Facebook, Cambridge Analytica Scandal: The Prosumer is also Culpable

Responsibility for Cambridge Analytica’s (mis-)use of Facebook data to aid Donald Trump’s 2016 presidential campaign has, rightly, been accorded to all the major players.
Facebook has been criticized for being lax about its data; encouraging loosely controlled third-party apps; allowing them to gather data, sometimes quite personal in nature, about Facebook users; and lacking the ability to prevent that data from falling into the hands of others, especially those who might misuse it. This permissiveness was good for business as more apps generated more users and therefore more advertising revenue for Facebook.
Cambridge Analytica certainly deserves blame for using private data from responses to a personality quiz (thisisyourdigitalife); an app that was installed on 270,000 computers. That, in turn, led to access to information on about 50 million of the app users’ friends.
And. of course, the Trump campaign was willing, even eager, to use all that data, no matter how it was obtained, to aid Trump’s presidential bid.
While all of the above are culpable, at least some of the responsibility lies with Facebook’s users- the prosumers- who provided the data. They were very cavalier about the information they provided and how it might be used and misused. Most of them did not seem to know there was much they could have done to protect their data. They also did not know about the admittedly minimal defenses (e.g. installing tracker blockers) available to them after they had provided the data.
In the past, I, and others, have criticized social media’s prosumers for allowing their information to be used free of charge (see my November 19, 2017 blog “It’s Time to Pay Digital Prosumers for the Data They Now Provide Free of Charge”). These prosumers now stand accused of being oblivious to the potential uses of their information. Prosumers are, by definition, not only consumers of digital information, but they are also the source- the producers- of that information. As such, they should not only be paid for it, but they should be able to exert control over it. They are guilty of not using (or even being aware of) the power they have as a result being (active) producers of information on Facebook (and elsewhere).
In pointing the finger at prosumers, I am in danger of being guilty of “blaming the victims” in this case. There is something to that accusation, although much more of the blame goes to Facebook, Cambridge Analytica, and the Trump campaign. However, it is not enough for Facebook’s prosumers to accept the fact that they bear some responsibility for the misuse of their data. They need to become what they have the potential to be. That is, “dangerous giants” able not only to exert control over larger systems (e.g. Facebook), but to bring them down when the need arises.
We can expect (minor) reforms as a result of the current scandal, but many risks will always remain. As a result, prosumers need to be aware of what they contribute, as well as the dangers they pose, to systems such as Facebook. When the need arises, they have a responsibility to act like the “giants” they have the potential to be.

Bitcoin, Blockchain in the Age of Prosumer Capitalism

Producer capitalism, which continues to this day, was dominant from the Industrial Revolution to the end of WW II. It was (and is) based mainly on the exploitation of producers (especially the proletariat). Consumer capitalism grew increasingly predominant, mostly in developed countries, after WW II and remains of central importance to this day, at least in the U.S. (about 70% of the U.S. economy today is accounted for by consumption) and other developed countries. Consumer capitalism relies primarily on the exploitation of consumers through excessive costs for goods and services and by encouraging hyperconsumption. While both producer and consumer capitalism continue to exist, we are now in the era of the emergence of prosumer capitalism. This economic system is rooted in the synergistic exploitation of the prosumer as both producer (prosumer-as-producer) and consumer (prosumer-as-consumer).

In prosumer capitalism people are exploited as prosumers-as-consumers in that, as in the case of consumer capitalism, they pay more than they “should” for their goods and services. The level of exploitation is amplified because they receive little or no economic compensation for the increasing amount of the work they perform in consuming products and services. That is, they are exploited as “working consumers” (prosumers-as-producers), as producers of their own services (e.g., in “working” online, in fast food restaurants, etc.). In some cases (e.g., 3-D printing; additive manufacturing) they are even producing the goods that they will ultimately consume. The exploitation of both prosumers-as-consumers and –as producers is synergistic. In that way, the two types of exploitation build off one another to create unprecedented levels of exploitation…and profitability.

As a highly fluid currency, Bitcoin (or any of the other digital currencies already in existence, or that could be created in the future), as well as blockchain, have the potential to power all forms of global capitalism. This is especially the case in prosumer capitalism since both Bitcoin and blockchain are systems of prosumption that fit seamlessly into prosumer capitalism.

