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I moved to New York City in 1999 just in time to see the dot-com dream come crashing down. I saw high-profile start-ups empty out their spacious lofts, the once ebullient spaces vacant and echoing; there were pink-slip parties where content providers, designers, and managers gathered for one last night of revelry. Although I barely felt the aftershocks that rippled through the economy when the bubble burst, plenty of others were left thoroughly shaken. In San Francisco the boom’s rising rents pushed out the poor and working class, as well as those who had chosen voluntary poverty by devoting themselves to social service or creative experimentation. Almost overnight, the tech companies disappeared, the office space and luxury condos vacated, jilting the city and its inhabitants despite the irreversible accommodations that had been made on behalf of the start-ups. Some estimate that 450,000 jobs were lost in the Bay Area alone.¹

As the economist Doug Henwood has pointed out, a kind of amnesia blots out the dot-com era, blurring it like a bad hangover. It seems so long ago: before tragedy struck lower Manhattan, before the wars in Afghanistan and Iraq started, before George W. Bush and then Barack Obama took office, before the economy collapsed a second time. When the rare backward glance is cast, the period is usually dismissed as an anomaly, an embarrassing by-product of irrational exuberance and excess, an aberrational event that gets chalked up to collective folly (the crazy business schemes, the utopian bombast, the stock market fever), but “never as something emerging from the innards of American economic machinery,” to use Henwood’s phrase.²

At the time of the boom, however, the prevailing myth was that the machinery had been forever changed. “Technological innovation,” Alan Greenspan marveled, had instigated a new phase of productivity and growth that was “not just a cyclical phenomenon or a statistical aberration, but … a more deep-seated, still developing, shift in our economic landscape.” Everyone would be getting richer, forever. (Income polarization was actually increasing at the time, the already affluent becoming ever more so while wages for most U.S. workers stagnated at levels below 1970s standards.)³ The wonders of computing meant skyrocketing productivity, plentiful jobs, and the end of recessions. The combination of the Internet and IPOs (initial public offerings) had flattened hierarchies, computer programming jobs were reconceived as hip, and information was officially more important than matter (bits, boosters liked to say, had triumphed over atoms). A new economy was upon us.

Despite the hype, the new economy was never that novel. With some exceptions, the Internet companies that fueled the late nineties fervor were mostly about taking material from the off-line world and simply posting it online or buying and selling rather ordinary goods, like pet food or diapers, and prompting Internet users to behave like conventional customers. Due to changes in law and growing public enthusiasm for high-risk investing, the amount of money available to venture capital funds ballooned from $12 billion in 1996 to $106 billion in 2000, leading many doomed ideas to be propped up by speculative backing. Massive sums were committed to enterprises that replicated efforts: multiple sites specialized in selling toys or beauty supplies or home improvement products, and most of them flopped. Barring notable anomalies like Amazon and eBay, online shopping failed to meet inflated expectations. The Web was declared a wasteland and investments dried up, but not before many venture capitalists and executives profited handsomely, soaking up underwriting fees from IPOs or exercising their options before stocks went under.⁴ Although the new economy evaporated, the experience set the stage for a second bubble and cemented a relationship between technology and the market that shapes our digital lives to this day.

As business and technology writer Sarah Lacy explains in her breathless account of Silicon Valley’s recent rebirth, Once You’re Lucky, Twice You’re Good, a few discerning entrepreneurs extracted a lesson from the bust that they applied to new endeavors with aplomb after the turn of the millennium: the heart of the Internet experience was not e-commerce but e-mail, that is to say, connecting and communicating with other people as opposed to consuming goods that could easily be bought at a store down the street. Out of that insight rose the new wave of social media companies that would be christened Web 2.0.

The story Lacy tells is a familiar one to those who paid attention back in the day: ambition and acquisitions, entrepreneurs and IPOs. “Winning Is Everything” is the title of one chapter; “Fuck the Sweater-Vests” another. You’d think it was the nineties all over again, except that this time around the protagonists aspired to market valuations in the billions, not millions. Lacy admires the entrepreneurs all the more for their hubris; they are phoenixes, visionaries who emerged unscathed from the inferno, who walked on burning coals to get ahead. After the bust, the dot-coms and venture capitalists were “easy targets,” blamed for being “silly, greedy, wasteful, irrelevant,” Lacy writes. The “jokes and quips” from the “cynics” cut deep, making it that much harder for wannabe Web barons “to build themselves back up again.” But build themselves back up a handful of them did, heading to the one place insulated against the downturn, Silicon Valley. “The Valley was still awash in cash and smart people,” says Lacy. “Everyone was just scared to use them.”

Web 2.0 was the logical consequence of the Internet going mainstream, weaving itself into everyday life and presenting new opportunities as millions of people rushed online. The “human need to connect” is “a far more powerful use of the Web than for something like buying a book online,” Lacy writes, recounting the evolution of companies like Facebook, LinkedIn, Twitter, and the now beleaguered Digg. “That’s why these sites are frequently described as addictive … everyone is addicted to validations and human connections.”

Instead of the old start-up model, which tried to sell us things, the new one trades on our sociability—our likes and desires, our observations and curiosities, our relationships and networks—which is mined, analyzed, and monetized. To put it another way, Web 2.0 is not about users buying products; rather, users are the product. We are what companies like Google and Facebook sell to advertisers. Of course, social media have made a new kind of engagement possible: they have also generated a handful of enormous companies that profit off the creations and interactions of others. What is social networking if not the commercialization of the once unprofitable art of conversation? That, in a nutshell, is Web 2.0: content is no longer king, as the digital sages like to say; connections are.

