Australia must act now to preserve its culture in the face of global tech giants

The following is an edited version of the Brian Johns lecture, delivered on Monday night by Professor Julianne Schultz. It’s a longer read at just over 4,500 words.

We now live in the Age of Fang – the shorthand term for the new global era dominated by the oligopoly of Facebook, Apple, Amazon, Netflix, Google and others. These companies have made globalisation real and personal thanks to the intimate objects we carry with us and access, unwittingly transmitting all the time.

In the Age of Fang, we need to find persuasive and creative ways to answer those who argue that the national and local are now irrelevant. In the Age of Fang, we’re all global citizens, which threatens to make national cultural institutions both more vulnerable, but also more important than ever.

The audience numbers that attach to the most popular items whizzing around the globe in an instant are remarkable – exceeding even the wildest dreams of the gatekeepers of the age of mass media. Millions of views, shares and likes, followers counted in the hundreds of thousands.

This is an almost unimaginable world away from an asterisk on a TV ratings chart, or the tally of a bestseller in one country.

Digital disruption has become the new cliché that is supposed to capture this phenomenon. But it is inadequate. It suggests that what is happening is just the latest technological change. Albeit one that has created a new class of self-interested global consumers, fostered new businesses and remarkable monopolies, transformed or trashed old ones. Technology has been transforming business, and by extension the way people live, for every generation since the industrial revolution.

Yves Herman But this is different. What is at stake is more profound, with implications that encompass but go well beyond the commercial. The speed and reach of the technology these companies deploy now challenge the mechanisms of public administration, regulation and taxation that have been refined and developed over a century or more. They may in time even challenge fundamentals of the nation state itself. In the past, great realignments like this were the outcome of war – so far this has been avoided, but the tension between the global and the local is starting to play out in unpredictable ways. As the British scholar Martin Moore noted recently, Democratic societies don’t understand the phenomenon of the tech giants, what the phenomenon might mean in civic terms, what benefits it might bring to governance and the dangers inherent in it. Cultural and political disruption Most importantly, as scholars are beginning to draw out, and people are feeling in their bones, this disruption is not just about technology. It is cultural and political. Although we haven’t yet got our heads around what it might mean and how it might play out. You can see it in the Brexit debate in Britain, in the Trump rallies in America and authoritarian responses in China and India. What we do know though, is that technology companies have figured out how to make money in an unprecedented way from the marriage of technology and culture. As a result we are seeing a massive redistribution of wealth from the cultural sector, where meaning is created, to the technology sector, which has figured out how to market, distribute, reach and make money out of it in ways the cultural industries never imagined possible. Now, in the Age of Fang there are a handful of global companies shaping tastes, distributing and exploiting information we didn’t even know we generated. In the process creating a new world which generates unprecedented wealth, yet which gives us enough of an illusion of choice and being in control to feel we are free agents, global citizens even. It is hard to think of historical precedents. The new oligopoly exceeds the control and reach of the East India Trading Company. Even the grandest colonial empires did not manage to secure such willing and active participation. The international reach that characterises the companies at the heart of the Age of Fang exceeds even the ambition and scope of the American monopolies of the early 20th century that built that country before antitrust laws constrained them. You could say that each of these epochs collapsed, but it took a long time for regulatory mechanisms to define and assert public interest. What makes this different to say, the rise of the multinational firm of the middle years of the 20th century – the great corporations that sold energy, transport and consumer goods – is that culture and the art and craft of making meaning are at the heart of the new corporations. Capturing and creating meaning The old technology companies only sold machines and systems, software and business solutions. The new mega profitable firms make their billions by capturing and creating meaning and belonging: personal information, news, video, copyright, education, music, and information that is the sinew of everyday life – directions, health, banking, shopping. Some would argue that no one saw this coming – but that is not strictly true. While the particularity of Facebook, Google and the others was not foreseen, the notion that content would be king has been around for a long time. However the role of the creator of that content has proved to be somewhat more precarious than anticipated, as we saw in Productivity Commission’s draft report on copyright released on Friday. As a result, support for sustaining, growing and exploring cultural identity is also more fragile than those