http://liberationtech.tumblr.com/post/28442687690/how-cooperatives-could-fix-social-medias-net
How Cooperatives Could Fix Social Media’s Net Censorship Problem<http://liberationtech.tumblr.com/post/28442687690/how-cooperatives-could-fix-social-medias-net> Recently, a scandal broke out<http://www.huffingtonpost.com/2012/07/31/guy-adams-twitter-nbc-olympics_n_1724597.html> over Twitter’s and NBC’s collusion to censor users as a result of a flurry of criticism about NBC’s Olympic coverage, which culminated with journalist Guy Adams <https://twitter.com/guyadams/> being suspended over a tweet disclosing the corporate email address ofGary Zenkel<http://www.nbcumv.com/mediavillage/sports/nbcsports/executives?bio=contents/biographies/ExecutiveBios/V_Z/Zenkel_Gary.xml>, the man in charge of NBC’s Olympic coverage, even though Zenkel’s address was already publicly available. Adams’s suspension generated such a massive outcry that Twitter was forced to revoke it. The incident, however, has left me feeling as though all of us social-media users are living in the movie “Groundhog Day<http://en.wikipedia.org/wiki/Groundhog_Day_(film)>.” We have seen this script play out many times before, whether that company is Facebook, Google, Twitter, or others. Even in politics, we see the same phenomenon play out in the recent NationBuilder flap<http://techpresident.com/news/22556/nationbuilders-mammoth-deal-state-level-republican-committee-sparks-calls-boycott>. And the script often unfolds in the same way: Company censors user. Users complain en masse. Company apologizes, usually by saying that such incidents are rare. The company and users then go back to business as usual but no substantive changes are made. Instead, as in “Groundhog Day,” we continue to wake up every morning to the same flap, with different actors being censored and different companies doing the censoring, with the same symbolic verbal responses but no substantive action. Why? The fundamental problem lies in the legal template that is used for organizing startup firms in Silicon Valley, that of a for-profit corporation. *Silicon Valley’s For-Profit Model* Say that you are a programmer/hacker, and you have written some very cool code for reinventing the social-media space and perhaps even changing the world with it for the better. So what do you do? You’ll meet others in Silicon Valley who will tell you that you need to start up a new venture. But how do you do that? Typically, the process will end up in a legal firm. The lawyer will speak to you in a foreign language that you barely comprehend and give you lots of forms to sign that you sign because “that’s the way things are done around here.” Lo and behold, you now have a for-profit corporation and can get down to the business of enhancing your code and getting users. What are you in fact signing when you agree to found a for-profit firm? In short, you are saying that the sole goal of your organization is to make money. You are selling the cheapest product at the most expensive price. Or in the language of economics, revenue maximization with cost minimization yields optimal profits. Legally, you are also saying the following things: You (and your co-founders) own this firm, you will most likely seek investors and offer them stock so they become shareholders, you will seek customers to monetize <http://en.wikipedia.org/wiki/Monetization> (a fancy Silicon Valley way of saying “to make money”), you will hire people to work for you, and you will pay taxes on your profits. Legally, your company will only be accountable to its owners, who are usually you and your co-founders and any investors you bring in as shareholders. Some of you will serve on the board, which will run the firm and appoint its officers. Notice what is NOT mentioned above. There is no mention of changing the world, empowering your users, making a difference, or creating public goods. There is also no mention of your customers and consumers (or users). Customers only matter to the extent that they bring in revenues. This implies that not all customers are created equally. Those customers who bring in more revenues more quickly at the most affordable cost become more important to the firm than those who bring in less revenues over a longer time horizon at a higher cost. This translates into a focus on large corporate customers at the expense of individual users. To get Procter & Gamble as a customer means millions of dollars in revenue, an amount that would be much more time-consuming to get if you focused on thousands of mom and pop stores, or millions of individual users. Silicon Valley knows this and has discovered over time that millions of user accounts can bring in large corporate accounts like Procter & Gamble, leading technology firms to treat their users’ personal data as the product being sold. *Social Media User Ideals & Myths* So why were