Thursday, April 20, 2017

From LOLCats to Rated Dogs

We may need no further evidence of the progress we've made as a society than the fact that dogs, not cats, now power the Internet.

It's been close to a decade since LOL cats became a thing on the Internet. You know, those pictures of cats in various positions, superimposed with captions written in, presumably, kittyspeak, that drove the online world cat mad. In a good way.

Apparently it's time for the cats to move over though. Things have changed and there are millions of Twitter followers to prove it.The inaugural talk of the MIT Humor Series (not only is there one, but there's a research fund in support of it) featured academics Jonny Sun and Susan Benesch in conversation with the man behind the wildly popular Twitter account @dog_rates, exploring the phenomenon it has become and the role of humor in online discourse. Rating dogs online is pretty much what it sounds like, which is a dog-rating account. You send in a picture of your dog, and if you're lucky it receives a numerical rating, accompanied by a caption. But then again it's not. It's actually a person, who turns out to be Matt Nelson, impersonating a dog who rates other dogs, sometimes picking fights with picture submitters and viewers, and often ignoring the constraints of the 10-point rating scale. 

L to R: Jonny Sun, Matt Nelson aka The Dogfather,
and Susan Benesch at the MIT Media Lab, April 2017

Nelson started the account on a whim in his North Carolina college dorm room in November 2015, picking up 100,000 followers in his first month online. By January 2017 the number of dog rating enthusiasts on Twitter had swelled to 1 million, and as of April 2017 is approaching 1.8 million. Along the way he's direct messaged with Harry Potter author J.K. Rowling and Hamilton's Lin Manuel Miranda and received coverage in The Washington Post.

Yes there are lots of dog accounts on Twitter and Instagram but most of them are just cute canines doing cute things like wearing tiaras and ties. Things that make people go dawwww. Most people post pictures of their own dogs, while Nelson aggregates and then adds captions, often written in a kind of lingua franca of frequenters of the account. He explains: "The first time I used "af" people lost their minds. So then I tried to use it as often as possible. The life cycle of these things is short. I try to expand them beyond the usual few weeks so I can get the t-shirts made."

What does the workflow look like for a Twitter account rapidly approaching 2 million followers? "We're sent a stupid amount of pictures each day", Nelson told the standing room only crowd assembled on the 6th floor of the Media Lab. "1 guy condenses them to 20 to 30 pictures and then sends those to me. If inspiration hits immediately I can get the caption done in 5 seconds. If not, I put the pictures into a folder for later consideration, so it takes anywhere from 5 seconds to 30 minutes to come up with just the right caption."

While the account is primarily a combination of puppy love and inside jokes, @dog_rates does not shy away from taking a political stance, as was the case at the Women's March held in Toronto in January 2017.

...but not everyone was happy

Nelson ended up losing the most followers ever on the day of the march, when 800 dropped off. The good news is that 37,000 were added. And as the Internet is endlessly generative the rating trope has extended beyond rating dogs, to things such as rating dads.

@dog_rates founder Matt Nelson gets the pleasure of being the inspiration for such offshoot accounts  as We Rate Dads but doesn't benefit in any financial way. "Anyone can rate anything. Just like anyone can post pictures of dogs", he pointed out. But clearly there's room for it all in the world of rating things online. In addition to the Twitter account that he says often takes as much time as a full time job Nelson has an app and a book slated for publication this fall.

Friday, March 17, 2017

The Internet is worth how much??

Do you ever see headlines that make sweeping claims such as “The Internet is worth $_______”, and then wonder what that even begins to mean?

If so, today is a day of edification, because a study I co-authored on precisely this topic was released this week.

When you are a hybrid such as I am, it is often tricky to explain what it is that one does. And when the project is quantifying the economic value of the Internet, the conversation can get even more convoluted.

So I had to come up with a way to describe the project to people, just well enough to satisfy their basic curiosity, but not so detailed as to bore them to tears. I came up with the following:

Think of the Internet as a framework that starts on the left side of the doodle below (yes, I’m the artist) with the Internet backbone on the left side and you, the user, Craigslisting and Instagramming away on the right hand side of the picture. 