Though no longer the popular buzzword it once was, “Web 2.0” remains relevant, its key tenets incorporated not just by social networking sites, but in just by all cultural production and distribution, from journalism to film and music. As traditional institutions go under—consider the independent book, record, and video stores that have gone out of business—they are being replaced by a small number of online giants—Amazon, iTunes, Netflix, and so on—that are better positioned to survey and track users. These behemoths “harness collective intelligence,” as the process has been described, to sell people goods and services directly or indirectly. “The key to media in the twenty-first century may be who has the most knowledge of audience behavior, not who produces the most popular content,” Tom Rosenstiel, the director of the Pew Research Center’s Project for Excellence in Journalism, explained.

Understanding what sites people visit, what content they view, what products they buy and even their geographic coordinates will allow advertisers to better target individual consumers. And more of that knowledge will reside with technology companies than with content producers. Google, for instance, will know much more about each user than will the proprietor of any one news site. It can track users’ online behavior through its Droid software on mobile phones, its Google Chrome Web browser, its search engine and its new tablet software. The ability to target users is why Apple wants to control the audience data that goes through the iPad. And the company that may come to know the most about you is Facebook, with which users freely share what they like, where they go and who their friends are.⁵

For those who desire to create art and culture—or “content,” to use that horrible, flattening word—the shift is significant. More and more of the money circulating online is being soaked up by technology companies, with only a trickle making its way to creators or the institutions that directly support them. In 2010 publishers of articles and videos received around twenty cents of each dollar advertisers spent on their sites, down from almost a whole dollar in 2003.⁶ Cultural products are increasingly valuable only insofar as they serve as a kind of “signal generator” from which data can be mined. The real profits flow not to the people who fill the platforms where audiences congregate and communicate—the content creators—but to those who own them.

The original dot-com bubble’s promise was first and foremost about money. Champions of the new economy conceded that the digital tide would inevitably lift some boats higher than others, but they commonly assumed that everyone would get a boost from the virtual effervescence. A lucky minority would work at a company that was acquired or went public and spend the rest of their days relaxing on the beach, but the prevailing image had each individual getting in on the action, even if it was just by trading stocks online.

After the bubble popped, the dream of a collective Internet-enabled payday faded. The new crop of Internet titans never bothered to issue such empty promises to the masses. The secret of Web 2.0 economics, as Lacy emphasizes, is getting people to create content without demanding compensation, whether by contributing code, testing services, or sharing everything from personal photos to restaurant reviews. “A great Web 2.0 site needs a mob of people who use it, love it, and live by it—and convince their friends and family to do the same,” Lacy writes. “Mobs will devote more time to a site they love than to their jobs. They’ll frequently build the site for the founders for free.” These sites exist only because of unpaid labor, the millions of minions toiling to fill the coffers of a fortunate few.

Spelling this out, Lacy is not accusatory but admiring—awestruck, even. When she writes that “social networking, media, and user-generated content sites tap into—and exploit—core human emotions,” it’s with fealty appropriate to a fiefdom. As such, her book inadvertently provides a perfect exposé of the hypocrisy lurking behind so much social media rhetoric. The story she tells, after all, is about nothing so much as fortune seeking, yet the question of compensating those who contribute to popular Web sites, when it arises, is quickly brushed aside. The “mobs” receive something “far greater than money,” Lacy writes, offering up the now-standard rationalization for the inequity: entertainment, self-expression, and validation.⁷ This time around, no one’s claiming the market will be democratized—instead, the promise is that culture will be. We will “create” and “connect” and the entrepreneurs will keep the cash.

This arrangement has been called “digital sharecropping.”⁸ Instead of the production or distribution of culture being concentrated in the hands of the few, it is the economic value of culture that is hoarded. A small group, positioned to capture the value of the network, benefits disproportionately from a collective effort. The owners of social networking sites may be forbidden from selling songs, photos, or reviews posted by individual users, for example, but the companies themselves, including user content, might be turned over for a hefty sum: hundreds of millions for Bebo and Myspace and Goodreads, one billion or more for Instagram and Tumblr. The mammoth archive of videos displayed on YouTube and bought by Google was less a priceless treasure to be preserved than a vehicle for ads. These platforms succeed because of an almost unfathomable economy of scale; each search brings revenue from targeted advertising and fodder for the data miners: each mouse click is a trickle in the flood.

Over the last few years, there has been an intermittent but spirited debate about the ethics of this economic relationship. When Flickr was sold to Yahoo!, popular bloggers asked whether the site should compensate those who provided the most viewed photographs; when the Huffington Post was acquired by AOL for $315 million, many of the thousands of people who had been blogging for free were aghast, and some even started a boycott; when Facebook announced its upcoming IPO, journalists speculated about what the company, ethically, owed its users, the source of its enormous valuation.⁹ The same holds for a multitude of sites: Twitter wouldn’t be worth billions if people didn’t tweet, Yelp would be useless without freely provided reviews, Snapchat nothing without chatters. The people who spend their time sharing videos with friends, rating products, or writing assessments of their recent excursion to the coffee shop—are they the users or the used?

