 Well, I want to thank you all for coming out tonight. And this is a pretty interesting conversation that I think we have lined up and a pretty interesting presentation. And before I get into that, I just want to make a couple of sort of thank a couple of people. I want to thank the folks here at New America who actually set this up, who organized this event. This is co-hosted by New America and the Open Markets Program. My name is Barry Lynn, and I run the Open Markets Program. And the main person we're going to hear from tonight is Jonathan Taplan. And Jonathan's written a really terrifically important book. And it's about this revolution that's taking place in our midst, in our political economy, in our lives. And let me give you a little sense of who Jonathan is. He's the director emeritus of the Annenberg Innovation Lab at the University of Southern California. And he is the former tour manager for Bob Dylan and the band. He is also a film producer. And he produced, among other things, Martin Scorsese, Vim Vendors, and Gus Van Sant. He is an expert in digital media entertainment and a member of the Academy of Motion Picture Arts and Sciences. And he sits on the California Broadband Task Force. So talking to Jonathan tonight is our own Frank Fohr, who is a friend and someone we have had the privilege of having part of the New America family for a number of years now. Most you know, I mean, no Frank from his work at the New Republic. He's also written a best-selling book, which was How Soccer Explains the World. And he's working on a new book, which is going to be out in September on a very similar set of issues. And that book is called World Without Mind. So anyway, now I'm going to turn it over to Jonathan. Thanks, Barry. I'm going to just show a few slides from the book just to kind of set the table. And then Frank and I are going to just have a conversation and hopefully include you in the conversation. So I came to this topic from a kind of personal story level. So this is the band. I work for them, and that's me. And Richard Avedon took that picture in 1969. So it dates me a little bit. I was fresh out of Princeton. And the guy in the back drinking the Coke is Levon Helm. And he was the drummer in the band. And he was the lead singer. You probably know the weight. The night they drove old Dixie down. A lot of great songs he sang. And the band made a lot of good music in the late 60s, early 70s. But they were what I call middle class musicians. They were not like the Rolling Stones and Cream. They weren't making, selling millions of records. They were selling hundreds of thousands of records. And because the way that the business worked at that time, they made a decent living. And that living continued into the 80s and 90s because the CD came in. And so everybody renewed their record collection. And the people who had records got a whole new sorts of income. And in 2000, Levon got throat cancer. And in 2000, Napster arrived. And those two things converged to ruin his life. His royalty stream literally came to a halt. And he had no money to pay for his health care. And so a group of musicians in Woodstock rallied around him and created something called the Midnight Rambles, which was a series of house shows in his barn in Woodstock. And at first, he couldn't do any singing. He was just playing drums. But people would come and pay money. And it was enough to kind of keep the health care going. And then eventually, he got a little bit of voice back. But six years later, he died. And when he died, we put on a benefit for his wife so she could keep her house. And that, to me, seemed radically unfair. And I had a debate with a guy named Alexis O'Hanion, who was the head of Reddit. And he said, what right do musicians have to make money from their old records? They should just go on the road. And it seemed absurd to me that in a world where there were, perhaps by the end of next year, five billion smartphones that a musician had to earn a living, like they earned a living in the 17th century, rent a room, lock the doors, make people to pay to get in the doors. So I began to think about how this had all come about. And I went back to the beginnings of the internet in 1968 when essentially hippies like Stuart Brand, who ran the Whole Earth Electronic Link, along with Ken Keesey, guys like Tim Berners-Lee, who created all the protocols for the web and didn't ask to have patents or anything, just gave it, was financed by the government. This is a drawing of the first nodes of the internet done by Vint Cerf, literally on the back of a napkin. And as Nick Negroponte said, the whole idea was to decentralize control and harmonize people. And for those of us who were around in 1968, we know that that was a good idea. Because quite frankly, the media system in 1968 was three television networks and maybe a newspaper in each town. So it was very centralized. And so the idea that we would decentralize it was absolutely a wonderful idea. But by the late 80s, a different philosophy was beginning to inhibit this decentralized idea. And a lot of that philosophy came from this guy, Peter Teal, who came out of Stanford. He had been schooled in the iron-rand notions that capitalism and democracy are incompatible. That democracy, the Demos, as Teal calls it, is a mob that inhibits the great entrepreneur, the iron-rand hero, from doing what he needs to do and just gets in the way. And so it screws up everything for the Ubermensch. And he's gone so far as to build these. He's building his first C-STED, which is a community outside the reach of any government. Because he believes that government has no role at all in anything. And he created his first company called PayPal, who was also the first investor in Facebook. And out of PayPal came this self-proclaimed PayPal mafia. And so that's his term, not mine. And those people who were at PayPal now run most of the companies in Silicon Valley. And they all run them, as you would see from the reactions of Uber and others in a very libertarian, get mine, don't ask permission, frame of mind. So Teal had four basic theories. First off, that the internet should have no regulation because the entrepreneurs need this space to do without government interference. That there should be no taxes on the internet. So Jeff Bezos was able to undersell every single bookstore in the country because they had to pay 8% sales tax and he didn't. And as a result, put about 2,500 bookstores out of business and maybe another 2,500 record stores. They didn't believe in copyright. So YouTube is built on the idea that copyright, the person who owns something has no right to keep it off of YouTube. And as you will see, they didn't believe in competition. And Teal went on to say that Silicon Valley is going to dominate the economy. And it turned out he was right. So on the left is the chart of the largest companies in the world in 2006. So that's Exxon Mobil, General Electric, Microsoft City Group, BP, and Royal Touch Shell. And on the right is largest companies today. And by the way, Facebook has moved up to number five above Exxon Mobil this year. So as you can see, tech totally dominates the economy. The largest companies in the world are all tech companies. So what did that huge rise do to the business of the creative class? So this is the music business since the arrival of Google. The 71% decline in revenues. Even with all the new revenues into the little spikes out of there from Spotify and other things. This is the newspaper business, 