My early conceptual doodle for this project; Click to enlarge

In between the Internet backbone on the left and you and your smartphone on the right lie the various components of the machinery of the Internet, from infrastructure, such as the provisioning of broadband, wi-fi, and cloud storage, to the advertising and marketing technologies (aka ad tech and mar tech) that enable the movement of money between brands and the the consumer-facing layer of the Internet. That's just a fancy way of saying the only part of the Internet most of us ever come into contact with, as that’s where we find things such as news and information sites, entertainment such as games and video sites, and eCommerce.

The big picture is one in which the Internet as a market-making machine can be conceptualized and then analyzed at micro and macro levels. This makes possible an assessment of its impact on not only the economy writ large, but also the effects of networked connectivity on particular industries, plus less black and white outcomes such as societal good, in the form of things like crowdsourced problem-solving and civic engagement apps.

The TL;DR answer to what all this adds up to, for the U.S. economy, which was our task with this project: $1.12 trillion contribution to the GDP of the U.S. and 4.1 million full time equivalent jobs (and an additional 6 million full time equivalent jobs in what economists refer to as indirect employment). How this was accomplished is explained in detail in the study, but rest assured many, many spreadsheets and models were constructed.

Fun with spreadsheets; all part of the job of determining the scope of Internet-dependent activity 
The mapping of the economic model of the Internet evolving, on my floor, Summer 2016

And if that wasn’t enough, we mapped the Internet-dependent employment to congressional districts in the U.S.

Image from

For those who are curious, see the methodology section of the study (Chapter 2, pages 17 through 20), which explains the methods used and assumptions made to arrive at this figure.

And for those in a bit of a rush here are some highlights to provide an overview of our findings, placed into the context of the last time this study was conducted (2012) and now.

Click to enlarge
Click to enlarge

 To see the study in its entirety, just click here. But be forewarned; It's 118 pages long.

Wednesday, March 1, 2017

Taking on the fake news industrial complex

If there’s one thing most (reasonable) people agree on it's that post-truth is the new norm. The resulting uproar about ‘fake news’ is about more than just subjective narratives, because in a digitally interconnected world, stories spread with the force of not one or two or three media outlets, but via thousands if not millions of retweets, shares, posts, and comments.

My conference badge, should you choose
to believe it
Against this backdrop emerged last weekend's Misinfocon, an event that brought together journalists, technologists, software developers, academics, advocates, investors, a counterintelligence expert working for the Department of Defense, and even a bona fide fake news site creator (more on that coming up) at MIT’s Media Lab. In addition to support from a variety of journalism organizations and tech companies, the event received funding from the charitable foundation established by Craig “Craigslist” Newmark, whose classifieds free-for-all site ended up, quite unintentionally, removing the revenue stream that once subsidized the entire newspaper, i.e. the classifieds ads.

“There’s a lot of emotion around the topic of information right now”, said Jeanne Brooks,  one of the event’s organizers. “And there’s a lot of mistrust in media, right or wrong, and we have to design to support a deeper understanding of facts”, Brooks continued. “We have extremes to overcome.”

First up in getting to an understanding of the landscape was Claire Wardle of First Draft News, one of several Google-backed initiatives to assist with fact-checking, verification, and stemming the proliferation of misinformation and disinformation online.

Let’s start with some all important definitions, courtesy of First Draft News, because there are several nuances to take into consideration in order to analyze the situation at hand.

Misinformation vs. Disinformation courtesy

A taxonomy of fake news content, courtesy

And while we may think the fake news industrial complex --  and yes there is one -- is ‘all about the Benjamins', the crew at First Draft News did an impressive job of mapping out the full range of motivations involved, many of which have little if anything to do with dollars.

The "Ps" of fake news, courtesy

It’s also easy to place the blame on the Internet, for democratizing the flow of information by all but eliminating the costs of having global reach with a picture, post, or story, but of course that’s like blaming a knife for being good at slicing a tomato and also for often being implicated in killing people.