The Internet, it has been noted, is a strange amalgamation of playground and factory, a place where amusement and labor overlap in confusing ways. We may enjoy using social media, while also experiencing them as obligatory; more and more jobs require employees to cultivate an online presence, and social networking sites are often the first place an employer turns when considering a potential hire. Some academics call this phenomenon “playbor,” an awkward coinage that tries to get at the strange way “sexual desire, boredom, friendship” become “fodder for speculative profit” online, to quote media scholar Trebor Scholz.¹⁰ Others use the term “social factory” to describe the Web 2.0, envisioning it as a machine that subsumes our leisure, transforming lazy clicks into cash. “Participation is the oil of the digital economy,” as Scholz is fond of saying. The more we comment and share, the more we rate and like, the more economic value is accumulated by those who control the platforms on which our interactions take place.¹¹

Taking this argument one step further, a frustrated minority have complained that we are living in a world of “digital feudalism,” where sites like Facebook and Tumblr offer up land for content providers to work while platform owners expropriate value with impunity and, if you read the fine print, stake unprecedented claim over users’ creations.¹² “By turn, we are the heroic commoners feeding revolutions in the Middle East and, at the same time, ‘modern serfs’ working on Mark Zuckerberg’s and other digital plantations,” Marina Gorbis of the Institute for the Future has written. “We, the armies of digital peasants, scramble for subsistence in digital manor economies, lucky to receive scraps of ad dollars here and there, but mostly getting by, sometimes happily, on social rewards—fun, social connections, online reputations. But when the commons are sold or traded on Wall Street, the vast disparities between us, the peasants, and them, the lords, become more obvious and more objectionable.”¹³

Computer scientist turned techno-skeptic Jaron Lanier has staked out the most extreme position in relation to those he calls the “lords of the computing clouds,” arguing that the only way to counteract this feudal structure is to institute a system of nano-payments, a market mechanism by which individuals are rewarded for every bit of private information gleaned by the network (an interesting thought experiment, Lanier’s proposed solution may well lead to worse outcomes than the situation we have now, due to the twisted incentives it entails).

New-media cheerleaders take a different view.¹⁴ Consider the poet laureate of digital capitalism, Kevin Kelly, cofounder of Wired magazine and longtime technology commentator. It is not feudalism and exploitation that critics see, he argued in a widely circulated essay, but the emergence of a new cooperative ethos, a resurgence of collectivism—though not the kind your grandfather worried about. “The frantic global rush to connect everyone to everyone, all the time, is quietly giving rise to a revised version of socialism,” Kelly raves, pointing to sites like Wikipedia, YouTube, and Yelp.

Instead of gathering on collective farms, we gather in collective worlds. Instead of state factories, we have desktop factories connected to virtual co-ops. Instead of sharing drill bits, picks, and shovels, we share apps, scripts, and APIs. Instead of faceless politburos, we have faceless meritocracies, where the only thing that matters is getting things done. Instead of national production, we have peer production. Instead of government rations and subsidies, we have a bounty of free goods.

Kelly reassures his readers that the people who run this emerging economy are not left-wing in any traditional sense. They are “more likely to be libertarians than commie pinkos,” he explains. “Thus, digital socialism can be viewed as a third way that renders irrelevant the old debates,” transcending the conflict between “free-market individualism and centralized authority.” Behold, then, the majesty of digital communitarianism: it’s socialism without the state, without the working class, and, best of all, without having to share the wealth.

The sensational language is easy to mock, but this basic outlook is widespread among new-media enthusiasts. Attend any technology conference or read any book about social media or Web 2.0, whether by academics or business gurus, and the same conflation of communal spirit and capitalist spunk will be impressed upon you. The historian Fred Turner traces this phenomenon back to 1968, when a small band of California outsiders founded the Whole Earth Catalog and then, in 1985, the online community the Whole Earth ’Lectronic Link, the WELL, the prototype of online communities, and then Wired.

This group performed the remarkable feat of transforming computers from enablers of stodgy government administration to countercultural cutting edge, from implements of technocratic experts to machines that empower everyday people. They “reconfigured the status of information and information technologies,” Turner explains, by contending that these new tools would tear down bureaucracy, enhance individual consciousness, and help build a new collaborative society.¹⁵ These prophets of the networked age—led by the WELL’s Stewart Brand and including Kelly and many other still-influential figures—moved effortlessly from the hacker fringe to the upper echelon of the Global Business Network, all while retaining their radical patina.

Thus, in 1984 Macintosh could run an ad picturing Karl Marx with the tagline, “It was about time a capitalist started a revolution”—and so it continues today. The online sphere inspires incessant talk of gift economies and public-spiritedness and democracy, but commercialism and privatization and inequality lurk beneath the surface.

This contradiction is captured in a single word: “open,” a concept capacious enough to contain both the communal and capitalistic impulses central to Web 2.0 while being thankfully free of any socialist connotations. New-media thinkers have claimed openness as the appropriate utopian ideal for our time, and the concept has caught on. The term is now applied to everything from education to culture to politics and government. Broadly speaking, in tech circles, open systems—like the Internet itself—are always good, while closed systems—like the classic broadcast model—are bad. Open is Google and Wi-Fi, decentralization and entrepreneurialism, the United States and Wikipedia. Closed equals Hollywood and cable television, central planning and entrenched industry, China and the Encyclopaedia Britannica. However imprecisely the terms are applied, the dichotomy of open versus closed (sometimes presented as freedom versus control) provides the conceptual framework that increasingly underpins much of the current thinking about technology, media, and culture.