76% decline in revenues. This is the book business, Profits Crushed by Amazon, which is a monopsony, which constantly pushes prices lower. And this is the film and TV business, which is just beginning to experience the effects that it had killed the music business. Because for a long time, the size of a film, the file size was too big for it to be easily downloaded. But now with everybody having broadband, that's no longer a problem. But it's not like people stop listening to music, watching movies, reading newspapers, reading books. It's just that the money was reallocated from the people who made the content to the people who own these monopoly platforms through which everybody reached the content. And two of these platforms, Facebook and Google, are advertising businesses. And they're also the portal to which most people find content. And the third Amazon is, needless to say, a business that sells stuff, but also is in the same kind of surveillance capitalism that the other two business saw. And I'll explain that. Now Peter Thiele said competition is for losers. If you want to create and capture lasting value, you need to build a monopoly. And that's exactly what these businesses are. This is an example. So YouTube, most of you think of YouTube as a video service, but over half the files on YouTube are just audio files with a picture on the front of them. Every single tune in the history of the universe sits on YouTube for free. So YouTube has almost 60% of the streaming audio business, and yet it provides about 12% of the revenues to that business. So if you were lucky enough to have a song that could get a million people to want it, if you had a million downloads from iTunes, you would make $900,000. If you had a million streams from YouTube, you would make $900. That to me seems not right. The second problem, obviously, with YouTube, as we've seen recently, is because there is no control or supposedly no control over the content on the system and because they are protected by a safe harbor law, which I'll explain a little bit more later, under the Digital Millennium Copyright Act, anything can be on YouTube and nobody can sue YouTube for putting stuff on the thing. So here's an ISIS video with a bounty paper towel ad on the front of it. Now, it's ironic, of course, that bounty paper towels is a Koch Brothers company, but it's also ironic that YouTube claims that they can't really control this stuff. But you notice there is no pornography on YouTube, none. Why is that? YouTube has very good artificial intelligence that when someone uploads something and the artificial intelligence notices a bare breast or some other bit of skin, it stops it from being put on the platform and shunts it into another queue, in which a human then looks at it and says, well, that was just a National Geographic. We'll let that on. But in general, if it's porn, it obviously never gets on the platform in the first place. So all this talk over the last week by Facebook and others that we don't have the intelligence to control this content, this violent content, the beheading videos, the murder videos, is nonsense. They do, but that's not their business model. Their business model is to have as much content on there so as many people watch as much advertising and so they can scrape as much data from you as possible. Now, for the news business, this has become a huge problem. This is a little drawing by a brilliant guy named Ben Thompson who has a blog called Stratarchy, which I recommend to you. And this is how he sees the news business. So out there is all the providers of news and they have this tiny little funnel to which they get to the people. That's called Facebook. And he wrote a column today which says basically Facebook has taken all the money, all the advertising money out of the news business. And now, of course, some news organizations like the New York Times have caught on to this and are saying, we're not going to go play this game anymore. So maybe that's the beginning of resistance. But for most news organizations, they have no choice because they think that Facebook is the only way they get an audience. As Justin Smith, the CEO of Bloomberg, says, the list is a lot longer than is publicly known of publications that have Facebook delivering half to two thirds of their traffic. So why does this matter to us? Well, this is a chart of what happened during the last election. So all spring, Fox News and Breitbart were hammering on Facebook that the people who were running the trending topics part of Facebook, which is what surfaces the most thing, were liberally biased and that they had to stop that. And so on May 23, Zuckerberg gave in and said, OK, I'll take the humans out of the trending topics and I'll just let the computer algorithm decide what trends, what goes into the trending topics. And you can see what happened on May 23 fake news took off. Now, why is that? Because basically the Breitbart guys, I mean, Steve Bannon and Cambridge Analytica knew how to play the algorithm. And they knew how to make it happen. And so essentially what happened was they could bomb the algorithm with bots and everything and force their news up and nobody else could go for it. So I just want to think about two other little things, one which is I call this surveillance capitalism for a real reason because all three of these companies are in the business of data. That's really all they care about. Content is just a commodity to get you to come into their system so they can scrape your data. And now, of course, they're inventing all sorts of genius new ways to do that by putting these so-called smart speakers in your home. These are not smart speakers, they're smart microphones. And as the district attorney in Mississippi found out a few weeks ago, he had a domestic violence incident happen when there happened to be an Amazon Alexa in the home and he subpoenaed Amazon for the records of what happened. And Amazon fought it on First Amendment grounds but eventually gave it up. And sure enough, the whole incident was recorded on the Alexa. Amazon does not want you to know that the microphone is always on, which of course it would have to be for you to be able to ask it a question. So what it does is any time a brand name or a keyword is mentioned in your house, it adds to your advertising inventory. So if you're talking with your wife about diapers, next thing you know, there's an offer for diapers from Amazon or there's an offer from Google for diapers. So I said they were monopolies and I just want to finish with this chart. There's Facebook compared to every other social network. Here's Google at 88% market share of search advertising compared to little Bing down here. And just remember, Bill Gates and Microsoft spent over a billion dollars trying to compete with Google. So if you imagine that the market is gonna have a solution to this, you're crazy. If I went to you and said, hey, I've got a great idea, let's start a startup to challenge Google in the search engine business, you'd say, are you out of your mind? Bill Gates lost a billion on that. Why would I want to do that? So there is no market solution to this and this is of course Amazon's market share in the book business and as Morgan Stanley reported, 85 cents of every new dollar spent online last year went to either Google or Facebook. If that's not a monopoly, I don't know what is. So I had one brief experience with some of you and some of you participated in last year. So Maria Palente who ran was the