Michael Wolff has posted something fairly apocalyptic on Facebook and its absence of a hard-nosed business model. Facebook, he points out, is just another advertising platform. And we’ve already got way too many of those:
In its Herculean efforts to maintain its overall growth, Facebook will continue to lower its per-user revenues, which, given its vast inventory, will force the rest of the ad-driven Web to lower its costs. The low-level panic the owners of every mass-traffic website feel about the ever-downward movement of the cost of a thousand ad impressions (or CPM) is turning to dread, as some big sites observed as much as a 25 percent decrease in the last quarter, following Facebook’s own attempt to book more revenue.
It’s a problem every media owner on the Web recognises. When advertising inventory was scarce and easily gradable – when a slot on ITV was worth more than a colour page in Esquire was worth more than a classified in the paper – it was possible to maintain some kind of control over your ratecard. The cost and difficulty in creating new content, and new content platforms, mapped fairly well onto the demand for new content (and thus advertising inventory) among the public.
Digital technology changed all that. Content is now instantly and infinitely replicable. New content is cheap to produce and in some cases effectively free. In fact, even by existing?on the Web we create more content through Facebook likes, retweets, searches, emails. It’s like we breathe in oxygen and breathe out ad inventory. No wonder that inventory goes down and down and down in value.
Thing is, that doesn’t just apply to ad inventory. It’s beginning to apply to culture. We talk a lot about piracy and DRM when it comes to digitally distributed culture. We don’t talk enough about plenitude. There is more music being produced now than ever before in history. There are more books being published than ever before. There is more and more video being created.
Take YouTube as an example. 60 hours of video is being uploaded every minute. That’s over three million?hours of video every year. I’ve seen no figures for the amount of new music being added to Spotify or iTunes every year, but I bet it’s huge. And, with the growth in self-publishing, more and more books are being published all the time.
It’s not paywalls and DRM that are the issues; it’s the complete imbalance between supply and demand. Just like advertisers only need a certain number of slots, humans only need a certain amount of stimulation. We only have a certain number of hours in our day, and a certain number of years in our lives. Are we at the point where every single new song, book or movie lowers the potential demand for every other song, book or movie? What does that mean for our cultural economy?