Online Companies Like Facebook Have Created a Meaningless Economy, says Douglas Rushkoff

In the original .com era companies were measured
by how much money they made. The idea was that you sold a lot of stuff and took in a
lot of cash and that was the way you could get a valuation and then get acquired or do
an IPO. Now, consumers don’t have money anymore. People are poor. So companies can’t really
use revenue as a way of showing what they’re worth, plus they have no real business plans.
So what they do instead is use likes as a metric of their worth. If a company can have
a lot of people saying I’d like it, I like it, I like it, then that more ethereal abstract
metric, I’ve got a million likes; I’ve got 20 million likes, that becomes marketable.
So if I want to sell a record and make money and go to a record company or a CD company,
I can show look, my song on YouTube has 500,000 likes and the record company or the sponsor
will then promote my music, not even because they’re going to make money with that music
but because then I’m supposed to sell my likes, my views, my followers to their sponsors. So, a guy like Jay Z comes out with an album
through Samsung that he gives away for free because what it really did was installed spyware
on people’s android phones that could see what they were doing. So what Jay Z was doing
was rather than selling his music he was selling his likes. A company like Tumblr had no revenue
but they had lots of likes and users who all clicked on each other stuff, they had those
phantom metrics. And with that they were able to sell themselves for a billion dollars.
This year Yahoo is taking Tumblr, the billion dollars, as a loss. They’re writing the whole
thing off because they didn’t buy a company, they bought likes. But this is the new economy
that we’re in. It’s an abstracted absurd essentially meaningless economy. All of these companies, Facebook, Twitter,
Google, they’re all advertising based, they’re all market researched based. The idea is that
these companies will somehow replace advertising and marketing and market research and consumer
data. The problem is all those industries combined never account for more than three
or four percent of GDP. They can’t because if advertising becomes the majority of your
marketplace who’s left to advertise? If my talks are supposed to advertise my books and
my books are supposed to advertise my TV appearances and my TV appearances are supposed to advertise
my books, where is the revenue? That’s the problem in our society now is that every company
now is a data play or an advertising play, but how can the whole NASDAQ stock exchange
be one big advertising play? It can’t. You still need enough razor blades and bananas
and milk companies to support all of that stuff. So it won’t support the entire economy. So that’s why we don’t really use revenue
anymore in playing this out. The bottom layer of the Ponzi scheme, which is what we’re in
now, where these companies are still trying to get shareholder value and IPOs on Wall
Street, this bottom layer is made up completely of likes. It’s made up not of the revenue
that the companies make but the amount of likes, the amount of traffic, the amount of
data they can show. But if your company’s endgame is what they call a big data play
that oh the data we collect is going to be so valuable, you’ve all ready lost. Everybody
is collecting data. The one thing that there is a glut of is data. So that’s not what you
want to be trying to collect right now. The problem is most business people, whether
they’re in investment baking or whether they’re the hungry little startup people, they are
so oblivious to the operating system beneath their technologies that they end up really
driving their businesses off cliffs. And all I’m asking people to do, especially if they’re
programmers, especially if they’re developers, to look and say wait a minute, what am I optimizing
my business for? Am I optimizing it for the extraction of value from people and places,
which is a losing proposition? Or am I optimizing it to promote the circulation of value between
people and places, which is a winner’s game? The whole point of a digitally distributed
economy is that it’s networked; it’s distributed. You don’t redistribute the spoils after-the-fact.
You don’t say oh I’ve made too much money; I’m going to give back 90 percent of it now
before I die into all the schools and things I think need it. No, that means you’ve had
and extractive silly sick business, which let you get hundreds of billions of dollars
but killed your marketplaces, destroyed public areas, destroyed the planet. There are three factors of production. Adam
Smith, everyone’s known this: land, labor and capital. In the current VC driven technology
startup marketplace, the only one of those three that we value is capital. The VC makes
all the decisions and land and labor are left out of the equation. That’s why we have zillions
of unemployed people and why we’re destroying the planet. It’s really simple. Where if we
include land at labor the places where we do our business and the people through whom
we do our business. If we include them in the value equation all of a sudden business
is positive rather than a net negative on our society.

100 thoughts on “Online Companies Like Facebook Have Created a Meaningless Economy, says Douglas Rushkoff

  1. As someone who has done work as "social network manager" likes are absolutely pointless, and don't translate in to new business or clients!

  2. So true. Expanding on this people in well-off countries including myself are sucked into to this meaninglessness like material and career gains. Nationalism and Religion in post-modern nations have rapidly disappeared, and something needs to fill our nihilism. Although the better way to create meaning in our lives would be to create meaning within ourselves like through meditating or pondering about our life, we have been sucked into this materialistic facade of culture and media.