registrar of copyrights at the Library of Congress, held a series of hearings to determine whether this 512 Safe Harbor law ought to be changed because needless to say, as long as Facebook or YouTube has a safe harbor and no musician can challenge them for putting up content that they don't want up there, nothing's gonna change. Spotify will never get its subscription service up to the level it needs because it can't compete with free. So she concluded that actually there needed to be a change and she said that publicly to a few people and three days later she was fired by the Obama administration, which I must say has not been good on this thing. And so the Wall Street Journal wrote an editorial and said, so you don't have to be a conspiracy theorist to notice that an abrupt change of leadership at the US Copyright Office is good news for Google which aims to pay less for property from the property of others. So I'm just gonna finish by saying that I think there's gonna be a resistance. We're certainly seeing it in the music business. I was in Nashville last night, 300 people came to my talk with T-Bone Burnett and there was palpable anger at YouTube of what it's doing to the music business. And I think that's just the start and the fact that The Times is now resisting Facebook a bit is maybe the next step. So, Frank, why don't you come up here. In the back if you could maybe dim this projector or something that would be helpful. Yeah, when you read my book, I hope you don't get plagiarized because I'm thinking the same way. But one of the areas in which you get a lot of pushback if you make arguments like this is that people look at the internet and they say it's this gorgeous bounty. I can get access to anything. If I have an opinion and I'm not an elite, I can broadcast it there. How do you start to pick apart that argument? Well, first off, none of that would go away. I mean the fact that I'm asking YouTube to pay more than $900 to a musician who has a million streams of a song doesn't mean that someone can't have it write a blog or post on Twitter or post their opinion on Facebook. What I'm saying is that the equity, what's happened is these businesses got to be the biggest businesses in the world because they have advertising businesses that are so profitable. I mean, let's be clear, Google and Facebook have net margins of 30%. Net, right. I don't know if there are any business executives here but that's an unusual thing. In Hollywood if you have a 10% net margin you think that's a great year, right? So what is the difference between CBS which has a 10% margin which is an advertising business and Google which has a 30% business which is an advertising business. CBS pays for content, funds news, funds programming and Google doesn't. Google is a free rider on everybody else's programming as the Wall Street Journal printed out, takes all the money and doesn't give any of it back and that's what's the problem. But just from a framing standpoint, one advantage that these guys have is that they're looking at everything from a consumer perspective whereas the argument that you're making is that in order for the consumer to ultimately benefit there needs to be this healthy producer ecosystem and our political economy has strayed so far from that focus on producer that there's this, hay is that you get when you start to make this argument to people and it feels like while there's the prospect for resistance it's gonna be producers who are gonna be leading the resistance and it's gonna take a long time for consumers to swing around to the point of view where they understand that they're being injured in this system. Right, so let's think about it from the point of view of the news business. Yeah. So the Bureau of Labor Statistics says that employment in journalism has fallen by 50% in the last nine years. Half the number of people are working as journalists professionally actually getting paid than were eight years ago. That's kind of remarkable, right? Okay, so maybe that's not a problem at the Washington Post which is probably subsidized by a billionaire. Maybe that's not even a problem at the New York Times which is subsidized by a very rich family. But it's a problem at the Nashville Tennessean. I'll promise you, I was just there. It's a problem at the Cleveland Plain Healer. It's a problem of the local paper where there was supposed to be a guy who would watch City Hall and look for corruption and stuff like that. They don't have those people anymore. They take a bunch of wire reports and repurpose them and put them in the newspaper and have skeleton staffs in the local newspaper. So I think that's a problem. Well, isn't the problem twofold? So on the one hand, you have this proliferation of crap which is what your chart just illustrated. Crap is spiking and we have Donald Trump as a result of that. But at the same time we have this proliferation of crap, we have this rapid constriction of the number of actual gatekeepers in the world. Right. So why don't you explain, can you just explain how those two interact and why the crap model works? Right. Okay, so let's take these kids who were in Macedonia during the election who were making five to 7,000 bucks a week. I mean, these are teenagers in their bedroom off of fake news. So they would set up a website with a phony name that sounded somewhat authentic. They would register that in the United States. Then they'd get themselves a Facebook page and on their website they'd get a Google AdSense account. They would use their Facebook page to drive traffic to their website where then the Google AdSense account would give them revenue. Now, they would make up stories and everything was fake news and they would then get their friends somewhere else to bomb Facebook with bots. You all know what I mean by a bot, an artificial robot that just keeps clicking on a story. So it goes up, up, up, up, up, up, you know, you can just set it. You can all buy yourself, if you want 50,000 followers for yourself on Twitter, you can just put it into Google. You can buy them and those are bots. Half of Donald Trump's followers are bots. So I mean, it's a phony economy and now, of course, advertisers are beginning to catch on. They're beginning to, Procter & Gamble says, we're not going on the web anymore until they clean this up. That's why advertisers are saying, we're not going on YouTube because we don't want our ad on front of a beheading video. It's just not a nice atmosphere for advertising to be on. That's the quicker cleaner upper. So you mentioned Peter Thiel and he found this way to overlay monopoly and authoritarianism into a single worldview. And it seems to me that at the end of the day, that's the real threat that we're talking about. That in this world where you have few gatekeepers, the people who are able to take advantage of that best, whether they're Russians or demagogues or whoever are going to be the ones who thrive. And that in some ways, Facebook hasn't really taken enough heat for the election of Donald Trump. Forget about these questions about the, about, I mean, there are all these questions hovering about what the Democrats did or what, but really, Facebook enabled the creation and the flourishing in the election of Donald Trump. Totally, because it's this compression effect you talked about. In other words, if I had to try and figure out a way, if there were 50 sites that were equally used as social media, it would be hard for me to construct for Steve Bannon or Cambridge Analytica