MAINSTREAM REPORT-- Disruptive Innovation and --THE CRASH OF SOCIAL MEDIA

---

. Can Facebook, Instagram, Twitter, all of the cars on the train survive the crash?

---

Disruptive Innovation and Social Media, a Signature Presentation

          Paradigms are meant to be replaced. The phenomenon known as "social media" may or may not be considered a paradigm in the strict sense of the word but it has made a major mark not just on the internet but on culture itself.

     Within the confines of the social media universe, trends rise, and fall depending on the demands made by consumers and demands developed by industry. Pressure from both of those demands creates an atmosphere where progress, often times radical, replaces inertia. That pressure in radical form is defined by Clayton Christensen of Harvard University as "disruptive innovation."

          “Disruptive innovation” was outlined in the Jill Lepore 2014 article in The New Yorker titled “The Disruption Machine.”  Citing one of her associates at Harvard, Clayton Christensen, she defined disruptive innovation as;

          “The selling of a cheaper, poorer quality product that initially reaches less profitable customers but eventually takes over and devours an entire industry.” (Lepore, New Yorker)

Curiously, Lepore goes on to report that a company using the disruptive innovation paradigm will have to fail in order to succeed. She cites Morrison-Knudsen's effort for mass transit which resulted in total failure of the company.

By his own account, the founder of Friendster, Jonathan Abrams,  blames venture capital for its failure. Another entrepreneur, Joel Spolsky, has it right when he says;

          "The basic venture capital system is structured so that there are built-in conflicts of interest between the VC and the entrepreneur,"  (Max Chafkin, inc.com)

The market for upstart social media networks in the days of Friendster survived in a narrow range and investors hedged their bets by spreading cash out across the board. Naturally, when a better platform surfaced, the money went there, and Friendster was relegated to the dustbin of history; the first disruptive innovation in social media had failed. That, in fact, is the paradigm we are looking for in whether a social media endeavor, or social media itself, will survive in cyberspace, where survival of the fittest is the bottom line, and money is what fuels it.

     Fast forward to the current status quo of the primary social-media platform, Facebook (NYSE:FB). The company went public in May of 2012. It's current stock value is just under $200 a share. Its primary source of revenue is, not being liked by everyone posting pictures of their pets or trip to Paris, but advertising.  By the 4th quarter of 2018, the revenue topped just over $16 billion, most of which were publishers from the United States. Facebook depends on its US advertising to survive, there is no diversification, a basic component to stay in business in America. (Statista)

     According to Statista, the United States does not lead the world in Facebook users, but it is India, a predominant market in what Dr. Pain of the Reynolds School of Journalism at the University of Nevada, Reno, refers to as "The Global South." (Statista)  Facebook is still a one-trick pony depending chiefly on running ads to generate revenue basing its success on the number of users on the platform, but that's changing;

"...despite Facebook’s advertising growth, its user growth rate slowed during the quarter. The social network only added 38 million new monthly active users during the quarter. " (Digital Commerce 360)

     Now that we have set the stage for the crash, let's examine the mechanics. The above might be considered the hard scientific data on the current state of social media. We might call it a synthetic, or an inductive, interpretation. What about the analytical, or deductive interpretation? That's where we can see the weakness in the system, and it goes back to what happened to Friendster. The evolution from that site through the rise of Myspace to the eventual social media pinnacle established by Facebook is no matter of personal privacy, everybody knows about it. The difference was that Myspace never went public and was bought out by NewsCorp in 2005 (NAS:NWS);

     "News had been looking for $100m but settled for $35m offer from advertising targeting firm Specific Media. The sale is believed to be mainly in stock and News Corp will retain a small holding." (The Guardian)

Of course, what else would the site be good for but to run ads, just like the rest of the social media platforms that have no diversified material products to sell. This brings us back to deducting just what the flow chart looks like to the eventual decline of Facebook itself. Consider two things, where the revenue is coming from to float its income and who are the venture capitalists behind the wall propping it up.

