Future Social: The Model is the Message

Future Social: The Model is the Message

DannyTamez

The future is coming at us faster than ever. The biggest challenges to our existence as humankind are at our doorstep - climate, energy, security, space, AI, and more. Social media, in comparison, seems inconsequential. However, we have learned that social affects what we think about and how we think about it - that power makes social as important as any technology. You can see it in Elon Musk buying Twitter for $44 billion, Kanye West buying Parler for an undisclosed amount, Jack Dorsey starting a decentralized social network, and Mark Zuckerberg blowing $15 billion on the metaverse. The stakes are high, and it’s due time to teardown old models, imagine new products, and build & fund social startups that can help us produce a better future.

The medium is the message. Media scholar, Marshall McLuhan, coined that phrase almost 50 years ago. It means that the way we send and receive information is more important than the information itself. In his time, the difference may have been between newspaper and television. Today, it could be an iMessage versus a DM on LinkedIn. You may even have different interpretations of a text message based on the color of a text bubble. Does it matter if it is blue or green?

If a medium can affect the way that we send and receive information, then it can affect our perception, thoughts, and reality. The tech industry understood this phenomenon first, and in recent years the public has also learned about it through events like the Cambridge Analytica scandal, FTC v. Facebook, and The Social Dilemma film. Yet, many of us still can’t help ourselves from spending hours on social apps every day.

Social Creator II - Danny & DALL-E

If the product is free, then you are the product. Advertisers pay social networks to target you with ads. The advertiser is the paying customer, and you are the product - your time, attention, and data. In this model, social networks are incentivized to addict you to their apps without regard for your mental or physical health. Your lifetime value (LTV) to big social is how many ads you can see before you die. Think about that.

The model is the message

If you want to understand the intentions of a company, do not look at its mission statement, look at its business model. The model of a company will show you why it exists, its intentions, and how it values your life. The business model of a social network built on advertising reveals that it exists to extract as much of your life as possible to sell on the market for profit. The model is the message means that the business model of the products we use to send and receive information is more important than the information itself.

Regarding his recent acquisition of Twitter, Elon Musk wrote, "Advertising, when done right, can delight, entertain and inform you... Twitter aspires to be the most respected advertising platform in the world." In order to achieve that goal, Twitter would have to enable production of the best advertisements the world has ever seen and somehow flip the ad model to serve users over advertisers - a mission that could be more challenging than sending a man to Mars. If advertising remains the main source of revenue at Twitter, than the model is the message will continue to apply, no matter who is running the company.

Chamath Palihapitiya, founder and CEO of Social Capital and an early executive at Facebook, said, “We have created tools that are ripping across the social fabric of how society works… It is eroding the core foundations of how people behave by and between each other” and goes on to say that social is destroying civil discourse and cooperation, and spreading misinformation and mistruth. These negative effects compound by billions of people can wreak havoc on our society & culture.

The dark patterns of social are no longer a secret, but the tech industry has failed to present better solutions. TikTok now dominates the landscape and continues to look for new business models of their own. Apple's iOS 14.5 privacy update has also changed the game of what social apps can and cannot do regarding user data. Some say this was a competitive move against Meta, but Apple execs claim that it was simply a values based decision to protect users. It is also likely that Apple is pre-empting changes to data regulations by governments around the world. Either way, big social has lost its golden goose.

Social Creator III - Danny & DALL-E

Social companies who rely on the status quo model will have to adapt to the changing tides around user data and advertising. TikTok, YouTube, Twitter, Instagram, Pinterest, Snap, and Reddit all rely primarily on the advertising business model, and some are taking heavy hits. Though there are numerous factors at play here, Meta has lost $700 billion of value in the last year. So, what's next for social? How might we build new models that can change the world and compound to create a better future?

Web3 has shown us that people are in search of a better model for social. A DAO is an exclusive club where membership is represented by ownership of a (crypto) token. DAOs replace a centralized corporation, like Meta, with a decentralized network and transfer network benefits to their members. In many cases, DAOs promise cool friends, lifestyle perks, and financial gains.

It sounds great, but the DAO model has fatal flaws. First, it is hard to deliver on the promise of cooler friends and a better lifestyle. Second, the complex essence of crypto has blocked usability improvements and mass adoption. Members must be technical and take numerous steps to acquire and secure their tokens. Third, DAOs are difficult to run. Admins must think about security, private keys, wallets, voting, governance, treasury, and the resources needed to manage all of it. In 2021, a popular DAO, Friends with Benefits (FWB), was hacked and has since struggled to maintain its token value.

Speaking of token value, most DAOs are breaking laws and regulations set by The United States. The U.S. Supreme Court’s Howey Test states that “an ‘investment contract’ exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others,” and The U.S. Securities and Exchange Commission (SEC) has concluded that DAO tokens are “investment contracts”. Therefore, the main incentive mechanism of DAOs, the membership token, has been defined as a security by the SEC. That means that DAO leaders, investors, and members may be held liable to the federal government.

In late September 2022, The Commodity Futures Trading Commission (CFTC) issued a lawsuit against members of Ooki DAO for its illegal, off-exchange tokenized margin trading and lending services. While Ooki DAO is different than a social DAO, the case may impact DAO tokenization, membership, and regulation in the future.

In October 2022, we learned that the SEC is investigating Yuga Labs Inc., the Andreessen Horowitz (a16z) backed NFT company, over whether sales of its Bored Ape Yacht Club NFTs violate federal law. These cases, conclusions, and the uncertainty around DAOs and NFTs expose an extremely high risk investment in the web3 space for builders and investors.

If you add up the outsized promises, unfeasible ux, problematic management, and irrational legal risks, then web3 is not a viable solution for the future of social. However, the trends do signal people’s discontent with the status quo and continued search for better social products and experiences.

Social Creator IV - Danny & DALL-E

The world is ready for its next great social network.

What do you think is next for social? Comment @dannytamez.

If you want to continue exploring the social space and discover the next great social network with me, subscribe to my newsletter to stay updated on thoughts, news, and developments. Thank you for reading. - Danny