Siren servers gobble up economy

The culprits for the economic crisis have been exposed: siren servers. That says Jaron Lanier. Does the siren song of Facebook, Google and Amazon lead humanity to destruction?

How software eats the world
My grandfather had an impressive encyclopedia that took up the entire top shelf of the bookcase: the Winkler Prins. He, with the rest of the family, took family photos with videos of Kodak in his SLR camera. These photos were pasted into photo albums, which took up another hefty shelf.
He has not been able to experience it anymore, but all the functions that I just described are now taken over by the software in the smartphone and on large servers. Kodak, in its heyday a company with 100,000 well-paid employees, is a faltering patent troll after a relaunch, with only a few thousand employees left. There are also no longer many photo shops (only passport photos are a last, sparse niche).

Siren servers work like a tornado economically. They gulp everything down. Source: Wikimedia Commons

More and more sectors of the economy are affected by this fate. These are turning into shrinking markets. Think of newspaper journalism, photography, now the hotel and taxi industry. There is less and less to be earned. The annoying thing is that no new, more lucrative sectors are being added. Kodak's features, for example, are now being taken over by Instagram, employing maybe 20 people who are now filthy rich. Instagram is a billion dollar company, and a good example of what Jaron Lanier calls a 'siren server'.

How do siren servers work?
Sirens were mythical demigods from Greek mythology who, with their irresistible siren song, lured shipmen to three rocky islands off the Neapolitan coast. Siren servers are also irresistible in many ways. They form a huge hub of computing power and attract the network in which they function. They do this with their 'free' products: Google with free searches, Facebook with free social profiles and Amazon with cheap books, sometimes even free to dive below the cost of a competitor.

Jaron Lanier, homo universalis, here working on an exotic wind instrument. Source: Wikimedia Commons

Once there is a strong siren server, it is for competitors, such as the Dutch find.nl, almost impossible to survive next door. The owner of this can install much heavier servers, collect more valuable data and provide better service than the competitor. The location advantage, as a result of which a baker in Pau, southwest France, has little to fear from the Warme Bakker from Surhuisterveen, has completely disappeared. Anyone, anywhere in the world, can search via Google, create a profile on Facebook and post their photos on Instagram. Only in countries where there is strong government censorship, such as China and Russia, competitors still stand a chance.

How do siren servers affect the rest of the world?
Siren server owners want to make a profit as easily as possible. That means: maximizing profit, minimizing risks. For example, anyone who uploads an image on Facebook is personally liable if it is copyrighted and an annoying guy such as the late Guus de Jong thousands of euros. There are also several siren servers active in the financial markets. These were behind the complicated financial products that led to the banking crisis of 2008-2013. These products were constructed in such a way that the profits went to their owners and the risks to the rest of the world. At a certain point, these siren servers became so big that they dragged the rest of the world with them: the rest of the world had simply become too small to be able to absorb the shocks. Although, as is known, politicians have done everything to make the taxpayers pay for this.

Too big to fail
Which, according to Lanier, is also a huge danger with a huge siren server, such as Facebook. If the Facebook server farm goes down, for example in a bankruptcy, that means that the billion users of Facebook have also lost their digital data and the thousands of companies whose social relationships Facebook controls are also bankrupt.

Free, but not really
So that "free" is only an illusion, Lanier states in his book Who Owns The Future (2013). After all, we return something to siren servers that is not economically valued, but has enormous value: our personal data, a large part of our digital life. For example, Facebook, stock market value $ 200 billion, each user is worth more than a hundred US dollars. Not that you as a user see any of this money back, except in the ever-increasing functionality of Facebook. Facebook and Google know profiles of you, which can be used to show targeted advertisements. There are more applications of big data: Google is developing a comprehensive semantic network of all human knowledge with the help of digitized books and web texts. Google's translation services keep getting better by analyzing the work of others. In other words, based on the work of others, for which Google and Facebook do not pay. As a result, the economy is shrinking and wealth is being sucked into the owners of the siren servers.

How will this end?
Lanier foresees that if we don't act, more and more sectors of the economy will be affected by this process. After all, all technology consists of information. All capital will be swallowed up by the siren servers, removing the middle class, essential to the stability of a society.

Fortunately, he says there are several ways in which we can establish a new middle class and use it to grow the economy again. For example, information should no longer be free. Hereafter the sequel, and a discussion of whether Lanier's analysis is correct, and whether his solution is indeed the saving angel. And whether there are other solutions.

Source:
Jaron Lanier, Who owns the future, 2013, Simons and Schuster, ISBN 9781451654967 (new price approx. € 25-30, illegal copies available online)

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