Twitter users so angry about the company’s censorship? The simple reason is that there is a gap between users’ perception of Twitter and Twitter’s business reality. Users see Twitter almost as a cool public utility. They see it as a disruptive technology that is radically changing the world, providing tools that empower users to promote social change, and making the world more open and transparent. But this is all rhetoric, not reality. Twitter may say otherwise because it’s good marketing and advertising. But all Twitter really cares about is making money. It doesn’t have the public’s interest at heart. That’s what all those investors who gave it millions of dollars want it to do: make money. And Twitter must perform in a reliable and accountable fashion to these investors by making money, or else they will pull the plug on Twitter by taking their money elsewhere. But Twitter has an interest in propagating these myths of disruptive innovation, individual empowerment, social change, openness, and transparency, as long as these myths are effective enough to encourage millions of users to join it. For Twitter, more users only mean more data, which means more opportunities for data mining, along with more opportunities for monetizing that data by selling it to corporate customers. We as users, however, have so internalized the myths that Twitter and other social-media for-profit firms propagate, however, that we act like someone trapped in a vicious cycle of emotional or physical abuse. We continue to use the service because we are comforted by the firm’s rhetoric and thereby choose to ignore the firm’s actions. When Twitter CEO Dick Costolo<http://en.wikipedia.org/wiki/Dick_Costolo> declared<http://online.wsj.com/article/SB10000872396390443477104577549373137242122.html> that Twitter is “the free speech wing of the free speech party,” we believed that a company that chooses to refrain from censorship means that it will never censor. But there is nothing in Twitter’s legal status to prevent it from doing anything its owners want to do. If Twitter’s owners tomorrow decide to censor everything in sight, users have no recourse to stop it. Like a natural person, a corporation can do anything it wants as long as it doesn’t violate the law. What Costolo is not telling you is that Twitter as a for-profit firm has a competitive strategy of becoming the only company to provide you with a real-time status-updating service. It may not say so publicly, but in Twitter’s ideal world, it would slay Google and Facebook and any other company that dare challenge it. And Twitter won’t tell you who controls the controller. Since there are no net neutrality<http://en.wikipedia.org/wiki/Network_neutrality> rules that apply to it as they would to ISPs, Twitter could easily choose whose free speech to protect and whose not to protect. After all, there are a lot of bad things Twitter needs to contain to maintain its image in the eyes of its shareholders, and it knows the easiest way to contain those things is through censorship. Take another example. NationBuilder, a for-profit firm founded byJim Gilliam <http://nationbuilder.com/jgilliam?page=3>, who describes himself as “a geeky activist building Internet tools to shake up a broken political system.” NationBuilder’s mission <http://nationbuilder.com/mission> includes the following: “1. People connected create everything great in the world. 2. The Internet makes it possible for everyone to be a leader. 3. The tools of leadership should be available to everyone. 4. Service is scared. 4. Creators must become leaders.” But notice what is missing here. You could “shake up” and “fix” the “broken political system,” but who controls the new shaken up and fixed political system? Who connects people to everything great in the world? Who enables you to be a leader? Who provides the tools of leadership? In NationBuilder’s world, it would be NationBuilder. As a for-profit firm, NationBuilder seeks monopoly profits. It wants to vanquish its competitors and to do so will resort to any tactics that don’t break the law (and that the founders don’t consider unethical). Don’t believe me? Read the Bible of Strategy that is taught to MBAs every year at the premier business schools across the United States. It’s called competitive strategy <http://en.wikipedia.org/wiki/Porter_five_forces_analysis>, and the main reason why Harvard Business School professor Michael Porter<http://en.wikipedia.org/wiki/Michael_Porter> has tenure. But think of the implications of the new world NationBuilder would construct. NationBuilder would own this world: They would connect you to everything great in the world, so if you moved away from what they wanted you to do, they could easily disconnect you. They would enable you to be a leader, which means that they could easily prevent you from becoming one. They would provide the tools