Technologists who wish to talk about the big picture can sometimes find themselves in a difficult situation: In order to be taken seriously, they have to express a bold vision of the future. But predictions aren’t made in a vacuum, and the opinions of the twittering classes have gathered enough momentum that it’s dangerous to be seen contradicting them. Criticisms of the social web are terribly vulnerable to the rejoinder that the critic just doesn’t get it.

None of this seems to bother Jaron Lanier, whose 2010 book You Are Not a Gadget is a timely and much-needed analysis of the downsides to the Web 2.0 movement. Lanier, though he has form as a technological pioneer of Virtual Reality, is vulnerable to the claim that he is a hippie throwback who belongs in an earlier age. His dreadlocked appearance, humanistic philosophy and love of obscure musical instruments may seem a poor fit for the brave new world of Facebook and Google, but I believe we ignore his insights at our peril.

The book covers a lot of angles, but the overarching theme is a reaction against cybernetic totalism, the view that computer software can and should become at least as important to the world as humans, at its most extreme reducing us to components that serve a hive mind. The most approachable manifestation of this in today’s world is the way that user-generated content (in the form of blog posts, tweets, images, videos, Wikipedia edits and the like) is stripped of context and personal relevance and digested into a stream of data to be fed through algorithms, ultimately making billions for the “lords of the cloud” with zero return to the humans who produced the content in the first place. Genuine creativity is stifled in favour of endless regurgitation and mash-ups.

There’s a more fundamental point behind his argument, and one that’s more tightly bound to the nature of technology: People have forgotten, or never properly understood in the first place, that this is not the only way technology can be. As a technology evolves, choices are made that are hard to reverse, leading to a sense of inevitability where there oughtn’t to be. People have come to believe that computers are the social web, and that the social web is Facebook, or at least something not too dissimilar. This adds a note of pathos to the argument: it’s one thing to desire the hive mind as your future, quite another to believe that it’s inescapable.

To my mind, closer analysis of the argument about technological lock-in threatens to unseat Lanier’s claim that cybernetic totalism is the cause behind the problems he discusses. Where he sees a Silicon Valley elite who are prepared to sacrifice human values to speed the inevitable singularity, I see merely an unplanned marketplace that has hit upon local maxima in the field of methods to extract money from the web. It seems to me that the problems are economic, not political.

Even if cybernetic totalism is something of a straw man, the book overall remains a cogent critique, raising thought-provoking issues that are rarely seen elsewhere. This is definitely not to be missed.

The thing is, there never was a currency crash. There was a security breach at Mt Gox, one of the largest Bitcoin trading houses, which had dire consequences for their customers. But the journalists who wanted to analyse the impact on the Bitcoin market didn’t get any further than tracking the prices at Mt Gox, the very exchange that had just been cracked, and in the process mistook a bank run for a sovereign default. Limiting their view to this, it looked like the Bitcoin economy was in ruins. Looking beyond the Mt Gox exchange even briefly would have shown the rest of the economy was largely unaffected. Retailers continued retailing, exchanges continued exchanging, and coins that weren’t in your Mt Gox account were as safe as they ever were. If you considered Bitcoin to be a reasonable medium of exchange on the 18th of June, there was no reason to change your mind (though double-checking your encryption and backups wouldn’t be a bad idea).

There seems to be one sensible message to take away from the Mt Gox crash: the cyber-criminals have arrived. If Bitcoin ever was lucky enough to fly below the criminal radar, it certainly no longer is. Optimists will probably say that this moment was inevitable, and may even validate how seriously it’s being taken.

Bitcoin has very real, very interesting economic and usability difficulties that probably mean it will never be a viable currency. Suggesting that the recent security flaws in a single exchange undermine it is just lazy journalism.

fan•boy |ˈfanˌboi|

noun

1. informal derogatory: a term used to describe people who bought a product that competes with the one you bought, which is probably more popular than your choice, for reasons that you wish to discredit or diminish because you’re secretly afraid or upset that you made the wrong choice.

ORIGIN from fan + boy.

Now let’s just think about this. When a PayPal account is compromised by the Ukrainian mafia or whoever, we can assume that they make use of it very quickly. Probably within minutes, certainly in less than a day. Who knows when the victim is going to get suspicious and change their password or notify their bank? Sitting on a compromised account has no upside and potentially a large downside.

In order for a particular random cancellation to be effective, it would have to occur by chance at the exact moment the account was compromised. If it happened beforehand, it would have zero effect (the new password would be compromised rather than the old one). If it happened more than a few hours afterward, the account would already be drained and any protection would be useless. The odds of a particular random check providing any protection are astronomical.