to construct the model where I could get mass attention quickly. But because all the eyeballs, two billion of them are concentrated on this one site is very easy. Just like every advertiser, I only have to have one place to go. And I only have to have one set of analytics to know how to play Facebook. I didn't put some stuff up here, but this, the Trump campaign did a very kind of weird thing where they did just the opposite to it. They used it as a voter suppression tool. So they took the analytics from Facebook and said, okay, I want to put an ad for just African-Americans under the age of 45. And they sent an ad that basically had Hillary behind saying all young black men are predators. And they sent that ad just to African-Americans. White people never saw that ad. But they were able to target them and they targeted them in Milwaukee and Detroit and Philadelphia and Pittsburgh and it was a, I think, a probably fairly effective voter suppression mechanism. So, you can have it on the upside, you can have it on the downside, but the main point is, because there's such concentration and you only need Facebook and a Google AdSense account, you can make this happen. You know what works for me? Not to be all Andy Rooney about this, but, so Facebook says, all right, we'll just single out fake news. What will harvest the collective intelligence of our network in order to stamp out fake news? Yet doesn't that, in the end, circle back to the problem of having one player that has so much responsibility to determine what you see and what you don't see? So, yesterday Facebook had its annual convention for developers. So, Zuckerberg gets up there and he does two sentences apologizing for the fact that someone was murdered on Facebook Live. And then he says, but our focus now is gonna be on video because we think video and live video is gonna be the future of this company. And then he went on to say, which really amazed me, he went on to say, at our lab, we think in the next two or three years we can tap into your brainwaves and we can help you write posts just thinking something. But of course, what do they tap into your brainwaves for? They wanna know if it's true, and this is not just science fiction, they wanna know, well, I'm thinking about a hamburger and bang, there's the Burger King ad. Or it'll be worse, they'll tell you, think about a hamburger, think about a hamburger. Right, exactly. Homer Simpson-like responses figure it in math. Yeah, so that's irksome, but do you think it's possible? Is the problem that, so to go back to the original hippie vision of the internet, which is that we're all stitched together, is it possible to have a site or an apparatus, whatever that stitches the world together, that's not captured by a corporation that doesn't invest too much authority in one single set of individuals or stockholders or what have you? Well, that comes back to the work in this, think that, antitrust. Let's be clear that Silicon Valley was created out of two antitrust suits. First one was the 56th Consent Decree that allowed AT&T to be a monopoly, but in return said that AT&T bell labs seceded the area which had created the transistor, the microchip, the laser, the cellular cell, the satellite, I mean, pretty much everything that exists in the digital world. AT&T Bell Labs has to license every single patent that they own for free to any American company. So that was the beginning. So out of that came Fairchild Semiconductor, Texas Instruments, Motorola, Intel, CompSat, explosion of new companies. So that was the first one. And the second one, I would argue, is the Microsoft Antitrust Decree because at a certain point, those of you who think of Apple as this mega company, Apple was on its butt. It was, and Bill Gates has his neck on Apple. Apple had like 3% of the PC market and Microsoft had 97%. And the Justice Department intervened and said, stop it. And so now Microsoft is not that big a player and then of course, mobile came up and changed. You could twist it a little bit further and say, if Microsoft hadn't been hounded by the Justice Department, they would have strangled Google and its crib because they controlled the browser at that point. Right, exactly. So I mean, it makes sense for us to not say, oh well, Antitrust doesn't do any good. None of this innovation would have happened if it hadn't been for those two antitrust suits. So I mean, that comes back to the work that the Open Markets Group is doing, which is, and I know this is a heavy lift in Washington DC in this day and age. But we have to consider that maybe Google is what economists would call a natural monopoly. That it can provide all the services that everybody needs in search, better than two companies and cheaper. And in that case, like AT&T, maybe there should be, we should treat it like a utility and maybe it should have to license its patents for autonomous cars, for search algorithms, for advertising for the hundreds of thousands of patents it holds for free. And that's one of the suggestions I make, because I think if we allow things to continue to the way they're going right now, it'll get worse. If we allow Google to buy Spotify or Facebook to buy Snapchat or whatever. I mean, look at- Haven't we already gone past that threshold though? I mean, this is where it feels, my personal opinion is that we've gotten to the point where these monopolies are already too powerful and are thinking about monopoly and political economy just hasn't caught up to that power. And that we should already be at the point where we consider breaking up, not just Google, but we should even start to be having the conversation about Facebook and certainly Amazon. Well, look, let's be clear. These companies were not built organically. They were built by acquisition. Google bought AdMob, Google bought DoubleClick, Google bought YouTube, Facebook bought Instagram, Facebook bought WhatsApp, Amazon bought Twitch, bought Zappos, bought Alexa, bought many companies. So the way maybe to deal with it is to break them up. You have to sell DoubleClick. You've got to get out of the advertising place. You've got to get out of, you can't own four mobile social networks. The other point that you made was that at least Amazon, and it's true I think also for the other companies, that tax avoidance was central to the construction of their monopolies. And one thing that would be great is if they paid their damn taxes. Right. I mean, there was a piece in the London Times today. I mean, this is a big issue in the British snap election already. So there's a piece that between Amazon and Google, they've afforded about 12 billion in UK taxes. Yeah. So I mean, just in the last two or three years. Yeah. Well, before we open it up to questions, I think we should also just talk a little bit about what consumers can do other than simply applying political pressure to try to move the conversation on monopoly. That's a pretty, I mean, I think that there's some progress happening there in the way that that conversation is starting to shift. I think there's actually a surprising consensus within Democratic wonka elites that bridges not just the Sanders Warren crowd, but extends back to the center left and people who you wouldn't necessarily associate with the antitrust movement that we need to start moving on these questions because it's part of the reason why we have inequality and why communities are being eviscerated in the middle of the country. But there's this question of what's a consumer to do? Because dare I