The next bubble
Investors are bulging at the wallets with hype over the recent stock market flotation of LinkedIn.com, the business executive’s Facebook, although the initial price offer (IPO) of $45 per share was widely considered too high, given that it was a valuation around 17 times the company’s estimated 2010 income and given LinkedIn’s own prediction that it won’t make any profit this year. The IPO peaked on the first trading day at $122, but this was no great surprise since so far this is the only social media business you can buy shares in. LinkedIn is at the time of writing trading at 25 times earnings compared to Google’s modest six, and what goes up can come down. After the recent flotation of China’s version of Facebook, Renren, the share price initially rocketed but soon dropped to below the IPO. And all of this is nothing compared to the hysteria likely when the expected flotation of Facebook takes place, and analysts are already worrying that this could be the start of the next big bubble http://www.bbc.co.uk/news/technology-13436866
Eyebrows might descend to new heights at the idea of a huge internet bubble so soon after the devastation of the housing bubble. But in fact conditions are right for it. The banks are not taking any chances after their recent drubbing, but investors are sitting on huge piles of cash while rising inflation nibbles away like mice at their wads. Now is not the time to be holding paper money, and with the housing market still in free-fall and consumer spending screwed down there’s not a lot apart from the odd stray Rembrandt for the money rich to sink their loot into. So what to spend money on when there’s nothing to spend money on? Well, those social media johnnies are showing pretty strong market growth, so worth a punt surely? Doubly so if everyone else is at it too.
Well, that’s what they thought about web growth back in 2000, when dollar signs rolled down the punters’ eyeballs faster than the hit-counters on the hot websites. But the dollars turned to tears then as panicky shouts set off a share price avalanche. And they probably will this time too. The trouble is that it’s hard to put a real value on new and unproven social and commercial structures, but investors by nature are addicted to optimism. With the cool objectivity of those with no real money to throw at such ventures we might ask what do these social media really amount to? Whereas Ebay has been a success because people can actually make real savings on purchases, social media exist simply because they can, not necessarily because we need them. A combination of inane (and sometimes damaging) gossip and online narcissism can be amusing for a time, sure enough, but isn’t it just a phase most people will tire of eventually? In a Me-world where everyone is a celebrity, the problem is that nobody listens to anyone but themselves, and how boring does that become? What do people really get out of it, in concrete terms? A bunch of ‘friends’ they’ve mostly never heard of or haven’t got anything to say to, and business contacts they’ve no real use for. More is not better. We may not even be evolved for this sort of connectivity. ‘Dunbar’s Number’ is the theoretical limit – roughly 150 – of social relationships the human brain can feasibly cope with, a number derived from anthropological research. Still, who’s to say what limit there is on ‘virtual’ relationships? You don’t even know your neighbour’s name but so long as you’ve got a who’s who in your smart phone then you’re a functioning member of society, Jack. Just keep up the subscription payments and don’t worry about it.
But surely all this sub-light-speed handshaking has facilitated social protest and anti-establishment thought? Well, that’s what one would hope, but as fast as radical ideas sweep into the cyber-synaptic networks they seem to sweep out again, creating a series of political Mexican waves that leave the mass unmoved and the air only slightly disturbed above their heads. Should we be glad of the new mass attention, or bewail its lack of attention span? Maybe both. At any rate, socialists unlike capitalist investors have seen enough novelty not to expect too much from novelty.
Of course the owners of LinkedIn, Facebook and Twitter have made millions, but then so do crooks who start pyramid schemes. It doesn’t mean there’s anything of value there. There’s no real labour, for one thing, or any real product, just a frenzy of connections, sound and fury, signifying nothing. Can someone reinvent Friends Unplugged please?
Better luck next time…
If you’re reading this, then the globally promoted May 21st doomsday predictions of one Harold Camping have not come to pass, earthquakes and cataclysms have not riven and rent the firmament, and 200 million people have not been ‘raptured’ to heaven by the merciful beardie in the sky. But 250 of them will have got a double disappointment, as one (atheist) entrepreneur has succeeded in charging them up to $135 each for looking after their ‘Eternal Earthbound’ pets, and he gleefully adds that he doesn’t do refunds (‘‘Rapture’ apocalypse prediction sparks atheist reaction’, BBC Online, 20 May). Meanwhile atheists in North Carolina have been organising parties, presumably to fiddle while Earth burns, and another group in Washington have called their celebration ‘Countdown to back-pedalling’. Whether Camping renounces all his beliefs in the sober light of May 22nd remains to be seen, however he did make a similar prediction in 1994. But that one, say his followers (he has followers!) didn’t count for some reason.
Throwing away the keys
Technology news has lately been dominated by news of security leaks. Google’s Android operating system for smart phones has been haemorrhaging personal data that unscrupulous data-miners can collect and use. Sony’s Playstation network had a security breach through which a cyber attack stole account details of 100 million people. Meanwhile the smug smiles were wiped off the faces of Mac users convinced they lived a charmed life as hundreds have been hit by a ‘scareware’ attack, and an anti-piracy firm has itself been hacked and now made to walk the plank by the French government that employed it. It may be a trivial observation, but in a common-ownership society that is not fundamentally at war with itself like capitalism, there would be no more incentive to hack or create viruses than there would be to vandalise buildings or burgle houses. And then we could dispense with all these firewalls, speed-dragging virus-guards, and those endless, endless, endless bloody passwords.