Web pioneer: Can the 'Net's 'original sin' be undone?

As the Internet as we know it turns 20, one of the Internet's pioneers (and inventor of hated pop-up ads) hopes it's not too late to build a different kind of Web, one not built on ad revenue:

I have come to believe that advertising is the original sin of the web. The fallen state of our Internet is a direct, if unintentional, consequence of choosing advertising as the default model to support online content and services. Through successive rounds of innovation and investor storytime, we’ve trained Internet users to expect that everything they say and do online will be aggregated into profiles (which they cannot review, challenge, or change) that shape both what ads and what content they see. 

Building the Web on ads leads directly to the thing we like the least about it: lack of data privacy:

Once we’ve assumed that advertising is the default model to support the Internet, the next step is obvious: We need more data so we can make our targeted ads appear to be more effective. Cegłowski explains, “We’re addicted to ‘big data’ not because it’s effective now, but because we need it to tell better stories.” So we build businesses that promise investors that advertising will be more invasive, ubiquitous, and targeted and that we will collect more data about our users and their behavior.

Even so, Zuckerman admits that our ad-supported Web has made it "flat" and accessible:

The great benefit of an ad supported web is that it’s a web open to everyone. It supports free riders well, which has been key in opening the web to young people and those in the developing world. Ad support makes it very easy for users to “try before they buy,” eliminating the hard parts of the sales cycle, and allowing services like Twitter, Facebook, and Weibo to scale to hundreds of millions of users at an unprecedented rate.

Zuckerman argues that there are four main downsides to an ad-supported Web:

• First, [...] it’s hard to imagine online advertising without surveillance. 

• Second, [...] it creates incentives to produce and share content that generates pageviews and mouse clicks, but little thoughtful engagement.

• Third, the advertising model tends to centralize the web. [...] Companies like Facebook want get as much of that money as possible, which means chasing users and reach. Using cash from investors and ad sales, they can acquire smaller companies that are starting to build rival networks. 

• Finally, [...] personalization [of the Web] means that two readers of The New York Times may seen a very different picture of the world, and that two users of Facebook certainly do, shaped both by our choice of friends and by Facebook’s algorithms. [T]hese personalized sites may lead us into echo chambers, filter bubbles, or other forms of ideological isolation that divide us into rival camps that cannot agree on anything, including a set of common facts on which we could build a debate.

So on what business model would a different Internet run? Perhaps pay-forward schemes such Pinboard.in, and two-tiered, pay-for-Premium services, says Zuckerman. Meanwhile, online payment systems must be revamped to lower transaction costs, perhaps by switching to digital currencies. 

It doesn't sound too likely -- and Zuckerman sounds more apologetic about his role in creating this mess than hopeful it can be changed -- yet it's important to stop and realize that our young Internet didn't really have to turn out this way.

The Internet's Original Sin

By Ethan Zuckerman

August 14, 2014 | The Atlantic

URL: http://www.theatlantic.com/technology/archive/2014/08/advertising-is-the-internets-original-sin/376041/?single_page=true

New Putin laws crack down on free speech, assembly and Internet

Get used to these restrictions on your liberty and more to come, you Putin-loving Russians. 

Uncle Vova isn't going anywhere, and he knows what's best for you.

Putin Increases Penalties For 'Illegal' Street Rallies

July 22, 2014 | Radio Free Europe/Radio Liberty

URL: http://www.rferl.org/content/putin-penalties-rallies-law-bill/25466235.html

Russian harbinger: 'Russian Facebook' founder flees country

I don't harbor any affection for the founder of Facebook knock-off VKontakte (VK, for short) Pavel Durov -- I noted back in May 2012 how he was a spoiled rich a-hole. Yet undoubtedly, Durov's fleeing Russia is a harbinger of an even more despotic rule to come under Russia's President Vladimir Putin.

VK, which largely resembles an older version of Facebook, attracts about 60 million users daily, primarily from countries in the former Soviet Union, vastly outstripping Facebook's reach in the region. It played an instrumental role in bringing hundreds of thousands of protesters into the streets in late 2011 in the wake of widely manipulated parliamentary elections, and it has played a part in drawing crowds to the Kiev protest movement that helped oust Ukraine's pro-Russian president in February.

As many others have predicted, Putin's strong-armed adventures abroad must certainly coincide with a stronger hand at home against Russian dissidents, journalists, academics, ethnic and other minorities, and entrepreneurs.  Putin simply cannot allow a version of reality that isn't his own.

As AP noted:

On Tuesday, the Russian parliament passed a law requiring social media websites to keep their servers in Russia and save all information about their users for at least half a year. The same law, which will go into effect in August if signed by Putin, gave bloggers the same legal status — and responsibilities — as media outlets, making them more vulnerable to accusations of libel or extremism.