say, almost everybody in this room has used Facebook, Amazon and Google today, if not all three. And so what's the onus on us as consumers? Okay, so I was in Nashville last night and 300 musicians, songwriters and people showed up. And the one message they have is hey, if you like music at least at a minimum, do the paid Spotify, not the free Spotify. Don't use YouTube for your music. Just stop it because that would make a big difference. I mean, I'm just telling you just Spotify pays from the subscription service almost seven times more per stream than they pay for the free service. Now, the problem for the music business was that when Spotify sold everybody on this thing, they said that by this point in their growth that 80% of the consumers would be on the subscription service. And it's actually 20% of the consumers are on the subscription service because you cannot compete with free. So obviously from my point of view, if we could get rid of the safe harbor, that would resolve a lot of things fairly quickly because YouTube would actually have to negotiate in good faith with musicians. And if a musician said take this down, it would have to stay down because we all know if they can keep porn off YouTube, they could keep any piece of content off because as we all know, we've used Shazam and within two seconds, you can with artificial intelligence sense any file signature and say, if a musician said I don't want that on there, it would never go on there. So right now record companies pay $30, $50, $70 million a year just filing takedown notices for YouTube and on Google. I mean it's billions of these notices filed a year just asking them to take down. Of course it goes down and three days later it goes up under another identity. So it's like whack-a-mole. Well each of these industries is different in their own, right? But one thing that I think is, that the book business did which was they said we're not gonna give our stuff away for free, we're gonna defend the fact that if you wanna read a book, you should have to pay for a book because that's only fair in a capitalist economy. And even if we know that there are a bunch of oligopolies who sit there in the middle and swallow a huge chunk of that profit, as a writer it's even if it's much harder to get paid now in the age of Amazon, Facebook and Google, it's still possible. And so why not just broadly insist on that for everything else we consume because we know that somebody worked to produce it. And even if that constricts access to people, I mean maybe that's an elitist argument to make our democracy ain't exactly flourishing right now. Yeah, there's one other aspect of this from a consumer point that I think about. Barry and Matt Stoller and a bunch of us went out to a conference at the University of Chicago which is the core center of Borkian economics, right? And when I say Borkian, Bork's theory was the only thing that matters is price. So from their point of view, if Amazon was the only retailer in the whole country but could continue to price, force prices lower, that that would be an okay outcome. So the conservative Chicago economists who were defending Bork by the end of the conference came to the understanding that what I call surveillance capitalism is something different. It is a different beast. We have three companies that control most of the data from consumers. They are pushing deeper into your lives in all sorts of ways, whether they're a billion ability to keep the microphone on your phone open or the search where you go, what you buy, everything and now, last week, the Republicans eliminated the final barrier to that which is that all your search logs, all your browsing history is available for sale. So maybe, and I noticed at least online a pushback against that thing. In other words, people were offended by the fact that there's no privacy anymore and I know Scott McNeely told us that 10 years ago, get over it, you have no privacy but I think it defends people and the other thing that comes out of that of course is when you have these companies that are so rich and so big, as Peter Orszag who was at the conference mentioned, that creates income inequality. Let's just be really clear. If you look at the Forbes 400, the top 20 people out of the top 20, 18 of them are tech billionaires. And when people said to me in New York at the thing, well, wasn't that always the way, like Exxon was this huge company in the old days and I said, I would be shocked if Rex Tillerson owned 1% of the Exxon stock. I doubt it. I would be shocked if Jeff Immelt owned 1% of General Electric stock. This is a different deal and these guys have wealth on a level that we've never seen before and that inevitably not only distorts innovation and distorts income inequality but as we've seen with what Facebook has done to Snapchat in the last three weeks, these guys can kill startups. I mean, Snapchat doesn't stand a chance because every time they innovate, Zuckerberg will just rip them off and he's just blatant about it. I'm gonna do exactly what you do and I'm gonna call it the same thing. I'm gonna call it stories just like you did. And I'm gonna, so there's no reason for anyone to switch off Facebook to Snapchat. And Snapchat goes public and there's stock tanks because there's probably signs all over the wall on Facebook. Kill Snapchat. Right, right. Well, one of the things that strikes me, you went straight there with this Facebook developers cultist meeting that they had yesterday where Zuckerberg talked about wanting to tap your brainwaves. And so one of the things that makes these companies different is their ambitions, right? That ExxonMobil, well, let's not hold them up as a model of corporate responsibility. But there was, for General Electric, their imaginations were not, didn't have this evolutionary design where they wanted to complete this merger between the human being and the machine and each year it kind of went further in that. So one question, and maybe I'll just leave it with this with you and then we can open up to the questions is, one thing I think about a lot is shouldn't, what is a term that has a really bad name? But when it comes to thinking about these questions, why is it so terrible? Why shouldn't we slow down a little bit and just say we're messing with these incredibly big things? We're not just messing with the future of news or the future of knowledge. We're messing with the future of human being and we're leaving these questions to a handful of unchecked, unregulated monopolists who don't believe in democracy. I totally agree. I mean, I was shocked we had an election and none of this was ever talked about. I mean, nobody asked, I mean, I was at a dinner party the other day with a guy who works on robotics and said, we've perfected someone at the dinner table said, where will the new jobs be if all the robots take the manufacturing job? And someone said, well, they'll be in things like healthcare where you really need the human touch and this guy said, well, we've got a machine where you sit in a chair and your arm goes in this crotch and the machine comes over and senses where the heat is for the vein, takes your blood, we've tested it, works brilliantly. It doesn't need to be any human, even in the room. So this idea that Mnuchin says, it's 100 years before we have to worry about robots and artificial intelligence and machine learning and everything, these people have their head in the sand and it's not. I mean, I would argue that the truck driving because, you