Category Archives: Digital Economy

Regulating Social Media….

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The term “mainstream media” (or MSM) is generally used as a derogatory term to describe traditional news services (print, broadcast, on-line), especially by anyone who thinks that MSM does not reflect what’s “really going on” in politics, society and the wider arena of current affairs. Depending on which conspiracy theories or political agenda you follow, if MSM doesn’t agree with or express your viewpoint, it’s become very easy to dismiss the Fourth Estate as an instrument of the (deep) State, or merely serving the interests of an oligarchy of wealthy media owners and press barons. This dialectic is sometimes described as the Fifth Estate – those bloggers, podcasters, citizen journalists and marginalized voices that seek to pursue their version(s) of the truth via new content platforms.

Although the tradition of the counter-culture as represented by this Fifth Estate has a very long history, its growth has been accelerated and amplified thanks to new digital technologies in general, and social media brands in particular. The problem is, not only is social media challenging (and ignoring) many of the rules and conventions that underpin the social contract between the public and the traditional media outlets, our governments and regulators cannot keep up with the pace of technology.

In the late 1980s, when I studied sub-editing and basic journalism at night school, the ethos of The Five Ws of Journalism were still taught as the essentials of any credible news outlet or publication. This was also a time when the media was going through significant changes, from new content technology to cross-border ownership, from multi-channel narrow-casting to 24-hour rolling news formats – yet the principles of source verification, fact-checking, libel laws and the right to reply were generally still seen as crucial to instilling public trust and confidence in the media (alongside a healthy dose of scepticism to not believe everything that we read in the paper!).

Now, with social media grabbing more of our attention, and with large, global and engaged audiences on their platforms, who are getting more of their news from these channels, the term “MSM” could easily apply to social media itself. Hence the term “legacy media” has emerged to describe traditional news services.

Whether it’s Facebook wanting to be the “world’s newspaper” or X positioning itself as the global “public square”, it’s clear that these new media barons are in many ways no different to the aging media moguls they seek to displace. Newspapers don’t make money from their cover price or even subscriptions – most revenue comes from advertising and the “rivers of gold” it represents. Now, those advertising dollars are on-line, and tied to our social media accounts and the proliferation of posts, “likes” and “shares” (as well as our personal data).

So how should we think about regulating social media, if the old rules no longer apply?

First, the policy, regulatory and industry framework to oversee social media needs to be simplified and streamlined. In Australia alone, based on a cursory internet search, I identified more than a dozen entities (government, agency, association) that have some form of oversight of social media. Apart from being highly inefficient, surely it doesn’t have to be this complicated? (And complexity and ambiguity can embolden those who seek to flout convention.)

Second, if a social media platform wants to be taken seriously as a trusted news source, and if it aspire to be recognsied as a publication of record, it has to adopt some fundamental principles such as The Five W’s. It’s all very well saying that these platforms are anti-censorship, and pro-free speech, but those rights come with a heap of legal and social responsibilities. To argue that these platforms are merely conduits for public opinion (rather then being content publishers) undermines agency theory. Given that I am not entitled to a social media account (I don’t think it’s yet risen to being a fundamental human right?), and that I don’t own my account (often, not even the content I post), social media companies act as our agents. They give us permission to use their services, and they ultimately control what we post on their digital real estate. They also use algorithms to manipulate what is served up in our feeds. Social media should therefore be held accountable for content that it enables to be disseminated; take more responsibility for any libel, lies or dis/misinformation issued on its platform; and risk prosecution for any content that promotes, encourages or incites violence, insurrection and public disorder.

Third, the fact that much of the content on social media is user-generated should not absolve these platforms from having to provide a formal right of reply, as well as adhering to a recognised and independent dispute resolution service. This will enable alleged victims of on-line bullying, harassment, personal abuse and outright lies to seek redress, without having to embark on expensive legal proceedings. (Of course, if social media companies maintained fact checking and other verification tools, they should be able to mitigate, if not eradicate, the need to invoke these mechanisms in the first place.)

