by
Jaron Lanier
1
Prelude
0
terms
1
notes
2
Instagram isn't worth a billion dollars just because those thirteen employees are extraordinary. Instead, its value comes from the millions of users who contribute to the network without being paid for it. Networks need a great number of people to participate in them to generate significant value. But when they have them, only a small number of people get paid. That has the net effect of centralizing wealth and limiting overall economic growth.
he makes a good point but doesn't quite get to cosmic brain status: valuations are arbitrary and, at heart, political. Instagram is "worth" a billion dollars because Facebook decided it was, and we can only imagine that Facebook decided accordingly after running cost projections on how much more money it could get from advertisers in the long run. But that is an inherently subjective measure that takes into account how many years of revenue Facebook is looking at (i.e., how deep its coffers are right now); fantastical projections about Instagram's ability to attract and retain users in the future; and arbitrary decisions about how much to charge advertisers. Ultimately, Instagram is worth a billion dollars because enough people decided it was. Rather than accepting this valuation as God-given and trying to divide up this amount among Instagram's presumed contributors, we should question the idea of Instagram being worth anything at all.
Instead, his solution seems to be (and I think he clarifies it over the next few chapters) that we should pay all Instagram users who contribute anything to the service. Even if you could convince Facebook that it was worth doing this, I don't see how this will solve the winner-takes-all problem (you already see this with influencer marketing).
Instagram isn't worth a billion dollars just because those thirteen employees are extraordinary. Instead, its value comes from the millions of users who contribute to the network without being paid for it. Networks need a great number of people to participate in them to generate significant value. But when they have them, only a small number of people get paid. That has the net effect of centralizing wealth and limiting overall economic growth.
he makes a good point but doesn't quite get to cosmic brain status: valuations are arbitrary and, at heart, political. Instagram is "worth" a billion dollars because Facebook decided it was, and we can only imagine that Facebook decided accordingly after running cost projections on how much more money it could get from advertisers in the long run. But that is an inherently subjective measure that takes into account how many years of revenue Facebook is looking at (i.e., how deep its coffers are right now); fantastical projections about Instagram's ability to attract and retain users in the future; and arbitrary decisions about how much to charge advertisers. Ultimately, Instagram is worth a billion dollars because enough people decided it was. Rather than accepting this valuation as God-given and trying to divide up this amount among Instagram's presumed contributors, we should question the idea of Instagram being worth anything at all.
Instead, his solution seems to be (and I think he clarifies it over the next few chapters) that we should pay all Instagram users who contribute anything to the service. Even if you could convince Facebook that it was worth doing this, I don't see how this will solve the winner-takes-all problem (you already see this with influencer marketing).