The fetish for openness can be traced back to the foundational myths of the Internet as a wild, uncontrollable realm. In 1996 John Perry Barlow, the former Grateful Dead lyricist and cattle ranger turned techno-utopian firebrand, released an influential manifesto, “A Declaration of the Independence of Cyberspace,” from Davos, Switzerland, during the World Economic Forum, the annual meeting of the world’s business elite. (“Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone … You have no sovereignty where we gather.”) Almost twenty years later, these sentiments were echoed by Google’s Eric Schmidt and the State Department’s Jared Cohen, who partnered to write The New Digital Age: “The Internet is the largest experiment involving anarchy in history,” they insist. It is “the world’s largest ungoverned space,” one “not truly bound by terrestrial laws.”

While openness has many virtues, it is also undeniably ambiguous. Is open a means or an end? What is open and to whom? Mark Zuckerberg said he designed Facebook because he wanted to make the world more “open and connected,” but his company does everything it can to keep users within its confines and exclusively retains the data they emit. Yet this vagueness is hardly a surprise given the history of the term, which was originally imported from software production: the designation “open source” was invented to rebrand free software as business friendly, foregrounding efficiency and economic benefits (open as in open markets) over ethical concerns (the freedom of free software).¹⁶ In keeping with this transformation, openness is often invoked in a way that evades discussions of ownership and equity, highlighting individual agency over commercial might and ignoring underlying power imbalances.

In the 2012 “open issue” of Google’s online magazine Think Quarterly, phrases like “open access to information” and “open for business” appear side by side, purposely blurring participation and profit seeking. One article on the way “smart brands” are adapting to the digital world insists that as a consequence of the open Web, “consumers have more power than ever,” while also outlining the ways “the web gives marketers a 24/7 focus group of the world,” unleashing a flood of “indispensable” data that inform “strategic planning and project development.” Both groups are supposedly “empowered” by new technology, but the first gets to comment on products while the latter boosts their bottom line.

By insisting that openness is the key to success, whether you are a multinational corporation or a lone individual, today’s digital gurus gloss over the difference between humans and businesses, ignoring the latter’s structural advantages: true, “open” markets in some ways serve consumers’ buying interests, but the more open people’s lives are, the more easily they can be tracked and exploited by private interests.¹⁷ But as the technology writer Rob Horning has observed, “The connections between people are not uniformly reciprocal.” Some are positioned to make profitable use of what they glean from the network; others are more likely to be taken advantage of, giving up valuable information and reaping few benefits. “Networks,” Horning writes, “allow for co-optation as much as cooperation.”¹⁸

Under the rubric of open versus closed, the paramount concern is access and whether people can utilize a resource or platform without seeking permission first. This is how Google and Wikipedia wind up in the same camp, even though one is a multibillion-dollar advertising-funded business and the other is supported by a nonprofit foundation. Both are considered “open” because they are accessible, even though they operate in very different ways. Given that we share noncommercial projects on commercial platforms all the time online, the distinction between commercial and noncommercial has been muddled; meanwhile “private” and “public” no longer refer to types of ownership but ways of being, a setting on a social media stream. This suits new-media partisans, who insist that the “old debates” between market and the state, capital and government, are officially behind us. “If communism vs. capitalism was the struggle of the twentieth century,” law professor and open culture activist Lawrence Lessig writes, “then control vs. freedom will be the debate of the twenty-first century.”¹⁹

No doubt, there is much to be said for open systems, as many have shown elsewhere.²⁰ The heart of the Internet is arguably the end-to-end principle (the idea that the network should be kept as flexible, unrestricted, and open to a variety of potential uses as possible). From this principle to the freely shared technical protocols and code that Tim Berners-Lee used to create the World Wide Web, we have open standards to thank for the astonishing growth of the online public sphere and the fact that anyone can participate without seeking permission first.²¹

Open standards, in general, foster a kind of productive chaos, encouraging innovation and invention, experimentation and engagement. But openness alone does not provide the blueprint for a more equitable social order, in part because the “freedom” promoted by the tech community almost always turns out to be of the Darwinian variety. Openness in this context is ultimately about promoting competition, not with protecting equality in any traditional sense; it has little to say about entrenched systems of economic privilege, labor rights, fairness, or income redistribution. Despite enthusiastic commentators and their hosannas to democratization, inequality is not exclusive to closed systems. Networks reflect and exacerbate imbalances of power as much as they improve them.

The tendency of open systems to amplify inequality—and new-media thinkers’ glib disregard for this fundamental characteristic—was on vivid display during a talk at a 2012 installment of the TEDGlobal conference convened under the heading “Radical Openness.” Don Tapscott, self-proclaimed “thought leader” and author of influential books including Growing Up Digital and Wikinomics, titled his presentation “Four Principles for the Open World”: collaboration, transparency, sharing, and empowerment.

Tapscott told the story of his neighbor Rob McEwen, a banker turned gold mine owner, the former chairman and CEO of Goldcorp Inc. When staff geologists couldn’t determine where the mineral deposits at one of his mines were located, McEwen turned to the Web, uploading data about the company’s property and offering a cash reward to anyone who helped them hit pay dirt. “He gets submissions from all around the world,” Tapscott explained. “They use techniques that he’s never heard of, and for his half a million dollars in prize money, Rob McEwen finds 3.4 billion dollars worth of gold. The market value of his company goes from 90 million to 10 billion dollars, and I can tell you, because he’s my neighbor, he’s a happy camper.”

