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Tech companies and criminals have made billions
supporting the illegal exploitation of our cultural past
while ruthlessly pursuing the dismantling of incentives creators need
to fashion our cultural future

By Jonathan Taplin

In my last letter, I told you there was a time in the late sixties when the most critically acclaimed movies and music were also the best selling. The Beatles Sgt. Pepper album or Francis Coppola’s Godfather film were just two examples. I said that that is not happening anymore, and I wanted to explore with you why this change occurred. Because I spent the first 30 years of my life producing music, movies and TV, this question matters to me and I think it should matter to you. So I want to explore the idea that the last twenty years of technological progress — the digital revolution — have somehow devalued the role of the creative artist in our society. I undertake this question with both optimism and humility. Optimism because I believe in the power of rock and roll or movies to change lives. Certainly witnessing Bob Dylan go electric at the Newport Folk Festival in 1965 changed this Princeton freshman who was intent on being a lawyer into a passionate follower of the Rock and Roll circus, who managed to make a good living from the entertainment business for the rest of his life. My optimism also showed itself in 1996 when I helped found the first streaming video on demand service, Intertainer. Anyone crazy enough to found a service that needed broadband in 1996 had to be an optimist. And of course that led to humility, because the diffusion of broadband was much slower than I thought, so I know that predicting the future is a humble man’s game.

In the last few years I have run the Annenberg Innovation Lab at the University of Southern California. At the risk of biting the hand that feeds me I confess that I often feel like a cork tossed into a rushing technology stream and while I have no doubt of the wonders of the Internet revolution, I think it’s time to take stock of where this stream is carrying us. Somehow we have become convinced that only machines and corporations make the future, but I don’t think that is true. So in thinking about the role of the humanist in our technology driven future I was drawn to a sermon Martin Luther King preached at the National Cathedral in Washington two weeks before he was killed. At the outset he told the story of how Rip Van Winkle had passed a sign with a picture of King George III of England on the way up the mountain where he fell into a long sleep. And when he came down the mountain, the same sign bore a picture of George Washington.

Rip Van Winkle

And this reveals to us that the most striking thing about the story of Rip Van Winkle is not merely that Rip slept twenty years, but that he slept through a revolution. While he was peacefully snoring up in the mountain a revolution was taking place that at points would change the course of history — and Rip knew nothing about it. He was asleep. Yes, he slept through a revolution. And one of the great liabilities of life is that all too many people find themselves living amid a great period of social change, and yet they fail to develop the new attitudes, the new mental responses, that the new situation demands. They end up sleeping through a revolution.

I doubt that anyone would quarrel with the notion that the last twenty years of technological disruption have constituted a revolution, but I want to understand just who has been sleeping through this revolution and who has been awake, creating the moral, political and technical architecture of the world our children will inhabit.

The beginnings of the “cyber revolution” that King referenced in his sermon were already moving forward in 1968 as he was speaking. The origins of that technology revolution were clearly located in the counter culture as Fred Turner and John Markoff have shown and the idea (in Nicholas Negroponte’s words) was to “decentralize control and harmonize people”. That the earliest of networks like the Whole Earth Lectronic Link (WELL) organized by Stewart Brand grew directly out of the hippie culture was a natural progression from both the political and cultural growth of 1960’s counter culture. But within 20 years, starting with Peter Thiel’s cohort at Stanford University, the organizing philosophy of Silicon Valley was far more based on the radical libertarian ideology of Ayn Rand than the commune based notions of Ken Kesey and Stewart Brand. Thiel, the founder of PayPal, early investor in Facebook and Godfather of the PayPal Mafia that currently rules Silicon Valley has been clear about his philosophy.

PayPal Mafia

He stated, “I no longer believe that freedom and democracy are compatible”, his reasoning being that “Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of “capitalist democracy” into an oxymoron.” This is a pretty extraordinary statement and I have reread the interview he gave to the Cato Institute several times. It appears that most women in Thiel’s judgement fall into Ayn Rand’s notion of “takers” as opposed to Thiel’s vaunted male “makers”. So for Thiel, in a true “capitalist democracy” only the makers should get to vote and the women and the welfare recipients will take what the makers chose to give them.

