Apex capitalism

The Apple Vision Pro represents the end of something. Or possibly the beginning. It’s an apex product from an apex economy.

Stylised front-on photo of Apple Vision Pro VR headset against a black background

(updated on 10 June with some new market valuations)

What we know about capitalism – liberal democracy, Western economic dominance – suggests some kind of discontinuity is coming, some kind of historic break or epochal crisis. A lot of people accept this. Meanwhile, the happy plateau we were expecting from the 21st Century never materialised and the steady growth in incomes and wellbeing we were promised stopped years ago.

The exception

Except in America. Since Covid and the economic shock of the Ukraine war the US economy has essentially entirely rebounded. Growth is up, jobs are up and inflation is close to the Fed’s 2% target. This is not, of course, to say that there’s anything ideal about the US economy or permanent about this upturn. And the paradoxes of US economic power – out-of-control poverty and precarity, healthcare and housing in permanent crisis and so on – are self-evident. The American economy, though, continues to have all sorts of advantages, advantages that compound over time and help us to explain, er, the Apple Vision Pro:

The USA is the largest producer and the largest exporter of both oil and gas. Until 2016 it was literally illegal to export oil from the USA – a remarkable, unprecedented change in direction that is probably the biggest single contribution to the economy’s current robustness. The irony of the fact that the US economy is switching to renewable energy more quickly than anyone anticipated and thus needs a lot less of this oil and gas domestically is, of course, profound.

The country has the largest agricultural sector in the world and is the largest exporter of food. Huge expanses of fertile land of many different kinds, intensive production methods and light regulation (and huge federal subsidies, natch) make food in the USA cheap and accessible. This is not secondary to America’s success. Cheap calories is the most elemental fuel for a booming economy.

The US stock market is vast and getting bigger. The S&P 500, the main index of American stocks, is worth 60% of the whole world’s market capitalisation. The numbers are bonkers. As of today (10 June 2024) the largest company in the American system (Microsoft) is worth substantially ($3.15T) more than the whole of the London stock exchange’s FTSE all-shares index ($2.43T). Every traded business in the UK added together gives you nearly one Microsoft (or one Apple, for that matter).

The country has a larger working-age population, as a proportion of the overall population, than any other developed economy and it’ll be like that for longer. There’ll be a population crunch in the USA but it’s a lot further off than it is in Europe or Asia. Flexible, available labour will continue to drive the American economy (Southern border crisis notwithstanding).

America’s domestic economy is enormous and essentially insulates the country from the vagaries of world trade. Even the biggest world economies depend much more on the continued health of all the other economies. It’s difficult to calculate the exclusively domestic component of the US economy but, in 2022, US households spent $2.39T on food in grocery stores and on eating out – roughly the GDP of Italy. 335 Million people organised into a single economy with a very high level of integration, high disposable incomes and frictionless internal trade – and now energy independence – turns out to be a big deal. The 20th Century logic of world trade is unravelling, mercantilism is making a comeback and economies are hardening their borders. The USA will hardly notice.

Lockheed Martin Tomahawk cruise missile from from below against a blue sky

The tech economy and the warfare economy. You don’t need me to tell you that the US tech sector dominates the world (see the top five stocks above – MSFT, AAPL, AMZN, NVDA, GOOGL) but the country’s military sector – manufacturing and contracting – is also vast and has the unique advantage of not really needing an export market. Plenty of F-35s and Hummers are sold worldwide but the American military buys more kit than all the other militaries put together. Since the Authorization for use of Military Force, passed by Congress a few days after 9/11 and never repealed, military manufacturing in the USA has been on a war footing, both legally and economically, an unending bonanza for the contractors and manufacturers – and for the US economy. The US defence budget for this year is $842B, somewhere between the GDP of Poland and Switzerland. If you add in export income from weapons sales, aid to other countries that returns to the USA in defence contracts and space you have an economic powerhouse unprecedented in world history – a shadow nation grounded in warfare.

