AT&T Fell for Media’s Inflated Sense of Self-Importance

AT&T has entered the “content” business in a big way with the acquisition of DirecTV and TimeWarner. This is not a new plan–they’ve been in love with the glamour of Hollywood for years. But it is a misguided plan.

AT&T hopes to provide value and profit from exclusive content through focused advertising.

This is a fool’s errand.

Folks other than I have talked about the reasons why in greater depth for many years, most notably Andrew Odlyzko, formerly of AT&T Labs, whose “Content is Not King,” First Monday 6(2) (February 2001), persuasively showed that people pay overwhelmingly for connectivity, not content. And not by a small margin either.

The reason is simple: humans are gregarious. We are social animals. We want to reach out and touch someone.

Chris Anderson’s “The Long Tail,” Wired (October 2004), proposed that given infinite, instant availability, sales of things, particularly digital things, would tend to accumulate in the long tail of a Pareto distribution. That is, value would accrue to things that had had minimal value before. A follow-up analysis in 2008 at the Harvard Business Review noted that while this was the case, the long tail got longer and thinner so that the popularity of things on the thick end of the tail became more significant. (You can also see this with the current shape of income inequality.) That could provide hope for AT&T’s advertising plans, but it doesn’t because of two factors outside of their control: time and the supply of money.

Time and money are finite. Time cannot exceed 24 hours in a day. Money is artificially constrained by governments and their agents. But content is essentially infinite: All humans create things. All humans want to share what they create. Alas, there’s nowhere near enough time to consume infinity, and one’s personal supply of money restricts what little can be consumed even further. I have to choose between writing this, correcting a crontab entry, listening to a podcast, making dinner, lifting weights, watching the Champions League, voiding my bladder, and so forth. No matter how much I want to find out right now what happens when the Ice Dragon breaches the wall, for me to actually do so depends on those two things: time and money. I’ll wait, and get the DVD from the library.

Money, or the lack thereof, is what drives cord-cutting. Even were there infinite money, time trumps everything.

Or, you cannot squeeze blood from a stone.

Oddly enough, AT&T’s earlier foray into advertising, the Yellow Pages, was similarly profitable for the same reason telephony is: connectivity. Rather than shouting at customers “Buy Me!” the directory simply sat there, waiting, until a customer needed something. It, and the classified advertisements which provided much of newspapers’ revenues, have been gradually replaced not by pay-per-click advertising on the Internet, but by services built on the World Wide Web–basically Google and Craigslist–accelerated by the general decline in local economies. Everyone’s price sensitive these days.

But I can understand why they’ve made the choices they did. There’s only a certain amount of time in a day, and only a certain amount of time to spend reading or listening or watching or working or playing. It’s highly likely that the idea connectivity is more valuable than content never crossed their minds.

Better to invest in what enables connections and carries all of that content. And ignore the shiny distractions.

So what next? What could AT&T do with what they have?

What do people actually need? It’s not more advertising and it’s not more content; there’s plenty of that.

The Water the Frog Boils In

The last few days I’ve been watching presentations from LISA and Velocity on the difficulties and rewards of the cultural transformation needed by a lean, agile DevOps practice. It’s pleasant to be reminded of the range of interests of those in this field; I dislike falling into caricature. So while I generally enjoy John Naughton‘s writing in The Guardian, I’ve been bothered by a piece of his from last November on how the technorati don’t fully consider the ethics of what they do – and so implement things like Facebook – but might have if they’d had a more humanist college education.

It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted ideological and political messages to voters. Hence the obvious question: how could such smart people be so stupid? The cynical answer is they knew about the potential dark side all along and didn’t care, because to acknowledge it might have undermined the aforementioned licences to print money. Which is another way of saying that most tech leaders are sociopaths. Personally I think that’s unlikely, although among their number are some very peculiar characters: one thinks, for example, of Paypal co-founder Peter Thiel – Trump’s favourite techie; and Travis Kalanick, the founder of Uber.

