Category Archives: economics

The Structural Origins of Gamergate

“The AAAs *are* supporting Gamergate, at least tacitly. They don’t want the journos to gain any more influence (or to stop losing influence), and they loathe this pseudo-academic “critique” stuff just as much as your average gamer. The thought of having to kiss the ass of some PhD in order to gain an Indie or Social Justice imprimatur is insulting to them. They’ve got money to make. So by remaining silent on Gamergate and having IGN do the pageantry of adopting an ethics policy (no skin off their nose), the AAAs signaled that they were not in alignment with the journos. And they aren’t. They are happy to see Gamergate take these people on–and that enrages the journos all the more. This wasn’t a planned strategy on behalf of the AAAs, but it was an easy call to make once Gamergate was in play.”
David Auerbach, Sour Gripes: E3, the AAAs, and the Journos

Last year the most inexplicable event in the history of American publishing happened. Multiple game-enthusiast publications, in a coordinated campaign, published nearly identical editorials, with headlines like “Gamers are dead,” “Gamers don’t have to be your audience,” “Gamers are over, etc.”

gamasutra_gamers_are_over

Replace gamers with “golf-enthusiasts,” or “yacht owners,” or “biblical archaeology nuts,” or “railroad modelers,” or any other hobby you can think of. Never before, in American publication history, had publications that catered to hobbyists condemned their own hobby.

This was the origin of gamergate. There were events before (a sex-for-publicity microscandal in the hobby before hand, some tweets by actor Adam Baldwin afterwards), but those fit neatly into the daily churn of pop culture.

Hobbyist publications condemning their own hobby doesn’t “just happpen.” Something like gamergate requires professional media manipulators, and a failed revolt within a sector of the industry.

This is how it happened:

The games industry historically has five fundamental groups operating with in

  • Multimedia creators, such as AAA development studios (Electronic Arts ,etc) and indie studios of one or a few employees
  • Text and graphics creators, such as AAA magazines and indie hobbyist publications
  • Media consumers, who are gamers and game enthusiasts
  • Outrage entrepreneurs, attempting to extort various members of the three above groups for their own purposes
  • Gamers, who are customers that buy games

In the 1990s the barriers to capital for the multimedia and graphics creators were relatively high. It was (and is) expensive to run a AAA games studio. Running a magazine involved highering a lot of people, negotiating wiht book stores for shelf placement, and a large budget for printing and postage. Development tools were relatively unfriendly, and it was difficult to collaborate with others who were not in your same town. “Indie” games largely consistent of wargames, RPGs, and direct translations of these genres.

The only outrage entrepreneurs at this time were cultural conservatives such as Jack Thompson. They were alienated from all aspects of the industry, and so had to attack it (unsuccessfully) from the outside.

Gaming Industry Then and Now Slide1

Then, the internet happened.

The internet had a lot of consequences, all relating to lowering capital requirements as a barrier to entry:

  • News become “free” leading to the closure or consolidation of the old-line AAA publishers
  • Cheap “indie” or “clickbait” publications arose with no physical presense
  • Platforms with consumer-side economics of scale (like Twitch and Youtube) arose that lets gamers and game-enthusiasts self-publish to a broad audience, with no staff

But publishing a AAA game didn’t become cheaper. Instead (as gaming became increasingly hit driven, and the internet allowed the creation of marketing echo chambers) it became more expensive. Instead of both AAA game publishers and AAA news publishers both having ‘monopolies’ and some degree of equivalence, the remaining news publishers had a stark choice to make:

1. the transition to a “USA Today” of soft news managed by AAA game studios (the model adopted by the most popular online publisher, IGN, and the sole survivor of the print era, PC Gamer)
2. reducing expenses and dependency on AAA publishers for access by allowing writers more freedom; non-financial contributions in allowing writers to use their positions to push pet political interests, as long as the headlines geneated clicks (the model adopted by Gawker, Vox, and other “indie” or “clickbait” sites)

A second-order effect of the ultra-low cost model adopted by Gawker and Vox is that it enabled outrage entrepreneurs for the first time to target writers within the industry. In short order a new generation of such entrepreneurs. Its perhaps not a coincidence that the most successful such entrepreneur is rightist-become–leftist Jonathan McIntosh: as the audience for gaming outrage changed, so the political stances of the entrepreneurs changed.

Yet these “indie” or “clickbait” outlets faced the even lower-fost competition of self-publishing gamers on Youtube and Twitch. And there was a real culture clash. The sort of person who happily plays videogames and talks about videogames in a second or third tier city in England or Wisconsin is not the sort of person who moves to Brookyln or San Francisco to work for Vox and Gawker. Their sense of mission is different (evangelize how fun games are, v. share social commentary learned in university), their sense of persecution is different (memories of being bullied or mocked for a hobby, v. academic concerns learned in university), their sense of villains are diffrent (those who would prevent them from enjoying their hobby, v. rich businesses and capitalists).

This was gamergate: a “goat rodeo” built on an ill-defined culture clash but containing many petty grievances and placing indie developers at the center, with their presses and audiences eager to hear them praise or condemn any given side. The chaos of the situation lead to the bitterness, a civil war within the community.

Gaming Industry Then and Now Slide2

In internet debates, the larger community centered around AAA publishers is sometimes called “gamers,” and the rival community of outrage entrepreneurs and clickbait journalists “SJWs” or “Social Justice Warriors,” but these are ideological terms that hide the materialist structure of the unfolding drama. AAA publishers like money, and so have friendly relationships with light media which celebrates their industry; with self-publishers who act as category captains for their products, and of course with their final customers, gamers. Outside, and looking in, are the outrage entrepreurs, now joined by clickbait journalists who due to economic reasons have become their audience and mouthpiece.