Of course, maybe they’re just lying to me. That would be a whole lot better.

• There’s no good evidence that QWERTY is substantially slower than DVORAK, indeed the QWERTY layout succeeded in a competitive marketplace against other keyboard layouts
• It was never true that QWERTY was designed to slow people down anyway; it was designed to reduce the occurrences of subsequent kepresses being nearby in space, not nearby in time, the former being more important to preventing jamming than the latter
• We have a far better metaphor now in the shape of Twitter

Allow me to explain. Millions of messages a day are now being shared via Twitter. Some people use it to communicate with their family, debate political ideas or get the daily news. Central to the Twitter model is that messages are strictly limited in size, to which many people ascribe its approachability and rapid growth.

But there was never any thought put in to what should be the optimum size for a Twitter message. No studies were done of what the trade-off is between messages long enough for rich communication and short enough to discourage excess verbosity. There were no competing systems. The founders of Twitter simply settled on 140 characters because it was envisaged that Twitter would heavily use the SMS system, and SMS messages are limited to 160 characters (truncating Twitter messages at 140 characters allowed for some metadata to be attached). It’s a technical limitation driving a supposedly human-centric tool.

But it’s even worse than that. The SMS system that set the boundaries for Twitter is itself a holdover from an earlier technologically limited era. SMS messages were originally limited to 128 bytes by the signalling formats used on the networks. Even though this was eventually extended to 140 bytes (the now-familiar 160 7-bit characters) I’m assuming the technological tail was still wagging the ergonomic dog. SMS was envisaged as primarily for traders to send terse stock market tips, not as a replacement for other forms of human contact (fact: you can contact The Samaritans for support with suicidal feelings via SMS; I can’t imagine a worse situation to be trying to repeatedly re-edit your message to fit it into 160 characters).

I keep saying the same thing over and over, the Google Reader approach is wrong, it isn’t giving you what’s new — and that’s all that matters in newsSuccinctly put — news is about what’s new — and that’s it.

…

Why does Twitter work better for news than Google Reader? Simple, Twitter gives you what’s new now. You don’t have to hunt around to find the newest stuff.

The thing that annoyed me about this is the assumption that reading the news is some kind of competition, where if you’re reading stuff more than a few hours old you’re some kind of poor relation to those who are really up to date. It’s bad enough that anyone believes this obviously ludicrous idea, but what really got up my nose is the way Winer seems to believe this view of the news is not just his personal preference, but an unarguable part of what news is.

Certainly, there’s a benefit to having news sources that take account of the latest information that is germane to the subject under discussion, and that means that all news has a shelf life. If you’re a journalist who relies on making scoops to get readers then of course newness matters, but this isn’t even the case for all journalists, let alone the vast majority of people.

This idea about news is a new conception, and a technology-driven one. Back when people had to wait for the evening paper to find out what was going on in the world, society still functioned perfectly well. I dare say people were actually better informed than someone who spends hours a day on their twitter stream. Like all cases where technology allows us to do something new, we must ask ourselves whether we must, just because we can.

The reason that Winer’s conception of news is for most people not just inappropriate but actively harmful is that most information, most of the time, for most people, is not actionable. I don’t need to know about a buyout rumour or a shock opinion poll or a company’s financial statement the minute it happens because I’m not going to do immediately do anything with that information. There’s a downside to information too, in that the importance of news isn’t necessarily apparent until some time after the event, so trying to follow news as it happens inevitably weighs you down with lots of stuff that eventually turns out to be irrelevant.

Up to the second news updates? No thanks. Get back to me when you have a well-structured analysis telling me exactly what matters and how it will affect people like me. Don’t worry, I’ll wait.

Despite the arrival of fibre connections to the outside world in recent months, satellite is still the most cost-effective means of getting ISP traffic across the border. This is mostly because satellite bandwidth can be purchased in simplex, while buying fibre bandwidth involves paying for a massively under-utilised outbound connection. Obviously the satellite connection boosts the latency, so there’s a lot of trouble doing QoS so that customers who need the latency guarantees get routed to fibre.

The fact that satellite bandwidth is competetive at all should immediately tell you that bandwidth is a significant cost to the business. The economics of selling to a market of relatively poor people don’t stack if you have to buy relatively expensive bandwidth to serve them at a ratio of anything like 1:1. Caching and mirroring would seem to help, but it isn’t 1997 any more: most of what people do on the web isn’t static. You can’t cache Facebook. Even seemingly static pages often have enough dynamic content that you can’t reliably cache them. Mirroring the likes of Google search and YouTube might help, but you can’t get far without negotiating with the big boys, and they may not have time for such a small market.