 

Bitcoin, Blockchain and Prosumption

Bitcoin (and other cryptocurrencies) and its underlying blockchain system are prosumption systems. There are no producers or consumers associated with Bitcoin and blockchain. All of those involved both produce and consume; they are prosumers. One journalist makes this absolutely clear in the case of Bitcoin when he points out that those who use the system are “both customers and owners of both the banks and the mint” (italics added). While the “customers” in this context are, in the terms of this approach, prosumers-as-consumers, those associated with the banks and especially the mint (the “producers”) are prosumers-as-producers. Bitcoin (and blockchain) involve both the production (especially by “miners” in Bitcoin) and consumption of data by all “nodes” in the system.

While all involved in Bitcoin (and blockchain) are prosumers, some are at times more producers (prosumers-as-producers), although they must also of necessity consume information. Such prosumers (actually their nodes) function as miners whose computers and their software compete to order new and unordered transactions into a block. They must also create a hash for the block. This involves solving difficult computational problems. Miners (and others) also serve as prosumers-as-producers when they verify transactions (e.g., creation of a new block) undertaken by others. They thereby help to maintain and secure Bitcoin’s network.

While all of this is challenging for the miner, it is easy for others (really their computers) involved in the blockchain to check (to serve as prosumers-as-producers) to make sure that the requirements are met.

As in many other instances today, it is not prosumption that is new. What is new are the technologies (e.g. Bitcoin and blockchain) that make possible new forms of prosumption.

While Bitcoin may yet fail for myriad reasons (a bursting of the current economic bubble, theft of large numbers of bitcoins, loss of faith in digital currencies, etc.), it fits well with various developments in the social world. One is the increase in prosumption and the technologies that expedite, even require, it. Others include the increasing importance of consumption and the spread of consumer culture, globalization, and rationalization (McDonaldization). Blockchain has a similar fit with contemporary social changes, but it is more likely to succeed even if Bitcoin fails. Blockchains, both public and private, have many other uses.  For example, they can be used to track almost everything including voting; use of, and payment, for music and art; and locations of cargo containers

 

An Ignored Factor in Job Loss and Job Change: The “Working Consumer”

The McKinsey Global Institute’s November, 2017 report deals with the future of work (including job loss and change) through 2030, especially in light of automation (and AI). While the report covers a wide array of causes of job change and loss, it, as is usually the case in economic reports, has nothing to say about the role of unpaid non-marketized “working consumers” (a kind of prosumer) in these changes. This omission is especially striking because the report does discuss the implications of the shift from unpaid non-marketized occupations (those that do such domestic work as “childcare, early childhood education, cleaning, cooking and gardening”) to others that are presumably paid and marketized (e.g., workers in the previously non-marketized occupations who are employed by agencies that sell their services in a broader marketplace). The non-marketized unpaid work performed by prosumers is far more important economically than that of the occupations discussed by the report. Further, unlike domestic workers prosumers are not likely to be marketized any time soon.

Among the many examples of the working consumer are prosumers bypassing the services of tellers and doing their own banking via the internet or on ATMs, doing all of the work involved in making purchases (of all manner of goods and services; for example, buying airline tickets online and bypassing travel agents), serving as their own wait- and bus-persons in fast food restaurants, pumping their own gasoline at self-service stations, and so on. While it is the case that this shift to the working consumer leads to the creation of new paid jobs (computer-related occupations relating to the burgeoning online sites), it is likely, at least in the short run, that job loss far exceeds those gains.

The source of the problem lies in the fact that the McKinsey researchers, as well as other economists and technicians associated with these kinds of reports, lack the concept of the prosumer. As a result they are unable to see, let alone analyze and quantify, the prosumer’s role in job change, primarily job loss. While the concept of the prosumer is gaining increasing attention in sociology (and other fields), it has yet to be noticed by economists. Yet, prosumers are doing infinitely more unpaid, non-marketized work than, for example, domestic workers.

It is also worth noting that advances in automation and IT will bring with them an increase in “prosuming machines” that produce and consume largely on their own. Such machines are likely to lead to significant job loss in the future.  For example, autonomous vehicles will be a cause of job loss for Uber, taxi, truck drivers, as well as those in associated occupations. However, far greater job loss will result from the interaction of working consumers and prosuming machines (e.g. the use of ATMs rather than human bank tellers).

