Economics

FREED Technology – Economics and Social Good of Decentralization

In 2001 I started a Peer to Peer (P2P) company, RazorPop, that used the Internet to free media from the control of giant entertainment conglomerates and give the power of choice back to consumers.  Since the late 90s there have been waves of Internet decentralization with terms like P2P, Saas (Software as a Service), cloud computing, and now blockchains.

The utilitarian nature of technology leads to an ongoing process of creative disruption.  Accelerating returns can quickly create monopolies.  Competitors out innovate them or disaggregate the business or technology.  The market becomes redefined.  And the cycle starts anew.

Technology being evil was first attributed to Microsoft, and then in addition and more recently, Google, Apple, Facebook, and Amazon.  The evil refers to the inevitable problems of such monopolies. As the companies focus on revenues they increasingly lock in their business ecology, including customers, platform, technology, and data.  Despite their size, actual innovation slows as resources are redirected to reinforcing the market and existing products.  Both overtly and indirectly monopolies co-opt government, inhibit natural creative destruction, and crowd out actual and would-be competitors.  Economically this effect is called the monopoly rent.

Monopolies are contrary to the social good of a free and fair market, whether they’re tech or not.  It’s why technology should be freed and decentralized.

Chris Dixon has an updated take on decentralization for cryptonetworks in Why Decentralization Matters. Here is a key excerpt.

Decentralization is a commonly misunderstood concept. For example, it is sometimes said that the reason cryptonetwork advocates favor decentralization is to resist government censorship, or because of libertarian political views. These are not the main reasons decentralization is important.

Let’s look at the problems with centralized platforms. Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations. They do this to make their services more valuable, as platforms (by definition) are systems with multi-sided network effects. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.

When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits. Historical examples of this are Microsoft vs Netscape, Google vs Yelp, Facebook vs Zynga, and Twitter vs its 3rd-party clients. Operating systems like iOS and Android have behaved better, although still take a healthy 30% tax, reject apps for seemingly arbitrary reasons, and subsume the functionality of 3rd-party apps at will.

For 3rd parties, this transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment. In addition, users give up privacy, control of their data, and become vulnerable to security breaches. These problems with centralized platforms will likely become even more pronounced in the future.

 

https://frd1.us/Decentral

 

 

Posted by Marc Freedman in Articles, Commentary, Economics, Entrepreneurs, Philosophy, 0 comments

Content Needs to be FREED Too

We all need to show love to content creators, from artists, musicians, and other creatives to business consultants and content producers. By love, I mean money. In the past those channels were limited to mass media (buy a CD or book, listen to radio, pay for a webinar, etc.). The Internet opened – and in many cases destroyed – that world.

I was a part of that when I founded a P2P file sharing company in the early days of the Net. P2P was a social act of revolution that FREED content. It allowed individuals to seize control from the huge entertainment conglomerates. Good for the consumer. Good promotion but no revenues for the creator.

Since then the Internet has spawned new classes of services. Some like Spotify and Pandora replicate traditional experiences. But the financial trickle from streaming is not a solution for the creator.

New services like Patreon and D.rip (Kickstarter’s Patreon clone) are finally delivering on the promise of FREED content by directly connecting consumers to creators. Creators offer tiered fan levels that can cost just a few dollars per month or item. I support a number of creators like Robin Good.

But they’re just a part of the business puzzle.  They need more robust features like content management and community discussions that other services like Kajabi and Udemy provide.   But the largest obstacle to sustainable and economic FREEDom is that people still need to discover content creators outside the service. Even in a huge marketplace like Kickstarter, less than 25% of raised funds typically are sourced from Kickstarter itself.

What do you think? What have you found that is interesting? How do you support your favorite artists and businesses?

If you’re a content creator, how much time, if any, do you actively market to find new prospects? What’s working for you?

 

https://frd1.us/FREEDContent

 

 

 

Posted by Marc Freedman in Economics, Entrepreneurs, Media, 0 comments

Trump & The Tax Bill, the Present That Keeps Giving

The 2017 Tax Cuts and Jobs Act is the ‘win’ that wasn’t.  The legislation was promoted with proven lies and failures (trickle down).  It could have been fact-based and middle class-supportive.  Instead it’s a donor giveaway that transfers money from the have-nots to the already haves (corporations and the wealthy).

Lyin ‘Donald had a chance to deliver on his promise to support the people, even if it hurt himself.  Instead, to no one’s surprise, it benefits the rich, wealthy companies, and Trump.

It’s a cunningly crafted Trojan horse.  The lower and middle class  benefits are illusory.  Their tax benefits expire after a few years, while the giveaway to the rich is permanent.    When the $1.5 trillion deficit comes due the GOP already has said it’s prepared to go after social benefit programs.