This is Tapscott’s idea of openness in action: a banker-turned-CEO goes from rich to richer (of course, there was no mention of the workers in the mine and the wages they were paid for their effort, nor an acknowledgment of Goldcorp’s record of human rights violations).²² For Tapscott, McEwen’s payoff is a sign of a bold new era, an “age of promise fulfilled and of peril unrequited,” to use his grandiloquent phrase. “And imagine, just consider this idea, if you would,” he concluded. “What if we could connect ourselves in this world through a vast network of air and glass? Could we go beyond just sharing information and knowledge? Could we start to share our intelligence?” The possibility of sharing any of the windfall generated as a consequence of this collective wisdom went unmentioned.

A similar willful obliviousness to the problems of open systems undercuts the claims of new-media thinkers that openness has buried the “old debates.” While Lawrence Lessig convincingly makes the case that bloated intellectual property laws—the controlling nature of copyright—often stifle creative innovation from below, his enthusiasm for the free circulation of information blinds him to the increasing commodification of our expressive lives and the economic disparity built into the system he passionately upholds.

“You can tell a great deal about the character of a person by asking him to pick the great companies of an era,” Lessig declares in Remix: Making Art and Commerce Thrive in the Hybrid Economy, and whether they root for the “successful dinosaurs” or the “hungry upstarts.” Technology, he continued, has “radically shifted” the balance of power in favor of the latter. Proof? “The dropouts of the late 1990s (mainly from Stanford) beat the dropouts of the middle 1970s (from Harvard). Google and Yahoo! were nothing when Microsoft was said to dominate.” This, it seems, is what it means to have moved beyond the dichotomy of market and state into the realm of openness—that we must cheerlead the newly powerful from the sidelines for no better reason than that they are new.

Even if the players weren’t from Stanford and Harvard (two institutions where Lessig has held prominent appointments), the statement would still be unsettling. Who could possibly construe a contest between the dropouts of these elite and storied institutions as one between underdogs and an oppressor? And why should we cheer Amazon over local bookstores, Apple over independent record labels, or Netflix over art house cinemas, on the basis of their founding date or their means of delivery? The dinosaurs and upstarts have more in common than Lessig cares to admit.

As Woodrow Wilson famously said, “That a peasant may become king does not render the kingdom democratic.” Although new-media celebrants claim to crusade on behalf of the “yeoman creator,” they treat the kings of the digital domain with unwavering reverence, the beneficence of their rule evident in the freedom that their platforms and services allow. Praising the development of what he calls “hybrid economies,” where sharing and selling coexist, Lessig argues that advances in advertising will provide adequate support for the creation and dissemination of culture in a digital age. “As if by an invisible hand,” the ways we access culture will dramatically change as the dinosaurs “fall to a better way of making money” via hyper-targeted marketing.

Lessig is deeply concerned about control of culture and appalled that a generation has been criminalized for downloading copyrighted content, yet he ignores the problem of commercialism and is sanguine about the prospect of these same youth being treated as products, their personal data available for a price.²³ Though the reviled traditional broadcast model evolved the way it did to serve the interests of advertisers, Internet enthusiasts brush away history’s warnings, confident that this time will be different.

Going against the grain of traditional media critics, Lessig and others believe that the problem is not commercialism of culture but control. The long-standing progressive critique of mass media identified the market as the primary obstacle to true cultural democracy. When General Electric acquired NBC, for example, the CEO assured shareholders that the news, a commodity just like “toasters, lightbulbs, or jet engines,” would be expected to make the same profit margin as any other division. But art and culture, the critical line of thought maintains, should be exempt, or at least shielded, from the revenue-maximizing mandates of Wall Street, lest vital forms of creativity shrivel up or become distorted by the stipulations of merchandising—an outlook that leads to advocating for regulations to break up conglomerates or for greater investment in public media.

Internet enthusiasts, in contrast, tend to take a laissez-faire approach: technology, unregulated and unencumbered, will allow everyone to compete in a truly open digital marketplace, resulting in a richer culture and more egalitarian society. Entertainment companies become the enemy only when they try to dictate how their products are consumed instead of letting people engage with them freely, recontextualizing and remixing popular artifacts, modifying and amending and feeding them back into the semiotic stream.

When all is said and done, the notion of a hybrid economy turns out to be nothing more than an upbeat version of digital sharecropping, a scenario in which all of us have the right to remix sounds and images and spread them through networks that profit from our every move. The vision of cultural democracy upheld by new-media thinkers has us all marinating in commercial culture, downloading it without fear of reprisal, repurposing fragments and uploading the results to pseudo-public spaces—the privately owned platforms that use our contributions for their own ends or sell our attention and information to advertisers. Under this kind of open system, everything we do gets swept back into a massive, interactive mash-up in the cloud, each bit parsed in the data mine, invisible value extracted by those who own the backend.

In a way, this is the epitome of what communications scholar Henry Jenkins calls “convergence culture”—the melding of old and new media that the telecom giants have long been looking forward to, for it portends a future where all activity flows through their pipes. But it also represents a broader blurring of boundaries: communal spirit and capitalist spunk, play and work, production and consumption, making and marketing, editorializing and advertising, participation and publicity, the commons and commerce. The “old rhetoric of opposition and co-optation” has been rendered obsolete, Jenkins assures us.²⁴ But if there is no opposition—no distinction between noncommercial and commercial, public and private, independent and mainstream—it is because co-optation has been absolute.

