Incentives
I spent the first few years of my career as a Chartered Accountant giving guidance to small business owners. One of the strongest levers we have to affect the behaviours others is to incentivize the behaviours we want, and increase the cost of the behaviours we don’t. This isn’t a novel idea, and it formed a large part of my advice as an accountant. I’ve since learned more about motivation in general, and these days I would give different advice to small business owners than I used to (for example, agency is one of the key ingredients to intrinsic motivation in individuals - people want to do things how they want to do them, they don’t want to be told how to do them). However, at a larger scale, using incentives/costs as a lever is still a very compelling idea.
Social Media Incentives
Social media is owned by companies. Those companies are then owned by individuals: to some extent the public who are buying and selling on the stock exchanges of the world, and to a larger extent by specific private individuals or other privately owned companies. Company operates under a very simple incentive structure - the shareholders of the company would like to see their investment grow in value. This structure is followed to the most severe degree, where the shareholders of a company can and have taken the directors of said company to court when they believe the directors have made decisions that affected their future investment returns.
As a result, companies will do anything they can to ensure their profits are as high as possible, forever.
Social media companies operate under the same principles - profit at the cost of all else.
“Show me the incentives, and I’ll show you the outcome.”
- Charlie Munger
How Do Modern Social Media Companies Make Money?
There are two main ways:
- Advertisements
- User data
The best way to maximise both of these, is to maximise eyes on the platform. The longer a user is looking at the app, the more advertisements the company can show them, and the more data we can collect about what a user likes and doesn’t like, which we can sell back to the advertising companies so that they can better target their ads to our users…
The Algorithm
My understanding of “The Algorithm” that we have all grown to hate is that it is a machine learning model that is trained on a set of incentives given to it by it’s creator - a trillion baby algorithms are trialled and scored based on how well their recommendations keep you on the platform, and the best one is kept and used because it will result in the highest profit. This is also why social media companies love to say they aren’t responsible for what their algorithm recommends, because it’s a bit of a “black box”: they don’t necessarily know why it chose a post that it did just by looking at it, because the internal workings of a given algorithm don’t need to be understood, only its affect on the company’s bottom line.
The incentive used to train the algorithm is an extension of the incentive of the company through its ownership structure. Show me the incentives, and I’ll show you the outcome.
An Alternative?
I’ve been playing with ideas of what modern social media technologies would look like if they operated under different incentive structures. A few alternative ownership structures that might apply are:
- Not For Profits, which are established with a specific purpose and always reinvest their profits towards this purpose
- B-Corps or other alternative company structures, which enshrine within their binding constitution that the company must not only operate in the interest of profit
- Cooperatives, which are organisations that are owned and democratically governed by its members - one member, one vote (though these still sometimes implement hierarchical management). Influence of the organisation’s incentives are limited to the actual workers of the organisation in a cooperative, but this may still be a profit incentive.
- Collectives, which are similar to cooperatives except that the management structure is by definition flat, with every member of the collective automatically being an equal director of the organisation.
Out of these, I am currently most partial to a Not For Profit organisation, mainly because it takes a hard-line stance against profit as an incentive for the organisation.
Having said the above, I think a better starting place to think about is what do we actually want to incentivise in a social media platform? My answers to that are ideally:
Accurate perception of others’ beliefs.
It’s hard to have good-faith conversations about anything when you don’t have a clear picture of what someone who disagrees with you actually believes.
Less reliance on the platform.
This is directly at odds with the current incentive structure behind social media - I shouldn’t be compelled to use the platform more by using it at all, or in other words the platform shouldn’t be psychologically addicting. At the very least, I should be making a conscious decision about whether or not I use the platform, and how much time I spend on the platform.
Stronger connections with other human beings.
We are more connected than ever before thanks to modern technology, and that is absolutely incredible. So why do we often feel isolated and alone after using social media platforms?
Regardless of incentive structure, there’s got to be a better way than what we’ve got now.