Durov said "we held out for seven and a half years," meaning VK held some semblance of freedom despite Putin. But a threat to autocracy anywhere is a threat to autocracy everywhere; and threats cannot be tolerated.

Russian Social Media CEO Quits, Flees Country

By Laura Mills and Alexander Roslyakov

April 23, 2014 | AP

URL: http://bigstory.ap.org/article/russian-social-media-ceo-quits-flees-country

Re-post: What makes - and un-makes - young jihadists?

I want to re-post this article from 2009 about what made -- and un-made -- young British jihadists: "What Makes a Young Person Embrace Death and Murder? Former Jihadists Speak Out."

Here's what I had to say then:

It's not really that complicated. If white Western societies can successfully integrate Muslims, they will not feel alienated and look for a radical identity. (I cannot fail to mention that, for whatever reason, I haven't yet figured it out, the USA is light years ahead of Britain in this regard.) And if white Christians would be, well, more Christian, and embrace Muslims with love and acceptance, there would be many fewer terrorist recruits. That is not to say, "It's all our fault," but we do have a role to play, and a responsibility to build tolerant, loving societies -- as saccharine and heretically un-military as that solution may sound in today's post-9/11 world, where violence is always the answer.

From what we know so far about the alleged Boston bombers, they seemed to have been isolated loners who never felt like a part of U.S. society. The older brother said he had never made an American friend; he didn't understand Americans.

It's telling that they didn't have their parents or strong family ties in the U.S. either that could have offered psychological support.

It seems that they sought out a radical Islamist ideology that was ready and waiting for them on the Internet, to fill the void inside themselves, and perhaps to re-make themselves in a heroic image to compensate for their personal failures.

Many people will accuse me of trying to justify the alleged killers with these simple observations. People will accuse me of arguing that Islamist ideology played no role.  I'm not.  Explaining is not the same as justifying. It may make political hay and provocative punditry to paint all U.S. Muslims with the broad brush of "terrorist," but it's a dead-end conclusion. It's not operational. We must be smarter... and more human.

UPDATE (04.21.2013): OK, now a more detailed picture of the younger brother, Dzhokar Tsarnaev, is emerging. Apparently he "partied" in his dorm after the Boston marathon bombings. Maybe he wasn't such a loner after all. 

On the other hand, I know how loosely Americans use the word "friend," and how lonely U.S. life can be even while surrounded by smiling "friends," especially for non-natives.  In the U.S., a "friend" is anybody who says, "hey" to you on the street, shares a table with you in the cafeteria, or once had a drink with you. The American understanding of "friend" really confuses and ultimately disappoints many emigres to America, who after a time tend to seek out other foreigners, especially from their respective home countries, who share a similar understanding of friendship. So how many real friends did Dzhokar have, if any?.... Didn't he confide in a single friend besides his brother? 

Moreover, I think it's telling that Dzhokar Tsarnaev maintained an account on VKontakte, the Russian equivalent of Facebook. The stories I've seen didn't mention his having a Facebook account. Isn't that a bit weird? I don't know a single American teen or 20-something without a Facebook account. This kid emigrated to the U.S. when he was 9 or 10, and yet apparently he felt more connected to people in the former USSR. 

He did have a Twitter feed though, apparently. Here's one of those tweets: "Jahar @J_tsar: a decade in america already, i want out." 

UPDATE (05.02.2013): So it looks like Dzhokar Tsarnaev partly confided in three of his buddies, two of them from the ex-Soviet Republic of Kazakhstan, that he knew how to make a bomb; and asked them to take whatever they wanted from his dorm room after his photo appeared as a suspect.

Blogger buys Facebook users' data for $5

Facebook is probably freaking out not because some website sold their users' private data, but because they realized how bad their business model sucks.  They were probably like, "Five dollars, that's all he paid for more than one million FB entries was five dollars!  We were gonna sell it for waaaay more than that!"  

Seriously though, I wouldn't worry.  Zuckerberg seems like a pretty stand-up guy who has your best interests at heart.  He was like, you know, the good guy in that one movie.  You should totally trust him.  There is no black market for FB data, I repeat: no black market.  Your privacy is secure.  

Facebook Tries To Silence Blogger To Cover Up User Data Scandal [Updated]

By Dave Copeland 

October 26, 2012 | readwrite

URL: http://readwrite.com/2012/10/26/facebook-asked-blogger-who-purchased-user-data-to-keep-quiet

Another reason to hate Facebook...

... and women, too?  Thank goodness dudes aren't so catty and mean.  

Survey: 25% of Female Facebook Users Admit to Posting Unflattering Photos of Friends on Purpose

By Neetzan Zimmerman

July 3, 2012 | Gawker

Out of 1,500 women surveyed by the photo gift website Mymemory.com, one in four said they've deliberately uploaded "ugly photos of friends" to Facebook, though had different reasons for doing so.

