WHAT IS GOOGLE? A PLAGUE ON THE GLOBAL ECONOMY?

Though search engines are new, their most obvious old media comparison is the encyclopaedia. Encyclopaedia publishers gathered and verified information which was sold as a book(s) or belatedly as a CD ROM and they received money for their work. Google’s business model is rather different, though Google has successfully masked its impact by constantly telling us that it is a benevolent company and will maintain its saintly status as it matures.

Regardless of Google’s intent and/or diversification, everything about Google returns to its search engine and how it has turned the traditional encyclopaedia model on its head. On Planet Google we toil writing the content, we toil building the websites and when Google recognises humble little us near the top of a results screen we are grateful! You have to hand it to these guys who would have thought a ‘cool’, ‘liberal’, ‘good’ company would be relying on slave labour!

From about the time Google emerged as the de facto search engine, thereby ending the ‘portal’ concept which initially guided the user through the Internet experience as it went mass market, the company has made quite a song and dance about being a force for good. Yet Google’s epitaph will be quite the opposite.

Most commentators, cultural, social and financial, would agree that apart from the search, most Google products have either failed or been disappointing. Google’s radio ad programme has just been canned. Google newspaper ads was a non-event. Gmail is a clumsy mess. Google Docs hasn’t set the world alight. Google Earth is a fantastic plaything. Only Google’s search facility remains unchallenged and that makes me suspect that the majority of Google’s toys are a PR exercise to deflect criticism.

While claiming to be a force for good, Google has engaged in practices which are cunning. Making money from the trademarks of others while pre-emptively claiming it is legal strikes me as rampant greed, and a blatant breach of that much cited modern clause, the fair use policy. Google behaves like the well-armed hoodlum at the gold mine. The scanning of Gmail to find an opportunity to flog something reeks of utter vulgarity. Google wants to invest in green energy while its founders ponce around in their Boeing 767, a twin-aisle civilian airliner. These jokers make private jets look subtle!

But what makes Google’s prominence so inappropriate is the simple fact that Google search isn’t a complete product in the industrial or consumer sense. We do all the work. Google outsources the content to us. Google produces a screen, which they exploit monetarily, based on our efforts. Google isn’t a product – there is no Google mass market product, our efforts and products are piggy-backed by Google to make money. Google has outsourced creativity to others for it to financially exploit. Google profits from the efforts of everyone else. Google is not a product that has inspired other products or improved productivity.

Google, sooner rather than later, will come to be regarded as one of the most destructive companies ever, and pilloried as such. While capitalism and the free market have always been subjected to enormous changes the Internet has brought changes which are only now being felt. Unfortunately these types of upheavals are of the historical kind- that is there is no one alive who has lived through such previous disruptions so the likelihood of politicians or governments knowing what to do is minuscule. Destructive creativity is an indispensable part of capitalism, but Google is not creating anything. Google is efficiently destructive without bringing any commercial advantages. (If anyone thinks the ad words programme is a financially dynamic replacement for the value Google has destroyed then they are certifiable.) Google is a parasite, a locust.

Therein lies an important lesson for Western economies which has been either ignored or overlooked, and may come as a shock to most of our politicians. The ‘knowledge economy’ doesn’t exist. There is no opportunity for Western economies to deliver high value goods. I’m certainly not a fan of Warren Buffet but he correctly recognised as the first round of the Internet gold rush was underway more than a decade ago that the Internet would destroy value, and in the vast majority of cases it does.

At any public appearance of a software or Internet ‘billionaire’ you will find politicians dancing around like frisky labradors. They seize the opportunity to proclaim that this individual is the face of our prosperous future. Without fail it is a scene repeated in any Western city. The knowledge economy is the path to riches. Except it isn’t. The knowledge economy is an express route to poverty.

The West could only have a knowledge economy if everyone in the developing world was daft, and we all know that is certainly not the case. They are resourceful and industrious, and in many ways put us to shame. When it comes to employment, software and computing invoke of the law of diminishing returns. Each generation of software has to eliminate tasks and become more usable otherwise it wouldn’t sell. The workforce doesn’t grow in knowledge and accomplishment to master the software- the end user’s participation is always simplified. Making subsequent generations of software simpler is vital to the vendor’s market penetration. Every generation of software aims to make more of the coding invisible and almost always aims for greater simplicity and less skill. Only the computing requirements get greater. Software aims to make each task simpler until it can be traded down to a lower salary and skill level. The ‘killer app’ aims for ubiquity and instant comprehensibility. Once computing and software are indispensable to a role then that job can be outsourced to a cheaper country because, of course, the computers and software are there too.