    But how did we end up like this? Companies saw that our lives held little meaning and value, and then targeted our thirst for meaning. You can definitely see this in a lot new products, where companies keep changing the products to "look good" yet fail to develop greater functions for the products. Therefore, it's up to us to challenge these social norms and systems among our peers and people around us to help them escape this superficial dream.

  3. he's wrong. Advertising and content can be 100% or close to that. How? We all plug into the Matrix, forgoing the physical world and all aspects of the economy that go with it

  4. After watching this video I immediately gave it a like and sent it to my dad. He teaches marketing and responded as such take it as you will, "Wrong. There are 5 factors of production. He left out the most important 2…Knowledge and Entrepreneurship. Those 2 make the world go round."

  5. This was bound to happen anyways, thanks to technology (i.e. robotics, advanced farming techniques, longer lasting materials, etc., anything that helps remove the need/demand of human personnel).

    Money is an abstract concept anyhow, and economics isn't a force of nature; we can manipulate, interpret, and define economics the way we want. What has to change is our policies and how we interact with economics with our economy.

  6. Isn't it ironic that he is claiming during the original dot-com bubble that companies had "real revenue", while today they don't? I think he has it backwards…the previous bubble was a bunch of unprofitable businesses shipping dog food around the country at retail prices. Today it is a bunch of (very profitable) SaaS companies and different social networks that scale first and monetize later.

    Most new companies ARENT advertising startups. Every corporation in the US is really just a collection of functions – sales, manufacturing, accounting, management, etc. All of these can be greatly improved with software which is exactly what tons of companies are out there doing (SaaS).

  7. But how do you make business and capitalism about labour? Money that goes to labour and land is not going to capital, so its always more profitable to reduce the costs of the latter.

  8. what's an example of a business that has incorporated all three things; land, labor and virtual capital, in their business model. that would help me understand this better.

  9. During the "original" dot com era, companies were NOT measured by how much money they make. It was just the opposite, with the on-going joke in Silicon Valley being, if your startup was profitable, you must not be thinking outside the box hard enough. The mindset was, any idiot could make money–the goal was to do something so out there, that it would take awhile for the masses to realize it was something they needed. Those were the days…

  10. Yes, most of what he says makes a lot of sense. However, I think his argument about grinding for the likes instead of cash begs the question of whether the cash itself hasn't been a "meaningless abstraction" all along

  11. their economy consists of likes?… stupid much?…. the worth of facebook, google and such are measured by information; that's the real good they trade, by selling off your personal information to anyone (e.g. advertisers) who is willing to pay for that. de facto, you are note the customer of facebook – you are their raw-material, their resource, their cow to milk!
    Additionally, their value is inflated for potential future customers, like, e.g. governments, which are already interested in those vast data-pools those companies gather!
    Seriously: why is this "Big think"? – this guy doesn't understand shit!…what a quack!

  12. Amazing video but it's a shame this won't get through nobodies head smh. I love intellectual people and "Big Think"

  13. As a professional programmer, I feel that most programmers are given requirements a little at a time and don't have as much control or influence over these things as the video might lead one to think. This is usually controlled by management, sales people, marketers, and so on.

  14. I would go even farther and say it's not the likes that are worth anything, but the people's actively recorded attention at some point in time that is actually what is worth something.

  15. I don't know about economy, but facebook is certainly not meaningless; a large number of lives were (and presumably, are still being) saved in the Syrian refugee crisis because of facebook's real time updates on weather and which areas were safe/dangerous to travel through; facebook's "mark as safe" feature gave thousands relief after they heard their loved ones were safe, and that's just to name a few.

  16. is it possible that the 1700 thumbs up this got, means that people think that what he says is wise? Is it just directed anger? I hope so…

  17. Like I've been saying for a decade or two now, this society is fucking bullshit. It's run by fucking bullsitters and it's populated by a bunch of assholes, nitwits, and jerkoffs. Or maybe that was George Carlin. I dunno. Fuck it.

  18. "Likes" used to be called "leads". They have value and always have. Further, dumb money goes into dumb ideas – eventually dumb ideas crash and people lose – because in the end the economy still depends on selling something of value for real money. The grocery store still asks me for real money for the food I purchase.

    I don't buy the sky is falling – make no mistake – Facebook is making money, real money. Newspapers used to make that money for advertising- where are they – virtually extinct. If the worm turns on FB, then they will suffer the same fate if they do not provide value to those who are purchasing their leads, or likes. He has some other interesting observations, but is a bit alarmist when it comes to the whole concept of "likes" and his singular premise for global economic failure.

