I’ve written elsewhere of how much we would have suffered if AT&T had run the phone network with a Google strategy. You wouldn’t be able to talk on the phone until you heard a bunch of advertisements first. The restaurant you call for a dinner reservation would have to kickback a share of your meal tab to the phone company. Everything you did on your phone would be more cumbersome and less efficient.
Guess what? That still may happen. The only reason Apple hasn’t already started force-feeding ads on your iPhone is a fear that competitors may not do the same — and they might lose a few market share points. But all it takes is one backroom meeting of dubious legality between smartphone providers, and you will soon start hearing a pitch from the GEICO gecko before you even say hello.
Ted Gioia, “YouTube May Force You to Watch 10 (or More) Unskippable Ads in a Row”, The Honest Broker, 2022-09-19.
December 30, 2022
QotD: If AT&T had used the Google model
September 30, 2022
“To maintain the illusion of free, all our online activities are sinking into spam, scam, and sham”
Ted Gioia on the insatiable growth of predatory behaviour from providers of “free” content online:
The biggest trick the Devil ever played was convincing people that online stuff is free. But the Devil always collects, sooner or later — and we are starting to learn the actual terms of this cursed deal.
Consider some recent news stories:
- YouTube has been testing users’ willingness to watch 10 unskippable ads on a video. And the ads aren’t spaced out. They come at you, one right after the other, at the outset — because Google wants to be paid first, even if the video sucks.
- Nobody wants ads on iPhone, but they’re coming. Executives at Apple are allegedly planning to triple the ad revenue from phones.
- “For some Google searches literally the whole screen on Google is ads.”
- TikTok can track a user’s every keystroke, and Beijing has “access to everything”.
- “Scams are showing up at the top of online searches.”
- Snapchat has been forced to pay $35 million for storing and selling users’ biometric information without permission.
- Even if you pay for ad-free streaming, Spotify inserts ads in podcasts.
- Ads are coming to Netflix too.
- Etc. etc. etc.
This is what happens when “free” really isn’t free — but consumers prefer to stay in denial. Go ahead and rob me, just make sure I’m not looking when it happens.
It’s even worse than that. Web users are now hooked on free — and like all addictions, this one is far costlier than you realize at the outset.
You have more leverage when you negotiate an actual price. When I cancel a paid subscription, the corporate provider always comes back with a special offer to get me to reconsider. But how much bargaining power do I have if I refuse to click on those “terms and conditions” that always come with the free stuff?
I’ll answer that for you — none at all.
How bad will it get? YouTube described its ten unskippable ads as a “test” — but this wasn’t done in a laboratory or with volunteers. They just forced it on users, and watched them squirm. And squirm they did.
In fact, one person reported a 12-ad blitz.
This wouldn’t be so bad if it was just one business or sector of the economy that played these games. But this is the de facto business model for the entire digital economy. To maintain the illusion of free, all our online activities are sinking into spam, scam, and sham. Everything from sending an email to sharing a photo gets monitored and monetized by big tech companies — and often you’re the last person to find out what the real price is.
May 3, 2022
Is all of social media just a “giant domestic surveillance operation”?
Severian posted this last week, but I’m only just getting caught up now:
I was wrong about Musk buying Twitter. Lot of that going around — the Z Man got a whole podcast on “avoiding error” from his misread of the situation. It’s well worth a listen. I, too, had a “hot take” on Musk’s offer — not that it was particularly hot, as most folks on this side were saying it, but I too thought it was a stunt. After all, Musk, like Bezos and all the other “new commerce” billionaires, don’t exist without massive government support. I figured his “offer” was stoyak — he’s got something in the works in the Imperial Capital and needed to play hardball with somebody.
But I was also working off my longstanding assumption that Twitter, Faceborg, and all the rest are essentially CIA / NSA fronts. When I first heard about Facebook, my first thought was “Wait, don’t we already have Friendster? What does this bring to the table?” My second thought was the first one I’d had about Friendster: “That’s clever, I guess, but how on earth is this going to make money? Even if they saturate it with ads, to the point where it’s unusable — which will happen in about two weeks — they can’t monetize your personal data any farther. People are pretty set in their habits — once the algorithm figures out you’re the kind of guy who likes anime and New Wave music, any further data is useless.”