Of those responding positively to the question, one in three claimed they were doing so out of retribution for a similar slight made against them. A majority of the rest said they had fallen out with the friend in the photo.

75% of participants said they were in the habit of detagging themselves from photos they felt were unflattering, but a fifth of women said they were not swayed by a friend's request to have the photos removed from Facebook.

A full two-thirds would get mad if a friend were to post an unkind photo of them to the site.

"To see that so many women deliberately commit 'photo sabotage' and upload unflattering pictures of friends is somewhat surprising," said MyMemory co-founder Rebecca Huggler, "particularly when you consider how many said they'd be mad if the same was done to them."

An earlier survey conducted by the site found that Brits are drunk in the vast majority of the photos that appear on Facebook. Some 76% of nearly 1,800 Facebook users polled said they were at one stage or another of inebriation in most of the photos in which they were tagged.

Facebook 'Zucking us up as a species'

Opinion: Facebook threatens to 'Zuck up' the human race

By Andrew Keen

May 30, 2012 | CNN

The news last week was all about Facebook's dodgy IPO.  Investors are filing suit against Facebook about withholding "negative" assessment on its business prospects. This IPO not only "Zucked up" Silicon Valley's supposed tech bubble, but it has created the suspicion that Facebook willfully exploited the innocence of the small investor.

But something even dodgier than a potential stock market fraud is going on. The social network is taking something much more important than money from its nearly one billion members. By sabotaging what it really means to be human, Facebook is stealing the innocence of our inner lives.

It may even be Zucking us up as a species.

Sherry Turkle, Professor of the Social Studies of Science and Technology at the Massachusetts Institute of Technology, tells us there's a "shift" from an analog world in which our identities are generated from within, to a digital world in which our sense of self is intimately tied to our social media presence.

But this shift to a Facebook world of incessant "friending," Professor Turkle correctly warns us, is a "seductive fantasy" which is weakening us both as individuals and as a society. The problem, she explains, is that a "capacity for solitude is what nurtures great relationships." But in today's always-on social media world, our solitude has been replaced by incessant online updates, which both weaken our sense of self and our ability to create genuine friendships.

I call this shift from the private to the public self "digital narcissism." Behind the communitarian veil of social media, we have fallen in love with ourselves. But this is a super sad love story. Because the more we self-broadcast, the emptier we become; and the emptier we become, the more we need to self-broadcast.

Facebook isn't alone, of course, in offering this seductive fantasy of a radically transparent digital society in which our self esteem is determined by our updates, tweets and check-ins. And yet with its almost billion members and nearly $100 billion public market valuation, Facebook is shaping the digital narcissism of early 21st century culture more than any other social media company.

Most of all, Facebook is destroying our privacy as discrete individuals. And it's not just our kids who are revealing everything about themselves to their thousands of "friends" on Facebook. As Aisha Sultan and Jon Miller note in a chilling piece, "Facebook parenting" -- our obsession with posting data about our kids - is "destroying our children's privacy."

Sultan, a parenting columnist at the St Louis Post-Dispatch, and Miller, a researcher at the University of Michigan, whose article was based on interviews with 4,000 children, argue that we've created what they call a sense of "normality" about a world where "what's private is public." Kids are growing up, they explain, assuming that it's perfectly normal to reveal everything about ourselves online.

"And our children will never have known a world without this sort of exposure. What does a worldview lacking an expectation of privacy mean for the rest of society?" Sultan and Miller conclude with the eeriest of questions.

What it means, of course, is that we are creating a world in which our sense of identity, of who we actually are, is defined by what others think of us.  Social media's ubiquity means that we are losing that most precious of human things -- our sense of self . Our devices are always on; our "Timeline" (Facebook's product which greedily attempts to capture our entire life narrative) is there for everyone to see; we are living in public on a radically transparent global network that, by 2020, will be fed by 50 billion intelligent devices carried by the majority of people on the planet.

But the situation is actually more dismal than even Sultan and Miller acknowledge. The distinguished psychologists Philip Zimbardo and Nikita Duncan have written about an entire generation of young men who, they say, have been "desensitized to reality" by online gaming and pornography. But what Zimbardo and Duncan forget to add is that much social media is no less addictive that gaming or porn.

Yes, digital narcissism is a narcotic.  But unlike online gaming or pornography, it is desensitizing all of us -- young and old, men and women alike -- to reality.  Imprisoned in our delusional social media bubbles, our Facebook saturated world has become a self-referential stream of real-time updates about what we just ate for breakfast.

Don't worry about whether the Facebook IPO is creating an economic bubble. The real bubble are the billions of delusional social media bubbles which are distorting our real sense of self and weakening genuine social interaction.

So what to do?