The Decline and Fall of Independent Urban Brick-and-Mortar Consumption Sites

I recently blogged about the decline, at least in part because of the explosion in  digital consumption, of brick-and-mortar consumption sites such as shopping malls and various chain stores. However, a recent editorial in the New York Times (“No Shop Around the Corner”, November 20, 2017, p. A22) made it clear that I had failed to mention the decline of small, independent, urban, brick-and-mortar consumption sites. As a native New Yorker, I had noticed that decline several years ago when I stayed in midtown Manhattan. I went in search of the kind of local, “greasy spoon”, restaurants I had grown up with. I quickly discovered that they were nowhere to be found, at least in the midtown area in which I searched. Instead, what I did find were a number of outlets of various fast food chains.

The Times article focused on the “scourge” of store closings in New York City, mostly in Manhattan. While some those stores remain closed, others have been replaced by the outlets of national chains. Both alternatives adversely affect the distinctive nature and quality of life in New York and other large cities. Empty storefronts with large “For Rent” or “For Sale” signs cast a pall over the city (just as they do in shopping malls). Storefronts that become chain stores have a different kind of deleterious effect. Instead of a local shop, consumers are faced with a choice among the same kinds of chain stores found in many other parts of the United States, and increasingly elsewhere in the world. This has a homogenizing effect everywhere. The quite unique Manhattan of my youth is largely gone making it increasingly difficult to differentiate New York from other U.S. cities and even from the remaining shopping malls. The owners of the real estate on which Manhattan’s local shops are built are, at least in some cases, charging exorbitant rents that tend to force out small independent shop owners. The result is vacant shops. The landlords hope that a national chain (e.g. Sephora) that is able to afford the rent (or even to pay more), will open in those vacated locations.

Also worth mentioning in this context is the transformation the sleazy Times Square and 42^nd Street of my youth, an era and area that is currently being fictionalized in HBO’s “The Deuce”. Forty-second street between Seventh and Eighth Avenue has been transformed into a squeaky clean, Disney-like theme park with, among other things, a Disney theatre, a large McDonald’s, an Applebees, AMC and Regal multiplex movie theaters, and one of the Hilton’s hotel chain, with a Westin hotel just north of 42^nd street. In other words, 42^nd street is no longer sleazy, but it is also no longer distinctive. It now encompasses a similar mix of businesses to those found in many other locales.

Sleeping with the Digital Enemy: Salvation for Brick-and-Mortar Shops?

While many brick-and-mortar consumption sites are going bankrupt (Radio Shack, Payless), dying (Sears), or are long gone (Circuit City, numerous dead malls [see deadmalls.com]), several late 2017 articles in the New York Times suggested that it is premature to sound the death knell for brick-and-mortar stores.

Some brick-and-mortar consumption sites, most notably fast food restaurants, are not dying. In fact, they will continue to exist, if not prosper, at least until the day when technology is advanced enough to deliver burgers and fries to our homes digitally (e.g., that can be produced on our 3-D printers, or by even more advanced technologies of the future).  Many other kinds of stores (e.g. supermarkets) will survive for many of the same reasons. Furthermore, still other brick-and-mortar stores will continue to exist if for no other reason than the fact that many people will continue to feel the need to get out of the house and away from their computers, at least some of the time. Since consumption is, for many people, their major form of recreation, this will undoubtedly lead them to updated brick-and-mortar shops, malls, amusement parks, and the like.

There are also hopeful, but contradictory, possibilities for other brick-and-mortar sites such as, making them smaller (more focused, more personal and intimate) or more multi-functional. However, there is general agreement on the need to make such sites more experiential (for example, malls that have fewer stores and more restaurants and movie theaters; showrooms offering more personalized services and an array of amenities such as manicures and a glass of wine). Beyond that, such sites can move beyond a focus on brick-and-mortar shops and, among other things, transform themselves into “event spaces, classrooms, community centers”. While there is some promise in these changes, they seem, at best, dim hopes. The chief executive of Oscar de la Renta is quoted as saying that brick-and-mortar stores are no longer necessarily advantageous and in the second-tier markets they might be considered “millstones”.

The main source of salvation for brick-and-mortar stores is said to be augmentation with that- digital consumption sites- which have been, are, and will continue to be the greatest threat to them. The major hope for many of the brick-and-mortar consumption sites that continue to exist is in synergistic relationships with digital sites. While this will keep some brick-and-mortar locales alive, they will clearly be subordinated to the digital and on life-support. Further, that which is keeping them alive, at least faintly, is the very digital force that has been killing them and will continue to be fatal to them in the future. Brick-and-mortar stores are eagerly climbing into bed with their mortal enemy. If the alliance with the digital world does not kill brick-and-mortar sites, it will reduce them to insignificant appendages to the digital.

