Digital Wage

What a difference a year makes, to the country, and to the New Economy

The wages of sin is death.
-- Romans 6:23

If television images and security measures haven't fully illustrated how connected San Francisco is to America's current troubles, the empty halls of the George Moscone Convention Center last week ought to have. Many of the exhibitors planning to attend the 31st annual Seybold high-tech publishing conference changed plans for fear of flying. Another portion -- companies touted as dynamic pioneers a year ago -- no longer exists. Spectators were scarce, too, and the few present seemed edgy. Lecture halls were populated with empty chairs. Uncertain faces floated on escalators. Seminar discussions not somehow related to terrorist disaster were conducted halfheartedly, so as not to appear profane. Only a year ago Seybold was an ostentatious celebration of San Francisco's high-tech zeitgeist; last week it was ghostly.

In September 2000, Seybold was the site of what then passed for San Francisco's great ethical debates, and the place had been dressed to match. The walls of Moscone Center were swathed in 20-times-life-size images of great moral leaders of the past century: Mahatma Gandhi, Martin Luther King, and César Chávez. (The images had been enlisted to sell Apple computers.)

But like the ancient Israelites, who paid prophets and priests to praise them so that they could live lives at once ostentatious and sanctimonious, the ethical discussions of San Francisco's wealthy tech era were corrupt. Cynical libertarians disputed the ideas of cynical monopolists; thieving merchants debated thieving consumers; vice was sanctified all around. These discussions swam in a new type of popular spirituality based on consumption, which was epitomized by the moral-hero Apple ads. Outside-world ethical debates -- over the dramatic economic inequality the tech boom had engendered, the grand differences developing in Americans' access to technology, and the displacement created by San Francisco's new wealth -- were unheard-of inside these halls.

And as with the ancient Israelites, corrupt ideas portended collapse.

This year there were no banners depicting great moral leaders, because San Francisco and its tech industry weren't leading anybody anywhere. Hotel vacancy rates here stood at 80 percent. Hundreds of tech companies had vanished. Economists had just begun to predict a nationwide recession worse than anything previously imagined, and they were predicting the most unpleasant fate for San Francisco. Widespread joblessness and the humiliation that accompanies it were about to smite this city until it became a more miserable place than many of its young residents had ever seen.

The San Francisco Bay Area will eventually recover and prosper again, and will have its technology industry to thank. Venture capitalists will pour money back into tech start-ups yet unimagined. Grand ethical debates will again rage at trade conventions. And perhaps -- oh dear God let us pray that perhaps -- the debates won't be quite so specious next time.


In the moral universe of 2000, technology companies saw the Internet as a tool for spying on customers; they called this improved service. Web surfers sought Internet content without a price; for them, this was the New Economy. Publishers, music labels, and movie companies sought to jail people who exploited the Internet's ability to reproduce their wares; this was seen as only just. New Internet firms, uninvited squatters on what had initially been an electronic commune, spoke sanctimoniously about squeezing money from freeloaders. Consumers and artists and hackers, and the companies that served them, meanwhile sought to steal. By plagiarizing and hacking and illegally copying, they claimed, they lubricated the creative machinery of the digital information age. Information, they self-servingly said, wants to be free. Through all this, the sanctified status of the Internet as portal to an enlightened universe went unchallenged. Internet publishers and retailers and shysters of all stripes tilted their heads back and sniffed at their real-world peers.


Last year telecommunications companies imagined a future where it would be possible to monitor consumers' every move using computers, do-everything cell phones, electronic wallpaper, and other devices. Just a week before last year's Seybold conference, German telecommunications companies paid their government a record $37 billion for mobile telephone licenses, breaking the previous record of $33.75 billion, which had been established in the United Kingdom.

At the time it was thought that cellular telephones would soon become do-all devices that would be used to surf the Web, start car ignitions, open house doors, and make phone calls. As a result, it would become possible to deposit information about consumers' every daily move into a giant data bank, from which retailers would draw detailed profiles. Already Web merchants were using "cookies" and other digital techniques to monitor surfers' behavior. In the previous year millions of people had witlessly handed companies detailed dossiers on their personal lives. As investors saw it, this was just the beginning; companies would soon be able to follow people virtually every hour of every day. Just as cellular technology in Europe led the way for the United States, a new, lucrative Big Brother age would eventually move across the Pacific as well.

Happily this invasive future didn't completely materialize. Instead, the most notable result of this vision was an unprecedented transfer of wealth from private to public hands. Their coffers empty, European telecom firms are now struggling. "What happened to wireless? It went into treasuries of the world's governments," noted Mark Anderson, publisher of a technology newsletter.

Companies that had bet their future on leveraging the Web's ability to closely monitor users' behavior are either failing or have failed. And to the extent there is one, the privacy debate has moved to Washington and new civil-liberties-bashing anti-terrorist legislation: The government, it appears, may be the one doing the electronic spying.


