Ashlee Vance has an excellent feature today on Businessweek.com. Although the piece is burdened by the snappy, ambiguous title, The Tech Bubble Is Different, it's not the typical cyberutopian sermon you'd expect.
The gist of Vance's piece is this: the business model that underpins the social media bubble is advertising. This model has turned Silicon Valley into a magnet for the pure mathematicians who once went to Wall Street to develop trading decision algorithms; now they go to Palo Alto and design consumer behavior predicting algorithms and the Valley, instead of attracting the kind of hardcore computer scientists who once drove innovation, now just attracts quants. The quants, so Vance says, don't possess the kind of world-altering idealism of earlier generations of tech innovators. They're not looking to change the world, just to get you to click on an ad. As a result, Vance's reasoning goes, the social media bubble, when it bursts as all bubbles do, will leave behind no game changing technology infrastructure. The PC bubble put PCs into American households. The Internet bubble left behind the network infrastructure. The social media bubble will leave behind no such hard assets.
At least that's Vance's argument.
There's a lot of truth in what Vance has to say. The Internet--by connecting people and turning the computer, at least for consumer users, into, first and foremost, a communications device--has transformed the technology industry forever turning it into something that looks a lot more like the media business than the tech industry of old.
The horror and disdain this reality evokes from old-timers in the Valley is palpable in Vance's piece. Says one such person Vance quotes: "My fear is that Silicon Valley has become more like Hollywood--an entertainment-oriented, hit-driven business that doesn't fundamentally increase American competitiveness."
The quote captures the self-important, even sometimes delusional conflation of private business interests, public concern, and faith in science that has long characterized Silicon Valley, and which turned a simple observation about the pace of change in transistor manufacturing into "Moore's Law"--something with the whiff of basic physics as if inevitably planetary forces were involved. The quote also reveals the Goldwater conservatism that has always informed the basic presumptions in the Valley--increasing American competitiveness, there's a goal worth striving for, everything else is namby pamby hippie stuff.
But there's nothing wrong, of course, with entertainment and communications businesses. And they do actually produce innovative technology that changes not only the way we work (as if that were the only thing that matters) but how we play and, perhaps even more importantly, how we relate to one another. And one could easily argue that the role that Facebook, Twitter, and Internet telecom more generally played in, say, the populist revolutions in Tunisia and Egypt recently suggest that the social media bubble has already played a more important role in changing the world--and left behind a more important legacy--than, say, PowerPoint. Vance fails to measure or take any note of the kind of social change Internet communications and social media have enabled and, while not a legacy of hard assets, may in fact be no less important than PC penetration and the explosive group of Internet points of presence.
But in the end there IS something disappointing about how the advertising model has swallowed the world of computer technology. Back in the 1990s, when the Internet first began unwinding the world of traditional media, the dream for media technologist was not only about new ways of producing and distributing media, not only about community and user generated content, but also about a new business model that would support new media in a way that would allow for the continuing creation of not only pure entertainment media (like Farmville) but also new kinds of news products, and popular arts. Instead what has happened is that peer to peer file sharing and DIY media has driven the consumer price tolerance for media arts to $0; the movement of classified advertising from newspapers to the likes of Craigslist and Monster.com has hastened the demise of the urban newspaper, leaving us with the least well informed American population in a century; and, as Vance points out, Groupon--a cyber-coupon circular--is the fastest growing "tech" start up of the new bubble. Far from inventing a new business model for media, the Internet revolution has pushed the media business model into the world of technology, and the end result may well have been worse for the media sector than the tech sector.