The less we publicly announce about ourselves, the more mysterious and thus the more interesting our private selves become. 

It's time to wake up to the truth about social media. Networks like Facebook have turned us into products in which their only economic value is our personal data. Like any other addiction, we need recognize its destructive reality.  Facebook is free because it sells our most intimate data to advertisers.  Forget about last week's dodgy IPO. The fraud is on anyone who has ever used Facebook.

Last year, I quit Facebook. It's a growing movement. I hope you'll consider joining me as a Facebook resistor.  [I quit too! - J]

But the solution goes beyond leaving Facebook. Our addiction to digital narcissism can only be broken by a new regime of strict self-censorship. For many of us, perpetually high on the narcotic of self-broadcast, this won't be any easier than quitting smoking or kicking that online porn or gaming habit. But remember, the less we publicly announce about ourselves, the more mysterious and thus the more interesting our private selves become.

There are political solutions too. We need to support governments in both the E.U. and the U.S. to protect online privacy through "do not track" legislation; force companies like Google to be more transparent with their use of our data and even enshrine, as the EU Justice Commissioner Viviane Reding is bravely championing, a "law of forgetting" on the Internet.

The market can also play a role. Let's embrace new technology which allows data to degenerate over time so our online data, like real world trash, eventually decomposes.

Let's support Internet start-ups like the strictly private social network EveryMe and the defiantly private search engine DuckDuckGo. And let's recognize, once and for all, that "free" is never really free and that we are much better off paying for apps and services that absolutely guarantee the protection of our private personal data.

At the dawn of our brave new networked 21st century world, we are faced with two options. Either, we succumb to the narcotic of digital narcissism, turn ourselves inside out and let our kids inherit a world in which the quiet mystery of the disciplined private self becomes a historical artifact.  Or we fight our growing addiction to social media so that we are no longer enslaved to the personal update, the tweet or the check-in.

Privacy or publicness? It's not a hard choice. Zuck-up or save the species. I trust you'll know which one to make.

Facebook, other social media, won't replace real industries

I've never regretted deleting my FB account.  And I admit I do not wish Zuckerberg or Facebook any commercial success for basically spying on people (albeit with users' permission, but increasingly less so), although, I suppose to his credit, Zuck has created something that millions of people "can't live without"... as long as it's free.  

As you recall, I pointed out that FB's annual revenue per unique user is about $4, pretty much the average for purely social media companies.  Whereas FB's annual profit per unique user in 2011 was only $1.20.

The Facebook Illusion

By Ross Douthat

May 26, 2012 | New York Times

THERE were two grand illusions about the American economy in the first decade of the 21st century. One was the idea that housing prices were no longer tethered to normal economic trends, and instead would just keep going up and up. The second was the idea that in the age of Web 2.0, we were well on our way to figuring out how to make lots and lots of money on the Internet.

The first idea collapsed along with housing prices and the stock market in 2007 and 2008. But the Web 2.0 illusion survived long enough to cost credulous investors a small fortune last week, in Facebook's disaster of an initial public offering.

I will confess to taking a certain amount of dyspeptic pleasure from Facebook's hard landing, which had Bloomberg Businessweek declaring the I.P.O. "the biggest flop of the decade" after five days of trading. Of all the major hubs of Internet-era excitement, Mark Zuckerberg's social networking site has always struck me as one of the most noxious, dependent for its success on the darker aspects of online life: the zeal for constant self-fashioning and self-promotion, the pursuit of virtual forms of "community" and "friendship" that bear only a passing resemblance to the genuine article, and the relentless diminution of the private sphere in the quest for advertising dollars.

But even readers who love Facebook, or at least cannot imagine life without it, should see its stock market failure as a sign of the commercial limits of the Internet. As The New Yorker's John Cassidy pointed out in one of the more perceptive prelaunch pieces, the problem is not that Facebook doesn't make money. It's that it doesn't make that much money, and doesn't have an obvious way to make that much more of it, because (like so many online concerns) it hasn't figured out how to effectively monetize its million upon millions of users. The result is a company that's successful, certainly, but whose balance sheet is much less impressive than its ubiquitous online presence would suggest.

This "huge reach, limited profitability" problem is characteristic of the digital economy as a whole. As the George Mason University economist Tyler Cowen wrote in his 2011 e-book, "The Great Stagnation," the Internet is a wonder when it comes to generating "cheap fun." But because "so many of its products are free," and because so much of a typical Web company's work is "performed more or less automatically by the software and the servers," the online world is rather less impressive when it comes to generating job growth.

It's telling, in this regard, that the companies most often cited as digital-era successes, Apple and Amazon, both have business models that are firmly rooted in the production and delivery of nonvirtual goods. Apple's core competency is building better and more beautiful appliances; Amazon's is delivering everything from appliances to DVDs to diapers more swiftly and cheaply to your door.