Being a much more naive, trusting sort back then, I figured it was just stupidity. You know, Pets.com level stupidity. The VC boys were trying to get another dotcom bubble inflated, because if the first one proved anything, it’s that people are dumb and will keep falling for the same obvious scam over and over. I could hear them in the board rooms: “This time, instead of sticking ‘cyber’ in front of everything, we’ll call it ‘Web 2.0.’ Cha-ching!”
Obviously that didn’t happen. So I went with the common explanation that was floating around in those days, that “social media” sites made their money by selling your data to advertisers. But that doesn’t pass the smell test either. For one thing, as I said above, your habits don’t change very much. For another, as anyone who has any experience with them knows, those algorithms really suck. The other day, for instance, I was listening to some old music one of the streaming music sites. And I mean really old. Nothing I’d played the whole morning had been composed after the 17th century, but the service’s algorithm was convinced that what I’d really like to listen to next was some rapper.
Indeed, the whole point of the ads on Pandora, Spotify, whatever seems to be: To annoy you to the point where you pay for their premium service. Pandora, for instance, either really really really believes I want a Surface Pro 8 and some Taco Bell, or they’re just playing those ads every two songs to annoy me into buying the premium service (which is every ad that isn’t Surface Pro or Taco Bell). Which is just bizarre, because I haven’t had Taco Bell since college — which was 30 years ago, and I paid cash — and this essay right here is the first time I have ever even typed the words “Surface Pro 8”, much less looked at the product.
I really wouldn’t be surprised that the “algorithm” is reading itself. Hey, this guy sure has seen a lot of ads for Taco Bell and Surface Pro! He must really want some!
But the algorithm for companies whose entire business model is e-commerce is no better. Amazon seems to have gone to a “push” model — they must be selling their suppliers on the idea that they can push you stuff, which is why they always pimp the same four or five items in the “Amazon’s Choice” recommendations, no matter what you’re searching for. And these again are laughably wrong — the only things I get off Amazon are used history and philosophy books, and stuff for my dog. Based on this, they have concluded that what I’m really looking for are chick lit and beach gear.
Given all that, I came to the conclusion that “social media” (and Amazon too, probably) really only have one customer, who really does have a use for your data, and that customer’s initials are CIA. It’s a giant domestic surveillance operation.
And why wouldn’t it be? The Regime has had a legitimacy problem for a long time, and a “feedback loop” problem for longer than that. Even if we assume no ulterior motives whatsoever — fat chance, but let’s stipulate — the fact remains that public opinion polling, however you want to define it, has a similar problem as psychological studies. Since the vast majority of study participants are college undergrads, what you get is WEIRD — that’s Western, educated, industrialized, rich and democratic, and also in a very narrow age range. Psych studies that purport to be universal are, at their very best, snapshots inside the head of the BCG.
If you haven’t encountered the Basic College Girl, he provided a thumbnail sketch here.
January 21, 2022
QotD: Wrecking online civility is merely a byproduct
Turning people into hateful shitheads raging in echo chambers is just a side effect.
Tamara Keel, Twitter, 2021-10-19.
December 23, 2021
QotD: Stupid Commercials
Alan McLeod, “1 + 0 = 2”, Gen X at 40, 2005-11-15.
December 5, 2021
QotD: The oddity about online ads
David Thompson commenting on “Thrilling Content Goes Here”, DavidThompson, 2021-08-30.
November 16, 2021
Mike Solana interviews Chris Best, the co-founder and CEO of Substack
Not long after I started hearing about Substack, some of my favourite writers and bloggers began to move their work to the new platform. I now subscribe to more than a dozen Substack authors, although being a penniless blogger, I’m restricted to the free offerings in each case. Thus far I’m definitely seeing Substack as a positive influence in the online world, so this Mike Solana post was of some interest to me:
MIKE SOLANA: In your and Hamish McKenzie’s recent essay, “The internet needs better rules, not stricter referees”, you say Substack is changing the publishing model. Before we get into all that, how would you characterize the publishing landscape before Substack?
