Most of us would have observed and pondered over the effects of social media on various aspects of the society and economy alike. David Perell puts those observations in a framework that allows the reader to distinctly see these changes, especially focusing on the fields of commerce, education and politics and how the effects are in someways similar in all three fields. Central to the transformation is the shift from information scarcity to information abundance in the hands of the consumer, the student and the voter. Such a shift is obviously disrupting incumbents breaking down entry barriers (brand and distribution are no longer the competitive advantages that they used to be) whilst allowing new comers to take a shot at an industry’s profit pie which hitherto would have been out of reach given the stranglehold of mass media as the main tool of influence and the consequent prohibitive costs. “…legacy advertisers, distribution channels, and the mass media once formed an impenetrable holy trinity but now that trinity rests on wobbly ground, and its parts will decompose into fossils of the Mass Media era….among the top 100 consumer-packaged good (CPG) brands, 90 percent experienced a decline in market share in 2015 and in the past three years, over $17 billion in sales has evaporated from the 10 largest U.S. packaged-food companies.”
In education, large universities are being disintermediated to the benefit of both students and teachers to deliver the value proposition in the industry. David reckons ”Harvard and Stanford will be okay, but dark days are ahead for mid-tier universities” But given the unravelling of admission processes, it is not clear why the Ivy league should be any more moated.
“Burdened by rising costs and unable to justify tuition prices, mid-tier universities are on the brink of bankruptcy. Clayton Christensen, who coined the term “disruption,” predicts 50% of the 4,000 colleges and universities in the United States will be bankrupt in the next 10 to 15 years. The challenges are most acute for mid-size liberal arts schools such as Concord University in West Virginia. Its freshman enrollment fell 19% in five years. It burned through $12 million in reserves, and now it can’t afford to tear down to empty dormitories. “
The best section of the article is the one on politics which David uses to conclude why despite the threat of fake news and the ability of politicians or anyone else wanting to use social media platforms such as Facebook and Twitter to influence public opinion, it is still better than the status quo – in the past, given the information asymmetry we took for granted any information thrown at us by an individual or entity with a perceived sense of authority – such as Walter Cronkite’s (the influential CBS anchor) role in tilting Amercians’ opinion about the Vietnam War or the role of Britannica encyclopedia as the ultimate authority on a subject of our curiosity vs our ability to question Wikipedia’s authenticity. Now with not just a shift towards information abundance but also two-way information flow, the ability to influence public opinion is with the anti-status quo.
“In political science, the “Overton Window” represents the range of acceptable opinions in society. Rather than controlling speech itself, people can control speech by determining the limits of acceptable conversation. As Noam Chomsky, the father of modern linguistics said: “The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum…
Before cable, the limits of acceptable speech were enforced by political parties, who, due to their incentives for mass appeal, encouraged political centrism. With the stroke of a pen, small groups set narratives for the masses. Every town has one or two newspapers and three TV stations — all centrist, pro-business, and respectful of authority. Newspapers and television stations monopolized the distribution of information within their local territory. Through their power, they built social cohesion by eliminating diverse opinion and creating a shared intellectual ground for citizens…”
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