_battle_an​ _absurd_dairy_shortage_and_its_very_valuable_economic_lessons_.html. Yuran, Noam. What Money Wants: An Economy of Desire. Stanford, CA: Stanford University Press, 2014. Zajácz, Rita. “WikiLeaks and the Problem of Anonymity: A Network Control Perspective.” Media, Culture & Society 35, no. 4 (May 1, 2013): 489–505. doi:10.1177/0163443713483793. Zax, David. “Secrets Of Facebook’s Legendary Hackathons Revealed.” Fast Company, November 9, 2012. http://www.fastcompany.com/3002845/secrets-facebooks​ -legendary-hackathons-revealed. Zelizer, Barbara. The Social Meaning of Money: Pin Money, Paychecks, Poor Relief, and Other Currencies, First edition, First Printing edition. Princeton, NJ: Princeton University Press, 1997. Zetter, Kim. “Infoporn: Cyberattacks Have Created an Invisible but Vast War Zone (Wired UK).” Wired UK, September 29, 2015. http://www.wired.co.uk/magazine/ archive/2015/10/start/infoporn-cyberattacks-state-sponsored-hacking. Zheng, Song. “The Fundamentals Behind a Successful Hackathon.” TokBox Blog, January 24, 2013. http://www.tokbox.com/blog/the-fundamentals-behind-a-successful​ -hackathon/. Zynga. “Zynga—Annual Report.” 10-K, February 21, 2014. http://investor.zynga.com/ secfiling.cfm?filingID=1193125-14-62902&CIK=1439404.

Index aesthetics dimension, 18, 28, 44, 46, 60, 80, 81, 83–5, 89, 92, 96, 99, 102, 104, 106, 142 energy, 134, 155–7 grid, 134, 137–8, 140–1 legal, 132, 134, 137–8, 155 performance, 22, 66, 72, 83, 93–4, 106–7 preference, 12, 52, 67, 159 affiliate links, 26, 36, 44, 64, 70–1 affinity networks, 7, 65–7, 79–81, 84, 160–2 affordance (usability theory), 51, 60, 68, 157, 163 agency advertising, 19, 20, 41–2 human capacity, 12, 73, 83, 87–8, 113, 115, 117, 119, 143, 164 alchemy business process, 53–5, 67, 69, 72, 157–8 romanticism, 55 within trifold scheme, 26, 57, 122, 144, 163 as unicorn, 53, 126 utopian promise, 71–2 algorithms, 57, 60, 102, 118 Amazon, 43, 90, 145, 150 ambient awareness, 6, 10–11, 13, 21, 50, 67, 86, 152, 161–2 Anderson, Chris, 38 Apple, 22, 142, 144, 150 Application Platform Interface (API), 42, 51–2, 90, 110, 145, 157, 164 arbitrage commodity/form, 26, 34–5, 45, 71–2, 122, 128, 144, 163 online, 34–7, 40–5, 51–3, 69–71 television, 38–40, 56 armed conflict, 19, 101, 161

barter, 25–8 Benjamin, Walter, 17–18, 92. See also dream images Bernays, Edward, 60–2 Big Data, 127 Bitcoin, 27, 32–3 Blackrock, 97–8 Bogost, Ian, 84 boyd, danah, 8, 53, 56, 68 branding, 6–7, 13, 22, 40–1, 56, 58, 60, 96, 108, 115, 120, 135 bubbles Bitcoin, 32–3 cross-subsidy, 129 culture, 73 deflation precluded, 160 dot-com, 25 feedback loop, 158 housing, 99 institutional (Minsky), 159 negative cascade, 99, 159 patent, 141, 149–51 Peter Pan Cycle, 163 rational, 158 social media, 97, 99, 106, 140, 154–5, 158–64 systems issue, 158 technical failure, 100 theoretical framing, 17, 72, 104 unicorn, 68 Burger King, 127 business confidence confidence fairy, 99 perception, 78, 99, 103, 154 business hagiography, 16, 152 butter, 46. See also dutch disease Buzzfeed, 60, 71 Candy Crush, 75–7, 89 celebrity, 12, 48, 62–3, 71 Christensen, Clay, 111–13, 116, 126, 143

