Strolling through informatics #31 – Opportunities for everyone or just a few?

previous #30 ––– next #32

by Enrico Nardelli

(versione italiana qua)

We recalled, at the end of the previous post, how major technology multinationals typically tell us only about the positive aspects of their latest digital solutions to convince us to adopt them, while ignoring or downplaying the negative ones.

One of the first cases where this happened was at the beginning of this century with the widespread adoption of the Internet. At that time, people were talking about the theory of the "Long Tail," which became widely popular back then, perhaps also because there was an attempt to make sense of investments in information technologies after the burst of the dot com bubble that occurred between 2000 and 2001. According to this theory, the network's ability to quickly spread purchasing recommendations to people with similar tastes and preferences, coupled with overcoming physical limitations on warehouse inventory and the number of physically reachable users, would have opened up exploitation possibilities for many entertainment products (from books to records to films) that were unattainable with traditional models. The situation would have shifted from scarcity, where only a few authors or bestseller producers achieved fame and wealth, to abundance where many content creators would be assured a more than satisfactory level of earnings. The reason, it was explained, is that people want to stand out and not just follow trends, and therefore are interested in niche editorial products anyway. The network would have made it possible, regardless of how small this niche was, to find its inhabitants and sell them products. This wasn't possible, due to the physical constraints illustrated above, with the previous distribution model. This vision turned out to be only half true.

The distribution intermediaries for such editorial products, each of which became a monopolist in its sector, found ways to profit from selling even very few copies (especially if, as in the case of music and videos, the products became completely immaterial, thus with negligible management costs and virtually zero storage costs). This is explained by the fact that – in aggregate – few copies for thousands or tens of thousands of products still generate significant economic value for distributors. On the other hand, however, for most content creators, the revenues from these few copies sold make no significant difference. The phrase "The biggest money is in the smallest sales" became true, but only for the major players in this commercial sector. The prosperity promised by Long Tail theory became reality only for a few.

Compared to what happened in the pre-Internet era, popularity has become even more unbalanced. On Spotify, the music streaming service with the largest market share (32% in 2021), 90% of authors' revenues go to only 1.4% of all those present on the service, with an average per capita earning of $22,395 USD per quarter. The remaining 98.6% of authors (about 3 million) earn an average of $36 USD each in the same time period.

I don't think there's anything inherently wrong with this mechanism. Extreme talent is very rare and I think it's right that it should be adequately compensated, especially because, in the end, it's the audience that voluntarily chooses to pay out of their own pocket. What I do think should be done from a social standpoint is to properly inform young people – who must decide which path to choose for their future – about the extreme imbalance that characterizes these types of sectors. Conversely, often the encouragement that comes from the media world is aimed at convincing people that success and fame (and earnings) are within everyone's reach if they're willing to commit. Certainly, without constant and deep commitment, it's unlikely to reach well-paid job positions (unless one is favored by their social class), but in the creative content sector, commitment, while necessary, is a much less determining factor.

As Nassim Taleb aptly pointed out in his famous book "The Black Swan," success achieved in this type of activity is highly dependent on chance, even when one possesses good innate talent. I discuss this in this context because the entertainment sector has become economically increasingly relevant, thanks also to its suitability for distribution through digital technology. This further increases the imbalance in income distribution. Therefore, it's appropriate for a society as a whole to guide young people's choices toward "normal" professions, where one is essentially paid proportionally to the amount of work performed.

By doing this type of work, which is practically the only type that was considered by the vast majority of young people until about a century ago, it's unlikely to become rich, but it's also unlikely to become poor. In this sense, it's a socially desirable situation because it minimizes the worst-case scenario that people might face.

If 100 young people want to be writers and dedicate their lives to this, it's quite plausible that by mid-life at most ten will be very rich while the remaining 90 will struggle with survival jobs. Conversely, if 100 young people want to be office workers, the most plausible result is that only about ten of them will still be looking for satisfactory employment by mid-life, while the remaining 90 will have steady jobs and will have started families.

It's evident that from a social standpoint, the second situation, where income inequalities are much less pronounced, is far more desirable than the first. This is also confirmed by the OECD (Organization for Economic Cooperation and Development). In the 1980s, the richest 10% of the world's population had an income only 7.1 times higher than that of the poorest 10%. By 2015 it had become 9.6 times higher (and I'm convinced that the last ten years have further increased this imbalance). As also documented by the OECD, between 1990 and 2010, OECD countries collectively lost 4.7 percentage points of total growth because of this. California is often considered the US state to look up to, for its ability to combine social tolerance and technological innovation that has led it to be, paradigmatically, the embodiment of the "American dream" and therefore, more generally, of the universal hope for a better future. But the level of social inequality in that state is greater than that of Mexico, on par with Guatemala and Honduras. Normalized for cost of living, the poverty rate is the highest of all US states. In the area that includes San Francisco and its surroundings, one of the most dynamic and developed in all the United States, 76,000 millionaires and billionaires live but, at the same time, 30% of residents receive economic assistance from public or private entities.

It's this situation that has led several authors to speak of the contemporary era as neo-feudalism or techno-feudalism, based not on land ownership, but on the quantity of digital data. I describe this phenomenon in more detail in my book The Computer Revolution, which risks not only setting back people's well-being by centuries, but also regressing society's structure from that "rule of law" which was essential for the birth of modern democratic societies to a "rule of individuals" that characterized the long centuries in which individuals were enslaved, generation after generation, to the whims and caprices of their lord.

We'll explore in the next post, which will conclude this stroll, how a new political vision of digital society is necessary to counter this drift.

[[The posts in this series are based on the Author's book (in Italian) La rivoluzione informatica: conoscenza, consapevolezza e potere nella società digitale, (= The Informatics Revolution: Knowledge, Awareness and Power in the Digital Society) to which readers are referred for further reading]].

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The original version (in italian) has been published by "Osservatorio sullo Stato digitale" (= Observatory on Digital State) of IRPA - Istituto di Ricerche sulla Pubblica Amministrazione (= Research Institute on Public Administration) on 7 May 2025.