New Media Versus Silicon Valley

Recent revelations that Silicon Valley entrepreneur Peter Thiel has been quietly underwriting lawsuits against digital muckraking platform Gawker have doused new fuel on a simmering conflict between technologists and journalists. But this current dustup is about a lot more than the bad blood between these two behemoths. It's about creative destruction in news media and the friction of dealing with a world in which many of the remaining information-gatekeepers are being disrupted.

On the surface, this incident appears personal, so the resulting discussion has tended to be largely tribal. Thiel, who was incensed when the defunct Gawker tech-news site Valleywag outed him as a homosexual, views Gawker and its founder Nick Denton as unethical rumormongers who profit from slander and "bullying people even when there [is] no connection with the public interest." Journalists at Gawker and many other publications see things a bit differently. And from their position, a powerful tech billionaire acting as an angel-investor in lawsuits against controversial media companies appears immediately threatening to their means of earning a living and to the freedom of the press more broadly.

Of course, funding a legal case on another's behalf does not in itself affect a court's decision—particularly when the underwriter remains anonymous, as Thiel did. As Eugene Kontorovich of the Volokh Conspiracy pointed out at the The Washington Post, a violation of privacy is a violation of privacy, and it doesn't matter whether the case was self-funded, aided by public interest groups like the American Civil Liberties Union (ACLU), or even paid for by a lone technologist. Yet this plain fact is ill comfort for those digital journalists harboring existential anxieties about their place in society and their relationship to powerful groups that they fear can make or break their livelihoods.

As Goes Gawker... 

Most of this is overblown. Gawker versus Thiel isn't really about Gawker or Thiel. Rather, this incident can be better understood as a dramatic escalation of a difficult technological trend in news media that has been perceived but ignored for some time. Silicon Valley has built technologies that are disrupting both traditional and new channels of information distribution alike. The Gawker/Thiel spectacle is at its core a story about the pains of creative destruction.

The Internet has had an accelerating effect on media. Online platforms like Gawker became successful in the brutal market of News 2.0 by delivering the salacious content that their readers demanded—and fast. The buzz and ad dollars generated by "junk food" clickbait were then channeled to such platforms' more serious news operations. Gawker vehicles published tabloid gossip and commentary, but also broke a genuine scoop or two. Indeed, only a few weeks ago, Gizmodo broke the major story that Facebook might be politically censoring conservative stories on the platform. Legacy news organizations, meanwhile, were left to ape these proven clickbait techniques while trying to maintain some level of journalistic integrity and content.

The legacy establishments were not safe from techno-colonization, either. Facebook co-founder Chris Hughes caused a veritable exodus from The New Republic after he unveiled his plans to reshape the recently-purchased magazine as a "vertically integrated digital media company" last year. The Washington Post, too, was poached by Amazon's Jeff Bezos in 2014, who proceeded to oversee experiments with PostEverything, Storyline, and Morning Mix. ESPN had Nate Silver and FiveThirtyEight, the New York Times had the Upshot, the Atlantic had Quartz. By 2015, the Atlantic was gushing over how the Buzzfeed-age was "[changing] the way the news industry works." NBCUniversal put major money into Vox and Buzzfeed a few months later.

Considered in context, Gawker cannot be pigeonholed as merely a lone muckraker spewing irrelevant garbage. It did do that, but it also piloted and perfected a new form of news media that eventually came to dominate the industry.

As goes Gawker, so could go the world of the chattering classes. News media companies and outside investors have poured millions of dollars into such platforms since the last recession. Native digital platforms promised decent news gigs for new journalists trying to launch a career. Much of the news industry has been reoriented around the new digital structure. And before we know it, the whole thing could come crashing down.

From Disrupters to the Disrupted

The Code Conference describes itself as "an invitation-only event where top industry influencers gather for in-depth conversations about the current and future impact of digital technology on our lives." The event is hosted by Recode of the Vox media family and draws some of the biggest names in technology and media. Nick Denton was there last week, firing off against "thin-skinned Silicon Valley billionaires." The next day, Silicon Valley billionaire and Washington Post owner Jeff Bezos shared his vision to build factories on the moon. Fellow billionaire Elon Musk later opined that humans may already be cyborgs.

The color commentary from these figures largely overshadowed one of the most important speeches of the day: Mary Meeker's 2016 Internet trends report. Meeker is a partner at Kleiner Perkins, one of the most established venture capital firms in Silicon Valley. Each year, her data-heavy slides on the pulse and trends of the technology world is considered essential reading for everyone involved in this space. She foresaw robust penetration in foreign markets in the early 2000's and the fast rise of mobile by the end. This year, her outlook is rather bleak.  