By contrast, the more purely digital a company's product, the fewer jobs it tends to create and the fewer dollars it can earn per user — a reality that journalists have become all too familiar with these last 10 years, and that Facebook's investors collided with last week. There are exceptions to this rule, but not all that many: even pornography, long one of the Internet's biggest moneymakers, has become steadily less profitable as amateur sites and videos have proliferated and the "professionals" have lost their monopoly on smut.

The German philosopher Josef Pieper wrote a book in 1952 entitled "Leisure: The Basis of Culture." Pieper would no doubt be underwhelmed by the kind of culture that flourishes online, but leisure is clearly the basis of the Internet. From the lowbrow to the highbrow, LOLcats to Wikipedia, vast amounts of Internet content are created by people with no expectation of remuneration. The "new economy," in this sense, isn't always even a commercial economy at all. Instead, as Slate's Matthew Yglesias has suggested, it's a kind of hobbyist's paradise, one that's subsidized by surpluses from the old economy it was supposed to gradually replace.

A glance at the Bureau of Labor Statistics' most recent unemployment numbers bears this reality out. Despite nearly two decades of dot-com enthusiasm, the information sector is still quite small relative to other sectors of the economy; it currently has one of the nation's higher unemployment rates; and it's one of the few sectors where unemployment has actually risen over the last year.

None of this makes the Internet any less revolutionary. But it's created a cultural revolution more than an economic one. Twitter is not the Ford Motor Company; Google is not General Electric. And except when he sells our eyeballs to advertisers for a pittance, we won't all be working for Mark Zuckerberg someday.

Facebook's IPO, income, and users' privacy

Although Facebook founder and CEO Mark Zuckerberg said two years ago that privacy is obsolete among the younger generations, in fact, more and more Facebook users are opting to share less and less of their personal info. Reported HuffPost:

"Researchers at Polytechnic Institute of New York University tracked the privacy settings of 1.4 million Facebook profiles belonging to New Yorkers over a 15-month period between March 2010 and June 2011. They found a 'dramatic decrease in the amount of information Facebook users reveal about themselves to the general public' and the authors concluded that the users became 'dramatically more private' during the period, according to their report.

"Over the same period, users stepped up the frequency with which they hid personal details in their public profiles, which are visible to anyone on Facebook, a friend or otherwise. To measure this, the researchers tracked nine characteristics often included on public profiles -- 'friend lists, age, high-school name and graduation year, network, relationship, gender, interested in, hometown and current city' -- and monitored whether members shared fewer details over time."

Maybe younger folks are starting to catch on -- like their bosses and potential bosses already have -- that making your life an open book on the internet may not be such a swell idea.

Meanwhile, saying that "we must reject the conclusion that privacy is an outmoded value," and that privacy has been "at the heart of our democracy from its inception," President Obama released a "Consumer Privacy Bill of Rights" for the new global digital economy.

Gee, let's cross our fingers and really hope FB users' privacy issues and Obama's new regulations won't hurt Facebook's IPO, heh-heh-heh.

BTW, if you accept Facebook's figures, then in 2011 they earned about $4.40 in revenue per user. For comparison, let's look at Tristan Louis's figures for other internet/social networking companies:

*Average revenue per user:

Pandora: $ 0.54

LinkedIn: $ 1.79

GroupOn: $ 8.60

Living Social: $ 9.41

Zynga: $ 2.57

Facebook: $4.39

*Granted, since these firms have different business models, a better measure would be net profit per user -- see below. Notwithstanding, Louis's figures from 5 top social networking firms indicate that $4 average revenue per user is a good expectation, and that is supported by other analyses.

Per-user valuation at IPO:

Pandora: $ 50.98

LinkedIn: $ 86.67

GroupOn: $ 271.08

Living Social: ?

Zynga: $ 75.43

*Facebook: $11.83

*Assuming FB can raise $10 billion in an IPO; they said they hope to raise at least $5 billion.

For the above firms, I compiled these annual profit figures for 2011:

Net profit per user:

*Pandora: $ 5.10

**LinkedIn: $ 0.68

***GroupOn: -$ 1.29

****Living Social: ?

*****Zynga: -$ 1.68

Facebook: $ 1.20

*Pandora has had only 1 reported public quarter since its IPO. This is based on Q4 2011.

** LinkedIn reports only its annual EBITDA, not net profit.

***GroupOn has had only 1 reported public quarter since its IPO.

****Living Social is privately held and has delayed its IPO, but is expected to go public eventually.

*****Zynga went public in Dec. 2011; its annual net profit and latest user figures were used here.

Pretty slim pickin's in the brave new world of internet social networks. It's a definitely a volume game.