Google and the Internet have been lauded for giving power to consumers. But once consumers have more power than they need they focus only on the best price rather than a fair price. Consumers have become the impetus  for outsourcing and off-shoring their own jobs as companies strive to remain competitive.

The case of YouTube is probably an example not of Google’s ingenuity but its stupidity and arrogance. Google should not have purchased the site, and surely knows it. YouTube is nothing without the pillaged content. TV ratings and revenue collapse as Google has the ‘best bits’ for more advertising opportunities. Occasionally, yes, there is some press piece about some civilian celebrity whose clip has been viewed so many million times but that individual is immediately replaced by the next sensation. In the case of YouTube, though, the sensation doesn’t produce any wealth or benefit. Considering how often YouTube clips and the like do rounds of the workplace, Google and YouTube are anti-productivity. They have a resolutely negative toll on the economy.  If anything the Google and the Internet accelerate dumbing down. Over and above the pointlessness of the content it is simply astounding that old media have not retaliated by forming RecordLabelTube or at least made some effort to reclaim their turf. As is so often the case these days, the people at the helm have neither ideas nor gumption.

Startling too is Google’s decision to digitise books, all books. Is this really to broaden the minds of netizens everywhere or to data mine for unlimited advertising connections? Why not digitise all the movies ever made and make them available? Why not send a memo to the Hollywood studios telling them that they will have to opt out, otherwise it’s consent assumed? Wouldn’t the movies been better digitised? And TV too? After all we use a screen to view movies and TV so everything on our laptops would make sense. Well we all know the answer: Because the massed ranks of the studios and the A-List would give Google a financial thumping, with possibly a jail term too for good measure. Writers and publishers are being bullied. Google has identified the local sap it can take for a ride. (It’s a glaring hypocrisy too that a company as wealthy as Google had to be sued over the issue of scanning books- what message does Google’s behaviour send to the average citizen about the legality and morality of downloading music and movies?)

In a recent speech to Congress by British Prime Minister Gordon Brown, he said, as have many before and many still to do, that the West must concentrate on producing and selling high values goods to developing countries. The logic is plain: our citizens need high paying jobs to pay their mortgages, massive debts and have enough money to maintain the living standards they are accustomed to or our politicians will find themselves caught up in chaos. Europe and America will not produce high value goods for China and India etc. India and China, with nearly three billion people between them, will have to produce these goods on their own. In fact, they will have to surpass the West. At present the combined population of India and China is about 5 times US and Europe, and growing faster. These are citizens who will, by a simple matter of the size and extent of their need, control the market and dominate pricing power. Are these people going to be content to produce disposable clothing and cheap electronics for us while they buy our jetliners? Of course, not. Usually discussed in tandem with ‘high value goods’ is the vague mantra that technology is going to liberate us from oil dependency, on occasion it is said it will also solve our environmental problems. Technology, apart from militarily sensitive and nuclear, is a genuinely free market. To sovereign states its advantages are equal or comparatively similar. High value goods will be produced wherever it can be done at a profit. The interests of shareholders and the returns sought by pension funds will make China more tempting than Michigan for some time yet. China and India need their own purveyors of ingenuity and bold global brands to build and sustain their societies.

The dirty secret of Globalisation is that it is about standardisation, equalisation. I have long been a believer in fair global trade standards but I also understood it would involve considerable difficulties and probably take several generations. But Western countries have, as their citizens will shortly come to comprehend, been betrayed by a cabal aiming to enrich themselves by any means. Until recently the global economy was like a see-saw, controlled by us, the West. They, the developing world, dangled in the air while we dictated global trade, tariffs and economic power. That has been traded for a DVD player in every room. For the US, that bastion of the Internet boom, things look particularly bad. Entertainment and aviation have been for several decades America’s great exports. The Internet’s toll on old media does not need any elaboration and of course Boeing has been dabbling in outsourcing, called ‘sharing the risk’, for its new jet, the 787-an aircraft so innovative that in a ‘knowledge economy’ it would be the sort of high value product that could only be home-grown.

It is doubly ironic that the vigorously pro-free market Right has basked in the largely imaginary benefits of Globalisation will now, as we say in Britain, try to close the gate after the horse has bolted, while the Left which derided Globalisation as Americanisation, will see that the mass transfer of the means of production to China and a few others has damaged America and Western capitalism in a way the USSR could never manage. China is often the subject of demonisation in America. But let no American be fooled by this hokum. If China embraced democracy tomorrow the US would be ousted as top dog the day after! The consequences for the dollar would make the current situation look like Disneyland. Indeed, possibly the gravest threat to a solution to the fiscal chaos is the Chinese government succumbing to domestic protests.

