This book is a sobering account of the systematic destruction of value caused by the networked economy under whose spell we have fallen so deeply. It is a powerfully argued, complex and, at times, over-elaborate description of how we first invented and then released a genie that is disrupting its way through the fabric of our economy. Like the Sorcerer’s Apprentice, Lanier depicts us as amateur enthusiasts marvelling as the internet yields exponential efficiencies to our lives at the expense of our humanity. It is the antidote to the over-optimistic star-gazing championed by futurist (now Googler) Ray Kurzweil in his ‘Singularity’ prophecies, the popularity of which seems to rise in direct proportion to the success of the digital economy.

I first read this book a few months after it came out last year but the ideas have lived with me ever since and I am starting to notice them appear more frequently in mainstream media. With the recent arrival of the paperback (reviewed recently albeit briefly in the London Evening Standard) and the demand today by Sir Tim Berners-Lee for a ‘Magna Carta’ bill of rights to protect users of the web, I wanted to capture the essence of Lanier’s arguments in this piece which is less of a critique and more of an aide-memoire of his key themes. The ideas Lanier presents may seem far-fetched at first but they draw attention to the more pernicious cultural aspects of the our increasingly digital world and some fascinating suggestions to counteract them.

Summary

Lanier fully accepts the pervasive and inexorable rise of our software-centred economy. In fact he goes as far as to suggest that “software could be the final industrial revolution”. His contention is with the fundamental inequality of networked economics:

Networks need a great number of people to participate in them to generate significant value. But when they do, only a small number of people get paid. That has the net effect of centralizing wealth and limiting overall economic growth.

The book is an argument for us not to lose sight of the humanist objectives of society and therefore of its economy. It describes the problem, its effects and suggests a number of ways to mitigate them. In essence, his argument is that:

Popular digital designs do not treat people as being ‘special enough.’ People are treated as small elements in a bigger information machine, when in fact people are the only sources or destinations of information, or indeed of any meaning to the machine at all.

The Problems

Lanier cites two key flaws in the new networked economy that could have disastrous effects on society unless we address them.

Problem 1 – Siren Servers

The first is a fundamental truth about the nature of networked economies which is known as “the network effect”. The roots of the phenomenon go back as far as 1917 with the popularisation of the telephone when the Bell company first noticed that the value of their network increased exponentially with the number of new devices connected to it. Lanier quotes Robert Metcalfe, one of the co-inventors of Ethernet and a co-founder of the company 3Com who’s eponymous ‘law’ states that “the value of a network is proportional to the square of the number of nodes”.

The effect of this transfer of value is so profound that Lanier dismisses the creativity of today’s generation of internet entrepreneurs as merely the focused application of the effect of networked efficiencies. His term for the most successful of these businesses (Google, Facebook, Twitter etc) is Siren Servers reflecting the fact that they draw people to use them in a way that becomes unavoidable. As our economy becomes inexorably more networked, so these siren servers hoover up economic value almost despite themselves:

Individual Siren Servers can die and yet the Siren Server pattern perseveres, and it is that pattern that is the real problem. The systematic decoupling of risk from reward in the rising information economy is the problem, not any particular server.

While these networks are open to all who are enabled and consent to use them, the fact remains that they are privatised which concentrates their value in the hands of the few:

When too many layers of access to culture are privatized, as has happened online, you eventually end up with a few giant players.

His dystopian vision of a “future industry of ‘decision reduction’” in which you would choose a decision reduction service from one of these few giant information processing players “to create bundles of decisions you could accept or reject en masse” doesn’t really seem that far off and, to some perhaps, sounds dangerously attractive. He calls out the valueless conclusion of this ‘march of progress’ in which efficiency has become a zero sum game:

Google might eventually become an ouroboros, a snake eating its own tail, unless something changes. This would happen when so many goods and services become software-centric, and so much information is ‘free,’ that there is nothing left to advertise on Google that attracts actual money.

If robots are someday perceived to efficiently run the world, then little money will change hands and little investment will be made thereafter.

