Social media

Social media has copped a bit of flack in recent times. Facebook founder Mark Zuckerberg was dragged before Congress to testify about privacy, data mining, regulations and the whole Cambridge Analytica controversy. More recently, Facebook revealed that about 30 million of its users had their accounts breached via the theft of access tokens (which allow you to stay signed in).

Twitter has been accused of “shadow banning” controversial (mostly right-wing) individuals and groups. If you get shadow banned you stop showing up in searches, user feeds and such. You essentially become a ghost, able to tweet but no one can hear you.

Google gave up completely and closed its social media platform, Google+. The final nail in the coffin for the ailing network came after discovering it had left private profile data exposed.

It all begs the question: have we reached peak social media? The New York Times, for the first time that I am aware, published an article helping people disconnect. How to Delete Facebook and Instagram From Your Life Forever provides a step-by-step guide for people who want out, from backing up your data to the deletion process itself.

I purged my Facebook account over 5 years ago. I actually deleted it but apparently “delete” really meant “deactivate”, as everything was still there when I signed in again a few years later. So I went through the process of removing just about everything I had previously uploaded to the network (the process is easier than it sounds with the use of third-party tools). I did the same with Twitter just a few weeks ago.

Now I don’t for one second believe I’m some kind of thought leader, moving well before the masses with my decision to ditch social media. I just wasn’t getting enough value out of them given how much personal information I had to sacrifice. And the data do indeed show the opposite: more people than ever are using social media.

My decision to abandon Facebook was made around the middle of the first chart, right when growth in the number of users really accelerated. Conversely, I only quit Twitter a few weeks ago, yet its growth plateaued back in 2014! I’m clearly not ahead of the curve.

But that doesn’t mean I can’t be skeptical about the future of social media as it currently exists. Social media is a great way for people to organise events, stay in touch and connect with one another. But I’m not sure how centralised platforms such as Facebook, the business model of which depends upon harvesting user data for profit, can survive in the long run.

Hear me out. Facebook and Twitter are not social media companies; they’re advertising companies. 98 percent of Facebook’s revenue and 86 percent of Twitter’s comes from advertising. The two companies provide platforms for their users to network primarily for two reasons:

1. Direct advertising. Much like radio and television, Facebook and Twitter display advertising on their platforms. That includes allowing organisations to promote posts/tweets, accounts and even trends. They use algorithms to make sure promoted posts/tweets make it into the right users’ feeds.
2. Data mining. Everything you share on social media, whether public or private, is mined. That includes the people with whom you associate, the events to which you are invited, down to your location and the device you use to access the service. This data is used to improve the effectiveness of direct advertising, but it’s also sold off to third parties.

The provision of the social network enables the above. As the old saying goes, if you’re not paying for the product, you are the product. Social media companies sell you and any information you choose to provide, knowingly or not.

To date, people seem happy with this arrangement; the growth of Facebook, Twitter and smaller platforms such as Snapchat are testament to that (Instagram is owned by Facebook). But they all use variants of the same model. As do the likes of Google, which data mines your searches and even your email (do you use Gmail? Or send/receive to people using Gmail? Google’s bots scan it all).

But I’m not so sure this model is viable in the long term. Do I know what, if anything, will replace it? No. But as more and more information about the nefarious nature of how these companies generate revenue is revealed to the public, there will be pushback. Fewer new users will sign up, existing users will give these companies less face time and rivals - for example, encrypted and/or decentralised alternatives (e.g., diaspora*, Friendica, GNU social, Signal and Wire) - will slowly capture the more privacy conscious among us.

I’ll leave you with the following quote, written about a certain social media company:

“Well on the way to becoming what economists call a ‘natural monopoly.’ … Users have invested so much social capital in putting up data about themselves it is not worth their changing sites … Its massive user base will help maintain its dominance.”

That wasn’t written about Facebook or Twitter. It was about MySpace, which has since faded into obscurity. Not because of antitrust regulation but because a new competitor, Facebook, was simply better.

Does the same fate await today’s social network providers? I’m not sure. What I do know is that we live in an ever-changing world where business models need to constantly adapt just for a firm to maintain its status. Today’s advertising and data mining social media model seems antiquated to me, but I’ve been barking up that tree for years.

The 4 day work week

The concept of a 4 day work week has been gaining steam of late. For example, German workers recently won the right to work a 4 day week if they so choose. Anecdotally, I’ve been noticing articles about it appearing every so often and it’s certainly coming up during conversations with a higher frequency than usual (working “0.8”).

I’m not going to get into the potential economic and social implications of a shorter work week but I have been wondering why the shift is taking place.

The obvious reason is that most people prefer leisure to work, but that has always been the case. So something must have changed, with the most obvious candidate being the economic environment: households are faring well, so many people are happy to trade a day of work for an additional day of leisure. The data support that theory, with unemployment in much of the world approaching record-lows (in the United States it just hit its lowest level since 1969).

In the midst of a recession, for example, I would expect worker desire for a 4 day work week to be low (conversely, employer demand for a 4 day week would rise). But if the labour market is tight, wages are relatively high and good workers are tough to keep, increased worker demand for a 4 day week makes a lot of sense.