     First, the graph shows half its income is in the US-Canada market, which makes sense because that's where the money is. That's who can afford to promote their favorite pet or trip to Paris video on mobile phones. The problem isn't how much Facebook rakes in on the successful market, but its limited returns in The Global South. The largest prospect for growth is there, as seen in the explosion of users from India; even though the prospect to find ad publishers is very limited. No matter many people Facebook has coming into the site, if the money isn't there to support them, the stress will fall on the infrastructure. (Graph, Merch Today)

      Footing the bill for the stock is Vanguard Group out of Pennsylvania, one of the largest funds in the world. Its portfolio is spread across a myriad of sectors but its top holdings fall into a limited category, with ten out of top twenty stocks on the Dow Jones Industrial Average of 30 stocks. Even though there is a strong tech presence in the top twenty, it all about drugs, and it always is. Three of those are on the Dow30, Proctor & Gamble (NYSE:PG), Johnson & Johnson (NYSE:JNJ) and Merck (NYSE:MRK).  (Nasdaq) Keeping with the theory that venture capital spreads cash across the sector, betting big in hopes another Google (NAS:GOOG) will surface from the faces in the crowd, Vanguard is also the principal investor in Omnicom (NYSE:OMC). (Nasdaq)  OMC is one of the largest ad agencies in the world and even though its venues are different, it stands in direct competition with Facebook for consolidating the worldwide advertising publishing market. They are on a collision course, in effect, a head-on train wreck.

     When the crews clear the debris, it will be clear OMC survived due to a given number of basics, depending on global reach across a wide variety of venues, diversification in content, the ability to undercut the cost, and add to that the variability of clients it can attract for advertising. As FB revenues decline, Vanguard will opt to keep its particular portfolio in the sector balanced and the money will go not just to OMC but others who, as disruptive innovation requires, will emerge from the rubble. The timeline, as in any good deductive inquiry, is always up for speculation.

    It depends on the market as a whole, global pressure on the survival of social media as a bona-fide cultural necessity, emergence of it in regions such as the poorer Global South and the ability of those in the sector to support the infrastructure required to keep it online. There are the other usual restrictions, such as political, as seen every time some general decides he wants to topple a Third World country in a coup and an internet blackout is ordered with surveillance and shutting down of social media to contain organizing and dissent. Can Facebook, Instagram, Twitter, all of the cars on the train survive the crash?

Credits:

Disruptive Innovation, Lepore, Jill, The Disruption Machine, 2014, https://www.newyorker.com/magazine/2014/06/23/the-disruption-machine

Chafkin, M., Friendster, How to Kill a Great Idea, https://www.inc.com/magazine/20070601/features-how-to-kill-a-great-idea.html

FB Revenue, https://www.statista.com/statistics/218701/largest-source-of-revenue-of-leading-tech-companies/

FB Growth, https://www.digitalcommerce360.com/2018/07/25/facebooks-ad-revenue-jumps-42-in-q2/

MySpace, https://www.theguardian.com/technology/2011/jun/30/myspace-sold-35-million-news

FB Revenue Graph, https://martechtoday.com/despite-ongoing-criticism-facebook-generates-16-6-billion-in-ad-revenue-during-q4-up-30-yoy-230261

Vanguard Top, https://www.nasdaq.com/quotes/institutional-portfolio/vanguard-group-inc-61322?sortname=sharesheld&sorttype=1

OMC Investors, https://www.nasdaq.com/symbol/omc/institutional-holdings

Disruptive Innovation and the Crash of Social Media: first published in 2019.

---

MAINSTREAM REPORT--Mutual Assured Destruction--ON THE BEACH (1957)

---

MAINSTREAM--"On the Beach," Nevil Shute, 1957

---

On the Beach, a novel by Nevil Shute, Wm Morrow & Co., New York, 1957

The Author

     Born on 17 January 1899 in Ealing, London. After attending the Dragon School and Shrewsbury School, he studied Engineering Science at Balliol College, Oxford. He worked as an aeronautical engineer and published his first novel, Marazan, in 1926. In 1931 he married Frances Mary Heaton and they went on to have two daughters. During the Second World War he joined the Royal Navy Volunteer Reserve where he worked on developing secret weapons. After the war he continued to write and settled in Australia where he lived until his death on 12 January 1960. His most celebrated novels include Pied Piper (1942), No Highway (1948), A Town Like Alice (1950) and On the Beach (1957).