CHRIS BEST: My general story on this is we’re coming out of an age of attention-monster social media. People used to get bored. People used to have this problem of like, I don’t know what to do with my time. Then the internet, and especially the mobile internet, took over ALL of our time and attention. It filled up every crevice in our life.
In the first phase of that — the attention suck — it was like this giant land grab. If you were making something that competed for attention space, you wanted to grab as much as possible, as quickly as possible, because there’s only so much. You were competing for people’s 10 minutes while they were waiting in line at the grocery store or whatever. So publishers made content free, and they made it as broadly-compelling as possible. The goal was to grab as much attention as possible in the lowest friction way possible, and to turn that attention into money through advertising.
And listen, none of that was nefarious. None of that was like, people with tented fingers going, “Aha! This will create something bad!” But when you create a system like this, you end up with a certain incentive structure. Then, if you build your algorithms to serve your business model, the incentive structure you create for people participating in your network drives a certain sort of behavior.
The platforms all optimized for things that brought cheap engagement at all costs, that interaction weighed to some of the worst aspects of human nature, and drove emergent behavior that gave us many of the things we see today. The legacy media just got totally steamrolled by all of this, and lives in the world created by these platforms.
SOLANA: Do you really feel that Substack is completely protected from this scaled advertising dynamic with its subscription model? There are a lot of legacy media institutions that have subscriptions, and have had subscriptions for the last 10 or 20 years, in addition to running ads. Personally, I’m also getting requests to run ads on Pirate Wires fairly often. I’m not biting, which maybe answers my question before I’ve asked it, but … do you really see this all changing?
BEST: I think the subscription model is necessary, but not sufficient, right? First of all, as a writer, that you can actually make real money doing this is by itself a big deal. I’ve convinced a lot of people to do subscription instead of ads, and usually they come back to me later like, “Thank you, you changed my life. I can’t believe I was ever thinking the other thing.”
People tend to think about this like, “I could make money with ads. I could make money with subscriptions. Two moneys is better than one money.” But when you’re making the best possible product to drive subscriptions, what you end up having to write is qualitatively different — and better — than the thing you’d have to do to drive the most ad revenue.
If you want to earn and keep the trust of a relatively small number of people who value your writing really deeply, deeply enough to pay for it, and you want that number to grow, the work you do in that world is different than the work you do if you’re like, “I need to get as many people to hear my Casper mattress ad read as possible.”
However, to your point, it’s not enough. One of the big problems with Substack now is people are like, “Great, we’ve got this place where the incentive structure works differently, and I want create this better product to earn and keep the trust of my subscribers … but the way that people find out about my stuff is still on Twitter.”
So we’re kind of downstream from this, you know, attention sewage factory of incentives. I think for Substack to live up to the idea of letting readers take back their mind, and their attention, and helping us all create this kind of alternate universe of content with different laws of physics … we need to do more on that front.
October 14, 2021
The quasi-monopolies of the “web giants”
Arthur Chrenkoff runs afoul of automated “community standards” enforcement on social media, getting locked out of his Twitter account for something that any actual human being would be able to instantly decide was not at all any kind of violation of normal human interactions online or in-person. Of course, if you’ve been in this position yourself, you won’t be surprised to find that launching an appeal of the bot’s action does not get immediate response … and sometimes never gets any attention from a human. He’s aware of this, and he’s still of the belief that this does not call out for any kind of government intervention:
“Automotive Social Media Marketing” by socialautomotive is licensed under CC BY 2.0
I remain broadly sympathetic to the free market argument that competition will, in time, cure any problems that business activity throws up from time to time, such as market domination or underhand practices. The mighty will be brought down low, new players will offer new products, consumer preferences will change, creative (or destructive) equilibrium will be restored. We can all argue, of course, to what extent free market and free competition exist in any particular setting at any particular time. If “real socialism” has never been tried, “real free market” (as opposed to capitalism, which is not necessarily the same thing) might be equally rare in practice. It is certainly true that comparing the lists of top 50 biggest companies one hundred, 50, 20 years ago and today will indicate a lot of economic change, but might not tell us very much about the reasons for that change, which can be quite complex.