Index CLS v. Alice, 140 Coase, Ronald, 117 coase theorem, 117–18, 147 communication boundary management theory, 9–11, 123, 132 Dean, Jodi, 12 defamation, 131–4 derivatives (financial), 79, 92–3, 107 derivative works (textual), 133–4 Detkin, Peter, 146 dialog, 62, 85–7, 138, 163 disruption as argument, 121–4 Christensen, 113–16 definition, 112 Downes and Mui, 116–19 Dru, 119–20 framing, 13, 22, 111, 129 journalism, 128 mature firms, 125–6 dissemination (communication), 31, 86–7, 163 dividends, 32, 79, 91, 96 Dow 36,000, 115 Downes, Larry, 112, 116–22, 143. See also disruption; Killer App dream images, 17–19, 25–6, 33, 43, 55–6, 62, 73, 95, 106–7, 127, 147–8, 159, 163–4 Dru, Jean-Marie, 112–13, 119–21, 122, 126, 143. See also disruption Dutch disease, 46 East Texas, 138 EdgeRank, 55–6, 59 efficient market theory, 96, 98, 103, 158. See also bubbles; rationality exchange traded funds (ETFs), 32, 97–8 extraction data mining, 51–3, 55, 67 natural resources, 46–7 overview, 26, 45, 122, 144, 155–6, 163 Facebook glowing map, 2, 56, 154 Facebook newsfeed, 8, 55, 59, 110, 149 Facebook privacy notices, 151 fair use, 134

223

fake news, 128–9, 160–1 financialization, 33, 164 firehose, 6, 51 foursquare, 8, 47–53, 69, 155, 157. See also locative media Friendster, 40, 87, 138, 141 Fuchs, Christian, 20 fundamental analysis, 3–4, 14–15, 65, 84, 91–7, 115, 158–9. See also Mr. Market Gehl, Rob, 20–1 gift economy, 32. See also unicorns Gilder, George, 32, 73 Goldman Sachs, 108 Google advertising products, 22, 33, 35, 43, 48, 51, 111, 129 business process, 150, 153–4, 155, 160 cloud services, 90, 155, 157 Google+, 1, 7–12, 39, 50, 58, 89, 162 infrastructure, 131, 150 moonshots, 126, 157 nGram, 89 search engine, 57–9 Graber, David, 31–2 hackathon, 109–10 Havens, Tim, 17 high-modernism, 85–8, 108 homepage, 7, 10, 157 ideology Bernays, 61 Californian, 155 crude, 17, 72 enlightened false consciousness, 85, 98 immaterial goods. See virtual goods immortality, 126 indexical trace, 121–3, 126–7, 129, 153 infinity, 25, 46–7, 72–3, 96, 155, 159 information cascades contagion, 160 recurrent, 39 information wants to be free, 123 initial public offering (IPO) Facebook, 1–4 King, 76, 89

224

Index

Snapchat, 157 theory, 13, 66–7, 94, 97, 99, 106–8, 127, 149 Twitter, 66–7, 94–5 Zynga, 76 Innovator’s Patent Agreement (IPAs), 148–51 Instagram, 12, 14, 51, 58, 71, 157 Intellectual Ventures, 132, 145–50, 155 interest graph, 26, 62–7 Jenkins, Henry, 12, 53 judgment, 4, 7, 9, 14, 15, 82, 93, 96, 98, 100, 102, 104–6, 143 justification (argumentation theory), 16–19, 33, 93, 116 Killer App, The, 112, 116–19, 120, 122, 143 kin-keeping, 62 King (corporation), 11, 20, 22, 35–7, 41–5, 50–1, 60, 111, 120, 157 Krugman, Paul, 48, 99 legitimation, 32, 78, 80, 99, 104–7, 129 litigation as business practice, 13–14, 128–9, 135, 137–8, 155–6, 158, 163 deferral, 148–51 patent, 142–5 Locative Media, 8, 49–51, 78–82, 87–8, 157, 159–62 locative networks, 49–52, 160, 162 long tail, 28. See also arbitrage Lotz, Amanda, 17 magic, 27, 42, 45, 53–6, 66–71, 106, 112, 118, 123–6, 145–6, 154, 159, 163–4 market segmentation, 26, 47, 62, 69, 72, 85. See also pure demographics Marxian theory, 12, 20, 31. See also ideology maturity (phase of business), 4, 110, 113, 138, 150, 156, 163 melodrama, 19, 30, 79, 91, 98, 116, 122–4, 134, 142–3, 154–5, 164 Metcalfe’s law, 116–17, 123–4 moderation, 2, 27 molecularization, 50–2