of leadership or exclude you from accessing them. In short, in NationBuilder’s world, the firm’s shareholders would only be happy if NationBuilder shook up and fixed the broken political system to enable itself to control that system. This is not to say that the people who run technology firms don’t care about their users. Going back to our earlier example, as an entrepreneur, you may have started wanting to make a difference, bringing about social change, or changing the world. But there is a conflict between what you as an entrepreneur wants and what your investors want. They want to make money. You want your firm to succeed. You compromise, or else you don’t get the investment. When it comes down to a push and shove, these technology firms are just profit-oriented institutions that will trade principled rhetoric for making money. Does this mean that tech entrepreneurs are manipulative sociopaths seeking world domination? No. Gilliam may have the best intentions in the world when he founded NationBuilder, but the dictates of the for-profit organization are going to align any tech entrepreneur’s incentives and shape his or her behavior in ways that s/he may not have anticipated before founding. *How Do We Fix This Problem?* Given the dictates of the for-profit organization, what recourse do social-media users and tech entrepreneurs wanting to make a difference have? One approach would be to organize en masse, something that economist Mancur Olson <http://en.wikipedia.org/wiki/Mancur_Olson> and political scientistElinor Ostrom <http://en.wikipedia.org/wiki/Elinor_Ostrom> have shown is notoriously difficult to achieve given the collective action problem<http://en.wikipedia.org/wiki/The_Logic_of_Collective_Action> . One reason<http://press.uchicago.edu/ucp/books/book/chicago/P/bo5939918.html> is that, since most users don’t know each other or even know about the efforts of tech entrepreneurs wanting to change the current state of affairs, they cannot easily organize a movement to change things. Moreover, if they use social media to try to organize, the for-profit firms providing the very same social-media tools that would be used to organize such an endeavor could censor it at any time that it begins to challenge their dominance. The NBC-Twitter case illustrates this perfectly: You can say anything you want over social media owned by a for-profit firm, as long as this “speech” doesn’t conflict with the profit motive of the firm. In this sense, technology changes some things but not others. Alexis de Tocqueville<http://en.wikipedia.org/wiki/Alexis_de_Tocqueville>’s dictum during his visit to the United States in the 1800s still applies: “In America… within barriers, an author may write what he pleases, but woe to him if he goes beyond them.” A second approach would be for a tech entrepreneur wanting to make a difference to be extremely disciplined at running his or her for-profit firm. For example, the tech entrepreneur could make sure that s/he only accepts investment money from those who share his or her values and/or maintain a majority share in the company. (S/he would also most likely have to give up on any dreams of ever going public.) Under such a scenario, the tech entrepreneur could choose not to maximize profits and not feel any external pressure to cave in to profit-maximization. But for a tech entrepreneur founding a risky venture, to choose what investment money to accept increases the new venture’s risk significantly. Moreover, there is no guarantee for users, however, that the tech entrepreneur or the shareholders won’t change their minds and decide to change the direction of the firm at any time. Remember, the legal provisions afforded to for-profit organizations means that whoever owns and controls the firm decides how the firm is to be run. Confronted with this situation, some entrepreneurs have turned to the non-profit model. But here lies yet another myth: Both entrepreneurs and users have the misconception that non-profit implies “for the public good” or even “communal ownership.” It does not. A non-profit status for the most part is the same as the for-profit status. Non-profit organizations can sell products or services. They can accept donations but so can for-profit firms. Diaspora, and many of the other Kickstarter funded startups that are set up as for-profit corporations, is a case in point. The only difference between a for-profit and a non-profit organization is that the latter must spend or donate all of its profits at the end of the year. But non-profit organizations suffer from the same shortfall of for-profit organizations: The firm is owned and controlled by a small group, usually its founders, upon which rests the ultimate authority about how to run their firms. In fact, most non-profit organizations don’t even have federal tax exempt status, as that status is notoriously