The tech giants might not be historically unique as far as their size and power are concerned, but they’re not the norm either. They are not exactly monopolists, but their domination of their particular sections of the market elevates them from the domain of mere companies to something akin to public utilities. Google, Facebook and YouTube, for example, account for 80 per cent of digital advertising in Australia. There are alternatives to all these providers but they are so tiny by comparison as to defeat their main purpose for many users, which is to provide the biggest possible reach and exposure to the world. If you get demonetised or banned by YouTube, other video-sharing platforms can give you only a fraction of the traffic and the eyeballs, which impoverishes you literally and the internet users metaphorically, since they are now less likely to be exposed to the broad range of content. There are other social networks, but only Facebook has “everyone” on it, including your grandma, school friend from primary, and that couple you’ve met on the trip to Spain. Sure, if you get banned from Facebook, you can still try to keep in touch with all these people via many separate channels but it’s so much more difficult, disjointed and time consuming. For that same reason, Facebook’s Marketplace has a much better reach than other platforms that are focused exclusively on online ads. If Marketplace continues to shadow ban me, I can try Craigslist or Gumtree or Locanto, but – certainly in the categories I’m interested in – they all have significantly smaller audiences.
The traditional response to bad customer experience has been “try somebody/something else”. You don’t like Facebook – or Facebook doesn’t like you? Try another similar service. But I’m not sure if most of my friends would be able to name even one alternative to FB, and the chances they are on it are even slimmer. So telling people to stop whining and use an alternative to the tech giants is akin to telling someone “Oh, you can’t have a mobile (cell) phone? So what, no one is stopping you from writing a letter!” It’s the same but different. This is the consequence of the domination of the internet by the Googles and the Facebooks. And the internet now does play an essential role – for better or worse – in our lives and work. Hence the comparison to public utilities. Facebook might not be quite like electricity or running water, but it’s very close to, say, phone service. Yes, you can opt for another social network, but compared to Facebook this would be like a phone company that only makes it possible for you to contact one in twenty people instead of just about everyone, and even then maybe only once a week, at a time predetermined by the provider. It’s a service of sorts, but so inferior in every way to the main game in town as to be incomparable.
I’m not offering any solution to this problem. Many, both on the left and the right, are increasingly of a mind that, like Standard Oil of more than a century ago, the tech behemoths of today need to be broken down into smaller and less powerful units. That could solve some problems but won’t solve many others. Like mine, for example; a somehow “smaller” Twitter and Facebook can still be unresponsive and unaccountable. And as we know from other areas of economy, greater involvement and control by the supposedly impartial government does not guarantee better outcomes either. Big government, like big business, is run by human beings who, quite apart from their own characteristics as individuals, work within a particular culture, which has its own values, agendas and preferences. Government is a monopolist too in many ways, and for all the politics, is not necessarily responsive and accountable either.
September 23, 2021
QotD: The problem with “free” tech stuff
It has gotten so bad lately that they don’t just barrage you with ads, they’re now starting to force-feed you content. I used to have Amazon Music — the free one, of course — because it was a good way to listen to The Z Man’s podcasts and my classical library during my commute. I’d download albums to my phone, switch to “offline” mode, and listen that way. Which Amazon obviously considers no good, because they pushed out some “car mode” bullshit that now automatically turns your wifi on, then starts blasting hip hop at you. And that’s not all! A few weeks back, while trying to figure out a way to turn the damn thing off, I noticed that it now has a “your playlist” feature, based on “your” music … which is, of course, the same force-fed rap shit I’ve been trying so desperately to avoid. It has decided that not only shall I listen to Young Jeezy, Big Weezy, and MC Funetik Spelyn, I will also like it, to such a degree that they will start force-feeding me other shit based on my “likes”.