Whew! It gets worse. Thiel has made it clear that his preference (along with Google CEO Larry Page) for a Free Cities model in which polities are privately owned and unregulated by states, would be an ideal way for capitalists to avoid the “mob mentality” of democracy. He has even suggested that companies could set themselves up off shore (out of the reach of government) on platforms that would give them true freedom to operate.

SeaSteading

Like Amazon’s Jeff Bezos he has built his fortune on enterprises that were not taxed and were not regulated. He also does not believe in competition, having stated in the Wall Street Journal that “Competition is for losers. If you want to create and capture lasting value, look to build a monopoly.”

Peter Thiel, Larry Page, Jeff Bezos and Mark Zuckerberg have not been asleep at the revolution, as their inclusion near the top of the Forbes 400 list of America’s billionaires will attest. Who has been asleep is the creative class of America. The people who make the music, movies, TV, magazines, newspapers and video games that have been America’s unique contribution to global culture. Since the introduction of Napster in 2000, global recorded music revenues have fallen from $21 Billion to $7 Billion per year. Newspaper ad revenue has fallen from $65 Billion in 2000 to $18 Billion in 2011. Book publisher operating profits have fallen by 40% and the revenue from DVD sales of Movies and TV (of the top 100 titles) have fallen from $7 Billion to $2.3 billion. The astonishing fact of the precipitous declines in revenue has nothing to do with the idea that people are listening to less music or watching fewer movies and TV shows. In fact all surveys point to the opposite. Consumption of all forms of media is rising. So where did the money go? Two places. Into the pockets of Digital Monopolists and into the pockets of Digital Thieves.

While the revenues of movie, music and news purveyors were falling rapidly; the revenues of the “Internet Platform” providers were exploding. Google’s revenue went from $1.2 billion in 2001 to $66 Billion in 2014. Amazon went from $4.8 billion in 2002 to $89 Billion in 2014. Apple went from $7 Billion in2002 to $199 Billion in 2014. One could argue that a massive reallocation in the order of $50 Billion a year from creators and owners of content to platform owners has taken place since 2000. And make no mistake, while the movie studios, record companies, newspapers and magazines operate in a very competitive environment, the platform providers are monopolists or at the least, oligopolists. Competition is for suckers and by now Negroponte’s notion of decentralization and harmony has been replaced by Thiel’s beneficent monopoly.

But this does not account for the role of the Digital Bandits. There is a wonderful picture of Kim Dotcom, who made $200 million in two years off of the stolen music and video of countless artists on his Mega Upload Pirate site. In the picture, the fat German thief stands on a picturesque beach with his Playmate of the Year girlfriend sprawled on the sand in the foreground and his 200-foot mega yacht in the background. Kim, in an attempt to fight the lawsuits against him has appropriated the message of Martin Luther King, assuming the stance of the man who freed everyone from the slavery of having to pay for creative works. Exactly how the hard work of artists got exempted from the notions of the market economy escapes me, but for Kim to pose as some new sort of freedom rider brings us back to the whole fallacy of the Libertarian economy. Ayn Rand’s most famous quote is “the question isn’t who is going to let me, it’s who is going to stop me.” This is how Kim Dotcom has functioned from day one.

The larger question then becomes, who enables the Kim Dotcom’s of the world? Put into your Google search box the words “watch (your favorite movie) online free” and you will have the answer. Google is the enabler for the Digital Bandit Economy. Whether it is illicit drugs, stolen music or Jihadist lessons on how to blow up an airplane, Google with a 70% market share of all global searches is the beginning point of a great deal of online criminal activity.

Of course, for most of your generation, the idea of getting your music or movies for free from pirates like Kim Dotcom doesn’t seem like a big deal. But you are studying at USC to (hopefully) become the next generation of journalists, filmmakers and musicians and so the future of the business is in your hands. Somehow you have to let go of the idea that this is a victimless crime. As I said to you in my last letter, I’m not worried about Jay Z or Beyoncé. I’m worried about the middle class musician, the journeyman that used to be able to ply his trade and make a living selling 25,000 CD’s. That does not exist anymore.

But perhaps this tolerance for criminals like Kim Dotcom is part of a larger problem. As the Associate Chancellor of UC Berkeley, Nil Gilman has written, we are plagued by a twin insurgency.