Traffic shaping is another major opportunity to save bandwidth. No matter how unpopular the idea might be with Californian Slashdotters, in these circumstances the only alternative to an ISP that attempts to prioritise email over bittorrent at peak times is an ISP that goes bust and provides no service at all.

In the never-ending quest to get page views, the choices writers and editors are making to attract eyeballs and drive traffic are creating a new breed of low-brow, gimmicky disposable content.  At its best it adds little insight and at its worst amounts to a slimy bait-and-switch (catchy headline, nothing to say in the article).

It’s the new clutter. The article itself has devolved into a flashing, animated pile of fluff. The casualty of the rat race towards ad impressions isn’t just crappy layout and thoughtless art direction. It’s awful and useless content.

To me, this seems to be an all but inevitable result of attempting to fund the majority of the web publishing economy with advertising, which in turn is a natural outcome of the post-2000-goldrush exuberance that in the future, everything will be FREE.

The problem with advertising is that a casual or dissatisfied eyeball pays off just as well as an engaged, satisfied eyeball—quite possibly the former pays better, since a dissatisfied mind is more likely to wander away from the content looking for gewgaws to purchase. People (and companies) respond to this incentive, and attempt to gain maximal payoff with minimal effort.

Compare the open web with the content in Amazon’s e-book store (or any paid-content service): sure, there are plenty of bad books, but the vast majority are honest attempts to provide something of value, even if the author’s skill is found wanting.

Curiously enough, it’s not the lack of income that causes this: in places where advertising isn’t possible (e.g. wikipedia, feedbooks etc.) the average quality of content is higher. What seems to be important is not the size of the incentive, but the direction in which it pushes.

Currently some of the discussion in publishing centers on the fact that music is now sold in $1 downloads rather than $15 albums. But this too is an accident of circumstance. The length of a CD album is not a golden standard of the quantity in which people like to enjoy music, but one person’s personal taste: Sony vice-president Norio Ohga wanted a CD to hold the entire of Beethoven’s 9th symphony, and so for over a decade that is how we purchased our music.

Current commentary sometimes seems to imply that the music industry allowed the business model to be shifted to single-track purchases (to its cost) due to poor negotiation, and that the print industry might avoid making the same mistake. This is a delusion: certain changes in technology simply invalidate the old assumptions.

I expect the Amazon / Macmillan negotiation soap opera will resolve itself before long, but is in danger of drowning out discussion of the lasting shifts that the industry will inevitably go through. Here are a few of my predictions:

More competition with out-of-copyright works

In a physical book shop works that are out of copyright tend to sell for almost as much as recent releases. This is not unreasonable, since they still require editing, desigining and promoting, not to mention the cost of printing the physical book. Shelf space is a major cost in high street book shops, and costs no less when the work is out of copyright.

In a market for electronic books, some of these costs go away. The rest can be defrayed over a much longer period of time, since there is no opportunity cost to keeping books on the shelf. Competition with amateurish free copies will drive down the cost of a professionally-edited version to far below the cost of a new work, while still allowing publishers to turn a profit.

Most authors are not blessed with the wisdom of Marcus Aurelius, the wit of Jerome K. Jerome or the inventiveness of Arthur Conan Doyle (just three authors I’ve enjoyed for free on my Kindle). Of course the modern world has its own share of geniuses, and even those of middle rank can offer great value to readers by writing about the subjects that interest them, but it would be a sad world indeed if people didn’t capitalise on the opportunity to enjoy classic works for peanuts.

More flexibility in length of published works

It used to be that a book had to be of a certain length to be worth publishing. This is going to change, since the fixed costs of printing have gone away. The only question remaining is whether people will consent to pay small amounts for small amounts of content. There is no rational reason why not, but the field of paid content isn’t a shining example of rational consumer behaviour to date.

More competition from the back catalogue

The ‘long tail’ effect, where stock can diversify as shelving cost drops to zero, can flourish in the electronic market as the cost of warehousing drops out of the model. No book need ever again be out of print. This is going to help some authors and hurt others: books that have fallen from prominence aren’t necessarily bad, and if priced keenly they might prove a worthy substitute for recent publications at hardback prices.