who came of age in the middle of last century could have ever anticipated. Facebook’s 31-year-old founder Mark Zuckerberg is alert to this, but takes a different perspective. He recently warned the 2,500 developers who paid US$595 each to attend Facebook’s F8 conference of: the danger of people and nations turning inward – against this idea of a connected world and a global community. […] It takes courage to chose hope over fear. We might nod in agreement if we think about China at its authoritarian worst, but what about in an open place like Australia? Do we become invisible and lose our moorings? Is that the price of embracing hope over fear? Beck Diefenbach Certainly Zuckerberg and his shareholders are better off for this connected world. Arguably, so are many of the 1.6 billion people who regularly use Facebook. Content is the glue that brings people back to Facebook: personal stuff, photos, articles, video, news, music. It also means there are fewer and fewer reasons to leave. In the last three months of 2015, Facebook generated revenue of US$5.8 billion, and last week reported a first quarter profit for this year of US$1.5 billion. Facebook now includes its rapidly growing services like WhatsApp, Instagram and its free internet service in 37 developing countries, where the provision of national infrastructure is being outsourced to a company led by a man born in 1985. The stock analysts who came up with “Fang” as a way of describing the companies that are at the heart of this new era were acutely aware that the list of the top companies has changed fundamentally over the past two decades. Where there were once energy, banks and pharmaceutical companies, there are now companies that with the exception of Apple, Amazon and Google did not even exist at the end of the millennium, with a couple of banks and energy companies just hanging in. It is a remarkable tribute to the resilience and opportunism of American capital that this has occurred – no other country (with the possible exception of China) can point to such transformative renewal. For a reality check look at our top companies – banks, mining, insurance and a couple of former government owned enterprises. The names and ownership may have changed but the structure is, with the exception of News Corp, more or less as it was twenty years ago. There is not enough time to do a full analysis of the Fang companies but it is important to provide a few numbers to sketch why what is at stake is so profoundly different to anything we have known before if we are to shape a cultural and civic response. Spreading Apple seeds Apple is the granddaddy of these companies. Despite recent slowing, I expect it will go on doing what it has done so well since it was founded in 1976 when it produced stylish and functional devices that appealed to the cognoscenti. I bought them then and loved them. They called us early adopters “apple seeds”. And like all the best genetically modified seeds we have gone on to produce an unrivalled crop – in our house we have nine devices we use every day and three on reserve. Tattoo artist Dave Hurban displays an iPod Nano which he has attached to his wrists through magnetic piercings in his wrist. Keith Bedford In January, there were a billion Apple devices operating and communicating with the Apple cloud, and more than 800 million people with an Apple iTunes account. According to recent research by accounting academics from UTS, Apple paid tax here at the rate of 1.2% on the billions of dollars in revenue it earned in Australia, thanks to what in other circumstances would be regarded as a disappointing 3-4% net profit. I prefer to spell Fang with two A’s – so it is F-A-A-N-G. This is to include Amazon, which recently turned 22. Amazon did not take long to recognise that those who buy books, were also likely to buy other stuff. Last year 244 million of them did so – in many cases Amazon knew what they wanted to buy before they did. It is a ruthless operator, the Walmart of the online world, but much more glamorous and convenient. Amazon has relentlessly pushed prices down, squeezing publishing companies and their authors, using the power of its algorithms to make books virtually disappear, or pop to the top of the list. In the trade books sector it is estimated that Amazon accounts for about A$250 million of the almost one billion dollars worth of annual Australian sales. Amazon is not a flash company. It is focused on keeping costs down, profits up and goods moving, and while global in its reach it is another quintessentially American enterprise. I had an interesting insight into this a couple of years ago. I met with one of the senior editors responsible for originating long form essays for the Kindle in his cubbyhole office in midtown Manhattan. After a fruitful conversation full of praise for the essays published by Griffith Review, he told me Amazon would be very interested in publishing the pieces we generated. There were just a couple of issues: we’d need to Americanise the essays, with American examples and locations. There was no point in saying we Australians are absorbed in the stories of obscure American towns and events, people are people, does it matter if it is Des Moines or Brisbane? The next condition was that Amazon would have to publish first, and there would be no advances or guarantees that could be made about income. Finally as I prepared to leave he asked, “We can work with either, but what is your currency, the euro or US dollar?” Somehow I didn’t think it was going to be worth the effort, and we’d remain wrapped in the