From below comes a series of interconnected criminal insurgencies that route around states and seek ways to empower and enrich themselves in the shadow of the global economy.From above comes the plutocratic insurgency, in which globalized elites seek to disengage from traditional national obligations and responsibilities.

Just how we distinguish between the criminal, the warlord and the rogue state actor will become harder as Robert Kaplan pointed out many years ago in his prescient book, The Coming Anarchy. What was the nature of the massive hack on Sony this fall? Will we ever know if it was a state sponsored act or that of an angry laid-off employee? Of course the on rush of the much heralded “Internet of Things” will make the possibilities of cyber crime even more profitable. Imagine the now prevalent cyber blackmail (pay me $1000 to unlock your data) played out on a larger scale: “pay me $200 million to bring the Los Angles Department of Water and Power back on line.” Forbes has reported a software program being sold on the Dark Web that can ostensibly hack into the “connected car” and take over the acceleration and braking functions.

Here we run into the tricky area of free speech. Google says in can filter out child porn from You Tube, but not the Jihadist videos from Anwar Al Awlaki that were the entrance point of the Charlie Hebdo terrorists into the Al Awlaki network.

Anwar Al Awlaki

Just where Google draws the line seems important. Should they block Al Awlaki’s Inspire online magazine which last month published detailed instructions on how to build a bomb that could pass through airport screening undetected? I don’t really have the answers but I hope we can begin to have a dialogue around this issue. Abraham Lincoln supposedly was the first to say, “The Constitution is not a suicide pact” and certainly the fact that there are 3000 ISIS videos on You Tube and 10,000 ISIS accounts on Twitter should give you pause. Clearly this is a tricky area and I don’t believe this is necessarily a matter for government regulation. I do however think that Google might alter it’s “Don’t be evil” motto to “Don’t enable evil”. The use of their automated content identification technology could be employed to filter content being uploaded to their servers, before it is ever displayed on You Tube. Of course then they couldn’t be selling paper towels in front of ISIS videos.

At this point you might be asking why the loss of billions in the media and entertainment sectors is worth worrying about in the face of the benefits ubiquitous Internet technology has brought you. My feeling is that Media is just the canary in the coal mine, and that in the next twenty years millions of the jobs you are training for might be automated. The Economist recently ran an article in which they projected the probability your job being taken by a robot in the next 20 years. Citing work from two Oxford University economists they wrote that “jobs are at a high risk of being automated in 47% of the occupational categories into which work is customarily sorted.”

Replaced by Robots

Larry Summers recently said that those who think that the answer to the jobs crisis is just higher education are, “whistling past the graveyard”. I cannot imagine that your parents spent $40,000 a year at this University to prepare you to be part of the new “sharing economy”. What a life awaits you. You can loan your car out on Relay Rides or become an Uber driver. If you can afford a house you can rent your extra room out on Airbnb and find extra work on Task Rabbit. We are only a few years into the sharing economy, but one thing is clear; as with Google, most of the economic gains will flow to those who own the platform rather than those who do the work. Uber is currently valued at $41.2 billion, making it one of the 150 largest corporations in the world. That’s a capitalization larger that Delta Airlines or FedEx, all built on Ayn Rand’s motto: “the question isn’t who is going to let me, it’s who is going to stop me.”

And of course with such economic power comes political power. Uber recently hired Obama campaign Svengali, David Plouffe to help it navigate the political lobbying waters of Washington, taking a page from Google’s bible. Google outspends all but a few financial and military firms in its lobbying efforts. And of course the main financial backers of the Libertarian movement, the Koch brothers, have vowed to spend $900 million in the 2016 election cycle to ensure that the “no regulation, no taxes” principles of the movement are sacrosanct in the corridors of power. And of course the digital monopolists are not above using the rhetoric of libertarianism to spread the message that they alone are the guardians of freedom in the world. When the media companies tried (in an admittedly ham-handed fashion) to pass a law (Stop Online Piracy Act) that would require Google to block sites that were making millions off of stolen content, Google unleashed an online campaign stating this would amount to Censorship and the uproar from the crowd quickly killed the bill.