In September 2000, electronic books -- small devices with screens that can display the text to novels and other digitized volumes -- were heralded as the greatest thing since Gutenberg's press. Companies such as Adobe had once promised a future where vacationers read electronic books on the beach and electronic magazines in the bathroom. A year ago e-books were going to change the nature of books. (That was before Stephen King, the e-book movement's erstwhile champion, abandoned his second electronic book late last year.)

But the act of copying electronic files -- an activity that had become as natural as breathing to users of the Internet -- had book and movie distributors trembling in the face of "peer-to-peer" file-sharing technology popularized by Napster. The key to the success of books composed of electrons, it was then said, lay in punishing those who would copy the works without permission, and hence without compensation to the creators and publishers of the works.

Along with record labels and movie houses, book publishers had a weapon: the Digital Millennium Copyright Act, a controversial 1998 law that Congress passed to protect holders of intellectual property in the Internet age. The law makes it a crime to circumvent copyright protection systems. "Copyright law was originally designed to create a public domain of ideas. It provides an economic incentive to authors as a means of providing this vibrant public domain. So far the Digital Millennium Copyright Act hasn't been used for copyright infringement," said Robin Gross, staff attorney for the Electronic Frontiers Foundation, a digital advocacy group. "Instead, lawful speech has been curtailed. Scientists all over the world saying they're afraid to travel here because they've made a copy of something or written a paper that could be subject to Digital Millennium Copyright prosecutions."

A year later, the e-book companies have delivered neither readers nor authors, unless you count Dmitry Sklyarov, a terrified 26-year-old Russian software writer who is now under virtual house arrest in San Mateo. Sklyarov awaits trial for his "crime" of writing something called Advanced eBook Processor, a computer program sold by his Russian employer, ElcomSoft, that allows purchasers of Adobe e-books to make backup copies for themselves. Adobe swiftly retracted its complaint in the face of public outcry, but the U.S. Attorney's Office proceeded with prosecution just the same.

Sklyarov is now out on $50,000 bail and is not allowed to leave Northern California, his attorney told me.

"I don't want to be a celebrity at all," said a pale, retiring Sklyarov when I spoke with him last week. "I just want to go home."


A year ago there still existed meager hope that the Web would change everything in the information business. Amateur Web journalists and Webloggers would keep people more informed than they had ever been. Entrepreneurs would figure out some way to make surfers pay for what they saw, and entrepreneurs would somehow make money. Those still practicing in the "old journalism" would soon be roadkill.

Last week a panel made up of both "Web journalists" and traditional news editors discussed the Web's role in covering the World Trade Center attack. It became immediately evident that the independent Web amateurs knew nothing of journalistic methods, the trained pros who started their careers in the print and television worlds were -- well -- trained and professionals, and the world would remain the same as it always had: As a news medium, the Web would be most effective as a way to distribute traditional journalists' output.

For years tech seers talked about how the World Wide Web would steamroll ordinary media. The newspapers, television networks, and other news organizations that sent experienced reporters to foreign lands to gather news would become defunct now that surfers could log onto amateur Web sites originating around the world. A Seybold panel effectively debunked this idea within minutes. Rather than brag about how the Internet might make military censorship impossible in a wired-together age, Web journalists defended their ability to adequately censor themselves.

The panel's moderator, Dave Winer, host of Scripting News, a Weblog, had been quoted in Wired News as saying, "The Web has a lot more people to cover a story." The following week at Seybold he revealed he was unfamiliar with ordinary journalistic conventions such as reporting a story before going to press. "But wouldn't that [time spent reporting] mean a competitor might go with the story before you?" he asked a panelist.

The Web was indeed full of firsthand man-in-the-street accounts from New Yorkers near the blast during the second week of September. But it was newspapers, not Webloggers, that were breaking all the important stories.

Meanwhile, Web experts seem to have given up on the idea that consumers would ever pay for content delivered online. "My message is, it's worse than you think, even though most of you realize it's pretty bad," said Mark Anderson, the tech-industry newsletter publisher. According to Anderson, the best way for Web content properties to survive is as charities.

"Government could fund the top 1,000 most popular articles. There could be micropatrons, which is different than micropayments. Rather than single patrons, funding Michelangelo, you could have thousands of patrons paying $100 to fund an artist," Anderson said. "A third way could be nonprofit foundations, such as the American Rhythm and Blues Society. People could sell T-shirts. It would be a way of saying, "Hey, this is my way of supporting X.'"

Which, given the San Francisco Bay Area's coming economic apocalypse, isn't a terribly bad idea. Thousands of newly unemployed might be kept busy in makeshift T-shirt stands. They could conduct a side business hawking silk-screened coffee mugs -- until the tech renaissance returns.

Then, venture capitalists will begin pouring money into start-up companies offering laser modems and holo-pets. San Francisco will be in the pink again. Topics such as technology and money and cybersnooping and pseudo-theft will tempt us as themes for earnest theological debate. But we'll know better by then. We'll still remember the wages of sin.


The pastures of the shepherds will languish, and the summit of Carmel wither. I will send fire upon the house of Hazael, to devour the castles of Ben-hadad. ... And the sceptered ruler of Beth-eden; the people of Aram shall be exiled to Kir.

-- Amos 1:1-5

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