bandages of global invisibility. N comes next, and Netflix, the company that spectacularly made the transition from renting videos and DVDs to streaming and creating global content. There are more than a million people in Australia whose credit cards are debited $11.99 each month from Netflix, Los Gatos, CA for their subscription. There are virtually no Australian employees. The only Australian content is recycled programs often under a different name – so Utopia, the wonderful Working Dog production, has become Dreamland. This week you will be pleased to know there were two other Australian features: Restaurant Australia season one, and that old favourite Yindi the Last Koala, a 1996 documentary about a baby koala injured in car accident. We know the American screen industries have always been ruthless: charging top dollar or dumping product depending on what the market will tolerate, remaking the best ideas with American accents. Claire Foy in The Crown, 2016. Left Bank Pictures, With this comes alertness to opportunity and ideas. The most striking example of this approach I am aware of now is the new series The Crown, which Netflix describes as an American series, albeit one that it is making in the UK with multi-million pound budgets for each episode and much of the best British talent of a generation. Thanks to the Downton Abbey effect and the love affair with the British upper class in the US and China, the number of episodes of The Crown keeps growing. Finally, to the silent G in Fang. Google is ubiquitous. It only emerged in 1998 and last year reported earnings of US$75 billion and gross profits of US$48 billion. In many ways it is the glue that holds all this together. In the course of writing this speech I must have made 30 or more Google searches – it accounts for 89% of global searches, even more in many countries, its video streaming service responsible for about two thirds of the desktop video watched on devices everywhere. A few years ago it digitised 20 million books for a grand Google library, without the approval of authors or publishers, fair use in an information marketplace. And that is just the start. There is a paradox at the heart of this – the way that global digital monopolies are able to sell themselves as enablers of greater consumer choice. In Australia we are more committed to free trade than most. We want to believe in the level playing field, in the opportunities to trade, and we have done OK out of this. But it works better for minerals and agriculture than for services or cultural product, as we will see as the copyright and IP debate unrolls in coming months. Even though the global cultural sector continues to grow faster than any other segment – we don’t take it seriously. The European example To my mind, the Europeans are more clear-minded about what is at stake. Australian media companies have grizzled about the impact of the Fang companies. Generally they prefer to blame the public broadcasters and regulation, rather than the global enterprises at the source of the problem. European companies and regulators are more adept at cultural protection and export. They get particularly agitated when they see their revenue streamed off to American companies, even if they have tax domiciles within the EU. European regulators have demonstrated they are more willing to use legal and regulatory tools to ensure a level playing field, protect cultural products, secure a local return and reach international markets. So there are tax and antitrust, privacy and right to be forgotten cases against Google and the other Fangs. European Competition Commissioner Margrethe Vestager has charged Google with breaching antitrust laws. Francois Lenoir I was struck last year when talking to European media executives about the clarity of their vision of why this mattered. Sure there was the commercial dimension – if advertising income is growing, as it is, but 80% of it is going to Google and Facebook – that is a problem. If Google and Facebook and the others are not paying anything like the tax they should, that is a problem. But one of the oldest lessons of American business shows that that they are not only tough, but always ready to find ways to co-opt the best ideas and neutralise the opposition. So there is the sweetener of Google’s Digital News Initiative – 150 million euros to provide opportunities for innovation in news, and new ways of European story telling – at the same time broadening and deepening the content pool, and putting a gloss on one of the most spectacular global monopolies ever known. The first tranch of 27 million euros was announced in February – but across 23 countries, with hundreds of organisations, it won’t go far. This snapshot is I think you will agree, somewhat chilling. It goes some way to explaining why the age of Fang is quite different to any we have known before for those of us engaged in cultural exploration, production and participation. It is true that the internet has made a long tail of information more accessible than ever before. There is more, but most of it remains invisible. When the habits of human nature are combined with the algorithms designed to recognise patterns it becomes inevitable that increasingly we go back to the same handful of sources. There is a long tail but it is an odd shaped tail – more like a fat sausage with a tiny sliver of the intestine it was stuffed in to, dangling at the end. And it is in that sliver that most of our cultural product resides, virtually invisible to the rest of the world, and increasingly hard to find at home. Last