Here you can see another analysis of revenue per unique user among internet firms:

Facebook too shall pass

This gives me hope. We may just outlive Facebook and Twitter. But even if we don't...

... Just think, a thousand years from now digital archaeologists might dig up the remains of your LOL cats and vacation photoblog and ask in awe and amazement, "Who were these people?" and "What were they thinking?" Because you'll be long dead but personal data never dies.

(There won't be LinkedIn then either because everybody knows that in the future there is no more money, hence no need for job networking; it'll be a socialistic paradise enabled by rational scientific advancement and one-world government where everybody wears identical unitards and gets along.)

But for those of you crave constant contact with your Facebook, there is also a bright side to a future without it: Perhaps, just perhaps, the posted minutiae of your trek to Starbucks or to pick up your dry cleaning may actually seem interesting to human beings a few millenia from now, as opposed to people today.

Social media's moment will pass – but when?

February 18, 2012 | New Scientist

URL: http://www.newscientist.com/article/mg21328523.300

More proof Facebook is a simulacrum

Our hard-wired genetic limitation on meaningful association with others may disappoint you, but there is still room for optimism.

First, your world is more intimate than you think it is, no matter how big you want to make it, or how big you feel under pressure to make it in today's global world. So concentrate on cultivating your personal "village" of 150 or fewer people: it's yours and nobody else can do it for you.

Second, you are one of only 150 (or fewer) of the most important people of every friend or close associate you have, i.e. you are automatically a member of their village, too. You may be more special to others than you think!

Third, the purpose of networking isn't to endlessly collect business cards and get acquainted with more and more people, it's to cultivate meaningful relationships in your village of 150 (or fewer) friends and associates, and from it receive real recommendations and reliable info, thereby extending your circle of trust beyond 150 still in a meaningful and personal way, unlike feckless friending on Facebook or connection collection on LinkedIn.

UPDATE: I added like 15 contacts on LinkedIn over the past few days. Guilty!

Don't Believe Facebook; You Only Have 150 Friends

June 4, 2011 | All Things Considered on NPR

URL: http://www.npr.org/136723316

Desperate Facebook suicides: OMG! 4COL!

Another last cry for help in vain on Facebook. Sad.

Here's a thought: next National UnFriend Day, maybe you should perform a little test by posting your intention to kill yourself and see which of your hundreds of "friends" bothers to try and stop you. Anybody that doesn't post at least a lazy "Stop! LOL," "Oh no! LMFAO" or "2BZ4UQT" should be un-friended that very day.

Or better yet, stop using Facebook and Twitter altogether. As I've said before, I just don't get them. And if I don't get it, it must not be that cool.

Simone Back Announces Suicide On Facebook--And None Of Her Friends Help

January 5, 2011 | Huffington Post

URL: http://www.huffingtonpost.com/2011/01/05/simone-back-facebook-suicide_n_804566.html

Simon Johnson: Goldman creating new bubble with taxpayer cash

"Goldman is not a venture capital fund or primarily an equity-financed investment fund. It is a highly leveraged bank, meaning that it borrows through the capital markets most of the money that it puts to work." And where does Goldman borrow that money? From you and me -- the Fed Reserve.

Some people say Goldman is the smartest. I say they're the most brazen. They pay off whom they can, and bully the rest.

Why Are Taxpayers Subsidizing Facebook, and the Next Bubble?

By Simon Johnson
January 6, 2011 | New York Times

Goldman Sachs is investing $450 million of its own money in Facebook, at a valuation that implies the social-networking company is now worth $50 billion. Goldman is also creating a fund that will offer its high-net-worth clients an opportunity to invest in Facebook.

On the face of it, this might seem just like what the financial sector is supposed to be doing – channeling money into productive enterprise. The Securities and Exchange Commission is reportedly looking at the way private investors will be involved, but there are more deeply unsettling factors at work here.

Remember that Goldman Sachs is now a bank-holding company – a status it received in September 2008, at the height of the financial crisis, in order to avoid collapse (see Andrew Ross Sorkin's blow-by-blow account in "Too Big to Fail" for the details.)

This means that it has essentially unfettered access to the Federal Reserve's discount window – that is, it can borrow against all kinds of assets in its portfolio, effectively ensuring it has government-provided liquidity at any time.

Any financial institution with such access to such government support is likely to take on excessive risk – this is the heart of what is commonly referred to as the problem of "moral hazard." If you are fully insured against adverse events, you will be less careful.

Goldman Sachs is undoubtedly too big to fail – in the sense that if it were on the brink of failure now or in the near future, it would receive extraordinary government support and its creditors (at the very least) would be fully protected.

In all likelihood, under the current administration and its foreseeable successors, shareholders, executives, and traders would also receive generous help at the moment of duress. No one wants to experience another "Lehman moment."