And all this is essentially self-sustaining, an arrangement continually renewed by a thoroughly captured Congress: a perpetual motion money printer. If Raytheon never sold another Tomahawk missile abroad they’d barely notice. This cannot be said about other warfare-dependent nations, like the UK, where a constant stream of new beligerant dictatorships must be secured to sustain the industry. The American economy has a military economy – with investment and manufacturing on an amplified, war-footing cadence, on the scale of a large developed country – inside it. America cannot help but pull ahead of those nations lodged in the older model of a civil polity that steps up to war once or twice per century. In combination with that long list of advantages, the USA looks like the unassailable world-historical superpower to end all unassailable world-historical superpowers.

I don’t want to idealise the American economy. I really don’t. And even the most basic logic of reversion to the mean must, presumably, eventually apply. Can a single economy so enormously exceed the mean forever? A quarter of a century past the end of history – and well into the end of the end of history – can an economy expect to continue to add wealth and complexity at the same pace? Can a capitalist economy indefinitely resist collapse into a more primitive shape, a less productive form?

What’s this got to do with anything?

Well, now there’s the Vision Pro, a new product from Apple that seems to stand at the junction, right on the brink of the discontinuity. It’s evidently an extraordinary bit of kit and it has the potential to jar the matrix, change the way we think about computing, in the way the Mac did forty years ago. I haven’t even met one yet but it’s giving me the kind of tingles I got when I essentially bullied my dad into buying me a Mac Plus and when I got an iPod couriered from California before they were available in the UK.

But why all the numbers? Well, this new device is a creature of the American boom and of the spinning flywheel of the American tech innovation machine. It’s a condensation of all those advantages and all those crazy distortions. Not directly, of course – no pork bellies here, no space lasers – but the Vision Pro could not have been produced in any other economy. It combines breakthroughs in half a dozen areas. Not raw innovation – this is an Apple device after all – but brilliant integration of features developed elsewhere. And each one of these features – the gorgeous hi-res displays, the subtle and beautiful UI, the eye-tracking and gestures and all the rest – each one represents the very peak of an industrial discipline, of a software or hardware or project-management culture. There’s a level of integration and completeness that hardly any organisation could match and that really only an American organisation with access to essentially unlimited capital could fund.

In this sense, the Vision Pro seems in some way overdetermined, too richly-provisioned, too designed, too complete. And in this it really does seem like a creature of an economy at its apex, of a culture that cannot be further refined, of a state that has reached its organisational and economic peak.

But I should say that I thought this about previous Apple products too (and I have to remind you that I haven’t even seen one of these things yet so you’ll have to forgive me if when you buy yours it turns out to be a bit Russell Hobbs). I remember an uncanny feeling when I unpacked my first Mac and set it amongst all the junk on my desk in Camberwell. It seemed to possess an extra dimension of detail, of conceptual complexity. It made all the other bits of kit, even the lovely ones, like my Nikon and my Walkman, seem half-finished, barely thought-through. From another era.

On that Mac Plus I wrote my undergraduate dissertation. I’d found a quote from Jacques Derrida about nuclear war. He said that nuclear war, unlike previous kinds of conflict, would be ‘fabulously textual’, which was a phrase I loved. What he was describing was the complexity and technological density of modern weapons systems but also the layers of inscription and meaning embedded in them. I remember thinking my Mac, a product of the Silicon Valley outpost of what had already been the apex economy for decades, was definitely also fabulously textual.

  • The Vision Pro has competition and some devices – from Meta, for instance – have been around for years. They’re basically simpler and cheaper, they come from a little further back down the complexity curve and will mop up billions of dollars of business from the markets and users that can’t quite stomach the cost and complexity of the apex device.
  • Comparing market capitalisations is legit, obviously, but comparing a company’s market cap with the GDP of a country (something people do all the time because it’s kind of dramatic) less so. One is a stock and one is a flow. But, Will Davies says here, this is more appropriate than it used to be.
  • Over the long run, since the 1980s approximately, incomes in the most of the developed world have stagnated for working people. The USA is no exception.
  • This was really all triggered by an ep of the Vergecast. The breathless excitement about the Vision Pro launch was infectious (there was plenty of scepticism too) but what seemed really significant was something kind of hermetic about the discussion. I realised there was no discussion at all of the world beyond the USA (or beyond the product’s highly-paid, tech-literate customer base for that matter). I realised that, for these journalists, there was really no need to consider the world beyond at all. This extraordinary bit of kit, one of the most complex consumer devices ever launched, marrying half a dozen bleeding-edge technologies, will almost certainly produce big international sales but, to be honest, it doesn’t really need to.
  • Of course, when I linked the American warfare economy and the Apple Vision Pro it hadn’t occurred to me that there might be some more concrete connections.
  • Another trigger for this was an episode of the FT’s excellent Unhedged podcast.
  • Since the beginning of the year, Microsoft’s market cap has increased from $2.75T to $3.17T and currently stands at $3.15T – an increase of $400B, approximately the value of the top three UK businesses added together.
  • Since I published this post, Apple and Microsoft changed places at the top of the S&P more than once. Microsoft’s market cap is currently $130B larger than Apple’s. That difference is approximately today’s value of the FTSE’s third-biggest company HSBC. It’s as if non-US stock markets trade in the gaps between individual stocks on the S&P.