Yeah. Uninstalled. Fuck you, Bezos. I’ve got a CD player. And when Microsoft decides that I’m not listening to the right music on that, and uninstalls the driver, I’ve got a tape deck. And when that breaks, I will sing to myself as I go down the highway. 99 bottles of beer on the wall, motherfucker, just like bus trips back in Boy Scouts. Enough is enough.
Severian, “Mailbag / Grab Bag”, Rotten Chestnuts, 2021-06-18.
August 31, 2021
QotD: “It’s not news, it’s irritainment”
“Yeah, I watched [Tucker Carlson/Rachel Maddow].”
Except that’s not the news. That’s an editorial program where a person gets performatively angry about their opinion of selected bits of news so that you get angry about it along with them … righteously angry enough to sit through an hour’s worth of commercials.
It’s not news, it’s irritainment.
Tamara Keel, “It makes me so mad!”, View From The Porch, 2021-05-25.
July 24, 2021
QotD: Demolishing the Tim Hortons myth
Tim Hortons is not a defining national institution. Rather, it is a chain of thousands of doughnut shops, several of which have working toilets.
Tim Hortons is not an indispensable part of the Canadian experience. Rather, it is a place that sells a breakfast sandwich that tastes like a dishcloth soaked in egg yolk and left out overnight on top of a radiator.
Tim Hortons is not an anti-Starbucks choice that makes you a more relatable politician or a more authentic Canadian. Rather, it is a great place to buy a muffin if you’ve always wondered what it would be like to eat blueberry air.
There is no shame in having been caught up in the Hortons hype. It happens. Just last week, a columnist in the Toronto Star likened Tim Hortons to a precious vase that’s about to be juggled by its new owner, a monkey. (I was so irate at this irresponsible journalism that I wrote a letter demanding the Star issue a retraction. Everyone knows monkeys juggle only coconuts.)
Meanwhile, the NDP’s Peggy Nash — who, by all accounts, is an actual person and not a fictional construct of The Onion — gravely warned of the potential consequences of the Tim Hortons brand “falling into foreign hands.”
Yes, imagine the consequences. Maybe these madcap foreign owners will go so far as to alter the sandwiches so they taste like … something. Preferably like sandwich, but, at this point, most of us have stopped being picky.
Am I getting through to you, Canada? While we’re on the topic of hard truths, there is something else that needs to be said.
Canada, you sure do like your double-double — or, as it is by law referred to in news reports, the “beloved double-double.” But here’s a newsflash for you: If you drink your coffee with two creams and two sugars, the quality of the coffee itself is of little consequence. You might as well pour a mug of instant coffee or sip the urine of a house cat mixed with a clump of dirt from your golf spikes. It’s all basically the same thing once you bombard it with sweet and dairy. You’re really just wasting your …
I see from your reaction that I’ve crossed a line. I hereby withdraw my defamatory comments about the double-double and kindly ask that you return that handful of my chest hair.
Scott Feschuk, “Okay, Canada: It’s time for the hard truth about Tim Hortons”, Macleans, 2014-09-14.
July 18, 2021
“Yes, we know Facebook is not the only harmful corporation on Earth, but sweet-jeepers-boy-howdy it is a blood-curdling fart in the elevator of existence”
At Damn Interesting, Alan Bellows bids an unfond farewell to Facebook:
For the past few years, we at Damn Interesting have been hearing from scores of long-time fans who were under the mistaken impression that we had ceased all operations years ago. These fans are typically delighted to hear that a) we are still writing and podcasting; and b) there is a wealth of new content since they last visited. When we ask them what caused the assumption of our demise, they invariably cite the fact that our posts disappeared from their Facebook news feeds.
I never had anything like the number of contacts on Facebook that Damn Interesting had, but I had the same experience with people contacting me to ask if I’d given up blogging because none of my posts were showing up in their timelines any more. As more information came out about just how creepy Facebook’s activities are, I stopped even trying to share to that site and eventually stopped linking to any content hosted there. For video credits where the only link for a creator is their FB page, I choose not to make it an active link (although I don’t remove the text). The only use I had after that was for keeping in touch with a few family members who only use that platform, and even that went away after I got locked out of my personal account anyway.