Referring to the Edward Snowden’s revelations as an inevitable collaboration between these powerful few players and the most powerful few governments, Lanier highlights that we have merely created a new tier of elites to serve:

In what sense is becoming dependent on private spy agencies crossed with ad agencies, which are licensed by us to spy on all of us all the time in order to accumulate billions of dollars by manipulating what’s put in front of us over supposedly open and public networks, a way of defeating elites?

Problem 2 – Copying & copyright

The second key problem that Lanier highlights stems from the facility of the Internet to copy files, text and even concepts perfectly without any reference or trace of their origin. He notes that although the Internet could be described a giant copying machine, “copying on a network is actually rather odd and at the very least an extraneous, retro idea”. The point of a network is surely to allow many people access to the same information simultaneously to avoid duplication and inefficiency. More importantly, however, Lanier points out that the act of copying robs data of any inherent contextual information which, in an era of abundant and free access, is where much of the value of data lies:

If you copy a file, you don’t know where it came from, if it’s been altered, or what other information might be needed for it to make sense. The context is lost, and meaning is dependent on context.

It’s an article of faith in cyber-democracy circles that making information more ‘free,’ in the sense of making it copyable, will also lead to the most democratic, open world. I suspect this is not so. … A world that is open on the surface becomes more closed on a deeper level.

The Effects

1 – The devaluation of personal data

The direct result to us of the growth of networks and the decontextualisation of information is that value shifts from the creators of personal data (us) to the providers of services about the data (specifically Lanier’s Siren Servers). Lanier includes himself when he blames the naivety of the original Silicon Valley code builders for designing the ‘open’ information economy from which advertising would inevitably become the biggest beneficiary.

We in Silicon Valley undermined copyright to make commerce become more about services instead of content: more about our code instead of their files. The inevitable endgame was always that we would lose control of our own personal content, our own files.

We, the idealists, insisted that information be demonetized online, which meant that services about information, instead of the information itself, would be the main profit centers.

Therefore, the structural bias of the networked economy that favours Siren Servers has been exacerbated by its actual construction leaving people at a significant disadvantage and devaluing their input to this data-centred world.

2 – The decline of employment

In tandem with the devaluation of personal data, Lanier raises another more frightening side-effect of the exponential growth of the networked economy, the weakening labour market. This is a story that is gaining an increasingly high profile as more books and articles debate the possibility of a decline in employment in the face of algorithms and robots. This neo-Ludditism is no longer confined to manual labour but, instead, sectors that have previously benefited from the growth in the knowledge economy are now feeling threatened. As Lanier points out:

The key question isn’t ‘How much will be automated?’ It’s how we’ll conceive of whatever can’t be automated at a given time.

…

Instead, if we go on as we are, we will probably enter into a period of hyper-unemployment, and the attendant political and social chaos. … What should the role of ‘extra’ humans be if not everyone is still strictly needed?

3 – The rise of digital feudalism

According to Lanier, the collapse in the value of personal data is responsible for the commensurate rise to power of the siren servers and has resulted in a significant and dangerous shift in both economic and political power.

The information economy that we are currently building doesn’t really embrace capitalism, but rather a new form of feudalism. … We want free online experiences so badly that we are happy to not be paid for information that comes from us now or ever. …  In the meantime, those true believers encrypt their servers even as they seek to gather the rest of the world’s information and find the best way to leverage it. … That sensibility also implies that the more dominant information becomes in our economy, the less most of us will be worth.

If the information economy is to evolve on its present track, so that each player is either running a Siren Server or is an ordinary person ricocheting between two extremes of noncapitalism, between fake free and fake ownership, then markets will eventually shrink and capitalism will collapse.

The current online commerce models create a new kind of class division between full economic participants and partial economic participants. That means that there isn’t enough shared economic interest to support long-term democracy.