know, profession if Google has its way is toast in ten years. And that's two million people out of work plus another three million who are supporting. Yeah, everybody's always unconcerned until they start to automate treasury secretaries and center-left fund it to apologize for these companies and the like. Why don't we open it up for a question? Here's one over here. Thanks for doing this. I played in punk rock bands before I became a journalist. So this is a subject that's very near and dear to my heart. But I remember back in the 90s, like the big bad guys who all the punk rockers hated were the major labels and there were five of them and we hated them basically for monopolistic reasons. But now we're down to three major labels, I think. And I think the sort of monoculture problem has become even bigger. We don't really have local music anymore. If you want to listen to new music, you can buy any record you want so long as it's by either Adele or Beyonce. Is this a problem that can be solved just by taking on these platform monopolists or do we need new institutions to foster the creative industries? Well, you know, I think about that a lot because when I was in the music business in the 70s, we used to talk about the 80-20 rule. So the idea was that a record company would make 80% of its revenues off 20% of its product. So one in five records would be a huge hit and that would pay for the Van Dyke parts and the Randy Newman's and the others. Last year in the music business, 80% of the revenue came from 1% of the product. So that is a monoculture. That says to me that Taylor Swift and Adele and Beyonce and Jay-Z are doing well but there is no middle-class musician. When I put up that picture of the band, they were middle-class musicians. They sold 250,000 records at a time, you know? But those records were selling at 12, 13 bucks. The musicians would make two bucks a record, three bucks a record and it was a decent living, you know? So if you look at the, you know, there was this notion about the long tail. Well, that's the total myth. It's like a clip. It just drops off and then if there's eight million tunes out there, you know, the bottom seven million, no one is listening or hardly anyone is listening. So that's a problem and it's a problem in the movie business as well. You know, what happens is the sure thing, the franchise gets, attracts all the money and you have to kind of work at the edges to try to do something new. Now, we've had periods where we've had a flourishing of good, interesting stuff. I was lucky enough to be involved in the music business and then in the early Hollywood, when, you know, when Marty and I, when we made Mean Streets, the only reason we got in there was because all the studios were bankrupt. They had made these big, huge movies like Cleopatra or Paint Your Wagon, these. So here's an interesting question to, so one of the models that's held up now is television where we're supposed to be in this golden age of television. How do you reconcile the fact of its existence with all these other broad trends? Okay, so first off, television is still a model of where people are getting paid to do something. So 100 million people give Netflix 12 bucks a month. So they have a huge cash flow and they can afford to pay people to do this. Now, you know, there's a guy out in Hollywood named John Landgraf who runs FX and he says this cannot sustain itself. You know, in other words, five years ago, there were 180 television series in existence in the world and today there are 490 television series because of Hulu and Amazon and all these other things. Now, it probably won't sustain itself and somebody's gonna lose their shirt. But for now, if you're a filmmaker or an agent, it is a golden age because there's a lot of money floating around. But that still is money flowing into the community. This is not free stuff. This is not people doing that. And so... What do you think? I mean, we all hate the cable companies because they're the worst companies short of the oil companies. But once the cable bundle disappears, isn't that gonna imperil this golden age? Because if you're FX, you're not gonna exist if there's no cable bundle, right? And so then you're back to the same problem where it's gonna be Netflix and Amazon and Facebook and Apple will be the four big gatekeepers who are gonna be paying for content. Right, because let's be honest. In the cable bundle, MTV has 17 channels. Does anybody care about any of them except maybe one or Comedy Central or something? Discovery channel has 16 channels. Does any of them pass the who cares test except maybe one? So there's no reason for that to happen. But that doesn't mean that you couldn't shrink the TV use of bandwidth, what we call linear use of bandwidth down to 50 channels, which would probably be sports and news. And everything else would be on demand. Yeah. And there could probably be an economy around that. One of the things that just bothers me is another kind of semi-lady point, which is that as algorithms come into play such a central role in these creative industries, it will end up constricting the formulas, right? Because algorithms are based on our past behavior. So they're just trying to, they're using machines to try to anticipate our taste, whereas before it was left up to instinct and gut decisions and this desire to kind of outthink the market, which was much more imprecise and resulted in that 80-20 model that you were talking about. Right. So, I mean, any of you who are around both the music business or the, or Hollywood knows that there's these essentially snake oil salesmen who are telling you that they can design an artificial intelligence program that can tell you what's gonna be a hit movie or what's gonna be a hit song. And of course, the hit songs, especially in EDM and electronic dance music, are all formulaic to such an extreme that literally at 7.8 seconds in, there's a hook and it's all just laid out linear and it's like, who cares? It doesn't matter. And as far as someone saying that you can put a script. Because that's not music. No, of course it's not. Someone put a script into a machine and tell you whether it's a total lie. There's one over there. Okay. Music business has always had factory aspects. I mean, look at Motown, look at even a one, four, five progression endlessly recycled by some of the generational icons that you mentioned at the top. Not done yet. Also, if you're looking at the evolution of electronic music as an outsider, it's very, very difficult to track the cultural evolution of what to an unfamiliar or uninitiated listener might hear as repetition. And I think that's probably just a factor of us being old people and not really particularly dialed in, but I can assure you, there's an abundance of creativity in the EDM community and a lot of the participants in that community see themselves at the vanguard of a cultural wave of innovation. Getting back to the idea that there are fewer companies that have aggregated copyrights and exist to begin with is a perfect storm when you actually consider the fact that their primary business partners are also monolithic platform monopolies, which means that when the deals are done, they're typically done to the exclusion of anybody else, unless those anybody else's are willing to adhere to the terms of a predefined marketplace. And so where I agree with you fundamentally is that there's the antitrust concern and I think the antitrust concern is one that can be broadly applied to the