  19. It strikes me that Rushkoff is leaping at the low hanging fruit in his position by merely focusing on online companies rather than the accompanying reality that has seeped into all aspects of day to life/commerce. Corporations want likes in the same manner as so many on YouTube want likes in that they can perceive a value but cannot quantify nor can their followers comprehend exactly what they are getting. Rushkoff complains that these online companies do not in fact produce anything tangible that can be measured as a profit/loss but at the same time we see that the stock market has increased in value far exceeding inflation apparently ignoring profitability of corporations in favour of 'belief' by Investment Bankers.

    Historically name brand companies were entirely premised on consumer interaction; ie: Wonder Bread was known whereas Monsanto that provided the wheat was not. Unless you were a company town the fact the local factory made the the most important components of a vacuum cleaner was lost to the world except that the parts helped comprise a "Hoover". Yet was not Hoover not merely a sum of its parts? Probably not. The ABC Sucking company in Jerkwater USA traded at around its actual value of cost to expense whereas the Hoover Corporation could raise capital and demand that ABC Sucking find new ways to reduce its price merely based on its public image even though its survival depended on ABC Sucking.

    This is the economic model and it is naive to suggest that just because online companies are little bit more intangible that they are any more or any less valid players in the shell game that passes for commerce.

  20. Damn, you nailed it. This is an explanation that is concise and consumable
    by the average person. It will be on my share list in my crusade against the

  21. I don't fully agree with Mr. Rushkoff's views because I believe that companies like Google and Facebook provide targeted advertising, and advertising products is a service that has a definite measurable economic value. However, on a different note, reading Henrik Ibsen's brilliant play "An Enemy of the People" when I was in high school taught me that sometimes it is better to have a million hates (i.e. to have a million people really passionately hate you) than to have a million likes (where the "likes" are just limp, lukewarm feelings that have no real passion or strength to them). People like Ozzy Osbourne and Alice Cooper who got their initial career boost from being hated by large numbers of people are more remembered and have gotten their message through to more people and have had more staying power in their careers than someone like 2010 American Idol ninth season winner Lee DeWyze who merely had a lot of "likes" but was never truly passionately hated by a large number of people. What lesson can we learn from the fact Jesus of Nazareth was one of the most hated people in the ancient Roman Empire (he was hated so much that they nailed him to a cross while he was still alive) and yet 2,000 years later there are a dozen churches dedicated to him within walking distance of my house?

  22. I think this man has no idea about FB's business model as a company and is even farther to know the data on the real revenues FB generates. Who really knows?
    On the other side, Facebook going into the stock market is the way of materializing the brand name into real money. People transfered real bank digits from their accounts to have stock shares from this company with the hope that in a future this company is worth more than they spent for their share. So FB actually is worth for at least the value it's stock shares have right now. Now, if money in the stock market is worthless because of it's virtuality created by leverage and speculation, that is a whole other deal.

  23. Thanks for blowing through all of the current bullsh*t generated by these Start Ups & trendy Companies around the globe Douglas. Nice talk.

  24. Investors are not silly. If they invest money in Facebook or Google, then they think that companies producing razor blades, milk or banana still don't understand consumers tastes enough and are willing to pay money to Google to do it for them. It is not a silly idea that instead of every big company creating it's own research centers they pay Google of Facebook to analyze what their potential consumers want. Of course companies like Google can't grow forever, because they are dependent on companies producing those ''razor blades'' who pay them money to analyze their consumers' tastes, but if these companies still grow, then they haven reached their maximum. No one says that Google can replace GM, but if Google analyzes data more sufficiently then companies' analytic centers do, then outsourcing it to Google is a better deal both for companies and for economy as a whole.

  25. ..OK he says it's a Ponzi Scheme….but where is the money coming from…when will it run out…and what happens then?

  26. Finally someone throwing light on this shitstorm economy. Big Data made a buzz-word by these companies and they are selling data to other businesses. C'mon business is not just advertising.

  27. i feel like tech gets all the attention in our economy so because it's an unsustainable sector it'll crash our economy but the whole technology industry only accounts for 7 percent of GDP. its way over represented in the stock market and financial markets, so if it crashes the financial economy will potentially crash pretty hard. but the regular economy is a lot healthier than people think.

  28. The guy is clueless about online business. Basicly onle sites are new versions of traditional newspapers and magazines: the more readers, the more ad revenue. The more links to articles the more authority.
    He basicly says all media is meaningless.

  29. Online Companies Like Facebook Have Created a Meaningless Economy… obviously.
    Spyware with free downloads? Sure… Who didn't know that?
    Net businesses produce a net negative on society? Yep, also obvious.
    I suppose someone had to say all this aloud though, since so many can't see the obvious.