Nevertheless, twenty plus years into the consumer Internet the full ecosystem has developed, with legitimate information flowing through the same pipes as misinformation and disinformation, and increasingly automated advertising systems enabling b.s. to become a business model. We’re not just talking “…and you’ll never guess what happened next” clickbait, but intentionally misleading, and often malicious information, and the more ridiculous the better, if better is measured in clicks, as clicks mean the ability to serve ad impressions to s/he who has clicked. As but one example, from such a universe was born Pizzagate, a particularly quacky conspiracy theory implicated high ranking individuals in the Democratic party a pedophile ring run out of a Washington, D.C. pizza parlor. Think of the story and its millions upon millions of shares on social platforms as a click factory that not only furthers partisan causes but creates a digital advertising jackpot for those central to the story’s dissemination.

And on this note, one of the most intriguing people I encountered at Misinfocon was a former fake news site publisher. Yes, former. I won’t mention him by name as after being outed he had angry citizens showing up at his house and even received threats against himself and his family. If you had to pick the publisher of a fake news site out of a roomful of people chances are you would not pick this guy. Unassuming, fairly quiet, maybe around 40, with a full time job and 2 kids, he told our breakout group he would typically spend 1 to 2 hours per night posting stories that were deliberately designed to incite rage and in turn bring in dollars by way of his Google Ad Words account. Did I mention he’s a self-described liberal? Well he is. That’s who was running a vehemently anti-Democrat site that pulled in 100 million views and about $200,000 in ad revenue over the course of its short existence. “It was an addiction”, he said. “Watching my analytics page in real time after I posted a story was my fix."  

But how did he do it? There are millions of blogs and sites out there and most of them get very little traffic. “I studied the audience deeply”, he revealed, going to the sites of the likes of Alex Jones, Sean Hannity, and Glenn Beck, and learning the keywords and the hot button topics. “I could often identify trends in advance, and anything anti-institutional tended to be a winner.”

We often think of Twitter as being the linchpin in making things go viral online when this fake newsman said he rarely got any traction on Twitter. “Too many educated, left wing elites and journalists."  He feasted instead on the buffet that is Facebook groups, particularly those with large memberships of white males over the age of 55. “Fake Facebook accounts are the bread and butter of spreading fake news”, he pointed out, with the irony not being lost on most of us in this particular breakout group that Facebook initially differentiated itself from its arch competitor MySpace by insisting that people use their real identity

It turns out that with a carefully crafted Facebook persona one can plant the kinds of stories that speak to people’s fears and biases and the audience takes care of the rest: sharing, re-posting, and fanning the flames of outrage. “I didn’t need to buy a spam farm or bots. I created my own, with 2 Facebook accounts with pictures of fake people with their fake kids.”

That’s crowdsourced distribution for you. 

The party did eventually end, though, and Google closed down his account. Of course there are hundreds of other ad platforms to work with, and he tried some of those in the aftermath of his Google ban, but he never came close to making the kind of money he did via Google.

By this time you’re probably wondering what the forces of sanity can do against the forces of click-based commerce hiding behind the cloak of news reporting, and I’m happy to report that there are several initiatives at work, such as:

On a systemic level there are also issues to be broached with the platforms that benefit from user-generated content, content discoverability, and its monetization – namely Google, Facebook, Twitter, and the Google-owned YouTube. Bear in mind that the platforms benefit greatly from surges in traffic, regardless of their origin. Facebook gets to say we serve 1.8 billion people globally, YouTube gets to say that billions of hours of video are viewed per day on its platform, and both share in the ad revenue generated by the traffic to their sites.

Pieces of the solution might take the form of funded research and fellowships and sponsored initiatives in such fields as journalism and media literacy, but, as one conference attendee close to the issue put it, “Mark Zuckerberg would happily contribute tens of millions of dollars to media literacy programs tomorrow, but that is not the answer. It takes the onus off of him and Facebook. What’s really needed is something that dampens virality and the incentive system.” And as we learned from our fake news making friend earlier in this post those incentives can be darn attractive.