This means that Goldman Sachs's cost of financing is cheaper than it would be otherwise – because creditors feel that they have substantial "downside protection" from the government.

How much cheaper is a matter of some debate, but estimates by my colleague James Kwak (in a paper presented at a Fordham Law School conference last February) put this at around 50 basis points (0.5 percentage points), for banks with more than $100 billion in total assets.

In private, I have suggested to leading members of the Obama administration and Congress that the "too big to fail" subsidy be studied and measured more officially and in a transparent manner that is open to public scrutiny – for example, as a key parameter to be monitored by the newly established Financial Stability Oversight Council.

Unfortunately, so far no one has taken up this approach.

However, there is consensus that the implicit government backing afforded to Fannie Mae and Freddie Mac in recent decades allowed them to borrow at least 25 basis points (0.25 percent) below what they would otherwise have had to pay – a significant difference in modern financial markets.

In "13 Bankers," Mr. Kwak and I refuted the view that these government sponsored enterprises were the primary drivers of subprime lending and the 2007-8 financial crisis – that debacle was much more about extreme deregulation and private-sector financial institutions seeking to take on crazy risks.

Nonetheless, Fannie and Freddie were badly mismanaged – and followed the market in 2005-7 with bad bets based on excessive leverage – in large part because they had an implicit government subsidy. Those institutions should be euthanized as soon as possible.

Goldman Sachs now enjoys exactly the same kind of unfair, nontransparent and dangerous subsidy: it has effectively become a new form of government-sponsored enterprise. Goldman is not a venture capital fund or primarily an equity-financed investment fund. It is a highly leveraged bank, meaning that it borrows through the capital markets most of the money that it puts to work.

As Anat Admati of Stanford University and her colleagues tirelessly point out, the central vulnerability in our modern financial system is excessive reliance on borrowed money, particularly by the biggest players.

Goldman Sachs is a perfect example. Most of its operations could be funded with equity – after all, it is not in the retail deposit business. But issuing debt is attractive to shareholders because of the subsidies associated with debt financing for banks and to bank executives because their compensation is based on return on equity — as measured, that increases with leverage.

If banks have more debt relative to equity, this increases the potential upside for investors. It also increases the probability that the firm could fail — unless you believe, as the market does, that Goldman is too big to fail.

Social-networking companies should be able to attract risk capital and compete intensely. They do not need subsidies in the form of cheaper financing, or in any other form.

Social networking is a bubble in the sense that e-mail was a bubble. The technology will without doubt change forever how we communicate with each other, and this may have profound effects on the nature of our society. But investors will get carried away, valuations will become too high and some people will lose a lot of money.

If those losses are entirely equity-financed, there may be negative effects, but they are likely be small – in the revised data after the 2001 dot-com crash, there isn't even a recession (there were not two consecutive negative quarters for gross domestic product).

But if the losses follow the broader Goldman Sachs structure and are largely debt-financed, then the American taxpayer will have helped create another major financial crisis.

And if you think that sophisticated investors at the heart of our financial system can't get carried away and lose money on Internet-related investments, remember Webvan: "During the dot-com bubble, Goldman invested about $100 million in Webvan, the online grocer that never got off the ground and eventually collapsed in bankruptcy."

I don't get Facebook either

Ms. Jones took a break from reviewing movies to totally read my mind.

She has written one of the best lines ever, IMHO: "I hate [Facebook] without understanding it, like a dog barking at a vacuum cleaner."

Admittedly, I'm on Facebook because I succumbed to peer pressure, too. I look at it maybe once every two months, and I still don't get it. Just like I get Twitter even less. Call me old fashioned, but back in my day, we used to write e-mails and blog. You youngin's with your Walls and thousands of friends just can't understand.

To Jones's credit, she didn't say anything about our increasingly atomized, bowling-alone society which beckons pseudo-social networks like Facebook to step in and fill the yawning void of our lonliness and disconnectedness. Thankfully she left that for me to point out and feel smart.

Facebook Friends: God Died to Get Away From Us
By Eileen Jones
May 23, 2010 | Exiledonline.com

Maybe somebody could explain Facebook to me. I'm on it and I still don't get it. I hate it without understanding it, like a dog barking at a vacuum cleaner.

Facebook's in the news for violating people's privacy and selling off their information, for general malfeasance and sleaze, the usual stuff. Boycotts are called for. It's made me wonder: is something as apparently rotten as Facebook worth the trouble of boycotting? If you're misguided enough to join Facebook in the first place, don't you deserve everything you get?

[By the way, there have been gobs of articles lately about how Facebook founder, wunderkind, and CEO Mark Zuckerberg is a total prick who cares nothing about our privacy, or people in general. - J]

Let me just say in my own defense, I never intended to be on it. As soon as I heard about it, I sensed it was sinister. "What's it good for?" I'd ask, and the eager Facebook shill would say, "It lets people find you, people you used to know."