year’s report by Oxford’s Reuters Institute showed that Australians were the most likely people in the world to use a digital device to obtain their news. Most strikingly, international sites accounted for two-thirds for this. It was tempting to explain this as a product of Australia’s undoubted multiculturalism and outwards looking nature. Eric Gaillard But I think really it is a testament to the power of the great English language sources – the BBC, New York Times, Guardian and the other international news generators that fill our Facebook feeds and pop up at the top of most Google searches. While our brands remain strong, Australians are increasingly going to the world for their news, information and entertainment. Being English speaking is both a blessing and a curse. Canadians, Irish, Scots, New Zealanders all have the same challenge: how to remain visible and distinctive when living next door to a pushy, noisy neighbour. It is scarcely surprising that some of the most innovative and distinctive cultural products should emerge from countries with their own language – The Netherlands, Germany, Denmark, Korea come immediately to mind. Their people may be effortlessly fluent in English, but with an additional layer that makes them unique, adds meaning at home and creates global opportunities. The big question is how do we – with 24 million people living in an Asian timezone – respond, and what is the role of our cultural institutions in this? A culturally grounded nation Before I attempt to answer that I want to take a side step and trace the process of developing an idea of Australia that is culturally grounded – that is more than koalas and celebrity cooks. Understanding this as part of the process of trying to make sense of this new world order is important, otherwise we risk operating with the cultural equivalent of terra nullius. Terra nullius is a good place to start, because in recent years we have come to realise that one thing that makes Australia unique, that is not replicated anywhere else, is being home to the world’s longest continuous civilisation, one that is different in structure, tone and content to any other. This is now centre stage in Australian cultural engagement, though it still fails to be realised politically or economically. But it is a big step from where we were 50 years ago. It came as something of a shock to me recently to realise that with the exception of the ABC, all the key national cultural institutions in Australia are only about 50 years old. Of course there are great state libraries, galleries and universities that were founded before federation, but it took more than 60 years after federation to create national cultural institutions. I was with a group of chairs of these institutions when I realized this, and I must say it took me by surprise – the National Library and Gallery, the Australia Council, AFTRS and others have been fixtures in my adult life. But they are younger than me. They were created as a result of persuasive argument, gathering supporters and connecting with the public. These institutions are now facing the greatest financial challenges they have ever confronted. This is due to budget cuts, the rupturing of bipartisan political support and the exclusion of culture from the innovation and comparative advantage agendas (even when a quintessential cultural industry – education – is one of our biggest exports). The creation of these cultural institutions was a product of the post war world. Post war mandarins, particularly Nugget Coombs, following in the footsteps of John Maynard Keynes, recognised that culture is as important as legal institutions, trade, land and people in creating a strong nation. A generation of writers, artists, editors and scholars who had seen the horrors of the war pursued this in little magazines, art, books, on stage and radio. The result was the cultural architecture we now take for granted, the national institutions and the funding agencies, which foster excellence and innovation and make it possible for skilled artists to tell old stories and imagine new ones on the page, screen, stage and canvas. For people of my generation it created a sense of belonging and opportunities to explore, to see ourselves reflected back, to dig deeper into the forgotten layers, to make sense of place and time. Beyond Oi Oi Oi But then something happened. The interrogation slowed down, no go areas appeared, we stopped telling stories to ourselves, happy with the first version. The Aussie Aussie Aussie Oi Oi Oi of the Olympics made us cringe and the politically sanctioned history wars forced people into defensive positions. We stopped telling different stories and got stuck with a handful of tropes, Gallipoli, Ned Kelly, Eureka (without the women until Claire Wright came along), Bradman and more recently 1970s pop culture: Puberty Blues, Molly, Ita. No wonder young people hankered for a bigger global stage, and felt somewhat embarrassed about being Australian, preferring to take their skills and education somewhere they will be valued and challenged. Individual Australians are conspicuous in film, music, television, media, theatre, design, fashion, architecture all around the world – our companies are not. Eduardo Munoz But if we are not to be a net exporter of creative talent – the country town that sees its best and brightest leave and never return – we need to make more effort. There are many more layers of stories to be told and explored. We need to find the songlines that connect the past and the present and share them at home and with the