Podcasting—the platform battle

Picture of young man wearing headphones by Gauthier Delecroix

UPDATE 2022. I got this completely wrong – at least the bit where I decided who will win the podcast battle.

If podcasting is going to become a real business it’s going to have to leave the commercial dark ages behind, evolve some more sophisticated audio platforms and —let’s face it— pick a winner. This is the second of two posts about the evolution of podcasting. Part one is about the explosion of new formats.

How did we get here?

One of the geeky pleasures of the audio boom is the secret knowledge that the whole teetering, upside-down pyramid of podcasting stands on the back of a simple technology that’s nearly twenty years old.

It’s called RSS (which stands for Really Simple Syndication) and it was designed as the simplest possible way to share content on the web —a way to publish lists of stories so that other web sites could receive them automatically. We use the word ‘feed’ when we talk about RSS and that makes it all sound very active — as if you’re firing your content out into the cloud when you create one — but an RSS feed is really just a regularly-updated list with its own URL — a text file that’s so simple you could create one yourself, right now, if you felt like it.

RSS is simple and it’s not perfect — in its origin it was almost the definition of ‘quick and dirty’— but it’s been exceptionally effective. The fabric of the mid-period web – the explosion of sites that became the blogosphere – was essentially a product of RSS. It’s impossible to calculate the number of articles and episodes shared via RSS since the late 90s, and, although you may not know it, you’ve certainly used it — you’ll use it today, in fact.

And the lovely, unforeseeable breakthrough that made podcasting happen was a minor tweak to RSS (thank you, Dave Winer) that allowed publishers to add audio (and video) files to their article feeds. Suddenly you could syndicate your store of audio, turning it into a globally available broadcast channel with hardly any effort. Then, in 2005 when Apple allowed users to paste these RSS feeds into iTunes, the idea of ‘subscribing’ to a podcast was born and the whole thing took off.

But the simplicity that produced the extraordinarily dynamic DIY content industry we call podcasting has also radically limited it. This passive, statelesspublish and subscribe’ model means that publishers can know essentially nothing about who is on the other side of the transaction, downloading the audio. So, while creativity in podcast formats and content is essentially out of control, innovation in distribution, ad-tech and in understanding audiences has hardly begun.

The upside, of course, is that Podcastland, at least so far, is a near-Utopia for privacy and freedom fans. The simplicity of RSS effectively inoculated podcasting against intrusive ads, data harvesting, fingerprinting and the rest of the miserable ad-tech toolbox. At least for the time being, subscribing to a podcast is the least compromising thing you can do online. In the increasingly predatory 21st Century ad-tech landscape, RSS is a glorious 20th Century anachronism. Long may it last, cry the listeners.

For podcasters and advertisers, though, the technology is irritatingly non-dystopian. It lacks some really basic features that they’re going to need if it’s going to become a real business, a self-funding medium in its own right.

What’s wrong with podcasting now?

User data is laughably thin. There’s some subscriber data locked up in Apple’s servers but, even if you could get it, it’d be close to useless, at least from a voracious ad-tech perspective. Podcast owners can now get nice-looking listening graphs from Apple and your own server data will tell you how often each episode is downloaded but that’s essentially it. There is no equivalent for the insane level of detail you get from Facebook Insights or Google Analytics.

You’ll learn nothing useful about how people listen. Want to know where your subscribers listen? What time of day? What they’re doing on their phones while they listen? Are they running? Commuting? On holiday? And what else are they listening to? Sorry. Not happening (you can ask them, though).