Google and the Internet will make this recession more severe. Various networking and business sites touting themselves as gateways to a new career will depress salaries already under pressure. Although the B2B bonanza hasn’t really happened the way it was originally envisaged- there’s a surprise! – it has enabled even the smallest businesses to access the ‘China price’. Now of course in boom times competition is vital to a robust and healthy economy. In bad times competition will cull the weak and expose the fat but in the current circumstances the Internet will be a driver of deflation. This is not really being considered by officials because of their relative tech ignorance. The developed and developing economies are caught at a point in the equation where neither side looks able to produce the spurt that will avoid stagnation. Globalisation’s natural course is to have the see-saw become a spirit level. And the only way that can happen is for our standard of living to drop and their standard of living to rise. Living standards will drop because salaries in the West will be forced down, as will house prices. The bulk exporting of the consumer manufacturing base can only be reversed when it is economic to make things in the West, although the adjustment for people who expect cheap consumer goods will almost certainly cause confusion and political opportunism. The Internet’s role in the global economy will be to further erode high paying jobs in the West. Most industries and manual workers have been subjected to decades of streamlining. The office is next. Animation is a perfect example of what would be a typical knowledge economy product in the eyes of a politician, yet it has been outsourced to an astonishing level.

We are pre-occupied with how the banks have been allowed to run riot unregulated. Soon, very soon, we will be questioning why the influence of Google, which is effectively an information monopoly, and the Internet has been allowed to run riot unregulated too. Most politicians have little or no grasp of the Internet and its implications. Much of what they know has come from the PR teams of tech companies and the wretched executives-as-salesmen who have convinced them there is a crock of gold at the end of the tech rainbow just waiting for their constituents to divide the spoils. Yes, the Internet is a vast and wonderful resource in the right hands but like opium controlled in hospitals as morphine and heroin on the street… The Internet has destroyed and devoured vast amounts of monetary value just as the West’s deindustrialisation has reached it zenith. Child pornographers have flourished like never before. The commercialisation and even sexualisation of childhood is now becoming the norm. Simple consumer goods to complex medical formulae are pirated and faked on scale we haven’t quite grasped. Suicide bombers have organised their activities and funding and then introduce themselves posthumously, and jeeringly, to a global audience. Militants have webcast the staging of the most brutal executions as entertainment, inspiration and recruitment drive. Copyright has been abused and plundered. Financial scams are rampant too, though the banks seem to keep the information close to their chests. The vulnerable are targeted. Not since the heyday of Western imperialism has there been such a prolonged robbery and free-for-all. (You could argue we deserve it.) Yet nobody is held to account.

Despite the Internet often being described as the Wild West politicians, intimidated by computers and geeks, have abdicated responsibility. Isn’t time to look again at the conduct of the IT industry at the turn of the millennium? Who can forget the sales-driven panic of the Y2K bug? Nuclear missiles were going to detonate themselves as 2000 dawned across the time zones. Our computers would crash in unison. Air traffic control would be helpless; anything with a chip – that is almost everything- would stubbornly defy our attempts to operate it. Bank tellers would be unable to give us our money as their computers mutinied; shops would be unable to sell us the most basic things, but of course the solution was simple: give the IT machine more money. Held to ransom we upgraded everything and some of us thought it was really just sensible to buy everything all over again. What an expensive anti-climax the millennium bug was!

Despite that episode of enforced monetary extravagance, policymakers are still spellbound by anything Internet/tech and show a rash willingness to genuflect unquestioningly in the presence of geeks.

The Internet needs regulation and the control of information must be removed from Google. Long before the Internet went mainstream we weren’t completely isolated, ignorant and information-deprived. The Dark Ages were several centuries behind us, have we forgotten? We need a civic information gateway, possibly state owned but autonomous or overseen by UNESCO, say- a stepping stone to what we need to know. Yes, there are issues of free speech and government surveillance, but there always has been!

When everyone realises there is no knowledge economy and we have exported all the factories because we knew the price of everything and the value of nothing we will feel nostalgic for simpler times when we used to get our hands dirty.

Publishers Are Dead- Long Live Books!