Though she now tours under her own name, the Portland-based musician Rebecca Gates long fronted the Spinanes, a band that, in the nineties and early aughts, released three albums on the influential Sub Pop label. She had, in many ways, the classic indie rock experience, playing clubs around the country, sleeping on couches, getting aired on college radio and MTV’s 120 Minutes. Sub Pop provided advances for the band to make records and tour support, and though the albums never sold enough copies to recoup, the label made it possible for Gates to devote herself to her craft. Then, after a hiatus of ten years, Gates finished a new record and went back on the road, but this time she self-released her music, taking advantage of the low cost of digital distribution. Gates was cautiously optimistic that she could end up better off than under the old model—that the enterprise may be more sustainable and satisfying—even if she sold fewer copies in the end.

Gates thought a lot about the new opportunities offered by technology as part of a project undertaken in partnership with the Future of Music Coalition, a nonprofit that advocates for the rights of independent artists, lobbying for everything from health care to community radio. She led an ambitious survey of working musicians to see how they had actually fared as the recording industry transforms. “It’s really easy to get hung up on success stories,” Gates told me, referencing appealing anecdotes about creators who “made it” by leaving their record labels and going viral online or by giving their music away and relying on touring income or T-shirt sales. Gates discovered it was hard to generalize about people’s experiences. “I’ve seen hard data for people who are in successful bands, quote unquote, festival headlining bands, who would make more money in a good retail job,” she said.

“There’s this myth that’s not quite a myth that you don’t need intermediaries anymore,” Gates continued. But it is harder than it seems for artists like Gates to bypass the giants and go solo, directing traffic to their own Web sites, though that’s what many artists would prefer to do. “Let’s imagine your record is done, that somehow you paid for production and you’re in the clear—then immediately you’re in a situation where you are dealing with iTunes, which takes thirty percent, and if you are small and you go through a brokerage, which you sometimes have to do, you can lose fifty percent.” Artists who do work with labels, big or small, often end up getting less from each digital sale.

A similar arrangement applies to streaming services such as Pandora and Spotify, which have come under fire from a range of working musicians for their paltry payouts. The four biggest major labels have an equity stake in Spotify and receive a higher royalty rate than the one paid to independent artists and labels (one independent songwriter calculated that it would take him 47,680 plays on Spotify to earn the profit of the sale of one LP²⁵). “As far as I can tell, there’s been this replication of the old model,” Gates said. “There’s a large segment of the tech platforms that are simply a replacement for any sort of old label structures except that now they don’t give advances.”

During this crucial moment of cultural and economic restructuring, artists themselves have been curiously absent from a conversation dominated by executives, academics, and entrepreneurs. Conference after conference is held to discuss the intersection of music and new media, Gates notes, but working musicians are rarely onstage talking about their experiences or presenting their ideas, even as their work is used to lure audiences and establish lucrative ventures, not unlike the way books and CDs have long been sold as loss leaders at big chains to attract shoppers. The cultural field has become increasingly controlled by companies “whose sole contribution to the creative work,” to borrow Cory Doctorow’s biting expression, “is chaining children to factories in China and manufacturing skinny electronics” or developing the most sophisticated methods for selling our data to advertisers.

It wasn’t supposed to be this way. One natural consequence of Web-based technologies was supposed to be the elimination of middlemen, or “disintermediation.” “The great virtue of the Internet is that it erodes power,” the influential technologist Esther Dyson said. “It sucks power out of the center, and takes it to the periphery, it erodes the power of institutions over people while giving to individuals the power to run their lives.”²⁶ The problem, though, is that disintermediation has not lived up to its potential. Instead, it has facilitated the rise of a new generation of mediators that are sometimes difficult to see. As much as networked technology has dismantled and distributed power in more egalitarian ways, it has also extended and obscured power, making it less visible and, arguably, harder to resist.

The disruptive impact of the Web has been uneven at best. From one angle, power has been sucked to the periphery: new technologies have created space for geographically dispersed communities to coalesce, catalyzed new forms of activism and political engagement, and opened up previously unimaginable avenues for self-expression and exposure to art and ideas. That’s the story told again and again. But if we look from another angle and ask how, precisely, the power of institutions has been eroded, the picture becomes murkier.

Entrenched institutions have been strengthened in many ways. Thanks to digital technologies, Wall Street firms can trade derivatives at ever-faster rates, companies can inspect the private lives of prospective and current employees, insurance agencies have devised new methods to assess risky clients, political candidates can marshal big data to sway voters, and governments can survey the activities of citizens as never before. Corporate control—in media as in other spheres—is as secure as ever. In profound ways, power has been sucked in, not out.

In the realm of media and culture, the uncomfortable truth is that the information age has been accompanied by increasing consolidation and centralization, a process aided by the embrace of openness as a guiding ideal. While the old-media colossi may not appear to loom as large over our digital lives as they once did, they have hardly disappeared. Over the previous decade, legacy media companies have not fallen from the Fortune 500 firmament but have actually risen. In early 2013 they surprised analysts by reporting skyrocketing share prices: Disney and Time Warner were up 32 percent, CBS 40.2 percent, Comcast a shocking 57.6 percent.²⁷