Finally, any reputable social media company should be willing to sign up to minimum standards of practice in respect of content originated or disseminated on its platform, as well as observing existing regulation around personal data, data protection, cyber-security, privacy, intellectual property rights and general consumer protections. At the very least, social media has to prove itself a credible alternative to the legacy media it seeks to displace, otherwise they are not the solution, just another part of the problem.

The wrong end of the stick!

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In a typical knee-jerk and censorial reaction, Australia’s Federal Parliament has recently approved legislation that will attempt to ban anyone under the age of 16 from accessing social media.

Knee-jerk, because the legislative process was rushed, with barely a 24 hour public consultation period. The policy itself was only aired less than 6 months earlier, and was not part of the Labor Government’s election manifesto in 2022.

Censorial, because Australia has a long history of heavy-handed censorship. I still recall when I lived in Adelaide in 1970 (aged 10), broadcasts of the children’s TV series, “Do Not Adjust Your Set” were accompanied by a “Mature Audience” rating – the same series which I had watched when it was first broadcast in the UK in 1967 during the tea-time slot!

As yet another example of government not understanding technology, the implementation details have been left deliberately vague. At its simplest, the technology companies behind the world’s most popular social media platforms (to be defined) will be responsible for compliance, while enforcement will likely come from the eSafety Commissioner (to be confirmed).

The Commissioner herself was somewhat critical of the new policy on its announcement, but has since “welcomed” the legislation, albeit with significant caveats.

From the perspective of both technology and privacy, the legislation is a joke. Whatever tools are going to be used, there will be ways around them (VPN, AI image filters…) And if tech companies are going to be required to hold yet more of our personal data, they just become a target for hackers and other malicious actors (cf. the great Optus data breach of 2022).

Even the Australian Human Rights Commission has been equivocal in showing any support for (or criticism of) the new law. While the “pros” may seem laudable, they are very generic and can be achieved by other, more specific and less onerous means. As for the “cons”, they are very significant, with serious implications and unintended consequences for personal privacy and individual freedoms.

Of course, domestic and international news media are taking a keen interest in Australia’s policy. The Federal Government is used to picking fights with social media companies (on paying for news content), tobacco giants (on plain packaging) and the vaping industry (restricting sales via pharmacies only), so is probably unconcerned about its public image abroad. And while some of this interest attempts to understand the ban and its implications (here and overseas), others such as Amnesty International, have been more critical. If anything, the ban will likely have a negative impact on Australia’s score for internet freedom, as assessed by Freedom House.

The aim of reducing, mitigating or removing “harm” experienced on-line is no doubt an admirable cause. But let’s consider the following:

