Facebook and Instagram as company towns  APR 11 2012

One of the more thought-provoking pieces on Instagram's billion dollar sale to Facebook is Matt Webb's Instagram as an island economy. In it, he thinks about Instagram as a closed economy:

What is the labour encoded in Instagram? It's easy to see. Every "user" of Instagram is a worker. There are some people who produce photos -- this is valuable, it means there is something for people to look it. There are some people who only produce comments or "likes," the virtual society equivalent of apes picking lice off other apes. This is valuable, because people like recognition and are more likely to produce photos. All workers are also marketers -- some highly effective and some not at all. And there's a general intellect which has been developed, a kind of community expertise and teaching of this expertise to produce photographs which are good at producing the valuable, attractive likes and comments (i.e., photographs which are especially pretty and provocative), and a somewhat competitive culture to become a better marketer.

There are also the workers who build the factory -- the behaviour-structuring instrument/forum which is Instagram itself, both its infrastructure and it's "interface:" the production lines on the factory floor, and the factory store. However these workers are only playing a role. Really they are owners.

All of those workers (the factory workers) receive a wage. They have not organised, so the wage is low, but it's there. It's invisible.

Like all good producers, the workers are also consumers. They immediately spend their entire wage, and their wages is only good in Instagram-town. What they buy is the likes and comments of the photos they produce (what? You think it's free? Of course it's not free, it feels good so you have to pay for it. And you did, by being a producer), and access to the public spaces of Instagram-town to communicate with other consumers. It's not the first time that factory workers have been housed in factory homes and spent their money in factory stores.

Although he doesn't use the term explictly, Webb is talking about a company town. Interestingly, Paul Bausch used this term in reference to Facebook a few weeks ago in a discussion about blogging:

The whole idea of [blog] comments is based on the assumption that most people reading won't have their own platform to respond with. So you need to provide some temporary shanty town for these folks to take up residence for a day or two. And then if you're like Matt -- hanging out in dozens of shanty towns -- you need some sort of communication mechanism to tie them together. That sucks.

So what's an alternative? Facebook is sort of the alternative right now: company town.

Back to Webb, he says that making actual money with Instagram will be easy:

I will say that it's simple to make money out of Instagram. People are already producing and consuming, so it's a small step to introduce the dollar into this.

I'm not so sure about this...it's too easy for people to pick up and move out of Instagram-town for other virtual towns, thereby creating a ghost town and a massively devalued economy. After all, the same real-world economic forces that allowed a dozen people to build a billion dollar service in two years means a dozen other people can build someplace other than Instagram for people to hang out in, spending their virtual Other-town dollars.

Also worth a read on Facebook/Instagram: Paul Ford's piece for New York Magazine.

Facebook, a company with a potential market cap worth five or six moon landings, is spending one of its many billions of dollars to buy Instagram, a tiny company dedicated to helping Thai beauty queens share photos of their fingernails. Many people have critical opinions on this subject, ranging from "this will ruin Instagram" to "$1 billion is too much." And for many Instagram users it's discomfiting to see a giant company they distrust purchase a tiny company they adore - like if Coldplay acquired Dirty Projectors, or a Gang of Four reunion was sponsored by Foxconn.

So what's going on here?

First, to understand this deal it's important to understand Facebook. Unfortunately everything about Facebook defies logic. In terms of user experience (insider jargon: "UX"), Facebook is like an NYPD police van crashing into an IKEA, forever - a chaotic mess of products designed to burrow into every facet of your life.

Read more posts on kottke.org about:
economics   Facebook   Instagram   Matt Webb   Paul Bausch   Paul Ford

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