The Era

     In the late 1950s, when the novel was published, the Cold War was being waged on many fronts; in space with the launch of the first orbiting satellite, “Sputnik,” by the USSR; in Berlin with the infamous Wall, in the United Nations as the Soviet Union’s Nikita Khrushchev, pounded a shoe on the podium and shouted, “We will bury you!” and at Yucca Flats, Nevada, with above ground atomic bomb testing. These routine atmospheric blasts, and the fallout clouds that accompanied them, set the stage for “On the Beach,” for it is in the mushroom clouds the end of the human race is spelled out in no uncertain terms from the beginning of the novel to its conclusion.

The Characters

Dwight Towers - Captain of the American nuclear submarine. Dwight is a practical, rational man, he continues to believe that his family is still alive. 

Moira Davidson - Single socialite young woman, dances and drinks as approaching radiation means she won’t fulfill her dreams. 

Peter Holmes - A lieutenant commander in the Royal Australian Navy. He fears a mission at sea would mean his wife and young baby may not be alive when the ship returns to Australia. 

Mary Holmes - Peter's wife. she refuses to accept that her world is coming to an end. 

 John Osborne - Scientist with CSIRO, the Commonwealth Scientific and Industrial Research Organization, faces the reality of his impending death. He is assigned to the mission the submarine makes and later participates in a road race in his Ferrari. There are others, most of whom play some important part of the story, but the main plot is centered around this ensemble cast with no real main character(s) assuming lead roles.

The Story

     Dwight Towers is the last US Navy commander and arrives in Melbourne because the Northern Hemisphere has been contaminated with radiation and everybody north of the equator has perished in several thousand atomic detonations. The fallout cloud slowly descends south toward Australia and those who remain alive count the days until their assured deaths. 

      Day to day existence goes on as normal people consider planting flowers, going on their vacations and shopping as if nothing was going to happen. In the meantime, unexpected developments create a set of circumstances that affect all of the characters in the ensemble. Towers is ordered to sail to Seattle where a mysterious Morse code signal has been retransmitted continuously but with no intelligible meaning. It didn’t make sense. 

     The submarine, the USS Scorpion, nuclear powered, had the capability to stay underwater long enough to make the journey up the Australian coast to check on the progress of the deadly cloud closing in on Melbourne, enroute to Washington state where the signal was being transmitted. Peter Holmes and John Osborne were both tasked to go along on the mission to gather data for the Australian navy. 

Moira

     The socialite Moira Davidson refuses to accept her fate as Dwight attempts to explain to her in detail the problem. 

      “There never was a bomb dropped in the Southern Hemisphere,” she said angrily. “Why must it come to us? Can’t anything be done to stop it?” He shook his head. 

     “Not a thing. It’s the winds. It’s mighty difficult to dodge what’s carried on the wind.” “It’s not so difficult to understand, really,” he said. 

     “In each hemisphere the winds go around in great whorls, thousands of miles across, between the pole and the equator. There’s a circulatory system of winds in the Northern Hemisphere and another in the Southern Hemisphere. But what divides them isn’t the equator that you see on a globe. It’s a thing called the Pressure Equator, and that shifts north and south with the season. 

     In January the whole of Borneo and Indonesia is in the northern system, but in July the division has shifted away up north, so that all of India and Siam, and everything that’s to the south of that, is in the southern system. So, in January the northern winds carry the radioactive dust from the fall-out down into Malaya, say. Then in July that’s in the southern system, and our own winds pick it up and carry it down here. That’s the reason why it’s coming to us slowly.”

 

     She turned to him in the starlight. “I’m never going to get outside Australia. All my life I’ve wanted to see the Rue de Rivoli. I suppose it’s the romantic name. It’s silly, because I suppose it’s just a street like any other street. But that’s what I’ve wanted, and I’m never going to see it. Because there isn’t any Paris now, or London, or New York.” 

       He smiled at her gently. “The Rue de Rivoli may still be there, with things in the shop windows and everything. I wouldn’t know if Paris got a bomb or not. Maybe it’s all there still, just as it was, with the sun shining down the street the way you’d want to see it.” She got restlessly to her feet. 

      “That’s not the way I wanted to see it. A city of dead people.”

