YouTube

The stochastic superstar economy

PNRJ critique of neoclassical economics, current events, futurism, inequality , , , , , , , , , , , ,

May 17 JDN 246178

Why do I make less money than, say, Mr. Beast (who now has a game show, apparently)?

The proximal answer to this question is obvious: He has a lot more people viewing his content, so he can sell ads that make him enormous amounts of money.

But that still leaves a deeper, more ultimate question unanswered:

Why are so many people interested in that?

Mr. Beast’s first truly viral YouTube videos was literally just him counting, one by one, from 1 to 100,000. He edited the footage to speed it up slightly so that the 40-hour ordeal would fit within a 24-hour video.

This is something that literally anyone could do that literally no one benefits from.

I also can’t imagine it was particularly entertaining to watch! Like, maybe he made it a little more entertaining than you might at first imagine (I don’t know; I have no desire to watch the actual video), but I still can’t imagine it would rate among even the top 100 most interesting things to do with 24 hours—or even the top 100 most interesting things that I could do right now from the comfort of my own home.

Right now you might be thinking I’m bitter about this, but if I am bitter, it is at our economic system as a whole; I harbor no ill will toward Mr. Beast in particular, who is actually something of a philanthropist. What I really am is utterly confused.

I don’t understand why anyone—let alone millions of people—would choose to watch that video. (Though it’s a bit easier to understand if you recognize that most viewers surely did not watch the entire thing.) I don’t understand how a man can make a highly successful career doing stupid stunts on video.

And I’m also quite certain that if I, right now, tried to do some similarly stupid stunt and post it on YouTube, it would get maybe a few dozen hits and nothing more would come of it.

Maybe Mr. Beast has something I don’t: A charm, a charisma, a salesmanship. Maybe he is spectacularly persistent in a way that I really can’t be (one certainly must be that to count to 100,000!). He likely is utterly unfazed by rejection, while I am severely oversensitive to it. So I’m not making the claim that there is nothing about Mr. Beast’s individual characteristics or talents that contributed to his success.

But I think it’s pretty clear at this point that the most important reason for Mr. Beast’s success is in fact no reason at all; his video is just the one that happened to go viral at that particular moment, and he managed to leverage that publicity into making yet more viral videos until he could become a multi-millionaire for doing stupid stunts in front of a webcam.

He is what I propose we call a stochastic superstar.

His success is not driven by talent, or intellect, or expertise; it is driven by luck. A million others have tried to imitate his exact methods and failed, not because they were any worse at it—but because he did it first.

This phenomenon is not entirely new; it certainly can be traced back at least as far as any form of mass media; radio and TV stars were often famous for no other reason that they were famous.

But I think it’s pretty clear that the Internet, and social media in particular, have made it much easier to become a stochastic superstar. Arcane, mysterious algorithms promote some content over other content in ways that hardly anyone—or perhaps literally no one, if LLMs are now involved—fully understands, and thousands of people doing basically the same thing get zero compensation for it, while one becomes rich and famous for no apparent reason.

This is not a healthy way to run an economy.

Yes, it certainly results in creating a lot of content, some of which is genuinely valuable. (Mr. Beast would not be high on my list of that either.) The Internet is an unfathomably grand and diverse place, and if you know where to look you can learn about almost anything in the world; or, you know, you can be fed complete misinformation and come away with fundamental misconceptions. Or you can just watch cat videos, which I’ll admit add some joy to the world, but probably not nearly enough to justify the amount of effort and time spent creating and viewing them.

It’s bad enough that glorifying superstars glorifies risk; but at least superstar athletes are objectively in peak physical condition and are the best players at the games they play. (I still don’t really get why people invest so much in these games, but whatever.) But it isn’t even clear that viral YouTubers are producing the best video content; they are just somehow producing the most successful video content in a way that seems basically orthogonal to actual quality or value for society.

I think this should lead us to a very important question:

Are there other systems we could use to compensate people for content?

What if ad revenue was divided evenly between all contributors to a platform, rather than just those with the highest view rates? Or what if there was some benefit to getting higher views, but there was some sort of mechanism to reduce the income inequality generated this way, like paying higher rates for views when you have fewer total views (e.g. $0.01 per view for the first 1000, $0.009 for the next 10,000, $0.008 for the next 100,000, etc.)? (Are there perverse incentives here, too? Surely. But are they worse than what we have right now?)