  • On-line platforms such as social media are simply reflections of the society we live in. Such ills are not unique or limited to Facebook and others. Surely it would be far better to examine and address the root causes of such harms (and their real-world manifestations) rather than some of the on-line outcomes? This feels like a band-aid solution – totally inappropriate, based on the wrong diagnosis.
  • When it comes to addressing on-line abuse and bullying, our politicians need to think about their own behaviour. Their Orwellian use of language, their Parliamentary performances, their manipulation of the media for personal grandstanding, and their “calling out” of anything that does not accord with their own political dogma (while downplaying the numerous rorts, murky back-room deals and factional conflicts that pass for “party politics”). I can’t help thinking that the social media ban is either a deflection from their own failings, or a weird mea culpa where everyone else is having to pay the price for Parliamentary indiscretions.
  • A blanket “one size fits all” ban fails to recognise that children and young people mature and develop at different rates. Why is 16 seen as the magic age? (There are plenty of “dick heads” in their 20s, 30s, 40s etc. who get to vote, drive, reproduce and stand for public office, as well as post on social media…) From about the age of 12, I started reading books that would probably be deemed beyond my years. As a consequence, I by-passed young adult fiction, because much of it was naff in my opinion. Novels such as “Decline and Fall”, “A Clockwork Orange” or “The Drowned World” were essential parts of my formative reading. And let’s remember that as highly critical and critically acclaimed works of fiction, they should neither be regarded as the individual views of their authors, nor should they serve as life manuals for their readers. The clue is in the word “fiction”.
  • Children and young people can gain enormous benefits from using social media – connecting with family and friends, finding people with like-minded interests, getting tips on hobbies and sports, researching ideas and information for their school projects, learning about other communities and countries, even getting their daily news. Why deny them access to these rich resources, just because the Federal Government has a dearth of effective policies on digital platforms, and can’t figure a way of curbing the harms without taking away the benefits (or imposing more restrictions) for everyone else?
  • In another area of social policy designed to address personal harm, Governments are engaging with strategies such as pill-testing at music festivals, because in that example, they know that an outright ban on recreational drugs is increasingly ineffective. Likewise, wider sex, drug and alcohol education for children and young people. Draconian laws like the under-16 social media ban can end up absolving parents, teachers and other community leaders from their own responsibilities for parenting, education, civic guidance and instilling a sense of individual accountability. So perhaps more effort needs to go into helping minors in how they navigate social media, and improving their resilience levels when dealing with unpleasant stuff they are bound to encounter. Plus, making all social media users aware that they are personally responsible for what they post, share and like. Just as we shouldn’t allow our kids to cycle out on the street without undertaking some basic road safety education, I’d rather see children becoming internet savvy from an early age – not just against on-line bullying, but to be alert to financial scams and other consumer traps.
  • Finally, the new Australian legislation was introduced by the Labor Government, and had support from the Liberal Opposition, but not much from the cross-benches in the Senate. So it’s hardly a multi-partisan Act despite the alleged amount of public support expressed. It may even be pandering to the more reactionary elements in our society – such as religious fundamentalists and social conservatives. For example, banning under-16s from using social media could prevent them from seeking help and advice on things like health and reproductive rights, forced marriage, wage theft, coercive relationships and domestic violence. Just some of the unintended consequences likely to come as a result of this ill-considered and hastily assembled piece of legislation.

Pudgy Penguins come to Melbourne

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Last week, I got to chill out with some of the Pudgy Penguins crew, as they launched the Oceania chapter of their NFT community. In case you weren’t aware, Pudgy Penguins are one of the top NFT collections, and have built a loyal fan base for these digital characters.

I went to a major Pudgy Penguin “Pengu Fest” in Hong Kong last year, and got to see first hand how engaged their members are. I also gained some insights as to how this ecosystem enables their NFT holders to license the IP associated with their individual characters into royalty-based income. In short, a subset of the NFT characters are chosen to be turned into merchandise. (For example, Pudgy Penguin soft toys are available in major stores such as Walmart in the USA, and Big W in Australia.) Owners of the selected NFTs earn a percentage of the sales revenue (less tax and production costs etc.).

The most recent collection of Pudgy collectibles are the Igloo figurines, which include early online access to Pudgy World. As a proud owner of one of these plastic figures, I’m still not sure what I have let myself in for…

As well as local meetups, other ways in which the community can interact include a trading card game called Vibes, also launched via the Overpass IP licensing platform.

Igloo Inc, the parent company to Pudgy Penguins and Overpass, has also announced it is launching a Layer 2 blockchain on Ethereum, to be called Abstract, and is being positioned as a “the blockchain for consumer crypto”.

Whatever your views on crypto, NFTs, on-line worlds and collectibles, there is no doubt that Pudgy Penguins have set themselves up with the admirable goals of building a healthy and inclusive community, underpinned by the twin pillars of individual creativity and positive culture.

To crypto sceptics (and the merely crypto curious), the “community” and the enthusiasm of its members could resemble something of a cult. Someone did say during last week’s panel discussion that “I am my penguin, and my penguin is me”. But there are worse things for people to get involved with – and for younger people (I don’t regard myself as part of the Pudgy core demographic), I can see the appeal. For example, your Pudgy Penguin PFP can act as a protective avatar as you engage and explore online – allowing you to share only the personal information that you want to, while you build up trust with other community participants, and before you choose to meet IRL.