Indie Authors, Gamers, and Monopoly Censorship

Book publishing and game news journalism are both being disrupted by “user generated” platforms that have consumer-side economies of scale.

For book publishing, two of these platforms are Kobo and Amazon Kindle. The users/producers of these services are called “indie authors.”

For game news publishing, two of these platforms are Twitter and Reddit. The users/producers of these services are called “gamers.”

While these services are united in their hostility to other types of publishing, each still faces competition from other “user generated” platforms with consumer-side economies of scale.

For instance, in book publishig, Kobo’s President Michael Tamblyn is warning “indie authors” that Amazon Kindle’s interest is not theirs, and Amazon Kindle could use market power to take away their profits and silence them.

Meanwhile, in game news publishing, this form of censorship has been observed. Early on in the #gamergate scandal, reddit began censoring discussion of collusion between Vox Media, Gawker Media, and game developers. This lead to the discussion to shift to twitter, a rival platform.

The power that monopolies have to extract all profits and control the agenda is called wholesale transfer pricing power.

If Amazon achieves a monopoly in “indie author” book publishing, they would have wholesale transfer pricing power, be able to strip all economic profits from indie authors, and censor indie authors at will.

If Reddit would achieve a monopoly in “gamer” news publishing, they would have wholesale transfer pricing power, be able to strip all economic profits from indie authors, and censor gamers will.

The only difference is that this shift from command-and-control to user-generated publishing is more advanced in game news than it is in books.

The today of gamers is the tomorrow of indie authors.

That’s why the gamergate scandal is the biggest news in publishing.

The Life Cycle of a Monopoly Enterprise

Every monopoly is born, lives, and dies.

First, a monopoly enterprise is born thru:

  • organic growth of one competitor
  • a trust between several competitors
  • an outside firm using cash to buy a monopoly position
    government fiat
  • a privatization of a governmental function

Standard Oil was created as a trust. China Mobile had originally been a branch of the government in China.

Second the monopoly enterprise acts like a monopoly by:

  • Enjoying economies of scale
  • Extracts economic profit
  • Experiences regulation by the political economic system, which itself requires the monopoly to:
    • flatter existing power-holdings
    • Assist other stakeholders in achieving their objectives
    • Avoid enraging any stakeholder that can kill the monopoly

I’ve previously discussed dangers that monopolies face.

Third, the monopoly enterprise loses monopoly status and capitulates. This can be because of:

  • Not understanding the market
  • Not being empathetic to other stakeholders

The unpopularity of the term “monopoly” comes from this process of capitulation from a consumer’s perspective.

Following capitulation, the monopoly might be

  • Broken up into multiple successor firms
  • Reduced to single competitor firm in a market
  • Incorporated into the government

At some point in their history, Hudson’s Bay Company and General Motors both operated as monopolies, and all have now been reduced to being single competitors in their respective markets. AT&T used to be a monopoly and was broken up into several successor firms.

China: Past, Present, and Future

Until Deng Xiaoping, there had been no wise Chinese leaders in the 20th century… only misguided idealists.

Former British Prime Minister Tony Blair sums it up well (h/t Tom Barnett)

Prior to 1949, China was a deeply riven and unequal society. There was a reason for the civil war and the multiple invasions of foreign powers. There was a reason for the upheaval of 1949. In the first 30 years came the completion of the revolution and the establishment of the People’s Republic

When you read about the Army-Parties in Iraq, and satirical pieces about “Afghan Presidential Election A Celebration of All Forms of Government,” one reads headlines that could have come from China in the 1910s, 1920s, 1930s, or 1940s.

The great men in China before Deng Xiaoping accomplished a lot, but may have destroyed even more

Sun Yatsen smashed the apartheid Qing dynasty, and replaced a slowly modernizing force for peace with political chaos and famine. Sun was never able to hold power, due to…

Yuan Shikai, who may have been the most able leader of the century. Originally the Imperial Governor of the capital district, Yuan negotiated the transition from the Empire of the Great Qing to the Republic of China. Using the Vatican City-State as a model, the Imperial Household obtained foreign head-of-state status in Beijing, with the Forbidden City and Summer Palace as sovereign territory. Yuan proceeded to throw all his contributions away by declaring himself emperor. The national ourage replaced revolutionary chaos with warlord barbarism. This was ended by…

 

Chiang Kaishek, who abolished the warlords system, largely at the price of redefining “loyal” warlords as general. Throughout World War II he acted as he was — the most powerful warlord among many — and kept of a de jure resistance against Japan while primarily struggling against the Communist insurgents and his generals (neither an exhaustive or a discrete set of adversaries). Chiang’s misrule lead to the collapse of his armies and the success of…

Mao Zedong, who lead three popular revolutions, only the first of which was good for China. In the Democratic Revolution (began in 1949), the one-party dictatorship of the KMT was replaced by “New Democracy,” in which a multiparty, corporate system of government would exist under the hegemony of the Chinese Communist Party. Using loyal subordinates, Mao pacified the countryside and brought the first peace China had known since Sun Yatsen. Mao immediately threw this way, first in 1950 with the Korean War (which singlehandidly sunk hopes for an early reunification with Taiwan), then with the Socialist Revolution in 1952 (in which “New Democracy” gave way to a clone of Sovietism), and then the Cultural Revolution (when Mao wisely recognized the unpopularity with Sovietism, and replaced it with “great chaos under heaven.”)

Following all these men, Deng Xiaoping took power, and introduced market reforms along with law and order.

Market reforms and the rule of law brought China to greatness.