The first (obvious) tremors of the deepening economic crisis are being felt in the detached worlds of New York and London publishing, the principal centres of English language writing. What is dismaying is that these outfits – they can hardly be classed as businesses or cultural bodies – have not collapsed already. Publishers face extinction. That publishers have survived in this condition so long is partly because they are often staffed by a privileged and connected crowd, recruited from the lower divisions of the elite who are rigidly of the opinion that their skills, insights etc are indispensable and although the economics winds may bring a chilly breeze, Canute-like they defy the waves. Until now. Publishers whimper about the books they cannot afford to publish, but it is writers who cannot afford publishers.

Are books dead? Is the novel is dead? Now that publishers are in an advanced vegetative state, the novel is about to flourish. Although book publishing has largely escaped the brunt of the Internet’s commercial impact, publishers are the media tribe’s prime candidate for being eradicated by the internet because writing is, in most cases, solitary. Admittedly the finished product needs a few helping hands, but nothing insurmountable. The literary product is not encumbered with the travails of film and TV production. The solitariness of writers is their trump card, and is what will make publishing as we know it extinct. Those self-publishing writers who have been pitied and sneered at will soon be envied.

Publishers are making their plight worse by becoming even more timid when they have to be bold. Most publishers no longer want to read unsolicited manuscripts and discover new writers, they seem to have acquired a taste solely for writers fresh off university creative writing courses. Was Ibsen guided by a creative writing tutor? Was Doris Lessing? Was Marguerite Yourcenar? Was Patrick White? Was Phillip Roth? US publishers fell, en masse, for this lark at least since about 1980 (but sporadically prior to then) and the pattern is an initial hullabaloo and synchronised fanfare then disappointment and stints back at fiction factories, this time as foreman overseeing the assembly of new writers for ‘discovery’. (In London Faber, once one of the greatest houses of British publishing, is running its own creative writing courses- the Faber Academy, if you will!- for those foolish enough to think they can buy their way in. It’s common knowledge that Faber is ‘adjusting’ to the loss of royalties from Cats, but this is beyond cheap, a crank not befitting its history.)

I am constantly dismayed by the books publishers choose to publish and promote. Bloomsbury in London and its US subsidiary published Heston Blumenthal’s Big Fat Duck Cookbook last year at £125 in the UK and $250. Even though the production of the title was probably begun before the fiscal crisis gathered pace, the book is still amazing example of the gaudy superficiality dominating publishing. When I checked Amazon UK on Thursday it was 9117 in book sales and the US store had it at 22453. Even if all the sales took place around the Christmas, those rankings say a lot about the wisdom of such an endeavour. It would have made more sense investing in writers, and promoting a group of writers together rather than massaging the ego of a man who hasn’t realised we didn’t like Findus Boil-in-the-Bag first time round.UK Sales of the book are around 6000, considering the price and the economy it has to be admitted that is not awful. However the absurd size and gimmicky recipes render the whole project meaningless, stupid and detached; like most people I chuckled heartily when The Fat Duck was closed due to illness among its high-paying diners. The priority of publishing houses must be writers, not chefs. (Bloomsbury, which owes a great deal to the JK Rowling’s Harry Potter books, has shamelessly brought forward a British writer’s vile account of parent-child strife to capitalise on the publicity- a repulsive irony.)

Some in publishing think the new electronic devices – ‘iPods for books’ is the tedious shorthand – will destroy books, while a few deluded publishers – is there any other? – think ‘ereaders’ will save them. I imagine a few see their imprints as the literary version of Apple’s iTunes Store, ignoring retailers and delivering books directly to the devices of delighted customers. The reader devices will destroy not save  publishers. The commercial base of the ‘next’ J K Rowling and the ‘next’ Stephen King etc and the future sales of those two current cash cows will be decimated. The small sales base of literary fiction will save books. Yes there will be a few shocks there too but this is where the genuine readers and book buyers are to be found- people who want, and will continue to want, the physical product to hold and place on a bedside table, a shelf.  Crossover literary titles, prize-winners and film tie-ins most likely, and the backlist of Nobel laureates will suffer as books are pirated and downloaded. It’s the mass market that will be destroyed as these Sony and Amazon devices are quickly be joined by cheaper ones, just as the MP3 market is awash with substitutes for the iPod. In fact books could be even more prone to piracy because many of the younger people, to whom these devices are principally aimed, are not generally book buyers; so if they are not loyal to music, film and video games, their main entertainment interests and focus of their spending power, what are the prospects for books? When one considers how books are already borrowed, photocopied and circulated in colleges, for example, will younger generations really want to buy a book when it could be downloaded and they could then spend their money on something else? Additionally literary reading for pleasure is something younger people simply don’t get.