world. This even more important in a country that welcomes hundreds of thousands of new people every year but fails to value the tales and experiences, warts and all, that have shaped us. In the Age of Fang this forgotten history, these neglected stories risk becoming even more invisible – hidden on an algorithm that is almost never accessed, unless it pops up with sob stories about injured koalas. As this attachment to cultural identity weakens, it is easier for politicians to cut budgets, if neither the economic or intangible value is recognised. We saw this last year with the extraordinary and disrespectful cuts to the Australia Council, and the swingeing MYEFO efficiency dividend cuts to the tiny budgets of the cultural institutions and the broken promises in relation to public broadcasting. Unless there is a reprieve in the budget tomorrow night, we can expect about a third of the small and medium key organisations funded by the Australia Council to be told next week that their funding will cease next year. But paradoxically in the Age of Fang, it is the cultural richness, the democratic, inclusive, pragmatic, egalitarian, highly skilled, educated and creative elements of Australia that make us attractive and distinctive. Britain, which we still like to emulate, realised this some years ago, and started investing in cultural industries for economic and social returns. This year that sector again grew faster than any other to generate just under 10% of GDP. Last year when the British chancellor led a trade mission to China, culture was at the heart of the enterprise. We know that China’s growth rates have slowed, but the cultural and creative industry sector is still growing at 17% a year. So a group of British cultural leaders were in the advance group, setting up exchanges and new ventures – like the Chinese audience for the new Netflix series The Crown. Yet on a recent Australian Chinese tour, cultural leaders and representatives of the cultural industries were conspicuous by their absence. The purpose of public investment in the cultural sector is not just the output but the outcomes – the building of capacity, sustaining citizens and civil society, fostering creativity and a sense of belonging, the projection of understanding, the strengthening of a sector of the economy that already accounts for more than mining or agriculture. Culture is one of the engines of economic growth, which produces outcomes as well as outputs. What can be done? So what can be done to join the dots in the Age of Fang? We need to become better advocates of the value of cultural investment. We need to find new ways to put the case so we can win political and bureaucratic supporters with hard headed and sustainable arguments. We need to find ways to embrace the particularity of being Australian in a global context and find new ways to express that. We need to be willing to challenge the market if it is not delivering – adding our voices to those demanding that the Fangs pay their taxes, and not allowing them to unfairly distort the market. Baz Ratner We need to be prepared to use the legal and other means at our disposal to demand that laws are not broken. We need to use the leverage we have as the generators of 2% of global GDP to get returns and opportunities to participate that are our due – a digital news initiative here for instance, or a major contribution to the digitisation of cultural assets without giving up the copyright. We need to leverage 50 years of cultural investment to ensure our stories are told not only to ourselves, but the world. If, as the scholars have identified, the dominant companies in the Age of Fang have the power to command attention, communicate news, give voice, enable collective action, hold power to account and influence votes, we need that to be done on our terms. This power needs to be institutionalised so that it is civically accountable. The smartest Fangs understand that playing a civic role brings extra kudos and wealth, but there is a need for vigilance to sustain this. Getting the settings of this institutionalisation will be challenge of the next decade. It will require a carrot and a stick. Some Americans are suggesting a royalty should be paid on data mining of personal information, as is done with the mining of minerals, and returned to the country of origin. Europeans are challenging antitrust and privacy. G20 is renewing attention on tax to examine ways to ensure that the wealth generated is spread appropriately, and not left to a few rich dudes to distribute to suit personal philanthropic ambitions. The market alone won’t do this. We know from the process of creating cultural institutions that there is a role for the state – a place where in the words of Robert Menzies, the future and past can connect in the present. Even in this rapidly globalising age, the nation state remains the best organising principle we have. I am not alone in feeling uneasy about the proposition we should give it over to a new oligopoly that is present every moment of our lives. The purpose of cultural investment in the Age of Fang needs to be reiterated and maintained. As a nation, we need to take this seriously now if we are not to become an asterisk. The purpose of cultural investment in the Age of Fang needs to be restated, funding maintained and opportunities to innovate and export enhanced. Otherwise we will become invisible at best and tribal at worst. If that happens we will be reduced as citizens and countries to passive consumers in a digital marketplace that values us only for our ability to pay.