What if we didn’t run ads at all, but instead people paid microtransactions to subscribe to content? Patreon already sort of does this (and my Patreon is also an utter failure), but I think the transactions still aren’t micro enough. I want people to pay $0.05 to read an article—because that’s all the ad revenue they would give by reading that article anyway. Nobody should have to pay $5 to read what advertisers only pay $0.05 for. I want you to be able to see the title of a blog post and a brief snippet, and think, “Sure, I’ll pay a nickel to read that.” I don’t want you to have to decide whether you’re willing to commit to subscribing for an entire month for $5.

I would like to believe, at least, that people would be more willing to pay $0.05 to read good journalism and serious intellectual content, rather than a random guy counting to 100,000 for no reason. But even if that’s not true, at least we wouldn’t be so constantly inundated by ads!

Or what if social media platforms were maintained as public infrastructure, not yielding profits to any corporation, and instead of running ads, their hosting costs (which really are not all that high; I pay for my own hosting on this blog, for instance) were covered by tax revenue? Or what if you simply paid a subscription to use the social media site, and it was no longer used to harvest your data and target ads to you?

With an alternative system like one of the above, stochastic superstars would still be able to get famous randomly, and there are benefits (and drawbacks) that come directly from being famous; but maybe at least there would be fewer multi-millionaire YouTuber superstars and more ordinary people who are better able to make ends meet by contributing content.

But who am I kidding? This system works great for the billionaires who run it (who makes the real money off YouTube? Not Mr. Beast—Sundar Pichai.), and our government has shown very little interest in doing anything that would reduce their wealth and power. So, we can expect this, and everything else, to continue to get worse in exactly the way that cyberpunk fiction explicitly warned us it would, and our government continuing to do absolutely nothing about it!

This is fine.

Halloween is kind of a weird holiday.

PNRJ current events, tribal paradigm , , , , , , , , , , , , ,

Oct 28 JDN 2458420

I suppose most holidays are weird if you look at them from an outside perspective; but I think Halloween especially so, because we don’t even seem to be clear about what we’re celebrating at this point.

Christmas is ostensibly about the anniversary of the birth of Jesus; New Year’s is about the completion of the year; Thanksgiving is about the founding of the United States and being thankful for what we have; Independence Day is about declaring independence from Great Britain.

But what’s Halloween about, again? Why do we have our children dress up in costumes and go beg candy from our neighbors?

The name comes originally from “All Hallow’s Eve”, the beginning of the three-day Christian holiday Allhallowtide of rememberance for the dead, which has merged in most Latin American countries with the traditional holiday Dia de los Muertos. But most Americans don’t actually celebrate the rest of Allhallowtide; we just do the candy and costume thing on Halloween.

The parts involving costumes and pumpkins actually seem to be drawn from Celtic folk traditions celebrating the ending of harvest season and the coming of the winter months. It’s celebrated so early because, well, in Ireland and Scotland it gets dark and cold pretty early in the year.

One tradition I sort of wish we’d kept from the Celtic festival is that of pouring molten lead into water to watch it rapidly solidify. Those guys really knew how to have a good time. It may have originated as a form of molybdomancy, which I officially declare the word of the day. Fortunately by the power of YouTube, we too can enjoy the excitement of molten lead without the usual fear of third-degree burns. The only divination ritual that we kept as a Halloween activity is the far tamer apple-bobbing.

The trick-or-treating part and especially the costume part originated in the Medieval performance art of mumming, which is also related to the modern concept of mime. Basically, these were traveling performance troupes who went around dressed up as mythological figures, did battle silently, and then bowed and passed their hats around for money. It’s like busking, basically.

The costumes were originally religious or mythological figures, then became supernatural creatures more generally, and nowadays the most popular costumes tend to be superheroes. And since apparently we didn’t want people giving out money to our children, we went for candy instead. Yet I’m sure you could write a really convincing economics paper about why candy is way less efficient, making both the parents giving, the child receiving, and the parents of the child receiving less happy than the same amount of money would (and unlike the similar argument against Christmas presents, I’m actually sort of inclined to agree; it’s not a personal gesture, and what in the world do you need with all that candy?).

So apparently we’re celebrating the end of the harvest, and also mourning the dead, and also being mimes, and also emulating pagan divination rituals, but mainly we’re dressed up like superheroes and begging for candy? Like I said, it’s kind of a weird holiday.

But maybe none of that ultimately matters. The joy of holidays isn’t really in following some ancient ritual whose religious significance is now lost on us; it’s in the togetherness we feel when we manage to all coordinate our activities and do something joyful and out of the ordinary that we don’t have to do by ourselves. I think deep down we all sort of wish we could dress up as superheroes more of the time, but society frowns upon that sort of behavior most of the year; this is our one chance to do it, so we’ll take the chance when we get it.