  30. This is a very lucid and clear conversation on the reality of the internet economy that we are ignoring at our peril. Although social media appears powerful, it is really fictitious and a waste of programmers talents. Programmers should be producing products, not working on what are effectively 21st century advertising billboards that just show metrics of internet traffic and likes, not production or real economic growth.

  31. Except at least in music, everything is now an advertisement for making money at the live show.

  32. Consumers don't have money anymore? The EU and ONS have reported record levels of disposable income in recent years. We are a consumer society and there are ever increasing levels of waste produced as a result of this consumption. There's just a ton of evidence out there to back this up.

  33. wow I think Big Think is finally starting to bring back some quality. Some of these videos really got low quality

  34. Right or not it still sounds as a rant, it ends without any advice on how to do things differently, because maybe things can not be done differently and just go on as they should

  35. Yes, the economy was far more meaningful in the golden consumerist days of the fifties and, unlike Facebook, real companies making real goods, like Monsanto or General Motors where struggling hard to save the planet, until Google and its buddies came and hammered down the foot on the mass extinction and global warming pedal.

  36. The problem is that money provides a medium of exchange for other things, including more money. So when you start valuing labor and land more, that leads to increasing capital-investment because everyone wants to grow and shift the burden of work they don't want to do but whose fruits they do want to consume.

    If people start get paid more and/or land-prices begin going up, they become a profit-making commodity for investors. That means investors will be working harder to control labor and land for the sake of extracting profit from it. On the other hand, they also don't stop trying to control resources as they get cheaper AS LONG AS other, more valuable commodities can be produced from those resources.

    Take land, for example. Natural land costs less than developed land so investors and developers buy it up, clear it of trees and natural ecology, build buildings and parking lots, and then market those spaces to businesses that can get loans based on revenue projections. If the cost of undeveloped land or labor would rise, it would make it harder to develop land and run businesses, but investors would find ways to commodify undeveloped land and labor and thereby gain economic control for the sake of producing those things they desire to consume.

  37. Where else can you post your selfie/dinner screaming silently "remember world of my existence in this slice of endless time", "remember of how happy I was in this world drown in sadness", "remember of how pretty I was before time takes it away", "remember world I'm a special soul".

    Facebook gives something back to society, a platform for our narcissistic lizard brain to express itself and to be exploited by those who know what data to collect and analyze.

  38. This is like saying buying land that is only used to support advertisement signs is a meaningless economy. It's not meaningless; advertisement is a necessary part of the production and spread of new ideas.

  39. I think Mr. Rushkoff is right in this case, for the most part. The whole economy isn't suffering from this delusional practice and the real culprit is the Fed's easy money policy and the government bailouts and subsidy. I surmise that a lot of the cheap money (near zero percent interest) goes towards betting on these flimsy business models. It's easy to make the bet because the cost of borrowing is low and if you loose big enough the government is going to bail you out. Of course this is only for the elites, while the entrepreneur, worker, and family man is being robed. There are also bubbles in the housing and auto markets and look at the educational industrial complex.

  40. Hm, hypothetically we replace all human labors with robots. Would that be a positive or still be negative?

  41. You say it's an abstract and meaningless economy, but isn't all money's value abstract to begin with? And how could it be meaningless if many businesses and individuals are finding ways to be successful around those platforms?

    Also, saying that people shouldn't be collecting data just because others are doing it is no solid argument. It's actually immensely valuable if you have an online platform – if you're not doing it you're probably being left behind by the competition.

  42. Google- Its good for sorting information, Youtube- I learned a lot of information, Facebook-Twitter-Instagram: I don't use it cause they are just a waste of time.

  43. weather you ewish like it or not we ARE going to a non monetary system. WHHHYY because all the gold is in the desert along with the greedy that propagated it.

  44. Move atoms, not near-massless electrons and photons, if you really want the economy going. If you're not moving mass, you're not doing work.

  45. Likes don't mean shit, go check out Gary V. on youtube. The old man is wrong, it's just a phase of change from how it used to be, to the new world. The world is currently in an industrial revolution not yet seen before. Don't be afraid of change lol. Companies who base their worth on likes or IPOs are going to fall really soon.

  46. he is all over the place despite at the end where he has a sincere care of what's happening to the masses or those who are employed. facebook or google aren't different to what already happened in the past which is television/radio/magazines being run by advertisers and funded by companies. the root of the problem are the rich who influences the government to make them richer while the money lays dormant until they find an expense that makes them more money.