So I thought as a purely speculative exercise I would check Google’s search trends for two topics, “4 day week” and “unemployment benefits”. Here are the results:

Correlation is not causation and I suspect that the 2008 spike was caused by the opposite force to what we are seeing today. That is, employers trying to cut costs without firing workers or reducing wages were instead offering employees a 4 day week.

So what does the recent spike in searches for a 4 day work week mean, if anything? One possibility is employees, aware that a 4 day week is an option given it was offered to them during the last recession, are using the strong labour market to negotiate for more leisure. Perhaps the extra family time that a 4 day week spurs employee productivity, making it mutually beneficial for the worker and employer. It could be some combination of those two and many other forces.

Whatever the case may be, the sceptic in me sees the increased demand for a 4 day work week as a “top of the cycle” moment. I hope I’m wrong.

Daylight savings time

This weekend much of Australia’s Eastern seaboard will switch to daylight savings time (DST). Being in Western Australia where it is not practiced (it was defeated in a compulsory 2009 referendum), the only annoyance is making sure I’m adding 3 hours instead of the usual 2 to the time difference.

Nevertheless, I am subjected to the debate whenever I browse my favourite news sites, turn on the TV or listen to the radio. The usual arguments cited are energy conservation, more time outdoors, reduced traffic accidents during rush hour, and even crime prevention. These are understandably hard to quantify, with a quick search revealing a U.S. Department of Transportation (1975, 1% saving) and a separate U.S. Department of Energy study (2008, 0.03%) showing small reductions in energy consumption. However, the findings have been disputed, e.g. Matthew Kotchen and Laura Grant found in 2011 that DST actually increased energy consumption by 1%.

Then there are the rent seekers who tend to come out of the woodwork whenever policy that might benefit them is proposed, e.g. the golf industry, which has lobbied for DST in the past. In 1986 it estimated DST was worth up to US$400 million annually in extra sales and fees (that’s nearly US$1 billion in today’s dollars).

In terms of costs, from what I can gather the most quantifiable cost comes from an increase in fatalities, especially on roads, following the switch to/from daylight savings:

“The sleep deprivation on the Monday following shift to DST in the spring results in a small increase in fatal accidents. The behavioral adaptation anticipating the longer day on Sunday of the shift from DST in the fall leads to an increased number of accidents suggesting an increase in late night (early Sunday morning) driving when traffic related fatalities are high possibly related to alcohol consumption and driving while sleepy.”

Others have argued that our circadian body clocks never adjust to daylight saving time, causing minor jet lag with all of the associated costs.

Ultimately, the costs and benefits are relatively small and difficult to quantify. In such a situation I tend to err towards the principle of primum non nocere, or first do no harm, and advise against DST.

Creative destruction and the NBN

One of my many concerns about Australia’s National Broadband Network (NBN) was the toll it would take on future innovation and competition. A legislated monopoly, entrepreneurs would be forbidden from competing with it, eliminating potential consumer benefits before they can even be discovered. Fortunately for Australians, I was wrong:

“Lightening Broadband is connecting homes and businesses using microwave links capable of delivering both 100 Mbps download and upload speeds. That’s better than the comparable NBN Tier 100, which offers 90 Mbps download and 30 Mbps upload speeds.”

…

“Another telco start-up, DGtek is offering its customers a full fibre alternative service … [it] uses Gigabit Passive Optical Networks (GPON) and runs it directly into tightly packed homes with the dense population of inner Melbourne. As a sweetener, DGtek offers free internet service to government organisations – such as schools and hospitals – in areas they service.”

…

“iiNet in Canberra has launched its Very-high-bit-rate Digital Subscriber Line (VDSL2) as its own superfast network. According to iiNet, it is made up of fibre and copper and provides a faster connection than ADSL and most NBN plans.”

Then there’s the competition from an area I did forecast, namely 5G wireless broadband:

“Optus and Telstra are both launching 5G services in 2019. This represents a quantum leap in wireless technology that could win away millions of current and potential NBN customers.”

The total accounting cost of the NBN is already over $50 billion. With competition on all fronts preventing it from monopoly pricing, and its mandate of cross-subsidisation (e.g., rural households) driving up costs, that figure will only grow.

At this stage - nearly 10 years after its inception - there’s an almost certain chance that the taxpayer will see a negative return on its NBN investment.

As the situation worsens, something will give; that’s just how politics works, and the NBN is a political beast. The easy (and wrong) option would be to regulate or tax the NBN’s competition away. The more difficult (and better) option would be to remove the NBN’s legislated fixed-line monopoly altogether and sell it off, owning the loss and salvaging whatever we can from the carcass.

Cape to cape

I just returned from a few days of hiking in the Southwest of Australia. The trail was the Cape to Cape, a 135km track along the Leeuwin-Naturaliste Ridge featuring:

“…spectacular coastal and forest scenery, a fascinating geology of cliffs, caves, headlands and rock formations and an ever-changing display of vegetation and wildflowers.”

We only walked the Northern half, having completed the Southern section 10 years prior. Here are a few pictures from the trek; we certainly lucked out with the weather, early October can be a bit of a lottery in Southwest WA!