These traditional gatekeepers have been joined by new online gateways, means of accessing information that cannot be avoided. A handful of Internet and technology companies have become as enormous and influential as the old leviathans: they now make up thirteen of the thirty largest publicly traded corporations in the United States.²⁸ The omnipresent Google, which, on an average day, accounts for approximately 25 percent of all North American consumer Internet traffic, has gobbled up over one hundred smaller firms, partly as a method of thwarting potential rivals, averaging about one acquisition a week since 2010; Facebook now has well over one billion users, or more than one in seven people on the planet; Amazon controls one-tenth of all American online commerce and its swiftly expanding cloud computing services host the data and traffic of hundreds of thousands of companies located in almost two hundred countries, an estimated one-third of all Internet users accessing Amazon’s cloud at least once a day; and Apple, which sits on almost $140 billion in cash reserves, jockeys with Exxon Mobil for the title of the most valuable company on earth, with a valuation exceeding the GDP (gross domestic product) of most nations.²⁹

Instead of leveling the field between small and large, the open Internet has dramatically tilted it in favor of the most massive players. Thus an independent musician like Rebecca Gates is squeezed from both sides. Off-line, local radio stations have been absorbed by Clear Channel and the major labels control more of the music market than they did before the Internet emerged. And online Gates has to position herself and her work on a monopolists’ platform or risk total invisibility.

Monopolies, contrary to early expectations, prosper online, where winner-take-all markets emerge partly as a consequence of Metcalfe’s law, which says that the value of a network increases exponentially by the number of connections or users: the more people have telephones or have social media profiles or use a search engine, the more valuable those services become. (Counterintuitively, given his outspoken libertarian views, PayPal founder and first Facebook investor Peter Thiel has declared competition overrated and praised monopolies for improving margins.³⁰) What’s more, many of the emerging info-monopolies now dabble in hardware, software, and content, building their businesses at every possible level, vertically integrating as in the analog era.

This is the contradiction at the center of the new information system: the more customized and user friendly our computers and mobile devices are, the more connected we are to an extensive and opaque circuit of machines that coordinate and keep tabs on our activities; everything is accessible and individualized, but only through companies that control the network from the bottom up.³¹ Amazon strives to control both the bookshelf and the book and everything in between. It makes devices, offers cloud computing services, and has begun to produce its own content, starting various publishing imprints before expanding to feature film production.³² Google is taking a similar approach, having expanded from search into content, operating system design, retail, gadget manufacturing, robotics, “smart” appliances, self-driving cars, debit cards, and fiber broadband.

More troublingly, at least for those who believed the Internet upstarts would inevitably vanquish the establishment dinosaurs, are the ways the new and old players have melded. Condé Nast bought Reddit, Fox has a stake in Vice Media, Time Warner bet on Maker Studios (which is behind some of YouTube’s biggest stars), Apple works intimately with Hollywood and AT&T, Facebook joined forces with Microsoft and the major-label-backed Spotify, and Twitter is trumpeting its utility to television programmers. Google, in addition to cozying up to the phone companies that use its Android operating system, has struck partnership deals with entertainment companies including Disney, Paramount, ABC, 20th Century Fox, and Sony Pictures while making numerous overtures to network and cable executives in hopes of negotiating a paid online television service.³³

Google has licensing agreements with the big record companies for its music-streaming service and holds stake alongside Sony and Universal in Vevo, the music video site that is also the most viewed “channel” on YouTube.³⁴ YouTube has attempted to partly remake itself in television’s image, investing a small fortune in professionally produced Web series, opening studios for creators in New York, Los Angeles, and London, and seeking “brand safe” and celebrity-driven content to attract more advertising revenue.³⁵ “Top YouTube execs like to say they’re creating the next generation of cable TV, built and scaled for the web,” reports Ad Age. “But instead of 500-odd channels on TV, YouTube is making a play for the ‘next 10,000,’ appealing to all sorts of niches and interest groups.”³⁶

Though audiences may be smaller as a consequence of this fragmentation, they will be more engaged and more thoroughly monitored and marketed to than traditional television viewers.³⁷ As Lessig predicted, the “limitations of twentieth-century advertising” are indeed being overcome. As a consequence, the future being fashioned perpetuates and expands upon the defects of the earlier system instead of forging a new path.

Meanwhile, the captains of industry leading the charge toward mergers and acquisitions within the media sphere cynically invoke the Internet to justify their grand designs. Who can complain, they shrug, if one fellow owns a multibillion-dollar empire when anyone can start a Web site for next to nothing? The subject of antitrust investigations in Europe and the United States, Google executives respond to allegations that the company abuses its dominance in search to give its own services an advantage by insisting that on the Internet “competition is one click away.”

Such is Rupert Murdoch’s view of things as well. Not long before the phone-hacking scandal brought down his tabloid News of the World, Murdoch made a bid for BSkyB, a move that would have given him control of over half of the television market in the UK. He assured the British House of Lords that concerns about ownership and consolidation were “ten years out of date” given the abundance of news outlets for people to choose from online. The House of Lords, however, was not convinced, as a lengthy report to Parliament made clear: “We do not accept that the increase of news sources invalidates the case for special treatment of the media through ownership regulation. We believe that there is still a danger that if media ownership becomes too concentrated the diversity of voices available could be diminished.”³⁸

In the United States, however, even the core attribute of the Internet’s openness, so disingenuously deployed by the likes of Murdoch, is under threat. The nation’s leading cable lobbying group has a phalanx of full-time staff campaigning against Net neutrality—the idea that government regulation should ensure that the Internet stay an open platform, one where service providers cannot slow down or block certain Web sites to stifle competition or charge others a fee to speed up their traffic.