Also not offering much hope to the brick-and-mortar world are the material sites Amazon has created (bookstores, convenience stores) or purchased (the Whole Foods chain of over 460 supermarkets). They are destined to be an infinitesimal part of Amazon’s total business. They may be useful for experimentation, the application of the massive amounts of data collected by Amazon.com, and for new bodies of data on consumers, but they are not going to contribute much to Amazon’s bottom line. On the other hand, Wal-Mart will gain much more by its move away from its massive number of brick-and-mortar stores and in the direction of becoming a greater presence in the digital world.

It’s Time to Pay Digital Prosumers for the Data They Now Provide Free of Charge

A recent New York Times article made the case that users- prosumers- provide highly valuable information to internet sites such as Google, Facebook and Amazon.com. That information is currently worth $1,000 per user, an amount that will rise rapidly in the coming years. The argument is made that these companies, as well as the data brokerages (with current revenue of $150 billion a year) that purchase and sell such data, ought to be taxed. While this a radical suggestion, at least as far as those who run these companies are concerned, it does not go nearly far enough. If we are willing to say that these companies should be taxed for this information, a far more consequential change would involve actually paying prosumers for the information they now provide, consciously and unconsciously, free of charge.

Hidden from view is the fact that the vast success and wealth of Google, Facebook, Amazon.com, and other companies of their ilk are largely based on the free labor provided by prosumers. As things now stand, prosumers are even more exploited than the workers in traditional capitalist businesses. Such workers have generally been paid as little as possible (the fast food industry is a notable example), but those prosumers who “work” on these online sites receive no pay at all. They are expected to be satisfied with rewards such as the ease of ordering products online and of maintaining contact with, and being informed about the lives of, family and friends. This just not enough!

After all, those at the top of these digital businesses are billionaires many times over largely because of this free labor. (Admittedly, these entrepreneurs deserve to be rewarded for their ideas and for the infrastructure they provide online prosumers that allows them to consume and produce). In thinking about paying prosumers, consider how much it would cost these digital businesses to hire traditional market researchers to collect and compile all of these data. In fact, given the vast and rapidly growing amount of data, it would be impossible for them to do at any price.

Digital businesses are getting an incomparable gift from their users. It is time for them to offer economic rewards to these prosumers commensurate with their contributions to the corporate bottom line.

Viewers as Prosuming Machines or as Directors of Highly Personalized Movies?

A recent (January 30, 2017) New Yorker article deals with interactive filmmaking. This revolutionary change will allow viewers to affect, consciously and unconsciously, what transpires in movies, perhaps on a moment-to-moment basis. Of course, from my point of view, such viewers (audiences) are prosumers. While viewers- and audiences- are inherently prosumers, this technological development allows for a great expansion of their role in the prosumption process. This is especially true of the productive aspect (which has always been there) of the prosumption of movies.

One of those at the forefront of this development had been influenced by the interactive “Choose Your Own Adventure” novels he had read when he was young (as well as by video games which inherently clearly involve both production and consumption). At central points in those stories, readers are allowed to make choices in the direction taken by the story and instructed to go to the page where the story moves in the chosen direction.

Early experiments in interactive movies put controllers in the audience members’ hands, but this technology offered them only limited options. Momentum started to build when Investors began to see the economic potential inherent in interactive technology, including the fact that it would allow them to collect useful and potentially profitable information on audience members.

The technology already exists allowing audience members to make conscious choices in the direction taken by a movie’s story. Envisioned is a system that tracks viewers’ story preferences and provides it to them. This would be much like the online tracking of our interests and then having ads appear that are in line with them. Even further, there soon will be eye-tracking technology leading to movies that focus on where viewers direct their attention, rather than having the focus predetermined by a director.

Such systems are, and increasingly will be, “prosuming machines”. They will consume an audience member’s preferences- either explicit or implicit in, for example, eye movement- and customize ensuing, or even ongoing, content in the movie to those preferences. In the process, as prosumption itself becomes increasingly unconscious, human prosumers will be transformed into prosuming machines more and more lacking in agency.

However, another possibility is technology that would allow viewers to move objects on the screen. In that case, viewers would have much more agency as they actively direct the movie as it unfolds. The next step, at least conceivably, would allow the audience to be able to insert entirely different objects, as well as people and events, into the story.