difficult to obtain, meaning that most are run as private foundations that are almost identical to for-profit firms. With non-profit organizations, once again we find that the ideals of disruptive innovation, individual empowerment, social change, openness, and transparency are only enacted to the extent that the owners of those firms want those values enacted. Should those owners change their minds or leave their firms altogether (and other, less idealistic individuals take their place), the ideals could be gone with them. This is why institutions such as Mozilla, Craig’s List, and Wikipedia are so rare in the non-profit world. So is there any solution to this conundrum? Perhaps there is one. The cooperative model <http://en.wikipedia.org/wiki/Cooperative> has rarely been tested for technology startups in the United States but has yielded results in other countries, such as Canada, Finland, and Sweden. A cooperative is a legal entity owned and democratically controlled by its members, who are often the producers, consumers, and/or employees of its products or services. For our purposes, the cooperative model would allow social-media users to own the firm that makes their tools and, at the same time, jointly share in its profits. Thus, the cooperative status, if organized properly, looks like the best alternative for those who want social media firms that are accountable to their users. Rather than have to beg for-profit social-media firms like Facebook and Twitter to adopt and respect the right to free speech, the right to be forgotten<http://www.stanfordlawreview.org/online/privacy-paradox/right-to-be-forgotten>, and the right to privacy, and the right not to be arbitrarily sanctioned for exercising these rights, among others I often hear mentioned, users could run their own social-media firms and choose what values they want adopted. For example, deeply religious users may choose to design a cooperative that censors for explicit content, whereas more Libertarian ones may design one that protects civil liberties at all costs. [Of course, this still wouldn’t solve how to overcome Facebook’s and Twitter’s network effects and how to maintain interconnectivity (or federation) with other social media sites, which are issues I’ve discussed in greater length in previous posts<http://liberationtech.tumblr.com/post/13377461578/how-the-next-generation-diaspora-should-be-built-to> and that are beyond the scope of the present one.] I find it surprising that for a place as innovative as Silicon Valley no one has tried to adopt this legal template. [One exception is Calyx Institute founder Nick Merrill<http://news.cnet.com/8301-31921_3-57412225-281/this-internet-provider-pledges-to-put-your-privacy-first-always/>, who is grappling with the same problems outlined in this post.] But then again, it’s not so surprising, since Silicon Valley is a place that produces routine innovation. In other words, while entrepreneurs will innovate with the product or service offering, they will rarely question the for-profit legal model that is offered as a template to them. Silicon Valley entrepreneurs — especially, social-media entrepreneurs — are typically programmers/hackers. They’ll take the time to innovate on the technical problem at hand but won’t bother with questioning Silicon Valley’s routines or taken-for-granted assumptions, such as its human-resources or organizing models. I don’t blame them: It is expensive and time-consuming to hire a lawyer to get innovative about legal status. Moreover, lawyers are not popularly known as being innovators. And the programmer is trying to build the most pragmatic solution for the task at hand, so it is tempting just to assume whatever is the most widely-accepted legal status. Unfortunately for users, as a result, they end up trapped in “Groundhog Day.” *About the Author: **Yosem Eduardo Companys is a PhD student in engineering at Stanford University and a coordinator for the Program on Liberation Technology at Stanford University. Yosem also worked as adviser, mentor, and consiglieri to the Diaspora* founders and as President & CEO of Diaspora*. He may be reached at companys[at]stanford[dot]edu.*
_______________________________________________ liberationtech mailing list [email protected] Should you need to change your subscription options, please go to: https://mailman.stanford.edu/mailman/listinfo/liberationtech If you would like to receive a daily digest, click "yes" (once you click above) next to "would you like to receive list mail batched in a daily digest?" You will need the user name and password you receive from the list moderator in monthly reminders. You may ask for a reminder here: https://mailman.stanford.edu/mailman/listinfo/liberationtech Should you need immediate assistance, please contact the list moderator. Please don't forget to follow us on http://twitter.com/#!/Liberationtech
