Should Facebook's Users Share Its Riches?
MELISSA BLOCK, HOST:
And finally, this hour, one other issue that involves a lot of money. When Facebook goes public, it will raise billions of dollars. But the people who produce all of its content - the users - well, they'll get nothing. One prominent computer scientist takes issue with that. He has a proposal for how Facebook could share money with its more than 800 million users. NPR's Aarti Shahani explains.
AARTI SHAHANI, BYLINE: Facebook is free and voluntary. You'd have to be nuts to think Mark Zuckerberg owes you a dime, right? Wrong. According to Jaron Lanier...
JARON LANIER: It would be in Facebook's own self-interest to find a way to increase the wealth of its users.
SHAHANI: Lanier is a theorist, entrepreneur and most recently author of "You Are Not a Gadget," a cautionary tale about how the Web is transforming our lives. By find a way, he means pay people who socialize on the social network. After all, Facebook's money comes from taking their posts, analyzing them and selling to advertisers.
LANIER: I'm not in any sense anti-Facebook. In fact, I believe that wealthier users in the long term will make for a wealthier Facebook, which I would view as a good thing.
SHAHANI: What's not a good thing, according to him, is the direction we're headed if industry leaders don't change course. Lanier lays out his theory: As we move from an information age to an information economy, people are getting poorer. That's because even though they're building social networks, he explains, they're not being paid in wages. The haves who control the servers reward the have-nots with likes and friends. It's a prehistoric bartering system, he says, not full-fledged capitalism. Lanier isn't telling Facebook to go collective and turn 800 million users into corporate shareholders. Instead...
LANIER: There should be payments in both directions.
SHAHANI: Repeat: Charge users and pay super users. That is the handful of people who generate serious traffic at any given moment. YouTube does it. And there's another reason to do it, Lanier points out: Advertising dollars are limited. Take Google and Facebook, totally different missions, yet they compete for the same ad money. The search engine just started paying some users $100 a month to mine their surfing habits even deeper and hopefully get more ad money. Facebook makes roughly $4 per active user or 3.5 billion a year. The company is expected to be valued at 100 billion by the stock market. Ad sales can't close the gap, Lanier says.
LANIER: That's a dead end in the long term for civilization. I mean, you can't have advertising be the only official business of the information economy if the information economy is going to take over.
SHAHANI: Just look at the old info economy. Newspapers relied on advertising for a century and then bam, many folded. Facebook can't comment on its business as it waits to go public. Sandeep Dahiya can. He teaches finance at Georgetown University. Users buying stocks and options, that's a viable way to profit from Facebook's wealth. But payment for posts...
DR. SANDEEP DAHIYA: I do not think Facebook users create value for a broad audience. It is like a telephone company paying its subscribers for talking on the phone.
SHAHANI: Strong analogy, but imperfect. The phone company doesn't record and sell your conversations to the highest bidder. Nicco Mele, a social media guru at Harvard's Kennedy School, makes this point.
NICCO MELE: It's all so new. We haven't developed good ways of thinking about it, about our data and how different kinds of data might be more or less valuable than other kinds of data.
SHAHANI: You never know when you'll wake up one morning and find that 400 million people have watched that video of your newborn biting your toddler's finger. Some posts clearly are more valuable than others even if we haven't figured out the math of whom to pay for what. That said, there's a sobering fact.
MELE: Jaron's asking Facebook to substantially change their business model. And they're about to go public on that business model, arguably with some success.
SHAHANI: This idea about sharing the wealth, well, he says, Lanier may want to share it with the next Facebook. Aarti Shahani, NPR News.
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