monetization as desire, 40, 55, 68, 72, 105–7 history, 27–31 non-standard currency, 27, 32–3 overview, 13–14, 22, 25, 129 as rationalization, 89, 96, 106, 120, 128, 132–3, 147, 156, 159 money as currency, 4, 25–8, 34–5, 37, 42, 47, 64, 68, 79, 94, 95, 110–13, 125, 128, 134, 136, 155, 159 as desire, 4, 13, 17, 22, 28–33, 40–1, 46–7, 54–5, 69–70, 85, 96–8, 107 monopoly patent bargain, 138 state, 161 telephone, 131 Moore’s law, 116–19, 121–3 Morozov, Evgeny, 88, 123 Mr. Market, 14–15, 32, 39, 91, 98, 102 Mui, Chunka, 112, 116–22, 143. See also disruption, Killer App Myhrvold, Nathan, 146–7 NASDAQ, 77–8 New York Stock Exchange (NYSE) floor, 77–8, 81–2, 104–8 headquarters of capitalism, 99 history, 79–82 image repair, 99–105 trust, 99–100, 105–8 Niederauer, Duncan, 82, 99 nigerian prince scam, 35–6 nobody knows (theoretical construct), 38–40, 76 Nucor, 114, 116 Obama, Barack, 63 Orkut, 8 patents abolitionism, 136–8 business methods, 137–44 defense paradox, 149 legal framework, 23, 45, 132, 134–6 as maturity, 148 section 112, 138–41 thickets, 135–6

Index Pepsi, 11 Peter Pan Cycle, 163 Peters, John Durham, 31, 87 Petronio, Sandra, 9 Pinterest, 26, 51, 57–8, 67–71, 124, 157 price/earnings ratio, 15, 96–7 privacy, 8–10, 50, 86, 123, 132–3, 151, 157, 162 privacy paradox, 9 proceduralism, 84–5 programmatic advertising, 40 public relations, 58–63, 66, 78, 99, 105 public sphere attentional, 6, 26, 36, 46–7, 59, 61–2, 110, 155, 159–60 autopoetic, 17, 118, 129 Brandeis formulation, 6–7 ecological, 128, 133 expressive, 6–7, 131, 135 publicity process, 60, 72, 105, 124 pure demographics, 60 rationality, 33, 36, 85–8, 95–6, 98 Reddit, 51, 161 resource dependence theory, 113 roadshow as a practice, 127 Facebook, 1–5, 22, 55–6 Twitter, 96 romanticism alchemy, 55, 72, 91, 97–8 coupling, 49 heroic inventor, 131, 134, 136–8, 146, 149 theoretically, 18–19, 43, 83, 86, 111, 154–5 transcendence, 15, 32, 56, 71, 88, 107 S-1

Facebook, 1–5, 154 requirements, 1 Snapchat, 157 Twitter, 25, 63–6, 148 Sand Hill Road, 146 Sandberg, Sheryl, 3–5, 162 scalability, 78, 85, 89, 108 Schlag, Pierre, 134, 137–8 Seattle metro locations, 135, 145–6

225

Securities and Exchange Commission, 1, 83 securitization, 13, 22, 78, 83, 85, 89, 96, 99, 106–8, 120, 132, 159, 163–4 sharing economy. See unicorns Silberman, Ben, 68–71 SimCity, 79–82 small business, 5, 143, 146–7 Snapchat, 51, 58, 67, 71, 124, 150, 154, 157–8, 160, 163 Social Network, The (film), 91 South by Southwest (SXSW), 5–6 sponsorship, 42, 59 Starbucks, 52, 66, 90 state sovereignty, 26, 131–3, 151–5 stock screener, 22, 78, 82–5, 107 Stubblefield, Clyde, 135 tactical, 85–8, 131 target (corporation), 125 targeting (advertising practice), 4–5, 7, 25, 42, 47, 50, 56, 62–3, 148, 151 technical analysis, 15, 92–4 temporal networks, 6, 51, 64 temporality, 64, 93, 104, 160 Things that connect us (video), 2 Tinder, 49–52 trademark law, 135, 137, 144 trading desks, 40–5 transmedia, 3, 11, 84 trolls patent, 142–4, 154–6 sadistic, 6, 11, 46, 56, 69 Trump, Donald, 62, 157 two-sided markets, 47–54 Uber, 53, 68, 124, 126 unicorns, 53, 67–8, 92, 111, 124–6, 128, 145, 163–4 valley of death, 94–5 valuation, 91–9, 105–8, 112, 116, 125, 132, 147, 155, 159, 163 value chain, 127 van Dijck, Jose, 21 virtual goods, 54, 68, 75–6, 107, 127, 138, 143, 148, 157–8 Wright, Will, 84

226 Yik Yak, 58, 67, 155, 160, 162 zero margin problem, 40, 47, 129, 143

Index Zuckerberg, Mark, 2–3, 91, 123, 133, 161–2 Zynga, 12, 19, 73, 83, 87–8, 113, 115–19, 143, 164