So the current business model-  lots of chaff to enjoy the respectability and prestige of a ration of wheat for the award circuit,- will be fatally undermined.

Sony went into the film business and got tangled up in an endless Digital Rights Management mess which has effectively destroyed the Walkman brand. You will notice that Sony has belatedly understood the lessons of its venture into movies and is not dabbling in the publishing business to complement its eReader …so the more books that are pirated the more money Sony makes selling its device. And Amazon, too, which is more of an online department store than a cyber bookseller, has had a look at the tealeaves and decided the money, is to be had in peddling its Kindle devices for the cyber booty. Publishers, if you think Sony and Amazon are customising the life rafts, calamity awaits. Even if publishers decide not to participate in download offerings, the pirates will simply scan the books and circulate them freely, or sell at a nominal fee, as PDF files, word docs, (or any proprietary format that will soon be hacked) since Sony and Amazon have so thoughtfully introduced the platform.

The future for agents isn’t very rosy either- because writers will not be able to afford them. The role of the agent has become exaggerated because of the few headline-grabbing advances that secure the elixir of splashy headlines for the agent, the author and a free publicity campaign for the house.

So what will the publisher of the future look like? Self-publishing.

Writers must publish themselves- a simple co-operative where all those commercial overheads are pooled to keep them to an absolute minimum, unfortunately that includes advances. Authors publish when they are ready and their sales finance the book, preparing the manuscript for publication is in effect the advance. An obvious disadvantage with such a scheme is that for it to work established writers – usually the most conservative – have to launch it. So let’s presume a few ‘names’ get together and launch the first writer’s co-op. In essence it’s a virtual operation. Possibly a writer belonging to the co-op will have a spare room to house an employee, or admin could be outsourced. An example: a few established British writers combine resources and set up, say, Ealing Press. Ian McEwan, say, participates and publishes On Chesil Beach under the Ealing Press imprint. Distribution will almost certainly be by mail, that way the writers can maximise the financials by balancing royalties and cover price without have to be at the mercy of retailers and retaining what would have been the retailer’s margin to make the cost (and presentation) of a book attractive to genuine readers and acceptable enough to occasional buyers for them to forego a pirated copy. Warehousing and distribution can be outsourced and, ideally, the collectives use their literary colleagues in any territory they have earmarked for translation. If the books sold in sufficient numbers, the collectives could bring the business end of publishing together as a separate entity working for all the independent publishers.

McEwan thinks his novel would sell in France so he finances a translation, Sur la plage de Chesil and Ealing Press print it in French. They don’t publish it in France, as such. It’s all done from London but the book is printed where it is economically viable to do so and despatched by whatever means. If it’s printed in France, La Poste collect the books from the printers or the printers deliver it to the French equivalent of Ealing Press who post to French buyers just as Ealing Press (etc) could dispatch the English editions of French novels from French co-ops and so on, country by country. So the presentation is identical in every language, as each imprint builds its brand globally, a horrible expression but writers are not making an impression at the moment, neither intellectually nor in terms of the economic importance of publishing.

Even if this model works perfectly until the books are ready to be distributed, how do writers overcome the challenge of dwindling markets? IPTV- Internet Protocol television, more commonly called webcasting. Readers, not surprisingly, used to follow the TV book programmes where a new title was discussed with the author or a general overview programme about a writer’s life and themes, sometimes coinciding with a film adaptation or such like. The costs are, in comparison with TV, miniscule. HD cameras, editing suites, storage and hosting are astonishingly cheap. Graphics and anything fancy can be kept to a minimum. Again the writers can combine resources so that there is not any excessive expenditure on  equipment, form an umbrella group to spread costs while maintaining the house identity and simply upload interviews, readings etc for the public to enjoy. There is no squabbling over scheduling or prominence- the public simply download or stream what they want when they want it. It’s simple. Moreover when the internet is awash with garish nonsense it is the responsibility of genuinely creative and talented people to provide the material the discerning public feel is being neglected by TV.

And will self-publishing as the standard business model assure the future of the novel in physical form as a source of income for writers? Possibly not but readers of serious books, fiction and non-fiction, tend to be more thoughtful and conscientious, snooty but true. They have no difficulty understanding that if books are not bought and sold honestly and fairly then literature and the spread of knowledge will die. Once the written word is imperilled, everything will be eclipsed.