Daily Archives: May 8, 2010

The Incentives of Capitalism

I wish I lived in the magical libertarian world where markets are efficient and the best product won. Unfortunately, capitalism doesn’t work that way. The incentives aren’t there for companies to provide what’s best.

Let’s look at television. If life were perfect, Arrested Development, one of the best television shows ever, would still be on (or have reached its natural end), and Two and a Half Men would have been aborted before it ever saw the light of day. Okay, I’m being too harsh on a mediocre sitcom, but bear with me. I don’t want to argue over specific shows or why specific shows fail. I do want to say that the incentives aren’t there to produce the best television show you can. Television doesn’t exist to serve you TV shows; television exists to serve you advertisements. So, the incentives are to make shows that advertisers will pay the most to be on, not make shows that people will love. Your eyeballs matter, but your brains don’t. Attention isn’t measured by quality; it’s measured by quantity.

Let’s look at talk radio — specifically, politically-oriented shows. The incentives aren’t there to provide quality content that changes America for the better. The talk radio host needs ears, needs to be exciting, so that people listen, and so that advertisers buy ads. The world revolves around advertisers. Glenn Beck’s show need not have any mooring in reality. He doesn’t have to be genuine. He just needs to say what makes him money. There are no incentives to produce better citizens or better laws; the incentive is there to produce better advertisers — and whatever gets you book deals and tours, etc.

Let’s look at social media. Facebook isn’t about sharing with your friends; it’s about sharing your information with marketers. All this talk about changing social norms is bullshit. Privacy gets in the way of sharing your data with marketers. Facebook solely exists to serve you ads so Mr. Zuckerburg can get his money. As with TV, the quality of your attention doesn’t matter. They want pageviews, and a pageview doesn’t care about you as a person. Facebook didn’t introduce “Like” for the universe because they wanted something great for its users. They don’t give a shit about their users. They want you to like things so they have lots and lots of data for advertisers to mine.

This all leads me to what I really wanted to write about, which is web standards. Sachin seems to be arguing that web standards should be abandoned and we should have an all-out browser war: “Browsers should innovate as fast as possible, adding additional functionality without concern about the other browsers out there.” He argues that this would lead to innovation. These are the supposed results of such a browser war:

  1. Greater innovation in browsers and the web platform as a whole.
  2. Each browser will become its own platform, with varying application support.
  3. Users will choose browsers that run the applications they care about. Browsers with poor application support will die.
  4. Developers will no longer worry about running on every browser. The goal will be to create the best experience on one browser.

Keep in mind what happened last time we had a browser war. IE won. Microsoft fucked us in the ass for years. In fact, I’m working at a large company where I have to support IE6 for my web development. I’m still getting fucked in the ass by IE6. Who says competition would lead us to greater innovation? The incentive is to beat down the competitors. While fantastic innovation that helps the user is one way to do that, it certainly isn’t the only way to crush your competition. And once you have a large enough market share, you don’t have to improve your product anymore. The natural tendency of capitalism is to produce monopolies and oligopolies. Capitalism won’t necessarily produce innovation.

I also want to take a closer look at #3. I don’t believe this is true. How can users choose browsers if they don’t even know what a browser is? Google made a video that showed the average person on the street can’t tell the difference between a search engine and a browser. People won’t pick what to do based on apps; they’ll pick what to do based what’s easier for them. As a designer, can you imagine telling a client that their web site won’t work in Internet Explorer, so most users won’t see their site? When they worry, you tell them: “It’s okay, they can still download another browser.” Yeah right. If users leave a web site if they can’t find what they want in five seconds, why would they bother downloading a new browser?

Just so that the last paragraph isn’t a complete diversion from the conversation about capitalism, I want to point out that the incentives aren’t there to provide “the best experience.” If a user doesn’t know what a browser is, how can capitalism provide the correct incentives for a company to create the best browser? We don’t live in a magical libertarian utopia where browser competition will provide the best route for innovation. In the real world, we got fucked in the ass by IE. I like standards.

So perhaps I shouldn’t have digressed, but the larger point is that capitalism isn’t about making things great for people. In the pursuit of money, it isn’t about making the best product, but maybe about making the best product for your advertisers. Or making it so that your product wipes out the competitors, without any regard for the quality of that product or the quality of the user experience.