Ironically, the effort is headed by ex-FCC (Federal Communications Commission) chairman Michael Powell, who, in 2003, began his abdication of his role as public servant by publishing an op-ed in which he argued against government intervention in the media marketplace. “The bottomless well of information called the Internet” makes ownership rules simply unnecessary, a throwback to “the bygone era of black-and-white television,” Powell wrote, positively invoking the very attributes of the Internet he is now paid handsomely to undermine. (In 2013 the revolving door came full circle when Tom Wheeler became Chairman of the FCC; Wheeler once stood at the helm of the same lobbying organization Powell now presides over.)³⁹

Based on the principle of common carriage—rules first established under English common law and applied initially to things like canals, highways, and railroads and later to telegraph and telephone lines—advocates of Net neutrality seek to extend this tradition to our twenty-first-century communications system, prohibiting the owners of a network from abusing their power by discriminating against anyone’s data, whether by slowing or stopping it or charging more to speed it up. They hope to defend the openness of the Internet by securing federal regulation that would guarantee that all bits, no matter who is sending or receiving them, are treated equally. The images and text on your personal Web site, they maintain, should be delivered as swiftly as Amazon or CNN’s front page.

Telecom companies have something different in mind. AT&T, Verizon, Time Warner, Comcast, and others recognize that they could boost revenue significantly by charging for preferential service—adding a “fast lane” to the “information superhighway,” as critics have described their plan. Service providers, for example, could ban the services of rivals outright, decide to privilege content they own while throttling everything else, or start charging content providers to have their Web sites load faster, prioritizing those who pay the most—all three scenarios putting newcomers and independents at a substantial and potentially devastating disadvantage while favoring the already consolidated and well capitalized.

The Internet is best thought of as a series of layers: a physical layer, a code layer, and a content layer. The bottom “physical,” or ISP (Internet service provider) layer, is made up of the cables and routers through which our communications travel. In the middle is the “code” or “applications,” which consists of the protocols and software that make the lower layer run. On top of that is the “content,” the information we move across wires and airwaves and see on our screens. The telecommunications companies, which operate the physical layer, are fundamental to the entire enterprise. Common carriers—“mediating institutions” essential to social functioning—are sometimes called “public callings,” a term that underscores the responsibility that comes with such position and power.

In his insightful book The Master Switch, Tim Wu, originator of the term “Net neutrality,” explains why this may be the biggest media and communications policy battle ever waged. “While there were once distinct channels of telephony, television, radio, and film,” Wu writes, “all information forms are now destined to make their way increasingly along the master network that can support virtually any kind of data traffic.” Convergence has raised the stakes. “With every sort of political, social, cultural, and economic transaction having to one degree or another now gone digital, this proposes an awesome dependence on a single network, and no less vital need to preserve its openness from imperial designs,” Wu warns. “This time is different: with everything on one network, the potential power to control is so much greater.”

While we like to imagine the Internet as a radical, uncontrollable force—it’s often said the system was designed to survive a nuclear attack—it is in fact vulnerable to capture by the private interests we depend on for access. In 2010, rulings by the FCC based on a controversial proposal put forth by Verizon and Google established network neutrality on wired broadband but failed to extend the common carrier principle to wireless connections; in other words, network neutrality rules apply to the cable or DSL service you use at home but not to your cell phone. In 2013, Google showed further signs of weakening its resolve on the issue when it began to offer fiber broadband with advantageous terms of service that many observers found violate the spirit of Net neutrality.⁴⁰

Given the steady shift to mobile computing, including smartphones, tablets, and the emerging Internet-of-things (the fact that more and more objects, from buildings to cars to clothing, will be networked in coming years), the FCC’s 2010 ruling was already alarmingly insufficient when it was made. Nevertheless, telecommunications companies went on offense, with Verizon successfully challenging the FCC’s authority to regulate Internet access in federal appeals court in early 2014. But even as the rules were struck down, the judges acknowledged concerns that broadband providers represent a real threat, describing the kind of discriminatory behavior they were declaring lawful: companies might restrict “end-user subscribers’ ability to access the New York Times website” in order to “spike traffic” to their own news sources or “degrade the quality of the connection to a search website like Bing if a competitor like Google paid for prioritized access.”⁴¹

Proponents of Net neutrality maintain that the FCC rules were in any case riddled with loopholes and the goal now is to ground open Internet rules and the FCC’s authority on firmer legal footing (namely by reclassifying broadband as a “telecommunications” and not an “information” service under Title II of the Communications Act, thereby automatically subjecting ISPS to common carrier obligations.) Opponents contend that Net neutrality would unduly burden telecom companies, which should have the right to dictate what travels through their pipes and charge accordingly, while paving the way for government control of the Internet. As a consequence of the high stakes, Net neutrality—a fight for the Internet as an open platform—has become a cause célèbre, and rightly so. However arcane the discussion may sometimes appear, the outcome of this battle will profoundly affect us all, and it is one worth fighting for.

Yet openness at the physical layer is not enough. While an open network ensures the equal treatment of all data—something undoubtedly essential for a democratic networked society—it does not sweep away all the problems of the old-media model, failing to adequately address the commercialization and consolidation of the digital sphere. We need to find other principles that can guide us, principles that better equip us to comprehend and confront the market’s role in shaping our media system, principles that help us rise to the unique challenge of bolstering cultural democracy in a digital era. Openness cannot protect us from, and can even perpetuate, the perils of a peasant’s kingdom.