The Economics of Ello’s Manifesto

Ello burst onto the scene in these past weeks, in part driven by its manifesto, which began with a salvo: Your social network is owned by advertisers. Ello is offering a different way: We believe a social network can be a tool for empowerment. Not a tool to deceive, coerce, and manipulate — but a place to connect, create, and celebrate life. The aim of Ello is straightforward. They hope to create the kind of progressive social networking site that has been the dream of the digiterati for ages, and in the process become a contender to Twitter and Facebook.

Ensuing responses from some of the brightest minds in tech have been disparate, but have generally sparkled with optimism. Nathan Jurgenson took a reformist view, hopeful of Ello as social media of a different politics, but “tired of social technologies being treated as far more technology than social, where the coders and designers run the thing and those who study social relations, study sex and gender and race and sexuality and identity and culture and power and domination and vulnerability and resistance and everything else hope to get our opinions heard later on.” Matthew Ingram was enthralled by all of the stories, because “they force us to think about how the social web works, and provide a tantalizing glimpse of what might be possible if they worked differently.”

As a voracious consumer of social media news and analysis, I have observed that the disappointment in the social web is clearly palpable. Both the academic and the mainstream criticism follows the same general line of reasoning. The spaces have become too crowded, too commercialized, too whitewashed. Much like Times Square on a late summer afternoon, the web has filled up with tourists who brought with them banality and bright neon signs.

But users congregate on the current social networking sites because so many others are also there. Content drives the value of Facebook and Twitter. The more people that are on a site, the more content there is, and thus higher overall value of the site to an individual. Economists call this effect a network externality, because one person’s use of a site has positive external benefits for everyone else. Though it is hard to quantify, there is a cost to switching from Facebook and Twitter to another site, not just in terms of time but also in missed opportunities for content. To use the parlance, consumers face significant switching costs.

As an upstart, Ello needs to attract users to create content and start the virtuous cycle of content creation. The emancipatory politics evidenced in the manifesto is an appeal that achieves this goal. It echoes with utopian elements that stretch back to the early days of the Internet when it was populated with the misfits, radical libertarians and Internet exceptionalists. Ello’s manifesto is also part technological prophecy. Professor Paul Duguid has explored this topic in depth, noting that these visions of the future depend both on supersession, “the idea that each new type vanquishes or subsumes its predecessors,” and liberation, “the argument or assumption that the pursuit of new information technologies is simultaneously a righteous pursuit of liberty.” Ello’s manifesto has both.

Wrapped in technological progressivism, Ello has been able to garner broad attention from the digital commentariat, pull in new users, and encourage those early users to create content. As Ingram and Jurgenson remind us, now is a time of creation and imagination for Ello, which, practically speaking, translates into content production, the lifeblood of any site. Taken in whole, the bent of the manifesto has been effective in reducing switching costs by spurring on quality content.

Yet, Ello faces a much larger hurdle in attracting early adopters and the early majority, who aren’t as concerned for the politics and privacy implications of current sites. While Facebook deserves its own share of criticism, most digital lives are far less political. Sharing pictures. Watching videos. Commenting on threads. These are the events that make up a social media life. Time and again, when users are presented an honest deal, when they are served advertising within bounds for various benefits, they take it. Consumer preferences and experiments reveal that most don’t consider the current paradigm especially costly.

And of course, while Ello sparks imagination, we shouldn’t be too hopeful that a social networking site will refashion social relations. As professor Tarleton Gillespie notes, “Imagining that new technology will rescue us from our persistent social ills allows us to momentarily forego the much harder questions.” Indeed, he is right to point out that we need to explore how the problems work and persist throughout society to find solutions. Technologies offer new opportunities for expression and connection to discuss the social ills, but they are not going to solve them.

Is this the beginning of Ello’s moment? Only time will tell. But it is clear that they have the manifesto to get their foot in the door.

Senior Research Fellow | Center for Growth and Opportunity | @WillRinehart

Senior Research Fellow | Center for Growth and Opportunity | @WillRinehart