Whether it is unconscious or conscious, viewers in the future will be much more productive prosumers of the movies.

Woefully Little “Sharing” in the Neo-Liberal Ride-Hailing Industry

In previous posts, I have dealt with the ride-hailing company, Uber, as part of what is supposed to be a “sharing” economy, but is, in reality, a triumph of the greed and one-sidedness inherent in neo-liberalism. Two 2017 New York Times articles (January 15, 16) underscored the difficulties raised in those earlier posts and pointed to new, even more problematic outcomes. The articles dealt with Uber as well as Lyfft, Via, Juno, and Gett and their disastrous impact on the taxi industry. Declining dramatically are the number of taxicabs, trips by taxi, taxicab drivers (many of whom have switched to working for ride-hailing companies), the amount of money spent on fares, and the cost and value of the medallion needed to operate a taxi in New York. In contrast, the ride-hailing companies are growing rapidly. There are now 60,000 cars in New York City with ride-hailing apps, but only 13,000 yellow cabs.

Uber drivers tend to earn twice as much as taxi drivers. While they enjoy their higher income and being self-employed, they incur additional costs and responsibilities being on their own in a neo-liberal world. Because of the need to get high ratings from customers, there is great pressure on them to keep their newer-model cars well-maintained, clean on the outside and spic-and-span on the inside; to dress respectably; and even in some cases to provide refreshments for their passengers. These expenses, as well as the cost of automobile insurance, can eat up as much as 50% of an Uber driver’s earnings. Then, there is percentage the ride-hailing companies take off the top of a driver’s earnings.

Uber has great power over the drivers and there is little they could do when, for example, Uber raised its percentage from 10% to 25%. Since drivers are not employees, they are not entitled to a minimum wage, or sick and holiday pay. They also have little in the way of defense as Uber and the other ride-hailing companies move in the direction of driverless cars which would completely eliminate the need for drivers.

There is little sharing in the ride-hailing economy since the drivers do all of the work, pay all relevant expenses, and take on all of the responsibility. What they do share- and can ill-afford- is their relatively meagre net income with many others, especially the ride-hailing companies.

This not a defense of the traditional taxicab industry. My father was a New York City taxi driver who earned little and was ill-treated by the company that employed him. However, the neo-liberal world now in development in the ride-hailing industry- and in many other sectors of the economy- promises to be much worse. Uber is a far more powerful company- and infinitely richer- than the taxi companies of my father’s day. Uber has even less interest in those who do “gigs” than the old taxi companies had for their expendable drivers.

Donald Trump: The Ultimate Prosumer

While it is far from his worst, or even his most defining, characteristic, Donald Trump is perhaps the ultimate prosumer. This is made clear in a December 12, 2016 New York Times article (“The New TV Reality: All Trump”):  “For the next four years at least, we are living in a TV show that Mr. Trump is simultaneously starring in, consuming and live-tweeting”.

Unpacking that statement in my terms, Trump is producing his act (his creation of the performance of the starring role in his- and the current U.S.’s- life), he is consuming that act as he reportedly continually watches himself on the television “shows” (where he also seems to get much of his information about the U.S. and the world), and he is using that information in producing live-tweets in response to some of what is said on those shows (often and not incidentally about himself). His tweets increasingly lead to re-tweets and further news coverage that he is likely to consume and to which he will, when the mood hits him, produce a response.

This endless cycle of consuming-producing-consuming is a particularly good example of prosumption– the interrelated process of production and consumption. While production and consumption are separated out in the preceding paragraph to make the elements of the process clear, they are in reality tightly intertwined in that case, indeed in all cases.

While this only serves to reframe Trump’s approach, there is a critique implicit in this reframing. That is, in this case, the prosumption lens reveals an extreme example of a person’s consciousness being shaped by interaction with others. While this is true of all of us, in Trump’s case it is more an interaction mediated by television where many of the normal interaction cues are more difficult to discern or are absent. Furthermore, Trump seems obsessed with looking at the mediated version of himself, and how others see him, on television. While most of us like to look in the mirror now and again, such narcissism takes a very different and more extreme form in Trump’s case. Furthermore, millions of others are peeking into that mirror at the same time.

As largely a prosumer of himself, Trump is not only shaping his own consciousness in this way, but more worryingly shaping the consciousness of many others, to say nothing of the domestic and foreign policies of the United States.