Internet growth is slowing down and may portend a global economic downturn. Profits gained from the low-hanging fruit of targeting developing countries for new devices and Internet services are dwindling at a worrying rate. What's worse, many online ads are now known to be ineffective or even counterproductive. China is slowing down. India probably cannot save us. "Easy growth is behind us," Meeker conceded.

If Meeker's inclinations are correct, then much of the drama surrounding the Gawker/Thiel dispute becomes more understandable. New-media companies boldly entered into a Faustian bargain with technology. They leveraged the scale and speed that the internet affords to bypass old gatekeepers and remake the media in their image. But the catch was significant: Keep up, or get left behind. Clicks became a currency which was steadily debased. Good reporting and analysis became an unfortunate casualty. When enough market players realize that these companies are massively overvalued, it's going to get ugly. 

We can already observe the beginning of the downturn right now. Top traffic generators such as Gawker, FiveThirtyEight, and Mediaite have suffered sharp declines in visits over the past months. A week after it raised $15 million with Turner Broadcasting, Mashable cut its whole political reporting unit, much of its global news team, and a handful of its editorial video producers. The International Business Times and VICE are having trouble as well and Buzzfeed has had to slash over-optimistic forecasts premised on constant growth. Even Gawker had started to trim down and button up before this latest brouhaha cropped up to crystallize the angst of this cohort's impending economic doom.

There is a kind of irony in the new media's rallying salvo against the Silicon Valley technologists that now seem to have the upper hand. Nate Silver provides a good example of this position: "Silicon Valley has unprecedented, monopolistic power over the future of journalism. So much power that its moral philosophy matters."

Now that the technological wave that recently compelled new media companies to power threatens to crash on their own heads, they start to sound more like the legacy media companies that they once upended. As venture capitalist Marc Andreessen shot back: "Journalism was, of course, far more centralized, homogenous, and monopolistic before the Internet." The disrupters have become the disrupted in only a few short years, and it's probably only going to accelerate.

Information Markets Want to Be Free

So what comes next? 

Some new-media platforms may reorganize and survive, but not without major bloodletting and a good amount of grumbling. Many of them could close completely or be rolled into another outlet. Legacy news organizations that have maintained a reputation for deep analysis and factual reporting may find themselves in a better position as consumers seek out more trusted sources of information. But it's unlikely that the "fast food" internet reporting that has dominated the industry will continue in its current form.

This is not to say that people will not crave digital junk. They will, but they will be able to get it using a much cheaper apparatus.

Several groups of developers have been working on launching decentralized "information markets" that empower people to deliver news and data directly to those who value it the most. This can be as simple as posting a bounty for information that will be paid upon verification of facts, or as complex as a conditional futures market that interprets market prices as a "prediction" of future events. As Robin Hanson, one of the leading information-market theoreticians, explains, "the fact that a trader must 'put his money where his mouth is' means that the things people do say in information markets can be more easily believed."

You're probably already familiar with one kind of information market: the prediction market. InTrade was a popular prediction market that allowed people to buy and sell "contracts" about the likelihood of some future event. It became well-known during political elections because its market prices provided insight into each candidate's odds throughout the campaign. Unfortunately, a fluke of U.S. commodities futures regulations brought scrutiny upon the platform in 2012,  which led to InTrade's eventual demise.

Some developers are building information markets on top of distributed blockchain technologies so that there is no "operator" to target and shut down. The Darkleaks project, for instance, allowed whistleblowers and criminals alike to verify and sell sensitive information anonymously on the Bitcoin blockchain. The Augur market is built on the Ethereum platform and seeks to harness the profit mechanism to optimize forecasting. BitBet is similar, but built on Bitcoin. In each of these cases, there is theoretically no "Intrade, Inc." that a body like the CFTC can target to take down. This will not, of course, save project developers from an overzealous regulatory body that simply makes up new authority. But in many cases, technology does have a way of getting around regulations—if only because it moves so fast.

Information technology is accelerating so rapidly that it can undermine the leaders who thought themselves to be ahead of the curve before they really even realize it. The techniques that are championed by today's titan of media technology can tomorrow just as easily undermine the large-scale news operations they built. The future of news media has never been more uncertain, but one thing is for sure: Modern journalists are living in interesting times indeed.