After GameGate, the deluge

GamerGate began with a sex-for-reviews microscandal concerning a free-to-play online game. It continued with coordinated editorials in which major publications asked their primary demographic to stop reading their magazines, in perhaps the most self-defeating series of op-eds in history

It is now an ethics-in-journalism movement.

Those all will pass. What comes next is the deluge.


The Economies of Scale

There are two kinds of economies of scale. One, producer-side economy of scale (just called “economies of scale” by old textbook) refers to the cost advantages of dividing a large fixed cost of capital over an even larger number of consumers. The great modern enterprises of our day — Barnes & Noble for example — were primarily based on the immense cost savings of producer-side economies of scale.

Producer-side economies of scale allowed Barnes & Noble to nearly destroy the local bookstore industry.

Barnes & Noble’s rise was the crowning glory of the Modern Age.

They were once even cool enough to draw protesters.


But there’s another kind of economy of scale: consumer-side economies of scales. This, called “network effects” in the booming days of the .com bubble because the socialized road and postal systems had been frozen for so long as to be invisible, refer to the transactional cost savings (reduction of duplication of effort, reduction of friction, etc) of accessing a standardized communication platform. The Internet itself is an example of something with massive consumer-side economies of scale: the more consumers are on it, the easier it will be to procure goods and services on it.

Consumer-side economies of scale allowed Amazon to challenge Barnes & Noble until it had acquired enough producer-side economies of scale to bury it.

Amazon was, and is, a company straddling the line between Modern enterprises, and whatever comes after.


The Publishing Industry

There are two ways to treat a human client. You can treat him as your customer, from whose wallet you obtain your income. Or you can treat him as your product, selling him to your actual customers. Amazon is an example of the first sort of enterprise, Google the second. Both approaches can lead to happy humans and happy shareholders.

But not always.

Consider magazine publishing. Traditionally, magazine publishers received their income from a combination of subscription revenue and advertising revenue. These magazines benefited from a “multi-sided market” in which the human end-users were both the client and the product. This allowed magazines to nimbly change their pricing strategy as the situation warranted. Humans were happy. Advertisers were happy. Shareholders were happy.

And all this coincided with massive supplier-side economies of scale, and no consumer-side economies of scale except for the socialized (and static) highway and postal systems. This was the Golden Age of publishing


The introduction of new consumer-side economies of scale meant that it was really, really cheap for each marginal consumer to acquire published materials — the internet, the web, web browsers, even communication lines were there, and accepting these standards was invisible. This allowed micro-amazons, with goals of large readership bases and exploiting consumer-side economies of scale, to thrive.

Time’s cover stories were for a quant age, in which transaction costs were still high enough to exclude low-cost low-quality competitors. Instead, new competitors enjoyed the benefits of economies of scale, from both the consumer and producer sides.

The new companies (Buzzfeed, Vox, and so on) were further able to exploit the economies of scale by substituting quality of audience for quantity. Instead of dedicated readers paying $10 or $20 or $100 dollars a year, instead, they focused on “click-bait” or emotional pieces written by even worse paid writers. The advertisers got their audience, the new publishers still got money, but the core readership felt increasingly alienated.


The day of the endless “Top Ten Reasons Why You’re Addicted to Buzzfeed” had dawned.


Self-Publishing and GamerGate

Just as Amazon put fatal competitive pressure on Barnes & Noble, Buzzfeed and its ilk put fatal competitive pressure on Time-Warner. With consumer-side economies of scale taking away its moat and producer-side economies of scale fading with declining readers, the old Modern enterprises began fading.

Two-forces kept churning: consumer-side economies of scale continued to reduce transaction costs. And the most engaged readers (those who had been most willing to pay for subscriptions, and more enthusiastic about their subject) felt increasingly alienated by the new Buzzfeed world.

In gamer-oriented commentary-and-entertainment publishing – because of the relatively young and educated nature of its target demographic — we see this post-Modern world right now. Self-publishing is more valuable than traditional (magazine-based) or hybrid (listicle-based) publishing.

The top self-publishing platform for gamers — — was recently purchased for for one billion dollars. This is ten times more than the highest estimate I was able to find for an estimate of the entire Vox Media conglomerate (of which a very small fraction is gaming).

And it’s not just revenue, but influence. “Steam” is the top online marketplace for video games. The top curator is a guy with a Youtube channel.


Of the top 10 curators, only 3 are magazines.

An example video from “cynical brit” is this op-ed piece, which combines footage of a computer game with commentary on GamerGate itself

These changes are coming to other parts of the media. The recent fight between Amazon and Hachette is just bargaining for a cut of the profits. It doesn’t matter. But what matters is when Amazon is able to drive the cost of reading for consumers to $0.

What happens then is what happened to gaming 15 years ago: a widespread collapse of the old publishers, a shift to an advertising model of some form, a collapse of wages, and a deprofessionalization of writers.

What happens after that? What happens when those future readers exploit even newer self-publishing platforms to cater to a nearly-forgotten core audience? What happens when book writers and journalists become as out of touch with their audience as game journalists?


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