Perhaps it is time to ask the question of who benefits from this technological revolution? Who is awake and steering the boat and who is asleep below decks? As The Economist pointed out, the ability to substitute capital for labor has profound implications for the future of our society. In early 1929, before the stock market crash that set off the Great Depression, the top 1% earned 23.9% of national income. By 1976, because of 30 years of changes in tax policy as well as regulation, the 1% earned 8.9% of national income. But the Reagan era reversed both the tax and regulatory policies that had brought on more income equality and today the top 1% earn 24.2% of national income. What is clearly visible is that the great productivity gains brought on by technology, which used to benefit the ordinary workers paycheck, now only flow to the owners of capital. The work of Thomas Pinketty, the French economist shows that this growing income inequality will only get worse in the coming years. The irony is the John Maynard Keynes envisioned this substitution of capital for labor in the 1930’s but somehow thought that the result would be an average work week of 15 hours, with a great deal of paid leisure for the common man. It of course did not work out that way, but it does seem that your generation is going to have to begin grappling with the possibilities of a new normal where there is not enough work for 30% of the population. Some have suggested a guaranteed income, but it does seem that without some discussion we risk a kind of social unrest that we have not experienced since the 1960’s.

If the technology revolution has failed to bring the average worker increased prosperity, it has also created a vast new set of industries built on mining that workers most private data, with questionable return benefits. By the end of 2016 we estimate their will be 5 Billion smartphones in the world, everyone of them a vast treasure trove of personal data that can be mined by both the surveillance state and the corporate data brokers who sell your digital life for immense profits. This is where Martin Luther King’s “asleep at the revolution” metaphor seems most telling. Clearly the current corporate narrative about privacy is that it is a sort of currency to be traded to corporations in return for innovation. But Georgetown University Professor Julie Cohen argues that privacy has meaning in and of itself.Jonathan Sadowski describes her argument in The Atlantic.

What Cohen means is that since life and contexts are always changing, privacy cannot be reductively conceived as one specific type of thing. It is better understood as an important buffer that gives us space to develop an identity that is somewhat separate from the surveillance, judgment, and values of our society and culture. Privacy is crucial for helping us manage all of these pressures — pressures that shape the type of person we are — and for “creating spaces for play and the work of self-[development].” Cohen argues that this self-development allows us to discover what type of society we want and what we should do to get there, both factors that are key to living a fulfilled life.

Do you think your shrinking zone of privacy is altering your behavior? Are the pressures of social media keeping us from finding this fulfilled, authentic life? What keeps us asleep at the revolution? Could it be that drinking from the firehose of big data is a sort of deep distraction that prevents us from even asking the humanistic questions of what makes for an examined, authentic life? In the 1930’s Aldous Huxley imagined a future in his Brave New World — a future in which the average citizen would take his dose of Soma (a kind of hybrid Prozac/Viagra) and go out to the Feelies, a form of entertainment that so all engrossing that the “prole” never had any sense that he was not a free human. Chris Sullentrop of the New York Times recently reported that several experts told him the Virtual Reality Porn was going to be the killer app. Huxley would smile.

After I gave a speech on this topic recently, I got a note from Jimmy Bartz, the minister at the small Episcopal Church, Thad’s, that I attend. He too agrees that we are asleep at a revolution.

However, I don’t believe enough people can be inspired to endure what it will take to change things if they are “asleep.” You mention the uptick in opiate addiction. There are also soooo many more people on mood altering medication (some need it, but not as many as take it), then, we have food, credit, media, devices. Our ability to endure what we’d have to endure to create the change you espouse (and I espouse) has atrophied to the point that we don’t even have consciousness around it. There’s a level of “insobriety” we’ve never experienced before — data, food, pharma, credit — we’re so doped up on that stuff that we’ll never have the will to legislate the change, and Washington’s too doped up on cash to have the will to do the right thing.

This sense that we are too doped up to care is pretty distressing, but what’s more worrying is that we are building whole sectors of the digital economy on the concept of addiction. I recently picked up a book called Hooked;How to Build Habit Forming Products, in which the author shows how you too can build the latest Snapchat. The schematic of a “trigger, action, reward, investment” sequence is curiously close to that of the Skinner Box we all studied in Psych 101.

