It’s not clear who first coined the phrase, “if you aren’t paying for a product, you are the product” but it clearly applies most appropriately to Facebook. This year, the company is on track to achieve revenues north of $6 billion dollars, all on the back of the data that its users contribute for free.
In his new book ‘Who owns the future?” virtual-reality pioneer Jaron Lanier paints the picture of a dystopian future in which everyone has access to free or cheap goods and services but not to jobs. Wealth and employment will be concentrated in the hands of the high priests of technology, such as Google, Amazon and Facebook. They are the new landowners and industrialists, who don’t exploit our labour to get rich, but our data – which they get for free.
Laron’s answer to this imbalance is a micropayment distribution system in which every piece of data contains data on its origins, and every time the data is used in a commercial transaction (e.g. targeting a Facebook ad), the data contributor is paid a small fee.
So Lanier has a point. The system isn’t fairly rewarding people for the value they create. At Facebook, roughly five thousand people write code, maintain servers and manage the business. But its 900 million users do most of the work inputing the data that make the company worth $65 billion, worth more than China Mobile, Toyota, Samsung and the Commonwealth Bank of Australia.
At its peak, Kodak employed 140,000 people; Facebook bought Instagram, a company of 13 people, for $1 billion last year. Again, its Instagram’s users who created the real value – and they’re paid with a free app. Instagram’s value lies in the redistribution of its users’ content.
We should however pause for a reality check. The effects of industrial revolutions aren’t simply to produce a new class of robber barons. We all have something to gain.
The first industrial revolution which began with the spinning jenny in 1776, changed the world in many ways, but the most profound is that it resulted in a doubling of human life span, at least in developed countries.
The second revolution (digital) in fact had its earliest origins in 1671 when the mathematician Leibniz invented a machine that could perform all four mathematical operations. But it was the threat of Nazi Germany that brought the digital revolution to life, beautifully documented in George Freeman’s book “Turing’s Cathedral”.
Inspired by the abstract ideas of Alan Turing whose work enabled Britain to crack the Nazi Enigma code, John von Neuman (himself an exile of Nazi persecution) led a team of scientists and engineers who built the first modern computer in the late 1940s. The digital world was democratized by the web; and it has given the billions of us with Internet access the potential to reach 7 people billion.
There are signs that another revolution is coming-digital manufacturing combining the power of the first two revolutions.
In next few years, mainstream 3-D printers will be sold in their millions once HP, Canon and Epson enter the market. Manufacturing will go desktop. This doesn’t mean large scale production in Chinese factories will cease, but there are many advantages to digital manufacturing.
Designers will be able to make their own products, without having to tie up their cash in large scale factory production. Manufacturing will be local, which means faster and more cost effective. The time from design to production will be dramatically reduced, which will power faster innovation. Products can be much more readily customized, and production runs much more flexible. 3-D printing will bring automated processes and quality to the smallest batches.
Combined with affordable robotics, small entrepreneurs will not have to rely on manufacturing in China to be competitive. Local factories, powered by 3-D printers and cheap factory robots, will run in the dark, 24 by 7, closer to the designers. Low-cost labour will cease to be a differentiator.
What this says is that future prosperity whether it is for an individual, company or a nation-state will be dependent on the intellectual power of people. All differentiation will be intellectual in nature – ideas, science, design and marketing.
Though computers can do so much for us now, more than ever we need to invest in education as a societal good, not just for our own children. The bigger question for me is that one George Freeman asks: “What if the price of machines that think is people who don’t?”