Sunday, May 22, 2011

The Master Switch by Tim Wu

A review of The Master Switch, by Tim Wu.

The latest book by Tim Wu, professor of law at Columbia Law School and prolific writer, is The Master Switch: The Rise and Fall of Information Empires. It is a history of a number of large industrial conglomerates, which Wu groups together under the category of "Information Empires":

  • Telecommunications companies such as Western Union and American Telephone and Telegraph

  • Broadcasting companies such as Radio Corporation of America and National Broadcasting Corporation

  • Motion picture companies such as Paramount, Fox, and Warner Brothers

  • Cable Television companies such as Ted Turner's Cable News Network

  • Internet companies such as AOL, Apple, and Google

It's a long list, and a broad scope.

The Master Switch covers a lot of ground. There are sections on patent law, on monopolistic behavior, and on trust-busting; there are sections on politics and policy and on the ability of corporate behemoths to use lobbying and political contributions to influence government behavior; there are sections on the differences between "open" and "closed" communications networks; there is a wonderful section that I hadn't known about before regarding the involvement of Leo Beranek and J.C.R. Licklider with Harry Tuttle's Hash-A-Phone lawsuit in 1950.

In my reading, Wu makes three major points:

  • These corporate behemoths may have good intentions, but they continually succumb to the Kronos Effect

  • Information industries deserve special attention, because information is not just a commodity

  • A firm and clear set of Separation Principles are necessary to achieve the right balance of profitability and freedom

Let's take these each in turn.

Wu explains the Kronos Effect thusly:

Kronos, the second ruler of the universe according to Greek mythology, had a problem. The Delphic oracle having warned him that one of his children would dethrone him, he was more than troubled to hear his wife was pregnant. He waited for her to give birth, then took the child and ate it. His wife got pregnant again and again, so he had to eat his own more than once.

And so derives the Kronos Effect: the efforts undertaken by a dominant company to consume its potential successors in their infancy.

Wu illustrates the Kronos Effect with a number of stories, such as this one, about how David Sarnoff and Radio Corporation of America reacted when Professor Edwin Armstrong of Columbia University showed them his new invention for Frequency Modulation (FM) radio:

You might think that the possibility of more radio stations with less interference would be generally recognized as an unalloyed good. More radio stations means more choices for the consumer and more opportunities for speakers, musicians, and other performers. But by this point the radio industry, supported by the federal government, had invested heavily in the status quo of fewer stations. Radio's business model, as we've seen, was essentially "entertainment that sells" -- shows produced by advertisers, with revenues dependent on maximizing one's share of the listenership. Hence, the fewer options the better.

The story of companies defending their dying market has been told many a time, notably by Clayton Christensen's theory of disruptive innovation, but Wu tells the story well and illustrates it with a number of compelling anecdotes.

Wu's claim that "information" industries are special is key to his book, and takes some time to establish and defend. Wu asserts that information industries are the keepers of the "master switch", a heavy responsibility. Here are several passages that I think do a particularly good job of stating his core premise:

But what if the figurative "marketplace of ideas" is lodged in the actual and less lofty markets for products of communication and culture, and these markets are closed, or so costly to enter as to admit only a few? If making yourself heard cannot be practically accomplished in an actual public square but rather depends upon some medium, and upon that medium is built an industry restricting access to it, there is no free market for speech. Seen this way, the Hays Code was a barrier to trade in the marketplace of ideas. And even without them, the higher the costs of entry, the fewer will be the ideas that can vie for attention.

And later, speaking about Fred Friendly, the father of broadcast T.V. news:

Friendly had identified a new reality of the age of mass information: the power of concentrated media to narrow the national conversation. It may seem paradoxical to suggest that new means of facilitating communication could result in less, not more, freedom of expression. But a medium, after all, is literally something that comes between the speaker and the potential listeners. It can facilitate speech only if it is freely accessible. And if it becomes the means by which most people inform themselves, it can decisively reduce free speech by becoming, whether by malign intent or merely benign effect, the arbiter of who gets heard. It was by such means, Friendly believed, that the shortage of TV stations had given exclusive custody of a "master switch" over speech, creating "an autocracy where a very few citizens are more equal than all the others."

Wu's argument reaches its height in this chilling description of the increasingly polarized and bitter public debate that seems to be commonplace today, discussing an essay by Professor Cass Sunstein:

"In a democracy," writes Sunstein, "people do not live in echo chambers or information cocoons. They see and hear a wide range of topics and ideas." There is a bit of a paradox to this complaint that must be sorted out. The concern is not that there are too many outlets of information -- surely that serves the purpose of free expression that sustains democratic society. Rather, the concern is that in our society, we have been freed to retreat into bubbles of selective information and parochial concern (Sunstein's "information cocoons"), in flight from the common concerns we must address as Americans. ... There is little to talk about around the proverbial water cooler in a nation segmented by divides of gender, generation, political inclination, and so on.

"Bubbles of selective information and parochial concern." That description of the modern socially-networked world is extremely apt and accurate; Wu totally nails it with this observation.

To protect us from these maladies and misdeeds, he proposes a surprisingly delicate approach to managing the risks, rounded in the rich heritage of American culture:

The better part of compliance with rules of all sorts actually depends on the power of self-regulation, not the threat of force, though of course that threat can help. Both church and state (or at least individual politicians) may occasionally feel motivated to push the boundaries of their coexistence, but overall both institutions tend to accept the wisdom of the divide between them, which is why it works.

There are uncodified norms governing the behavior of infotel firms in the twenty-first century, ones that did not exist decades ago, such as the norms that stigmatize site blocking, content discrimination, and censorship, broadly defined. Consider that when phone or cable companies have been accused of blocking an Internet site, their tendency has been to deny it, or to blame a low-ranking official, rather than to baldly defend a right to block or censor, as for instance the Edison Trust once did.

As Wu's book shows, this in fact actually is progress, and so we should be grateful for it, reward it, and build upon it.

Overall, The Master Switch is well-written, well-documented, and relevant; it explores important current issues from the perspective of how we got here. That is the mark of a historian who has done his job well. I enjoyed the book, and if you get a chance to read it, I think you'll enjoy it too.

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