Web 2.0’s role in economic crisis

I think the pundits have it all wrong. It wasn’t just the bad mortgages that brought about the seizure and near-collapse in the US. economic system. It was – and is – Web 2.0.

Yup. That’s the conclusion I’m drawing, after reading The Cult of the Amateur: How Today’s Internet is Killing Our Culture by Andrew Keen (link to newer edition). As you can tell by the title of this earlier edition, Keen’s premise is not really an economic one, though it is about what he sees as the moral and spiritual bankruptcy of our nation and culture brought about by Web 2.0.

What he points out – in a book that was published in 2007 – a year before the big economic meltdown – is that the free and freewheeling nature of Web 2.0 means that  anyone can create content. That means the death of the “expert” – which in turn, is really the death of many many experts. And entire industries.

Let’s look at the media. The massive layoffs and closures of large city newspapers, to a great extent, can be attributed to the growth of online media. To cite one example from Keen: Craigslist, which at the time of Keen’s writing, employed just 22 people, is essentially a free online classified ad service. But Keen points out – it is not free. It has cost us all. Each “free” ad takes money away from a local newspaper, and eventually, it takes away jobs. A San Francisco Chronicle VP believes Craigslist single-handedly depletes the Chronicle and other Bay newspapers of $50 million a year. Multiply that across the country for all the other large and small cities, consider that advertising revenue is a major part of the income needed for newspaper operations, and it is easy to see the domino effect of just one website – and a mere 22 people – upon the economy. In 2006, nearly 18,000 people lost jobs in print journalism.

And that is only one example. Granted, I’m not “blaming” Craigslist, nor do I dare to propose or suggest that it is single-handedly responsible for all of those job losses. That would be ridiculous. The point that Keen makes, is that job losses in the “real world” are not being replaced with job creation in Web 2.0. The 22 people of Craigslist stand in for thousands of people who worked in advertising at newspapers all throughout the country. Because ad revenues are down, that creates layoffs in the news department. And on it goes.

The example can be multiplied across any of the media formats – TV, radio, bookstores. Increasingly, these industries are losing jobs at a frantic pace. And “replaced” by virtual megastores, like Amazon.com, or user content like You Tube. User content sites like You Tube, obviously, won’t hire as many people as the movie industry in Hollywood or the news and cable stations throughout the country.

It’s easy to say “so what” if newspapers fail, or the millionaire Hollywood big shots and movie stars feel a little economic pinch. But all of these industries are made up of many many ordinary people. From the “go-fer” on the sound stage to the subscription order taker at the newspaper and many many others. Their jobs – if they still have them – remain at risk.

Keen worries that the proliferation of content by amateurs (I include myself in that group) not only “dumbs down” our culture, but may in fact threaten our democracy itself. Who, Keen asks, will do the hard-hitting and important investigative journalism that brought about Watergate, or any of the other major important news stories that help maintain and uphold the Constitution? Does any single blogger have the clout, skills, knowledge or power to do this? It is only businesses and industries that have this capacity.

I don’t entirely hold to all of Keen’s premises, but I do believe that much of what he writes about the economic consequences of Web 2.0 is very real – with frightening consequences.

Keen’s book now is available in a new edition, which I haven’t read, but it looks like it could provide some additional insights, judging from the subtitle, which explicitly includes the economy as one consequence of Web 2.0.

© writingreading, 2009

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