Hooked

Like the poor lab rate in pursuit of happiness clicking on the bar for a reward pellet, we spend hours looking for the “like” reward on our social networks. Those with the most likes can turn it into currency as was recently demonstrated at the myriad “gifting suites” at the Sundance Film Festival where popular You Tubers like IJustine collected thousands of dollars worth of free merchandise in exchange for posting about the swag on their social networks. IJustine, whose fames stems from having posted a video on You Tube about her 300 page IPhone bill, noted to the New York Times, “I love products, and I love sharing if I love something,” she said. “Like, you can probably guarantee that it’s going to be posted, especially if I love it.” It would be easy to diss IJustine’s blurring of the line between her own opinion and what she is getting paid to like, if it weren’t the basic currency of the Internet Age. What is any Hip Hop star but a walking product placement opportunity? How would the TV and movie business survive without “brand integration” dollars to top up the budget? And how would Vox, BuzzFeed or even the vaunted Atlantic survive without the “Native Advertising” that totally blurs the line between editorial content and paid advertising? If indeed the author of Hooked is on to something and we really are building powerful addictions to social network apps, then is Peter Thiel’s almost spiritual commitment to “liberty” really the same as Thomas Jefferson’s “Life, Liberty and the Pursuit of Happiness”? I don’t think so. Is your friend who spends three hours a day on Snap Chat really free? What agency do any of us have in our relationship with Facebook? Here I am just a guilty as you. I surrender all of my personal data to Facebook in return for the ability to post my vacation photos to my friends.

I have no doubt that innovative developers can continue to build addictive products. Just try to walk down any sidewalk in this university while you constantly dodge people staring at their smartphones. I’ve told you that the Innovation Lab has studied Twitter and politics and what we found was pretty disturbing. The anonymity that Twitter provides a shield that brings out the worst in humans. Plato told a tale of the Ring of Gyges that when put on would render you invisible. He asked the question, if we were shielded from the consequences of our actions, how would that change the way we act? We know the answer. As David Brooks says we have created a Coliseum Culture in which on a weekly basis some new celebrity gets thrown to the lions. Of course I know that writing you to resist the instant riches that might flow to you if you invent the newest addictive app like Yik Yak that allows students to shame each other anonymously, is probably a fools errand.

My deeper question comes from my position as a professor here for the last 12 years, where I have watched the lure of Silicon Valley grow stronger. If the best and the brightest of you are drawn to building addictive apps rather than making great journalism, important films or literature that survives the test of time, will we as a society be ultimately impoverished? I was lucky enough to be involved with some artists like Bob Dylan, The Band, George Harrison and Martin Scorsese, whose work will surely stand the test of time. I’m not sure I know what the implications are of the role model shift from rebel filmmaker to software coder.

This brings me back to the question of what do the tech plutocrats mean by freedom? Martin Luther King led the March on Washington for “Jobs and Freedom”. It’s obvious now that the new freedom brought to us by the libertarian elite will not come with jobs. The fact that Facebook generates revenues of $8 Billion with less than 9000 employees speaks volumes. Is Peter Thiel’s idea of corporations, free to reap monopoly profits free from government regulation, what we want for our country. Thiel’s icon Ayn Rand defines freedom as “To ask nothing. To expect nothing. To depend on nothing.” How far is this from Jefferson’s great inspiration, the Greek philosopher Epicurus, who defines the good life in these terms.

The company of good friends

The freedom and autonomy to enjoy meaningful work

The willingness to live an examined life with a core faith or philosophy

I worry that our universities are being turned into trade schools in the pursuit of the almighty tech dollar. Are we forsaking the humanities and a basic liberal arts education all in promise to prepare students for the Shark Tank that awaits them in Silicon Valley or on Wall Street? As I said at the outset, I have no answers, but another phrase from Dr. King’s sermon calls out to me: “Our scientific power has outrun our spiritual power. We have guided missiles and unguided men.” Let us not assume that this technological revolution we are living through has but one inevitable outcome. History is made by man, not corporations or machines. It is time to wake up and begin to think about a digital renaissance. As my colleague Ethan Zuckerman said, “It’s obvious now what we did was a fiasco, so let me remind you that what we wanted to do was something brave and noble.” Your generation does not need to surrender to some sort of techno-determinist future. Let’s try and “rewire” (Ethan’s term) the Internet.

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