marketplace. But I think where it breaks down a little bit is that when you're looking at cultural economies, there's an awful lot of activity that's happening under the radar and I think even in this marketplace of hyper consolidation and concentration and the new economic power law that makes it almost impossible for a new entrant to gain traction when there's already an extant company serving that commercial or social need. There is still a tremendous amount of activity that's happening below the surface. What I'm most interested in is how can we productively channel that into new economies that can sustain more creators and allow for more innovation in the positive sense that you described where you would get truly generative creativity applied to both the cultural production and the socially and technologically developmental construction. Okay, so let me take that in two parts. First, I have to disagree about Motown. I would say to you that Smokey Robinson, the margin and gay are two of the most original songwriters that ever existed in history and I would say Holland Does Your Holland were pretty close to that too. So I will just, no, no, let's not pour these people with our own taste discussion. Okay, as far as your other idea, I've been lucky enough to spend some time with Tim Berners-Lee, who's the guy who created the World Wide Web. And he says the whole trick is to somehow re-decentralize the web. Okay, so that makes it possible for small cooperatives, like Odd Future or people like that, to create stuff and yet still get out to the wider audience. But that takes a fundamental redesign. I mean, he's got two big projects. One is this idea, how do we create some new ways to go against search and social media monopolies? That's his first thing. And the second thing is, how do you as a consumer get control of your data so you can decide whether you want to have it monetized or not? And that's the trickier thing. And he doesn't know, he doesn't have a solution to that yet. But somehow, your corpus of data is in some kind of container and you can let someone in the container or not? No, I haven't either. Okay, so behind you, yeah. In a lot of the work I do with people in the music industry and movie industry and so forth, there's a lot of interest in blockchain technology. And many in those industries see it as a way to take some leverage back from the monopoly platforms and essentially re-decentralize the internet. You haven't sort of talked about that much tonight. I was just curious if you had any thoughts about whether that is a realistic scenario. So I'm involved with a group at the Berkeley School of Music a guy named Panas Pane who's trying to think this out through a registry because as we all know, there's so-called orphan copyrights and there's a lot of stuff that where Spotify and Apple Music are supposedly holding on to millions of dollars because they don't know where the songwriter is early. And they're not trying very hard because it's in their accounts and they're earning the interest on it. But I think it's just beginning. I don't think it's fully baked yet at any point. So I make a little reference to it in the book but I don't think it's ready for prime time at all. Yeah, way in the back there. Hi, thank you. This is really stimulating. As I listen to you talk, I think about whether the best fighting of this monopoly is fighting fire with fire. Quick background to give a sense of where I'm coming from. Media executive at Major League Baseball for 13 years through the period that was the birth of all things MLB.com and then took the first chief digital officer role for a major performing arts center in the country at Lincoln Center. There couldn't be wider differences between the world of all things sport and the world of all things non-profit performing arts. Two huge reasons for that, baseball's a monopoly. Baseball is in a position to actually take on and not have its stuff go into one of the three. And I watched that resistance. Sort of remarkably for a period. If you're a non-profit performing arts organization and further frankly to what you were saying about, maybe some of these books can pull out of things, you can't afford to not be discoverable. And if the only way you can be discoverable is to close your eyes to the copyright infringement that's happening as every, in my case, live from Lincoln Center program ever produced is up on that web on YouTube without payment going to any of the stakeholders. So I put all that as background to say, I mean, those are two very different worlds. What is the role of the funding community, I'm thinking foundations, especially for nonprofits in responding to this? Is it creating its own little sort of monopoly? Is it something else? What might that be? Well look, my hope is in the last chapter of the book I point to the notion of cooperatives. And I started with Sun Kissed. Okay, so there were all these orange growers in California in 1890s getting totally screwed and getting 12 cents a box for oranges. And they eventually said, this is not working out. And so they said, we're gonna sell directly to the Atlantic and Pacific Tea Company, right? And so they formed a cooperative, they owned it themselves and a hundred years later it's still going and it made $10 billion last year. So, and Magnum, the photography cooperative. I said, odd future. I mean, that's a hope for me that if people band together production cooperatives, distribution cooperatives, whatever you wanna call them, that maybe there's some hope against hope on this. Well isn't part of what needs to happen is that we gravitate towards these kind of quick fix solutions that we kind of hope that we have one problem that's created by technology and kind of the hope is that another technology will come along to solve that problem, which may be true. Right. But the fundamental thing is that we exist in this world where the whole economy has so gummed up and is so concentrated. And it feels like one thing that funders could do is to be more active in funding effort to try to change the structure of economy. And that, yeah, we look at this, look at it in journalism. The existence of propubica is a beautiful thing. I'm so grateful that it exists. It's done remarkably important sort of work, but propubica alone will not step in and fill the gap that's been left everywhere else. There should be 10 propubica. At least. Yeah, yeah, I totally agree. Hey, so you had talked about your time in Nashville and talking with artists who kind of were pleading for people to use paid Spotify and also talking about how this whole issue in your book wasn't really brought up at all in the election cycle. So my question is, I am no borkean, but it does for a lot of consumers eventually come down to price. And so how can you possibly structure incentives for people to realize for consumers to realize that they're not coming out ahead ultimately in this equation when everything seems to be free and kind of other than making some sort of moral appeal which hasn't really seemed to work. Well, let's be clear. This is a relatively new phenomena. Everything didn't used to be free. It only started being free once Google got into the business of taking everybody's content and making it free. So the Bureau of Labor Statistics said the average teenager 15 years ago spent almost 40% more on entertainment goods than they spent today. And this is with inflation figured into everything. So who said it had to be free? You know, that's just, that's a new