You can’t serve ads with any kind of intelligence —no pre-rolls or mid-rolls, no dynamically served audio at all— so no holiday ads during the commute, no Bisto ads on the way home and no control over frequency or day part. No geotargeting, no retargeting, no tracking, no spookily accurate robo-ads, no personalisation of any kind. For the time being it’s mattress ads all the way down.

But, of course, this low-tech Eden—this splendid anachronism—is not long for this world. Be sure, the ad-tech is coming, and it’s not just commercial podcasters who want to personalise audio—public service media will want access to these tools too.

The new audio platforms are already here

There’s a generation of new podcast hosting platforms. They’re offering podcasters a way to understand their audiences and —finally —to make some money. These new platforms deal with the holes in RSS by, well, getting rid of it all together. Run a search at tech business portal Techcrunch for “new podcast platform” and you’ll get a list of a dozen new and evolving businesses —ACast, Megaphone, Anchor, BuzzSprout, Stitcher… The business models vary but the pitch is obvious. In a hundred boardrooms, this week, someone will say— “audio is the new video, something, something, true crime podcasts are like crack for millennials, something, something, there’s no Netflix for audio, something, something, the targeted ad opportunity is enormous, something, something…”

So these platforms are going to start acting like platforms. Expect them to fight it out for ownership of the big podcast brands —just like Amazon and Netflix do with the TV brands. The audio business is inevitably going to look more like the crazy mosaic of rights, territories and exclusive deals of the video business. Your latest binge listen will be on ACast or Apple Podcasts or Stitcher but not “wherever you get your podcasts.” And the abandonment of cuddly old, simple old RSS will result in a wave of new and more intrusive ad formats. Get ready for personalised ads, ads that know where you are, ads that follow you from platform to platform and —you’ll like this —ads you can’t skip.

Common sense suggests that even the fancy end of audio is never going to be worth more than a decent fraction of the video streaming business but the investors diving into podcasting now are serious about it and want to build a business with real scale. And, let’s be honest, it’s in everyone’s interest for them to succeed —the mattress ads are not going to sustain a heterodox commercial audio ecology for long and the planet’s already stretched public service providers certainly can’t do it on their own.

Realism (and good evidence from the rest of digital media) also tells us that although we’d love to see a hundred flowers bloom, the audio business is going to pretty quickly shake out to a small handful of big platforms —with one global player making the rules, setting prices, shaping supply.

Can we take an educated guess as to who that will be, though? Which of the handful of serious-looking platforms will dominate podcasting?

So who’s going to win podcasting?

All right, I’m just going to say it: it’s going to be Amazon (I’m taking bets —leave a comment if you want some of the action). “But hold on”, I hear you say, “Amazon’s audio platform is called Audible. It’s a repurposed audiobook catalogue and, despite years of effort, they haven’t made even a tiny dent on the non-audiobook business. An audio outsider like Amazon doesn’t stand a chance!”

You’re right, of course. They’re slow off the mark and Audible itself is a pretty charmless environment in which to win over the next generation of audio nuts. There’s even a reasonable chance that Amazon will just ignore the podcast revolution all together, write the whole thing off and focus on the Billions they make from retail, video and web services. But I doubt it. Here’s why it’ll be Amazon that wins podcasting:

They’re everywhere. Amazon apps —shopping, video, music, Kindle, Alexa —have hundreds of millions of installs between them. Installed on audio-ready devices and pre-loaded with credit card numbers and a detailed purchase history.

They have a billing relationship with millions of people. There are around 90M Amazon Prime accounts in the US and it’s estimated that each spends $1,300/year with Amazon (about a third of UK households are already paying members). Few have even a fraction of Amazon’s customer base, let alone paying customers. Audible itself is a subscription platform that’s cross-promoted to Prime subscribers and Amazon has made clever use of cross-promotion in launching a dozen other services over the years.

They know how to sell media to millennials. They’re no Netflix but Amazon Prime Video already reaches millions of people in podcasting’s demographic sweet spot. Audible, in fact, already commissions a small number of ‘original audio series’ (they don’t call them podcasts, of course) and cross-promoting them to the company’s other audiences will effortlessly produce the kind of listening figures that most podcasters would kill for.

