Power to the People
The people formerly known as consumers are more powerful than ever, but the digital platforms that enable their power are even more powerful. Still, consumers need to exercise their power.
Old farts like me probably remember John Lennon's song Power to the People, released in 1971 as his fifth solo single. To be fair, back then I wasn't even two years old. The same-titled political slogan is of course much older than the song. But only three years after Lennon, in his 1974 book Computer Lib, Ted Nelson connected computer use with political freedom with the rallying cry “Computer power to the people! Down with the cybercrud.”
Later in the game, the digital industry shifted this idea of empowerment from politics to consumerism, turning people into consumers. Still, there has been a considerable power shift away from corporations and to the consumers, thanks to the internet in general and social media in particular. What once was a linear, one-way relationship between producers and consumers turned into a two-way and even multi-way conversation.
Markets are conversations is a famous phrase from the Cluetrain Manifesto, published in 1999. What the authors probably didn't expect at the time was the scenario we are witnessing today: Four companies essentially own the markets, and thus also the conversations and the relationships. That's a far cry from the decentralised internet that the founding fathers (yep, mostly men) had in mind.
Computer users, to borrow a term from the early days, and consumers now find themselves struggling with the GAFA behemoths: Through network effects and the power of digital platforms, Google, Apple, Facebook, and Amazon are effectively dominating more and more markets, owning consumer relationships and acquiring unprecedented power not only over consumers, but also over the rest of the economy.
Consumers not only feel increasingly trapped into the GAFA platforms, they essentially are. And it's the same with businesses: They also have no other choice than playing by the rules set by the GAFA companies. No wonder there are more and more lines drawn to the history of Standard Oil (broken up in 1911) and the Bell System (broken up in 1982/1984), two powerful precedents. Will we see the breakup of GAFA in our lifetimes?
Besides antitrust and other forms of regulation, there is still consumer power. An influential 2013 article in the Journal of Interactive Marketing describes four sources of consumer power: While demand- and information-based power is individual, network- and crowd-based power is collective. Granted, this distinction is a bit academic, since the purchasing (or boycott) power of any given individual is limited, while aggregated consumer decisions have considerable impact.
Thanks to the internet, e-commerce, and the GAFA platforms, retailers got increasingly disintermediated, while consumers and platforms both became more powerful than in pre-digital times. Thanks to information-based power, consumers are now better informed about products and services, while they produce relevant content themselves, e.g. product reviews, which further add to their power. The conversational element is strengthened, control shifts from the marketer to the consumer.
On the other hand, businesses now gain power through the information (i.e. data) consumers produce. Personalisation, profiling, filter bubbles, or big data all point in the same direction – towards greater control for the business. Consumers might in turn lessen transparency to preserve their power. Networks like Facebook enable the next round of power shifts, giving consumers the power of networks and connections, e.g. for content distribution.
But Facebook itself became powerful as well, through the same network effects consumers enjoy. Users in turn feel entrapped, addicted, or see the distinction between reality and virtual reality blurring. And marketers regained power through better targeting. Enter crowd-based power. That's the endgame, leveraging all sources of power to maximise consumer power: demand, information, and network. Examples include Wikipedia, Kickstarter, Amazon Mechanical Turk, or Etsy.
We are dealing with some fundamental paradoxes of technology, as described by David Glen Mick and Susan Fournier in their 1998 paper, published in the Journal of Consumer Research. In our case, it's the paradox of empowerment and disempowerment, taking place at the same time and through the same digital products.
Technology can facilitate independence or fewer restrictions, and technology can lead to dependence or more restrictions
The master-slave relationship between human beings and technology works both ways and is reversible.
(By the way, the other seven paradoxes discussed by Mick and Fournier are also worth keeping in mind.)
This leaves us with ambivalence. The people formerly known as consumers are more powerful than ever, but the digital platforms that enable their power are even more powerful. Still, consumers need to exercise their power, even if they end up like Don Quixote, fighting the windmills of Google, Apple, Facebook, and Amazon. We'll only know what we can accomplish when we at least try.