Seattle

Dwight went forward and found Lieutenant Sunderstrom sitting in the radiation suit complete but for the helmet and the pack of oxygen bottles, smoking a cigarette. 

     “Okay, fella,” he said. “Off you go.” He went upstairs and found the main transmitting room. There were two transmitting desks, each with a towering metal frame of grey radio equipment in front of it. One of these sets was dead and silent, the instruments all at zero. The other set stood by the window, and here the casement had been blown from its hinges and lay across the desk. 

     One end of the window frame projected outside the building and teetered gently in the light breeze. One of the upper corners rested on an overturned Coke bottle on the desk. The transmitting key lay underneath the frame that rested unstably above it, teetering a little in the wind. He reached out and touched it with his gloved hand. The frame rocked on the transmitting key, and the needle of a milli-ammeter upon the set flipped upwards. He released the frame, and the needle fell back.

The End        

     Following a rather exciting road race in which Osborne is the victor, the novel comes to a close with all of the characters given a choice in how they want to face the end. The first option is to wait it out and suffer the effects of a terminal dose of radiation, which the author shares in a detailed description. The second option is far more acceptable in the form of cyanide pills neatly packaged to soothe the nerves. 

     As the cloud descends, the lines get longer at the locations where the pills are being distributed. The Holmes are forced to decide how to take the life of their newborn child before taking their own. Moira also accepts her fate stoically and Commander Towers has made the decision to take the USS Scorpion out to sea and with the crew on board, sink it. His crew agrees to go down with the ship. Moira watches from her car on a cliff as the submarine sails away, then takes the pill.

Analysis

     IMAGE: The novelist creates striking scenes throughout, with detailed descriptions of not just ordinary life as the cloud slowly descends on southern Australia, but the complexity of the surviving military staff to understand its implications. 

     The mission to Seattle is a stark and intriguing center point of the novel that illustrates fate at its finest hour, the Morse code key with the ghost radioman in the form of a dangling windowsill. Note here that the feature-length film directed by Stanley Kramer and released in 1959 by United Artists failed to capture the essence of this most striking imagery of the entire novel, opting for the coke bottle variation instead. It was impossible to recreate visually, only in fictionalized writing.         

     VOICE: The characters clearly show mixed emotions throughout the novel, as seen in the brief scene featuring Dwight Towers and Moira Davidson. The sub commander trying to calm the socialite who is hysterical because she has never been to Paris and now can never go. It stands as a chilling reminder just how quickly fate can turn against even the most self-assured person. 

     CHARACTER: Although many of the ensemble principals appear a little too predictable and stock, they all have moments of expressing their emotions, self-doubts, shortcomings with facing an unfulfilled life. They blame everyone but themselves for the impending doom, especially those who lived in the Northern Hemisphere, where the war began. Others, such as the higher echelon military characters, remain cool headed, still searching for solutions until the very end, knowing all too well there isn’t one. 

      SETTING: Faraway places devastated by thousands of atomic detonations are brought to life and reflected diametrically opposite to the serenity of Australia, the last bastion for humanity. The ominous cloud hangs over not just most of the world but also in the minds of those few remaining who are doomed by its semi-invisible presence, read on a Geiger counter. 

     RESOLUTION: The novel ends predictably with the last of the ensemble one by one signing off. 

Credits

Bio & Photo, http://www.nevilshute.org/ 

Sputnik, https://www.razorrobotics.com/russians-launch-sputnik-satellite-into-space/ 

Berlin Wall, https://news.usc.edu/71860/remembering-the-night-the-berlin-wall-went-up-and-when-it-came-down/ 

Khrushchev, https://writingqueen.wordpress.com/2018/04/30/global-communication-today/ 

A-bomb photo, https://www.mun.ca/biology/scarr/A-bomb_testing_1957.html 

Character Review Notes (edited), https://www.sparknotes.com/lit/onthebeach/characters/ Story Summary (edited), https://www.enotes.com/topics/beach 

On The Beach, e-Pub, https://www.fadedpage.com/showbook.php?pid=20131214 

Coke Bottle, http://mark-markmywords.blogspot.com/2014/09/movie-review-stanley-kramers-on-beach.html 

Film Poster, http://www.gstatic.com/tv/thumb/v22vodart/3072/p3072_v_v8_aa.jpg

---