They own the most promising new interface to the global store of audio. Echo is the best of the voice-controlled devices and it’s already in 11% of US homes (an adoption rate that looks similar to that of radio in the 1920s). Better yet, it turns out that audio is one of the most popular services among users (according to this RadioPlayer research, from the UK, radio is the most popular category of audio on ‘smart speakers’). The affordances are perfectly aligned. Who knew?

Their platform will permit all the scary ad-tech. No dependence on sad old RSS here so there’s nothing stopping Amazon from dynamically serving you ads, right into the audio stream —and all targeted with insane precision, because…

…let’s face it, they know everything. It’s not clear exactly what information the Audible app captures as you listen but it’s safe to assume that —in addition to Amazon’s detailed understanding of what you like to buy— they know where and when you’re listening, how often you listen, how far you get through a download, how many sessions it takes you to complete a listen. And it would be trivially easy for Audible to capture a more detailed picture, using the sensors in your smartphone to learn what you listen to while you’re working out, while you’re commuting, on your lunch break, in the woods, on an aeroplane, in bed, in the vicinity of a military base

This level of detail —especially if passed on to producers— would profoundly change podcasting, becoming the primary influence on choice of formats, voices, themes and styles across the business —just as it has in journalism and video. More, it might secure commercial viability for an industry that, frankly, still looks shaky.

The only question, for Amazon, is going to be “how much is this worth?” If podcasting turns out to be worth a tenth of video streaming, it might be worth the engineering and marketing effort to relaunch Audible as a podcasting platform. If it’s a hundredth, they’ll hesitate and may not even bother. And, incidentally, this may explain why Amazon has been slow to capitalise on Audible’s ubiquity. Is Amazon holding back because their data tells them that podcasting’s just not worth it? I do hope not.

Bonus episode

I’m aware that I’ve left out some fairly important platforms. Not because I don’t think they’re important, although, actually, I don’t think they are quite as important. But I accept that some of these stories are going to be as interesting and influential as the big ones above…

Spotify’s Podcast offer is pretty rich but it sits alongside music uncomfortably —and there are some pretty hideous interface issues. The Swedes are about to raise a lot of money via an unusual direct listing on the NYSE, though and they could choose to blow a chunk of that money expanding their catalogue of commissioned audio content (and tidying up the UI). That would be interesting in itself, because it would represent an opportunity for institutional and retail investors to get involved in the next generation of podcasting platforms pretty directly.

Meanwhile, Who We Be, a new podcast tied to one of the platform’s big urban music playlists and presented by British DJ and broadcaster DJ Semtex, is probably a model for the next wave of speech audio from Spotify.

Soundcloud is also a podcasting company. Their stock of audio is enormous and the “wherever you get your podcasts” model means that lots of producers publish their stuff on Soundcloud automatically. But the money Soundcloud raised in 2017 is going to be devoted to keeping the company afloat and finding new focus. Building a new podcast brand is off the to-do list.

Google’s approach to podcasting is to make it another checkbox on the long list of services you can access via the mobile app. This checkbox approach commodifies the business, though, and makes it difficult to build a big, prominent brand. But we probably shouldn’t rule them out: they’ve already commissioned at least one original podcast series (although it seems to be on hiatus).

Apple’s podcast app got better in 2017. The data available to producers also improved. And no other platform can match the support the company’s podcast teams supply to producers in big markets. The charts and category pages they curate remain the primary way of finding the good stuff for listeners. There’s an obvious opportunity for Apple to convert this epic organic advantage (and a tiny shred of that enormous cash pile) into a serious new commissioning platform —although the company’s careful progress into video commissioning is probably a good guide to how this will unfold (Apple has commissioned eight TV series since hiring Jay Hunt in October last year, though).

Smartphone apps are very interesting (they’ll need a post of their own, really). They’re interesting because they can deliver a lot of the important platform benefits —a logged-in experience, dense listening data, recommendation and discovery, even a billing relationship —while piggy-backing the existing RSS-and-string-based infrastructure. No need to reengineer the distribution layer. These apps depend on the continued availability of content via the old RSS infrastructure, though, so if the big podcasts disappear into walled gardens, their catalogues will shrink and they’ll be left with only the DIY end of the market.

The podcast category in your app store is packed with interesting apps —some of which have been there for years and some of which promise an improved experience for listeners and even some income for producers (if you’re using one of these apps and you like it, leave a comment —I’d love to know which apps are doing this right).