More competition from the ‘gift economy’

Once you discard the requirement that books have to be printed on paper to be consumed, the barrier to entry to the market is much lower. Vast amounts of text in blogs, wiki articles and social network postings become readable in exactly the same circumstances as published books.

People who infer that this will drive the price of all textual content down to zero are unjustified in their conclusion and hopefully wrong. A well-researched, professionally-written and carefully-edited document is worth substantially more than an amateurish one, and a rational consumer will be prepared to pay more for it. However, for the portions of our reading time (hopefully not all) that are idle escapism, it may well be that the difference isn’t worth caring about.

Don’t shoot the messenger

I’m not saying the above out of ideology, but because I think the trends are inescapable, in direction if not in extent. More important is what won’t change: people will still exchange money for items that are of value to them. The lesson from the music industry’s experience is that the publishers that embrace the new rules and figure out how to turn them to their advantage will prosper.

Incorporating advertising into a web offering is often seen as a no-brainer: free money that you would be stupid to turn down, whatever your business model. However, I believe this assumption holds insidious consequences that can be bad for producer and consumer alike.

Advertising solves nothing

It always surprises me how blind people are to the cost of advertising. If I watch a movie on TV, I might sit through 15 or 20 minutes of advertising content that I wouldn’t say I wanted to watch. How much yould you pay to get 20 minutes of your life back to spend on something else?

Advertising has costs on the producer as well, in terms of trust. Seth Godin describes the problem eloquently:

The digital world, even the high end brands, has become a sleazy carnival, complete with hawkers, barkers and a bearded lady. By the time someone actually gets to your site, they’ve been conned, popped up, popped under and upsold so many times they really have no choice but to be skeptical.

Basically, it’s a race to the bottom, with so many people spamming trackbacks, planning popups and scheming to trick the surfer with this or that that we’ve bullied people into a corner of believing no one.

In addition to the hidden cost, advertising doesn’t bring more value into the economy, it merely reallocates it. Advertising-funded services aren’t really being provided for free, they are being paid for by the people who buy products that have been advertised (the sellers having passed along the cost of advertising to the consumer).

There are two possibilities as consumer of advertising-funded material: either you are one of the customers of the advertised products, or you are not. In the former case you are paying just as much for the content as you would if you paid directly. In the latter case, you appear to be getting a good deal by getting “free” content that is being subsidised by somebody else, but there’s a hidden problem.

The problem is that if you aren’t the one who pays, the content producers have no reason at all to cater to your tastes. If your favourite TV show is cancelled or your favourite blog stops being maintained, you don’t have any cause to complain: you were jus a freeloader, who was getting by on the fact that someone else was willing to pay for the content you enjoyed.

Missed opportunities from advertising

So advertising isn’t all that it’s cracked up to be, but it’s still the choice of individuals. If both the producer and consumer are happy with their ad-funded arrangement, even if it’s not 100% efficient, why should I care?

I care because I think using advertising has externalities. The most obvious is that making everything free at the point of use hides pricing signals. The amount of ad money made by reading a 3-page article is roughly the same as made from a worthless advert-packed spam page. In fact, you might be less likely to click on ads while reading a worthwhile article. Certainly there’s no way to show that you value one web page 3 times as much as you do another, when it’s all free at the point of use.

Right now I’m writing an article about internet business models, but it’s to my economic advantage to include terms like ‘mesothelioma’ or ‘acai berry’. In fact, I could probably do better for myself by dropping the whole attempt to create original content and writing keyword-heavy blogspam. Would this make the world a better place?

One of the most annoying things is that we’re missing the potential afforded by dynamic pricing. The real problem with charging for content isn’t that its value is zero, but that the price is rarely right. Paying newstand price for an online newspaper is a rip-off, getting it for free is a bargain. Somewhere between those two prices is the true value of the content, if only we could find what it was. Using advertising is tantamount to abandoning this search and letting the advertiser call the shots.

“Free” may not be as important as people think

On the topic of free news content, The Economist noted the following:

A poll by Harris Interactive for paidContent:UK, a website owned the Guardian, finds that three-quarters of Britons say they would switch to an alternative free news source if their favourite website began charging.

So what? Are you telling me that if Mars bars were free, their sales wouldn’t drop by 75% when they started charging? Nobody suggests that Mars have an unsustainable business model by trying to charge money for chocolate.

Strategically, a small number of customers who care about your product enough to pay is better than a large number of uninterested consumers, all other things being equal. With advertising in its current depressed state, it’s quite likely that payment from 25% of readers would amount to more money than they could make from advertising to 100%.