construct. And look, we can argue whether newspapers made a huge mistake saying, oh, let's just give it away and we'll make it up with advertising. The Wall Street Journal didn't call for that. New Yorker didn't fall for that, you know? But, and now New York Times and others are trying to claw their way back into making people pay for this stuff. But this is new. Nobody said the newspaper had to be free. I mean, nobody says food has to be free. Where did this come from? You know, so, I mean, that's just a lesson that people have to somehow grok that if you want a sustainable culture, if you want a newspaper in your town, you gotta pay for it, you know? And somehow maybe that lesson's beginning to spread. And by the way, if you're giving up everything, your privacy and all your information, in order to have it be free, is that really a good trade? Maybe not. I mean, that's what Burners-Lee is saying. You know, you're getting screwed because you're giving them everything and you're not getting that much for it, you know? So, this is a somewhat imperfect example because it's comparing among companies which are sort of equally abusive to consumers and producers. But I think about my own experience of, you know, I've been on, I'm a technology enthusiast. I'm on all the platforms. I've used Bing, I've used Google. I've been on a number of small streaming music startups that have gone bankrupt or been bought. And in both those cases, and this has even been quantified with surveys and things for the Google Bing distinction, they do provide an equivalent service in a lot of ways. And they're also both free. And then on the streaming side of the equation, in almost all the cases, they were all the same price and from a consumer perspective, provided a similar level of service. And these companies come and go. But yet, the dominant market players persist, Google and Spotify. And that's still a problem, I think, for all the reasons you talked about. But I'm wondering what that says to you about the nature of these new monopolies and how, you know, I think you did a lot of interesting reasoning going back to the AT&T example and things like that. But there appears to be something new about how we define these monopolies beyond just their ability to box players out of the market or use their powerful position to provide better service or things like that. Why are these monopolies that are providing equivalent costs, equivalent service at equivalent cost, so hard to dethrone? Well, I think that it goes back to this issue of scale that Frank was talking about. I mean, why is Facebook gonna triumph over Snapchat? It has scale. It has size, numbers, ability, money, customers, that attracts more advertising. It becomes a self-fulfilling prophecy. So, I mean, that's why I say I don't think there is a market solution to this. When I said would you invest in a startup to take on Google? I doubt there's anybody here who would raise their hand. And so, the question is if they have that kind of market power, and by the way, in the book, that market power isn't just economic power. It's political power too. Let's be clear. They play the Washington game better than anybody except maybe the defense contract. And you know, if you look at how Google had the Obama administration under their thumb, it's astonishing. The head of the patent office from Google, the head of the assistant attorney general for antitrust from Google, the CTO of the White House from Google. I mean, it just goes down the line. FTC, FTC. And right today, Google is working really hard to get a woman named Maureen Holhausen to be head of the FTC, which is gonna be their regulator. And I'll bet you in the next three weeks she will be announced as the head of the FTC. The other concept from economics, of course, is the concept of the block end, which is that it's not just, so Google Facebook, they want your data and they're giving you all these services that become essential to you. So you get the free email, you get the Google Docs, you get Facebook Messenger, you get all these other things. And it's escalating because they all wanna become your personal assistant, which means that they're going to be kind of in your grill and guiding you over the entire course of your day. And so I think that one of the things about these companies is just how fiercely they protect that lock-in and how it's kind of, there's an escalation that happens with it. In the book I cite up, the Google asked Robert Bork before he died to write a paper for them to present to the FTC, right? And the FTC had basically said, the staff had said, Google pushes people towards their own services and away from services like Yelp or other places like that. So they had them dead to rights, they had all the proof and everything. So Bork writes this paper and says, the switching cost to leave Google is zero. Well, it's total nonsense, because it's frank. It says, once you've given them your contacts, your Gmail, your calendar, you're in the map, you have all these other services, the switching cost is quite high to leave those services behind. So I mean, it was just nonsense. And of course, the staff understood it was nonsense, but the political appointees overruled the staff and gave Google a free pass. All right, one more. In the back. Quickly, Robert Shredder with International Investor. Two sides of the same question, I think. I don't know if your book covers this, but I wasn't so alarmed about this issue until I heard that some of the people from the gaming industry are being hired by these very organizations. So the people that made a science out of every single slot machine in terms of the colors, the bells and whistles, every imaginable way they looked at these slot machines to get people to keep putting more and more money in, they now have a test audience of several hundred million to try to use some of those same techniques to keep people glued to that screen for a longer period of time or react to some of the advertising. So that bothers me on that side. On the other side, how do you know eventually they're not going to suppress discussion of your book? They might. I mean, look, there's a whole section of what you've just discussed about addiction. So, I mean, they work very hard. There's a big popular book in Silicon Valley right now called How to Build Habit-Forming Products. And the whole idea is that there's a very, we all went to Psych 101, probably, with the Skinner box. So this notion of variable rewards where if the mouse clicks the bar and doesn't get the same reward every time it'll keep clicking is the nature of social network likes all of this stuff. And the 60 minutes hit a fascinating piece on this three weeks ago, in which a Google employee, a formal Google employee, talked a lot about how they had designed apps to be incredibly addictive. And if anybody who's had students in a college classroom know it's like almost impossible to get them to close their devices or do anything. And, well, anybody walking down the street in Washington and having people run into you because they're glued to their phone, it is, it's pretty scary. And now, if Mark Zuckerberg gets the chip inside your brain without putting the chip inside your brain, then it's really scary. Well, there was that article in the New York Times last week about how Uber was using those techniques to essentially manipulate its drivers to work the hours that Uber wanted, which was, I think, a pretty startling. So thank you so much. Thank you. Yeah. Great.