"Holy God," I'd say. "I'd pay to make that not happen."

For years, I maintained a semblance of human dignity. But the nagging got so intense, I finally succumbed to peer pressure about six months ago. I set up my Facebook "profile," which was no sweat. Nothing but name, rank, and serial number, that's all you ever give up. As for a photo of me, well, I laughed at the very idea. A photo of somebody could go up there, as long as it wasn't me. Morticia Addams, maybe?

Lots of people hailed me right away, wanting to be "friends." Some of them I actually knew, and didn't hate, so there was a brief interlude that was practically heartwarming. Jolly greetings ("Eileen!! How ARE you?!") and all that. So that was okay.

But I was immediately disturbed about the whole "wall" phenomenon. See, people who are your "friends" write short messages, and any replies from their "friends" also show up, and pretty soon you've got streams of communiqués, many from "friends of friends," aka total strangers, messing up your "wall." For sheer randomness, it's like reading the graffiti in a public toilet, only minus all the interest, because public-toilet-writing generally involves the thrill of anonymous venting, heavy on the obscenities.

On Facebook, nobody vents at all. Nobody even swears. They used to, apparently. During its first phase, as millions of tiresome gasbags will tell you, Facebook was the site for stupid college kids to revile their professors and employers and describe their embarrassing sex lives and post pictures of themselves drunk. Then professors and employers starting reading Facebook, and the feds went after the Einsteins who posted their "Should Obama Be Killed?" poll, and the party was over.

Which meant Facebook was safe for the oldsters. Oldsters are more cagy but still fundamentally stupid. They persist in providing absurdly generous "profile" information about themselves, throwing their identities open to the world, but they're all carefully pretending to be nice and upbeat and not-crazy. Look, I'm all for strangers being nice in public; hell, I'm in favor of bringing back dueling, just to guarantee that everybody thinks twice before being impolite to others on the street. But I don't want to go to a special site for blasts of can-do perkiness ("I had a great day today yodeling in the Swiss Alps!") or random endorsements ("Evelyn is a fan of STP Motor Oil").

The whole point of having friends, as opposed to "friends," is that you don't have to relentlessly keep up appearances and strike poses. You can get out of the public eye and relax and curse and rant and glower and generally express yourself. So I didn't understand the point of Facebook. Pretty soon I was only using it to send private messages to actual friends, and what's the point of that? I already knew e-mail was a great invention.

The queasy blend of friends and "friends" is central to the Facebook experience. People who might get some sane use out of Facebook are advertising something, a business or a service or something. Facebook might have originated as a means of personal connection, but now it seems like strictly business disguised as personal connection, and the rhetoric of it is just as horrible as that sounds. Everybody writes in ad-sized bits, everybody "likes" a million products and services, everybody affirms things and exclaims over things like TV pitchmen. It's as if everyone you know is turning into those horrible shills who blog about things they pretend to like for company kickbacks.

(You might say that's nothing, so what—pretending to like something for cash is no big deal. But if so, you're already a goner. What you like and dislike is fundamental, and if you've lost touch with that, you're a pod-person. Ask Ralph Waldo Emerson, who said the pressure to conform in America is so intense that most adults can't even articulate to themselves what their true preferences are, and that almost no one lives as a free human being but the occasional small boy, who will fearlessly declare the desires of his soul and body, and damn the consequence.)

After a few tentative attempts at posting on Facebook, I retreated into horrified silence. I couldn't do the lingo. Then I decided not to try to do the lingo. It's kind of like advertising for yourself, if your self was a plastic novelty toy: lots of cute photos and "hurray for everything" patter. I can only stand to look at it once a week. But I can't seem to cut ties, no matter how obviously I should. I mean, many friends are on there, posting like mad, poor sods! Plus there's a terrible fascination about Facebook: it's so godawful, but so generally embraced. It made me start to believe there really is such a thing as "postmodernity," and that most people have cheerfully given up the idea of having an authentic self. Happy artificial constructs! Meanwhile I'm a leftover modern type, still hanging back in the era of alienation, clinging to my likes and dislikes, occasionally fretting about the death of God.

Speaking of the death of God, I went to a graduation ceremony the other day, where the keynote speaker was a celebrated sound editor on many famous films. He did a PowerPoint presentation, heavy on the cornball humor that plays so well at graduations, showing the students that they are all "iGrad" units who need to upload the "experience app" and prepare for the world by self-branding, getting a logo, marketing themselves as product. "Because you ARE all products," he said encouragingly. "Universities are in the business of PRODUCING graduates, in the hopes that you will all become PRODUCTIVE in the world." The kids ate it up, and the profs smiled, and the parents applauded enthusiastically.

Way in the back, I broke out in a cold sweat.