This trend roughly coincides with Facebook’s introduction of “boosting” for pages; in this new model, according to the stats we can see, Facebook stopped showing our posts to approximately 94% of our followers, demanding a fee to “boost” each post into an ad, which would make it visible to more of our audience. We lost contact with tens of thousands of fans practically overnight. We don’t mind paying for a service if it is valuable, but we absolutely don’t want to reach our audience by buying ad space on Facebook. Yuck. But no other option is given to reach the many people who previously followed our posts, and who presumably want to continue to do so.
[…] In a move that feels long overdue, we at Damn Interesting are abandoning all interactions and connections with Facebook.
We really should have done this back when it was revealed that Facebook used the ubiquitous embedded “Like on Facebook” buttons to follow people’s movements around the web without their knowledge or consent.
This bit of belated information prompted me to check the settings on the Share This plug-in I’ve been using for several years and yes, all this time I’ve been inadvertently enabling FB to track anyone on my blog who uses that button (and possibly any other sharing button — that isn’t quite clear). I’ve eliminated that plug-in just in case.
Our reasons for leaving are not entirely abstract. We’re sure many of you, like us, have experienced first-hand how Facebook gives people license to be their worst selves. It can elevate mere differences of political opinion into anger and hostility, pushing friends and family into extreme views, turning loved ones into ugly caricatures of their former selves. Perhaps you have even regretted some of your own posts there; the Facebook interface is designed to make it difficult to engage in good-faith disagreements. It gives undeserved forum to misinformation, disinformation, and hate. Using Facebook has been scientifically demonstrated to cause depression. Facebook subtracts from the quality of the world at a magnitude seldom seen in history, and we’ll all be better off when it goes away.
H/T to Robert Swanson (@WWI) on Gab for the link.
July 6, 2021
GALAXY QUEST – WTF Happened To This Movie?
JoBlo Videos
Published 7 Feb 2020Hollywood has had its fair share of historically troubled productions. Whether it was casting changes, actor deaths, fired directors, in-production rewrites, constant delays, budget cuts or studio edits, these films had every intention to be a blockbuster, but were beset with unforeseen disasters. Sometimes huge hits, sometimes box office bombs.
In our latest episode we explore the 1999 surprise hit GALAXY QUEST, which had a long road to making it to the big screen. Starring Tim Allen, Sigourney Weaver, Alan Rickman, Sam Rockwell, Tony Shalhoub, Daryl Mitchell, Enrico Colantoni, Justin Long and Missi Pyle, this riff on Star Trek, directed by Dean Parisot, eventually got over its hurdles and made a galactic splash at the box office. Now, if we could just get that sequel …
For more MOVIE NEWS, visit: http://www.joblo.com
#GalaxyQuest #TimAllen #WTFHappenedToThisMovie
March 17, 2021
The long-gone economic framework of print newspapers
In The Line, Peter Menzies explains the economic underpinnings of the newspaper world back in the “good old days” before first radio, then TV, and finally the internet took all the profits out of their model:
“Newspaper Boxes” by Randy Landicho is licensed under CC BY 2.0
We will hear a lot in the months ahead about who’s making money from news, so let’s get something straight: Even in the profit-soaked heyday of Canadian newspapers, no one made money from news.
That all ended about 100 years ago when radio — and then television — began delivering it for free.
Oh sure, the occasional ongoing news story would inspire people to buy more newspapers. But in my 30 years in that business the only event that did so in any significant way was the death and funeral of Princess Diana. Even then, after the extra cost of newsprint and distribution, the financial return was insignificant.
But mythologies die hard. People in newsrooms believed news made money — and apparently some still do — even when year after year, surveys of readers showed that there were lots of other things that sold and sustained newspapers.
Some people bought them because they were looking for a job. For others, it was a house, a plumber, a companion, a pet, a car or, really, almost anything else you can think of that might be needed. Classified pages were every town and city’s marketplace. That’s where you found stuff you had to get and bought an ad when you had something to sell or tell people about. It was where you announced the births of your babies, the graduations, engagements and weddings of your children and the deaths of your parents. The lives of communities were recorded in the classified pages of their newspapers.