The Solutions

1 – The information economy humanised by ‘two-way linking’

At this point, the book becomes a call-to-arms for the development of a human-centred economy rather than one biased towards and controlled by Siren Servers:

The more advanced technology becomes, the more all activity becomes mediated by information tools. Therefore, as our economy turns more fully into an information economy, it will only grow if more information is monetized, instead of less. That’s not what we’re doing.

Lanier’s solution is to do just that – monetise information by ensuring that it retains its links to humanity, its provenance and its context, through ‘two-way linking’.

The foundational idea of humanistic computing is that provenance is valuable. Information is people in disguise, and people ought to be paid for value they contribute that can be sent or stored on a digital network. … If the system remembers where information originally came from, then the people who are the sources of information can be paid for it. That means if a snippet of your video were reused in someone else’s video, you would automatically get a micropayment. …. The primary distinguishing feature of humanistic computing is therefore two-way linking,

Lanier argues that much of the digital infrastructure built by Siren Servers (eg. Google and Facebook) would be unnecessary with an information architecture founded on two-way linking:

… if two-way links had existed, you’d immediately be able to see who was linking to your website or online creations. It wouldn’t be a mystery. You’d meet people who shared your interests as a matter of course. A business would naturally become acquainted with potential customers. ‘Social networks’ like Facebook were brought into existence in part to recapture those kinds of connections that were jettisoned when they need not have been, when the Web was born.

In fact he claims that keeping track of where information comes from “will actually make the Internet faster and more efficient.”

He goes further to suggest that retaining the provenance of information should be a basic human right “similar to the way civil rights and property rights were given a universal stature in order to make democracy and market capitalism viable.”

 Right now it might seem draconian to charge for access to information we have come to expect for free, but it would feel very different if you knew that other people were also paying you at the same time for information services you have fractionally contributed to in the course of your life. This is the only way that democracy and capitalism can be in alignment.

This statement was echoed only today by Sir Tim Berners-Lee, who marked the 25th anniversary of his creation by calling for a ‘Magna Carta’ bill of rights to protect its users.

 2 – Unique digital IDs

The logical precursor to securing payment for originating information is the pervasive use of unique digital IDs, something that all digital devices have but people are still reluctant to accept. Lanier points out that all Siren Servers are rushing to establish the primacy of their digital ID protocols and that it will happen sooner or later anyway. This is evidenced by Google’s Google+ system which operates less like a social network and more like an authorship ID management system, Facebook’s insistence on a single identity and the rush towards social logins to replace site-by-site registration. With internet services becoming “more like [utilities] every day”, unique digital IDs are “a piece of infrastructure people need, and when people need something they eventually ask the government to make sure they have it.”

3 – Value generation through creativity in the humanist economy

With these two premises in place (two-way linking digital information structures and unique digital IDs), Lanier addresses the question of sustainability and value generation in the humanist economy. Or, in his words:

‘Will there be enough value from ordinary people in the long term to justify the existence of an economy?’

His answer is two-fold. Firstly that the value of socially generated activity has already been priced-into the market capitalisation of the Siren Servers:

“network-oriented companies routinely raise huge amounts of money based precisely on placing a value on what ordinary people do online. It’s not that the market is saying ordinary people aren’t valuable online; it’s that most people have been repositioned out of the loop of their own commercial value.”

Finally, Lanier puts human creativity at the centre of future value generation in the information economy:

Change and development (human creativity) become the primary focus of the future economy in order to generate unique value irreplicable by computers.

The restless evolution of human culture and language will always require processing which will result in value generation enabled by two-way linking. In fact,

The humanist economy negates the need for attribution which is impossible to calculate truly as many influencers and contributors to purchases cannot be identified let alone have their value credited fairly. Ensuring that all data retains its inherent provenence and cannot be copied without it allows for value to be apportioned fairly far into the future.

For example, “code would remember the people who coded each line, and those people would be sent nanopayments as part of code execution. A programmer who writes code everyone uses will be able to benefit directly, instead of having to leverage code into a Siren Server scheme. The Google guys would have gotten rich from the search code without having to create the private spying agency.”