Sample idea wall from Misinfocon
But what comes from a weekend of impassioned debate and a frenzy of ideas captured on pink post-it notes? A totally reasonable question, and you can learn about the plans and action items that came out of Misinfocon by clicking here

Sunday, February 19, 2017

The Internet: Where hundreds of millions of users does not equal a business model

The subject of how the world of the Internet differs from the ‘real’ world is one of much erudite discussion. There is, of course, a lot to know, and a lot to consider that challenges conventional thinking about markets, economics, and customers/consumer/users.

Anil Dash recently penned a stinging critique of the 'fake markets' of the tech world, which is well worth your while, but I’ll go with a simpler thesis for now. On the Internet we use things without knowing how they work. Or maybe even wanting to know how they work. Where the money comes from, where it goes, and the machinery that lies in the middle could be described as a black box meets a hornet’s nest that mystifies many who have worked at the more traditional end of industries such as publishing, advertising, and marketing. Content has become unbundled, so that the site of production and the site of consumption are now separate (i.e. you don't have to buy the New York Times to read a New York Times article), we leave digital trails everywhere we go, with demographic and psychographic information contained within, and in the process what were once aggregate clumps known as 'audiences' have become micro-markets, but made up of millions. If that sounds challenging from the market and customer angles, it's because it is.

When news broke earlier in the week about SoundCloud’s serious financial difficulties, I was confronted, once again, with the reality of digital markets. SoundCloud with its 200 million users being fiscally-challenged, Twitter with its well over 300 million users being in similar dire straits.  And there’s Spotify, the undisputed leader in music streaming with 100 million users of which about 40% are paying subscribers – a huge proportion for a freemium service – and the company, say some, is on the brink of bankruptcy, or acquisition, which in Internet economics can actually co-exist. 

The big difference between SoundCloud's financial challenges and Spotify's is that in the case of the latter, on average, between 55% and 70% of revenues are paid to the music labels. These payments come to about $1.5 million per day and over 1 billion dollars in 2016.

Trying to figure out the SoundCloud riddle I used Facebook to turn to a friend who is a former major label VP for additional perspective.

He said he would put some pensiveness on the question and get back to me. He did.

This is definitely a reasonable theory. However, on SoundCloud hit and non-hit material exist side by side, with known acts such as Gucci Mane, Migos, and Drake using the site to upload, alongside the completely unknown. It’s still a ‘go to’ destination, with its own version of a star system. In fact, it’s one of the ones that catapulted Chance the Rapper, the now Grammy-winning artist who, to date, has made none of music available for sale, to stardom.

The SoundCloud Top Ten 2/19/17
Click to enlarge

And in the adjacent world of publishing there’s Wattpad, the social reading site that has 40 million monthly users and over 100 million uploads. Anyone can post to the platform and it has produced bona fide stars, such as Anna Todd, whose fan fiction based on boy band One Direction netted her a publishing deal and a movie deal with Paramount.

Which of these becomes a real market vs. a fake market in Dashian terms is TBA. But are any of these easy markets? Absolutely not. Are they new markets with new logics still being figured out? Yes. I'm reminded of the sharp comment uttered across the table in the lawyer's office by the Mark Zuckerberg character to the Winklevi characters in The Social Network: “If you guys are the inventors of Facebook, you would have invented Facebook.”

Wednesday, January 18, 2017

The digital future...and how it happened

“We blew it with television”, said Jeffrey Cole of USC Annenberg’s Center for the Digital Future

It was an arresting way to open a keynote at a digital media conference held earlier this week in Toronto. What Cole meant was that television, the mid 20th century revolution that not only brought together sound and pictures in a domestic technology but also ushered in new genres of entertainment and information programming, was a missed opportunity in getting to know its users/viewers on any sort of 1-to-1 basis. It wouldn’t have necessarily been easy as it was a non-digital technology for several decades, and as such tracking would have been costly and difficult. Doable, but not easily achieved, as is the case in the world of personal computing devices and the web, where technologies such as cookies and mobile fingerprinting serve as unique identifiers.