After a glance at the headlines, many other readers’ first and sometimes only stops were the horoscope, comics, crossword (an error there generated far more calls than a rogue columnist ever could) and other pleasant distractions. For still more, it was the stocks listings, sports scores or recipes to which they were primarily drawn.
There were movie and entertainment listings — even a TV guide so you’d know where and when to find Seinfeld. On Thursdays, you might buy a paper just for the Canadian Tire flyer. On weekends, specialty sections discussed books and told tales of travel adventures well-supported by the latest deals advertised by travel agencies. Housing developers pitched their latest home designs in special real estate sections. And there were magazines. Honestly, there were.
It’s been literal decades since we last subscribed to a print newspaper, and nearly as long since I picked one up from a news stand. My mother is the last person I recall still depending on buying a physical newspaper — she only stopped buying a Saturday Toronto Star in the last year or so — but that was mainly for the TV listings. Back when I still occasionally travelled on business (also more than a decade ago, now), it was a nostalgic treat to find a copy of USA Today at the door of my hotel room in the morning.
February 11, 2021
Tom Brady’s Super Bowl success has outlasted many titans of corporate America
Despite the headline, this isn’t really about the NFL, Tom Brady or the S*per B*wl, it’s about a key factor in free market economies: creative destruction.
“Blockbuster store closing sale” by Consumerist Dot Com is licensed under CC BY 2.0
Consider some of the names that bought Super Bowl airtime during Brady’s first rodeo in January 2002: AOL, Blockbuster, Radio Shack, Circuit City, CompUSA, Sears, Yahoo, VoiceStream Wireless, and Gateway Computers.
The Titans of Yesterday
Notice a theme? That list features some companies we saw in Captain Marvel, the 2019 hit movie that nailed 90s nostalgia and reminded us how fast the world had changed. Like when Blockbuster Video stores were still a thing.
For those who may not recall, when Brady was winning his first Super Bowl, Blockbuster was approaching its peak. In 2004, it operated 9,094 stores and employed some 84,300 people. The company was pulling in $6 billion in revenue annually and looked invincible. Today, a single Blockbuster store remains open — in the world.
Remember RadioShack? Once upon a time, it seemed as if you could find one of their brick-and-mortar stores in every corner of the USA. Not anymore. In 2015, RadioShack filed for Chapter 11 bankruptcy, in large part because of those many store locations, which cannibalized revenues.
Sears, one of the historic giants of retail, managed to make it to 2018 before announcing its bankruptcy. Its stores continue to close so fast, it’s hard to tell how many remain in operation. (The best guess is about 60.)
It’s sometimes difficult to remember that the titans of industry aren’t always the same companies from year to year, and the sector-dominating company today might well be begging for a bailout (or demanding protection from uppity new competitors) only a few years down the way.
Some might see the collapse of Blockbuster, Sears and company as a sign of something terribly wrong with our economic system. After all, Blockbuster alone paid rent at tens of thousands of properties and employed tens of thousands of workers. Sears was the largest American retailer (by far) for decades.
Watching the companies we once shopped at flounder and fail can be surprising, jarring even. But a closer look shows this cycle is not unusual and is actually the sign of a healthy market economy, not a dysfunctional one. What may seem like pure destruction actually clears the way for economic innovation and renewal. “Creative destruction” is how the economist Joseph Schumpeter (1880-1950) characterized business failure in a free market.
As economist Mark Perry points out, companies on top have a very hard time staying on top. Perry, a scholar at the American Enterprise institute and a professor of economics at the University of Michigan’s Flint campus, compared the 1955 Fortune 500 companies to the 2019 Fortune 500. He found that just 52 were still on the list six decades later.
I spent most of my working career in the software business, and many of the companies I’ve worked for over the years aren’t in business any more (my first job out of school was with Northern Telecom … remember them?). Software is a particularly fast-cycling industry, but it’s true of the economy as a whole at a slightly more sedate pace.