A review of how much the bill benefits the 1%:

  • 25% – Promised. Trump said the bill would hurt him. So the majority of benefts would have benefited the middle class.
  • 82% – Actual bill.
  • 1oo+% – After 2025 when the middle class benefits expire.

#ThankyouTrump. You could have helped the people or even your core voters.  But you didn’t.  And a majority know it.

Instead you gave us this wonderful gift for people to remember you by.  In case they miss your hourly tweets.   It may be a win for your fellow Republican lawmakers and donors now.  But this trillion dollar giveaway will be an eternally shiny present for the Democrats at election time later this year and beyond.

 

https://frd1.us/TaxBillPresent

 

 

 

 

 

Posted by Marc Freedman in Articles, Commentary, Donald Trump, Economics, Republicans, Thank you, Trump, 0 comments

U.S. Economic Slavery Worsens

I penned the article on the Civil War below four years ago.   I asked when will we ‘make the US great again?’  and return to economic equality and a strong middle class.

Today little has changed.  Trump took that phrase for his own slogan.  His version of MAGA is a reversion to earlier times of straight white male supremacy like the Civil War era.  With Lyin’ Donald and the Republicans in control, economic slavery is only getting worse.

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The Civil War anew: U.S. economic slavery 150 years later

March 28, 2013

The New York Times commemorates the Civil War’s 150th anniversary with an ongoing series called Disunion.  The closed patriarchy of slaveowners clashed with the freedom and opportunity of the West.  The article Mitchel Thompson’s War by C Kay Larson documents the strong support for the war in the Union Midwest.

Slave ownership made for bad economics …

[F]uture governor Richard Ogilvy told how, as a young laborer in Kentucky, he could charge only $6 a month, lest he lose out to slave labor, which could be rented out at $75 a year.

… and bad culture.

Rev. Charles Beecher  said the question was not “ whether black men are forever to be slaves, but whether the sons of Puritans are to become slaves themselves.”

The country was growing up and recognizing the externalities of an unjust and imbalanced socioeconomic system.

Northwest Illinois farmers’ mantra became “free territories, free homesteads, and protection to free labor.”

Is it any different today as billionaire industrialists have created their own plantations of wealth, often squirreled overseas to save every last penny … where their enterprises are too big to fail … their jobs are guaranteed with golden parachutes … their adverse actions have no consequences?   Their money has bought the political power to increase their holdings at the expense of the rest of the country.  They’ve destroyed the middle class, weakened the social network, gutted job security, increased poverty, and cheapened life for those who are not privileged.

150 years ago:

[A] new Republican Party alliance was struck between Western free farmers and Eastern industrialists.

Where is the alliance, Republican or otherwise, that will break today’s slavery?

When will the technology and innovation industries meet their social obligations and join with the people to make the US great again?

Posted by Marc Freedman in Articles, Commentary, Donald Trump, Economics, History, Politics, Republicans, Resistance, 0 comments

Corpocracy: Corporate Class Warfare

Bob Cringely writes IT class warfare – It’s not just IBM. The essay embraces the complexity, nuance, and global dimensions of the self-destruction of the IT industry. He writes primarily to speak to the legions of unemployed older and previously well-paid U.S. IT professionals. But the ills discussed don’t just apply to IBM … or the IT industry. As he writes, “It is about the culture of large corporations today, not yesterday.”

Technology has become synonymous with innovation. It’s a growth engine that has transformed business and everyday life and even led to the creative destruction of a few industries. It’s telling when this poster child for capitalism is just another casualty.

Cringely calls it an issue of a new culture. But he refers to the wrong culture. It’s not the state of affairs in the boardroom. He mentions Wall Street number crunchers, CEOs pushing for short-term results, an economic depression. Such business factors, as well as CEOs both ruthless and enlightened, have come and gone over the decades.

The latter half of the 20th century had reached a social balance where the wealthy and their proxy in commerce – large companies – shared power with the government and the people. Economies were strong, workers were empowered, and the middle class thrived in an engine of increasing consumer demand that grew and benefited everyone.

That balance tipped with the rush to a fully free and open marketplace. This is the culture that has changed and created the “corpocracy“, the rise and supremacy of corporations. Externalities, real costs, consumer safeguards, social commitments, and civic responsibilities withered against the onslaught of unchecked capitalism.

The result indeed is class warfare. Under corpocracy the rich got richer and everyone else got poorer. The middle class that drove the economy dried up. Job stability, benefits, pensions, healthcare, and true middle class pay have been eroding the past few decades for IBMers … IT workers … and all Americans.

Posted by Marc Freedman in Articles, Commentary, Economics, Resistance, 0 comments