Not wanting to repeat this particular mistake of television’s Cole started the World Internet Project in 2000, with the aim of tracking trends and changes in online consumption behaviour. Over the years Cole and his team have been able to tease out a number of themes in this regard, one of which is that legacy means more to industry than it does to people. While studying early usage of Amazon, for example, his team found that even though could purchase the same products -- primarily books at the time -- for the same product and/or shipping price from a known retailer such as Barnes & Noble, they somehow felt that ordering from Amazon was ‘cooler’, and a taste of a future that hadn’t yet arrived but almost certainly would in the years to come.

Cole sees a similar situation with banking today. “People delight when they can tell their bank to @#$% off”. And increasingly they can do just that, as other, more consumer-friendly and less expensive banking and financing options  are starting to proliferate thanks to innovations such as fintech and blockchain.

A recurring theme Cole has encountered is that legacy organizations cling to existing business models with great tenacity. This makes sense at first. Why abanadon the cash cow. But then, over time, this attitude can make a heck of a lot less sense, as a competitor arises, seemingly out of nowhere, with a better, cheaper, or just more fun product or service.

Uber and AirBnB are among the first examples that spring to mind but Cole points to Kodak, a company that he worked with on what the future of photography might look like. “When you looked at the attributes of film”, he explained, “you had to find it, then buy it, then take multiple pictures, not sure which would turn out, they you had to get the film processed, and wait, then pay again, and then find something to do with those pictures, which usually was put them in a box.” Compare analog photography with digital photography – let alone apps that pair a high quality mobile phone camera with instant upload to social platforms – and it’s obvious that the old way of doing things was not long for this world. But Kodak was reluctant to change. Why? Because they were making too much money selling film, film processing services and products, and hardware.

And of course there’s the music industry, discussed many times over the years on this blog. One could characterize its business model as ‘hostile bundles’, as people were forced to pay somewhere between about $10 and $18 for an album of which they often only really liked 1 or 2 songs. Shifting from that model of the form factor of the album and the supply chain of studios, labels, warehouses, trucks, and retailers, was not an attractive option, and so, what happened was that the album got unbundled on its own, first on the black market, via peer to peer file-sharing and later via Apple’s iTunes, which brought with it the iPod, then the iPhone, and in turn a whole new set of norms for the music business.

But why did Apple get this win? A company that had a 3% market share until the introduction of the iPod? The answer is in the question. The music industry was willing to enter into this dance with Apple precisely because they only had 3% market share. In the early 2000s Apple was a niche hardware company, and the last firm to be considered a threat to an industry worth tens of billions. Some in the industry even thought Apple could do the experimental grunt work for the industry and the legacy players could then swoop in and cash in. But that’s not what happened.

Instead, companies such as Sony, with a huge music catalogue and what should have been formidable leverage of having pioneered mobile music consumption with the Walkman ended up losing not once, but twice. The first loss was the music revenue going to the iTunes store; the second loss was the Walkman becoming a footnote. Sure they tried for years with efforts like the Walkman phone, but by that time, 2006, it was too late. The iPhone, not the iPod, was about to change everything.

Sony Ericsson Walkman Phone, c. 2006

But let’s move away from the historical and look at today, a world dominated by just a handful of companies; some call them GAFA, an acronym for Google, Amazon, Facebook, Apple, sometimes it’s FANG, for Facebook, Amazon, Netflix, and Google. Whichever the combination of companies they are the undeniable dominant forces not only in their original fields, but in adjacent areas of endeavour. Facebook with its forays into messaging, bots, virtual reality, and photography (Instagram), Amazon with its evolution from book store to everything store, as well as physical stores, enterprise cloud services, and original content, Google with a product range encompassing search, web browser, mobile operating system, email, maps, video (YouTube), driverless cars, and dozens of other applications.

In Cole’s words what these companies have in common is that don’t care about boundaries. The idea that a company should do one thing and do it well is a conventional wisdom challenged by these digital goliath.

And speaking of the digital economy, the report on which I have been working for about the past 8 months, will be released in the coming weeks. It is the third in a series of studies on the economic impact of the Internet on the U.S. economy. (Hint: it’s pretty big). 

Details from my actual project notebooks and scraps of paper

The results of months of scribbling, spreadsheeting, forehead slapping, and tea spilling to be revealed shortly.

Watch this space.