So what else could explain the astonishing naivety of the tech crowd? My hunch is it has something to do with their educational backgrounds. Take the Google co-founders. Sergey Brin studied mathematics and computer science. His partner, Larry Page, studied engineering and computer science. Zuckerberg dropped out of Harvard, where he was studying psychology and computer science, but seems to have been more interested in the latter.

Now mathematics, engineering and computer science are wonderful disciplines – intellectually demanding and fulfilling. And they are economically vital for any advanced society. But mastering them teaches students very little about society or history – or indeed about human nature. As a consequence, the new masters of our universe are people who are essentially only half-educated. They have had no exposure to the humanities or the social sciences, the academic disciplines that aim to provide some understanding of how society works, of history and of the roles that beliefs, philosophies, laws, norms, religion and customs play in the evolution of human culture.

While I agree with a humanist, liberal education, and believe that our secondary and collegiate educational systems are too oriented toward the perceived needs of the workplace, the computer industry in practice attracts a lot of people who did not study computer science: people who were, for example, history majors. Peter Thiel, mentioned above and formerly of PayPal, holds both a B. A. in philosophy and a J. D. from Stanford, with nary a science degree in sight.

Nevertheless, it’s often the case that it is the makers of tools who think deeply about how they used, and those who use them who do not. This is not, of course, to say that everything is rational, or that there aren’t people who act unthinkingly, but engineers do spend a fair amount of time considering the consequences of the latest novelty. Some of them happen to read science fiction — and if there’s been a class of people who has thought long and hard about their tools and their effects on society, it has been the authors and readers of science fiction (and the Amish). So do the fine folks in Marketing, though sometimes it’s hard to tell.

It’s not that there’s no thinking going on, though that’s true in some cases, but that the answers are disagreeable. A more apt politically relevant example, Mencius Moldbug, a computer programmer by trade, has spilled much ink thinking about his place in the world. His work is seminal fluid for the “alt-right.” Perhaps if he were calmly discussing the joy of monarchy on an academic quadrangle surrounded by ivy-clad brick it might be more respectable. Perhaps not; he doesn’t seem interested in the fuzziness of dealing with people. And that is, after all, what the humanities require.

Looking for an explanation for Facebook other than “asshole“?

Try Wall Street or Madison Avenue.

This is a cultural fault. And, as I’ve heard a couple of times the past few days, the real values of a firm are shown by who gets rewarded or let go. Facebook, et al., have been rewarded, handsomely, for doing exactly what it is they are doing. Why should they stop? We have consistently affirmed for some time now that earning a profit by any means necessary is the best and highest purpose of mankind: “Greed is good.”

A culture is defined by what it preserves and what it casts aside. Education talks mostly about HOW to do something, not WHAT to do or WHY. We leave those questions to the wider culture, which, at least at the moment, rewards the pursuit of wealth and power.

Business Ethics

One of the products I worked on at Prodigy was ProdigyBiz, since expired. ProdigyBiz basically sold brochure-ware. You too can have a presence on the Internet! Some of the businesses which bought the product used it. By “use” I mean updated the website with their telephone number and a blurb about their business. But the vast majority didn’t. All they did was pay the monthly charges. I don’t remember exactly when I found this, probably during planning for the termination of the service, but I do remember being shocked and speaking about it to one of the employees from the BizOnThe.Net acquisition. The low usage rate was expected: they sold the product to people they knew wouldn’t use it (which makes this cautionary article somewhat ironic).

But why? Why would you intentionally sell someone something they are never going to use in the first place, at rates that are higher than everywhere else?

Because they could.

They took advantage of ignorance to make the sale, much like Rachel from Card Services, The National Enquirer, or pretty much any nondescript direct mail marketing piece targeted at the elderly. The ProdigyBiz telemarketing effort was not unlike a boiler room, except they did deliver what was promised. So what was wrong with that? It wasn’t Nigerian princes bilking the little old lady from Pasadena out of her life’s savings.

Can I? May I? Must I?

Should I?

Some people are only interested in what they can do, and never ask if they should. Caveat emptorBuyer beware.