Jwitter and Netflix are very different companies. However, as cousins in the Big Tech universe, they helped define the last digital decade. Now everyone is at a crossroads: this week, Twitter
Elon Musk’s $44 billion takeover bid, while Netflix’s market value
nearly halved in the past month, from about $180 billion to $90 billion.
Twitter was vulnerable to
Musk’s Assault on Free Speech
because its stock languished for nearly a decade, failing to materially surpass its IPO price in 2013. Netflix has followed a much different path since its IPO in 2002 – first by shipping DVDs in the mail, then achieving hyper-growth with a shift to high-bandwidth streaming. When it announced its first drop in subscribers in 10 years last week, however, its stock fell to its lowest level in five years.
The crowded world of video streaming competes with what were once easy profits for forerunner Netflix. Now, Amazon Prime, Apple TV+, Disney+, HBO Max, Hulu and others are flooding the video market, often with much higher quality content than Netflix. My
outlook from 2014
looks pretty good: “We’re only halfway through the beginning of what’s going to be a decade-long process of sorting out the markets for video content, creation, distribution, aggregation, user interface, viewing, advertising and subscription.”
Above all, I predicted that Netflix’s lead in content aggregation wouldn’t be good enough to win the race.
The cost of content and consumer empowerment through broadband will tend to erode the power of those who only aggregate.
Netflix and HBO will therefore likely succeed largely to the extent that they can produce compelling original content. HBO has the upper hand. . . . The quasi-a la carte models from Apple and Amazon, on the other hand, are better suited to a different set of consumers who may spend less time watching but are more discerning in their choices. Apple and Amazon have more up-to-date content, rivaling MVPD’s on-demand libraries, and they also provide access to a wide range of networks for those who really “cut the cord”, which Netflix doesn’t offer. . (Emphasis in original.)
Musk, of all people,
Netflix’s content quality issue is the result of excessive ‘waking up’. It’s hard to disagree. The fact that Netflix employees almost
comedian Dave Chappelle, the company’s biggest star, probably says a lot about the rest of its content offerings.
While Netflix is suffering from a woke hangover, Twitter may be waking up. After the Twitter board
a poison pill in response to Musk’s surprise offer, he quickly secured funding through his own money and a mix of debt and margin financing. Over the weekend, Twitter’s board finally relented.
“Free speech absolutist,” says Musk, the new Twitter will dramatically expand the window for legal discourse and speakers. However, Barack Obama recently
that “misinformation” threatens “our democracy” and called for more, not less, “content moderation” by Big Tech. (AEI’s Mark Jamison
in response that more content moderation is often code for censorship.)
I agree with Musk that censorship and other forms of illiberalism and premature certainty are the real threats to democracy. Market rotation, where a benevolent centi-billionaire can unleash Twitter and disgruntled consumers can send a signal to Netflix, is the preferred fix. An open Twitter may reveal misbehavior on YouTube and Facebook, while Netflix may need to reconsider its ideological programming.
I don’t think we’re off the hook yet. Today’s censors have made “misinformation” their central organizing theme. The totalitarian tools of intimidation and erasure needed to suppress inconvenient ideas are seductive and powerful and will not be abandoned lightly. In January 2021,
that even if we were to generate free alternatives to current oppressive social media, censorship would likely move to other choke points:
Entrepreneurs are creating (and millions of users are fleeing to) alternative outlets, apps and channels. This is the genius of the Internet: unlimited space to innovate and choose. Bitcoin and crypto communities are just one important new path to decentralized independence.
As freedom seekers launch their own websites, servers, and streams, aggressive censors will hunt them down, demanding cancellation everywhere along the communication stack, eventually reaching the heart of the network. And then we will have come full circle. They will require ISPs to block, throttle and erase. And that the government, under the guise of net neutrality, applies their truth.
Indeed, crowdfunding apps, payment networks, and other layers of digital infrastructure have become increasingly political. Company honcho and all-around clairvoyant Marc Andreessen seems to agree. “I predict,” he said.
last week, “essentially identical censorship/deplatform policies across all layers of the legacy internet stack. Client-side and server-side ISPs, cloud platforms, CDNs, payment networks, client operating systems, browsers, email clients. With rare exceptions. The pressure is intense.
Get ready for the second phase of information warfare.
This piece originally appeared on the AEIideas blog and is reproduced with the kind permission of the American Enterprise Institute.