I’ve been wondering about this question for several years, and for now, it remains a question. The hype and draw of social media in its many and various forms is undeniable. Whether it is the Twitter IPO, or Yahoo’s $1 billion purchase of Tumblr, or the panoply of new companies that pop up in Silicon Valley and NYC’s Silicon Alley, these companies have buzz and they also garner income. Because so many of them serve as new media companies, occupying the same general space as journalists, they garner attention. Yahoo’s Marissa Mayer gets substantial press, far more than the chief executive officers of many companies many times larger. The same can be said for Twitter and before it Groupon, Zynga, and a host of others whose size was modest compared to many public companies, but whose profile was anything but.
Ask denizens of the Valley what they think, and they’ll say that companies like Twitter command premiums and generate buzz because they are transformative. They are transformative the way that Apple, Google, Microsoft and Oracle were transformative. They change the way consumers and businesses live and function, and they make it possible for people to connect ever more seamlessly to the products, services and people that they wish to and need to. Or so the argument goes.
Many people outside of the Valley view these claims with skepticism, hearing an echo of 1990s tech utopianism. And they are right — to a point. The problem with the tech utopianism of the 1990s wasn’t the utopian part; it was the speculative bubble. In that respect, the problem with tech in the 1990s wasn’t the technology. It was instead a toxic mix of pop culture and Wall Street that produced such overweening, Tulip mania-valuations.
And in fact, the actual innovations of technology over the past twenty years have made businesses more productive and unlocked the potential of individuals. Oracle has more than lived up to the grandiosity of its vision, and has become the digital highway for vast swaths of the world. Google is, of course, Google, and numerous smaller companies known only to the technorati are making possible everything from Big Data to the next wave of smart phones.
The scale of such potential is barely captured by official productivity statistics. As MIT’s Erik Brynjolfsson and others have demonstrated, the “free goods” of the Internet such as Google, Facebook and now Twitter may be adding hundreds of billions of dollars every year to collective output without that output registering in official GDP numbers. Twitter is still amorphous in its effects, but it clearly allows for a staccato conversation about vital information, acting as a more robust version of the instant messaging that Wall Street traders found so useful in conducting business a decade ago.
In a world where ideas and information are increasingly the coin of the realm, navigating data and manipulating it have tangible value that businesses and individuals will pay for. Of course, they will also seek such services for free if they can, which increases the business challenge for companies serving those needs. Would you pay for Facebook, Google or Twitter? Advertisers will pay for your attention, and for your data, but should you have to? We already pay for cable television and Internet access, so why not for services such as Twitter and Facebook that facilitate how we navigate our lives digitally? That hasn’t been an issue so far, but it is hard to imagine that it will not be.