Advertising: Someone is being irrational

PNRJ critique of neoclassical economics, public policy , , , , , , , , , , , , , , ,

JDN 2457285 EDT 12:52

I’m working on moving toward a slightly different approach to posting; instead of one long 3000-word post once a week, I’m going to try to do two more bite-sized posts of about 1500 words or less spread throughout the week. I’m actually hoping to work toward setting up a Patreon and making blogging into a source of income.

Today’s bite-sized post is about advertising, and a rather simple, basic argument that shows that irrational economic behavior is widespread.

First, there are advertisements that don’t make sense. They don’t tell you anything about the product, they are often completely absurd, and while sometimes entertaining they are rarely so entertaining that people would pay to see them in theaters or buy them on DVD—which means that any entertainment value they had is outweighed by the opportunity cost of seeing them instead of the actual TV show, movie, or whatever else it was you wanted to see.

If you doubt that there are advertisements that don’t make sense, I have one example in particular for you which I think will settle this matter:

If you didn’t actually watch it, you must. It is too absurd to be explained.

And of course there are many other examples, from Coca-Cola’s weird associations with polar bears to the series of GEICO TV spots about Neanderthals that they thought were so entertaining as to deserve a TV show (the world proved them wrong), to M&M commercials that present a terrifying world in which humans regularly consume the chocolatey flesh of other sapient citizens (and I thought beef was bad!).

Or here’s another good one:

In the above commercial, Walmart attempts to advertise themselves by showing a heartwarming story of a child who works hard to make money by doing odd jobs, including using the model of door-to-door individual sales that Walmart exists to make obsolete. The only contribution Walmart makes to the story is apparently “we have affordable bicycles for children”. Coca-Cola is also thrown in for some reason.

Certain products seem to attract nonsensical advertising more than others, with car insurance being the prime culprit of totally nonsensical and irrelevant commercials, perhaps because of GEICO in particular who do not actually seem to be any good at providing car insurance but instead spend all of their resources making commercials.

Commercials for cars themselves are an interesting case, as certain ads actually appeal in at least a general way to the quality of the vehicle itself:

Then there are those that vaguely allude to qualities of their vehicles, but mostly immerse us in optimistic cyberpunk:

Others, however, make no attempt to say anything about the vehicle, instead spinning us exciting tales of giant hamsters who use the car and the power of dance to somehow form a truce between warring robot factions in a dystopian future (if you haven’t seen this commercial, none of that is a joke; see for yourself below):

So, I hope that I have satisfied you that there are in fact advertisements which don’t make sense, which could not possibly give anyone a rational reason to purchase the product contained within.

Therefore, at least one of the following statements must be true:

1. Consumers behave irrationally by buying products for irrational reasons
2. Corporations behave irrationally by buying advertisements that don’t work

Both could be true (in fact I think both are true), but at least one must be, on pain of contradiction, as long as you accept that there are advertisements which don’t provide rational reasons to buy products. There’s no wiggling out of this one, neoclassicists.

Advertising forms a large part of our economy—Americans spend $171 billion per year on ads, more than the federal government spends on education, and also more than the nominal GDP of Hungary or Vietnam. This figure is growing thanks to the Internet and its proliferation of “free” ad-supported content. Insofar as advertising is irrational, this money is being thrown down the drain.

The waste from spending on ads that don’t work is limited; you can’t waste more than you actually spent. But the waste from buying things you don’t actually need is not limited in the same way; an ad that cost $1 million to air (cheaper than a typical Super Bowl ad) could lead to $10 million in worthless purchases.

I wouldn’t say that all advertising is irrational; some ads do actually provide enough meaningful information about a product that they could reasonably motivate you to buy it (or at least look into buying it), and it is in both your best interest and the company’s best interest for you to have such information.

But I think it’s not unreasonable to estimate that about half of our advertising spending is irrational, either by making people buy things for bad reasons or by making corporations waste time and money on buying ads that don’t work. This amounts to some $85 billion per year, or enough to pay every undergraduate tuition at every public university in the United States.

This state of affairs is not inevitable.

Most meaningless ads could be undermined by regulation; instead of the current “blacklist” model where an ad is legal as long as it doesn’t explicitly state anything that is verifiably false, we could move to a “whitelist” model where an ad is illegal if it states anything that isn’t verifiably true. Red Bull cannot give you wings, Maxwell House isn’t good to the last drop, and Volkswagen needs to be more specific than “round for a reason”. We may never be able to completely eliminate irrelevant emotionally-salient allusions (pictures of families, children, puppies, etc.), but as long as the actual content of the words is regulated it would be much harder to deluge people with advertisements that provide no actual information.

We have a choice, as a civilization: Do we want to continue to let meaningless ads invade our brains and waste the resources of our society?