The podcasting boom will support a complex services ecology. Lots of smaller businesses —usually with a national or niche focus —are providing services to the flourishing DIY end of the business. Hosting, audience measurement, editing, audio optimisation and —in some cases —advertising/sponsorship services. This is a good sign —a complex services ecology = a viable industry. Some of these businesses will try to scale up to become platforms. One or two might actually achieve it.

The BBC and other big broadcasters and publishers are in a tricky position. They feel an obligation to participate in the audio explosion. Some, of course, are grizzled pioneers in this business —try to count the number of online audio products launched by NPR, The Guardian and the BBC over the years and you’ll soon run out of fingers. They have big existing audiences, production talent and engineering know-how to bring to the game but they can’t easily challenge the mega-platforms on range or promotional clout. This is going to get interesting.

The first of this series of posts about podcasting is about the creative battle. Also read my 11 essentials for the modern podcast.

Picture by Gauthier Delecroix, on Flickr.

Steve Jobs and everyone’s fork in the road

Robert Scoble’s got a touching video on his blog today. He’s outside Apple’s Cupertino HQ and talking about his first encounter with an Apple computer. He talks about unboxing an Apple IIGS, the last in the line of pre-Mac Apples and a hugely influential machine in its time. He says:

That was the time I knew my life was going to be different from my dad’s

Robert Scoble on Steve Jobs

And I cried as he said it because I recognise that experience. I unboxed my first Mac in my student flat in Camberwell in 1985 (having basically browbeaten my own father into buying it for me). And that was my giant fork in the road. I’m wondering how many other lives forked radically with the arrival of one of Mr Jobs’ products and whether you could calculate the cumulative value of all those huge, personal changes of direction? What kind of number would that be? An incalculably large one, I should think.

No no no no no

Er, excuse me for blurting out my first reaction but have you lost your mind? An Apple takeover of Vivendi Universal Music will inevitably be a disaster. Much as I love the cat-among-the-pigeons potential of a tech counter-strike deep in the heart of showbiz-land, we now have decades of evidence that mega-mergers like this one almost always destroy value (and sometimes wipe out the merging businesses).

Here’s an idea: resist the mechanical logic of a merger – “we got a platform, they got content” – the kind of logic that produced AOL/Time Warner. Leave Vivendi Universal to dispose of its music division to some old school media mug and spend that cash pile on technology, design and marketing – stuff that will more directly produce high margin sales which is what a 2% market share luxury goods player like Apple needs most. Thanks to Jack Schofield at Online Blog for the the link.

Making of the Macintosh

I’ve used and owned Macs since 1985. Although they’re pretty hip again these days (after a miserable decade or so of grim, beige things), the core of the Mac userbase is like me: old gits with hair growing out of their ears. We’re stuck in our ways and we can’t change now so that’s that. The nice people at Stanford University Library are attempting a proper history of the machine’s early days (as part of a larger project documenting Silicon Valley itself). There’s some genuinely fascinating material here – memos, early sketches, engineering drawings, first person recollections. Thanks to LinkMachineGo for linking to The Making of Macintosh. Incidentally, I learn that, over the years, I’ve owned five of the Ten Worst Macs Ever. I’m selling two of them: an ugly all-in-one Performa 5320 and a lamentably underpowered IIvx, in case you’re interested.

ecommerce is rubbish

New data: 51.3% of ecommerce purchases are unnecessary, 16.9% rubbish, 13.9% embarrassing, 11.4% stupid, only 6.5% life enchancing. Poor Ellen Feiss was a celebrity for less than the regulation fifteen minutes. I got the mug anyway. Napster went bust ages ago. I got the t-shirt anyway (site seems to be finally down). Looking now for more faded or bust Internet phenomena to memorialise in high-quality merch.

Running web-based services from home

Danny O’Brien’s been talking about making good use of an always-on home connection to replace all those web-based services we’ve become dependent on and that are about to start charging. I’m looking forward to seeing his conclusions. So far I’ve got that ‘Apache installed here’ screen up on the Cube in our kitchen but I’d love to be able to fix it so I can see my MP3s from the office (or wherever). Only total UNIX-fear prevents me from sorting it out.