There was also a discussion about the difference between meme coins and NFTs – the short answer is that the former represent pure speculation, while the latter aim to create value for their holders. In fact, someone suggested that meme coin trading is not that different to punting on betting apps. But since most NFT collections are well down on their market highs of a couple of years ago, maybe NFT holders and communities like Pudgy Penguins are trying to convince themselves that they are still backing a winner?

Overall, however, I remain positive to the opportunities that NFTs represent – especially in the creative fields, and as a new model for IP licensing. Even if cute flightless birds from the southern hemisphere are not your thing, I don’t think you can dismiss or ignore the social, cultural and economic impact that NFTs will have.

Next week: “When I’m Sixty-Four”

 

 

Ticket scalpers? Blockchain could fix that!

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Music fans of a certain age and demographic have been complaining loudly about the use of “dynamic pricing” when trying to buy tickets for their favourite band’s highly anticipated reunion tour. (There must be a pun in there about “Don’t book online in anger”?)

Part of the rationale given for using a demand-based pricing system is to disincentivise scalpers. The higher the cost of the ticket in the primary market (not the same as the ticket’s face value), the smaller the potential mark-up in the secondary market. Except that some tickets with a face value of $150 were priced at $450 at the box office, only to be re-advertised in the secondary market for several thousand dollars. In other words, the touts have simply increased their margins, in response to the so-called dynamic pricing mechanism.

Without offering any sort of apology or mea culpa, the said band have now announced additional tour dates, tickets for which will be allocated and sold in a form of ballot. Stop me if you think I’m being cynical, but by quickly adding dates to an existing tour itinerary, it shows that the band knew there would be excess demand, because it’s not that easy to reserve major (and highly profitable) venues, even 12 months in advance. And if they can run a ballot system now, why couldn’t they have done that in the first place?

All of which simply shows how out of touch bands like this are with technology and market dynamics. In short, ticket sales and allocations could have been achieved far more equitably if the band and their promoters had chosen to use blockchain, crypto and web3.0 solutions.

Here’s a simple list of options that could have been used:

1. Issue all tickets as NFTs (non-fungible tokens)

2. Limit the number of tickets per digital wallet and/or the number of wallets per ticket buyer

3. Ensure the use of soul-bound tokens to link wallet ownership and ID to specific individuals (to limit the number of tickets per wallet, and to limit the resale of tickets)

4. Run social media campaigns, quests and airdrops to allocate and distribute tokens that entitle holders to a place in the ticket queue – e.g., the more active a wallet holder is in the band’s fan community, the higher their chance of securing a priority place in the ticket queue

5. Pre-publish the expected ticket price ranges, and enable wallet holders to vote on the minimum/maximum price they would be willing to pay (using something like Snapshot)

6. Cap the amount an NFT-based ticket can be sold for in the secondary market or write the token smart contract to allocate a percentage of the resale value as a commission to the ticket issuer

Of course, the UK competition regulators are taking a close look at this ticketing fiasco, to see if so-called dynamic pricing breached fair trading or other consumer protection laws. If punters were not aware that they may have to pay far more than the advertised or face value of a ticket, this would appear to be unfair and unconscionable conduct. It’s potentially a form of under-quoting – advertise the ticket at a artificially low price, then force buyers to pay well over the face value at the actual point of sale (under the guise of “market demand”), knowing full well that the fans had little or no choice in the matter.

One final thought – knowing the volatile history of this band, the chances are that the concerts (or at least some of them) may be cancelled. Hopefully, the ticket agent and box office operators won’t be counting the advance ticket sales as recognised revenue, rather they are required to hold the funds in a verified escrow account until the performances are delivered and the ticket revenue actually earned….. (again, something that could be easily factored into a smart contract – no release of funds until the loud-mouth sings?).

Next week: Cooking the books?