  47. Income inequality has rendered a demand-oriented economy more difficult. But there's this apparatus to sell things to people that needs to justify its existence when all they really need to do is make sure to vote for the right clown for president & approve of the wars we fight for our foreign allies.

  48. People have money.
    Companies are valued by potential selling power.
    Facebook sells a lot, and so does Google.
    This video is stupid.

  49. Who is this phony economist? Facebook had a revenue of $8 billion in last quarter and a profit of $3 billion. The phony economy is people like this guy who make money by saying made up things.

  50. Its about time that facebook becomes orkut. Sooner or later, a new kid on the block will appear and wipe the slate clean – then – a new era will begin and same shit will happen all over again!

  51. I'd argue that money is just data at this point. With 20Trillion in debt at a fed level and 18 Trillion or so in consumer debt (plus interest, crumbling public infrastructure), most created in the last 100 years, the data is clear how well this system works. Yet we are still caught up in the illusion that it does and can't quite figure out that it's not the answer.

    Modern Money is the titanic 2.0 post the iceburg 'bump' (when we started insane fractional lending and then unethered it from gold) , still looks impressively great, lots of great parties on the top deck,

    but still fatal flaws that will not keep it from sinking And now labor (mind/body tasks) has been shifting from human to tech to hybrid tech/human and only super skilled or unskilled (to hard/unaffordable for tech to do) which is eroding both sides so soon there will be very little humans HAVE to do in regards to the basics of food/water/shelter/transportation if we choose it.

  52. Not being negative but doesn't matter, labor it's being replaced by automatization in an exponential way in production and services. Capitalism cycles are like breathing, expansion, and contraction, each expansion is new technology, new laws, new social adjustment, better living, and health, we are living the contraction destruction, each expansion is more big government and more social, it starts with free and obligatory elementary education, in this expansion will be seeing free college and higher education financed by taxes, government institution about ecology and sustainability and universal basic income. Its change or die. The wealth it's about social if social collapse wealth loses its value.

  53. Every time I hear this guy talk, I'm impressed. Finally an economist that values ACTUAL value creation. Think I'm in love.

  54. It would be nice if VC's gave funds to honest startups that actually need it instead of wasting it on ones that don't. That would create real wealth and lift everyone up. In my industry, pharma, billions of dollars are lit on fire because of con artists that have "the appearance of value" rather than the companies with the actual good ideas that would create value.

  55. The Internet became today what the streets and highway was for millennia, were biggest vendors will get the most public places, the markets and streets where they were positioned to sell the most merchandise, and they got richer and richer. For millennia, nations fought for trade routes, now the internet has become the new Trade Route, the new Silk Road, and if you are Facebook, Google, Amazon, Twitter, doesn't matter what your name is or where you come from, if millions of individuals are seeing you, visiting your site, clicking on your pages, liking them or no, then there´s value there, you can sell, you convert this "virtual foot-traffic" into sales, profits, returns.

  56. yeah we've had a few tech bubbles so far, and probably will have a few more, but this seems like an unavoidable way to try out a lot of models and then find the few that work, just like industrialization in the early 20th century, this bubble will pop, we'll get a few solid companies, lose so money, but society hopefully moves forward a little bit, and hopefully after that advertising rates will become more reasonable for higher quality, better targeted customers

  57. The single best articulation and identification of the core cancer of our economy. Scary, but also hopeful.

  58. Very interesting point of view, the truth is that the internet has given people the power to choose where they spend their time, a few decades ago people would obliviate on T.V., radio, etc… I do not believe that the internet is a major player that causes unemployment, it only makes businesses more efficient and dramatically drops prices of goods and services. I.e. Netflix, a few decades ago we had to go to a Blockbuster, rent a physical liability that would be outdated and, we had to spend time and much more money to watch a movie. Nowadays we can choose whatever we want for a fraction of decades ago price. And where does this extra money goes? Into the physical economy, you have mentioned, land, labor or capital. You need to realize that there is no difference between the real world and the internet. When you walk in a Mall, shops displays can be perceived in 3D, however, they are beams of light interpreted by our ocular system. Lately with A.I. studies was observed that we humans have a very narrow focus range, our focus is only a few centimeters, all the rest is literally ignored. When an individual opens up their smartphone and swipe pages, he can see goods the same way that he does in a shop with lower resolution compared to reality. So Facebook, Google, Twitter, etc… is offering the people an opportunity to observe hundreds of items in. a fraction of the time needed if they had to go to physical stores, I believe my time is more valuable than anything else and buying on the internet is a great deal, plus this generates a physical outcome, shipping companies are growing exponentially since the beginning of internet because of the internet. Etc… But I respect your point of view, regards.

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