Dana Blankenhorn

Newswriting in the 21st Century

I was taught two ways to write a story in the 1970s. (That's me in 1981.)

First was the inverted pyramid. Describe the story in a sentence. Then summarize the most important point. Keep going, in order or importance, so an editor can snip the story, from the bottom, and always have the gist of it.

Second was a circle. Grab the reader in your first paragraph. Then walk around the story until it’s told. Deliver a sting ending, a thank you for reading. This was my specialty. It worked great in magazines.

In 2021, the Internet has two different ways of delivering the news.

The first is what I call the “oh no.” This has replaced the inverted pyramid. If it’s good news, say “yeah, but” in the first paragraph, then describe how things are likely to go bad. If it’s bad news, scream “oh noes” and describe how things can only get worse.

The second is what I call “hide the pickle.” This has replaced the circle. Promise you’re going to say something important in the headline. Then don’t say it. Lead the reader on for paragraph after paragraph, page after page, filling their eyes with ads, until you finally get to some point (always less than was promised).

Cloudflare and the Cloudless Cloud

The Cloud Czars gained dominance by putting cash flow into cloud infrastructure.

Apple, Microsoft, Amazon, Google, and Facebook now spend billions of dollars each quarter on data centers. They upgrade the ones they have, and they build new ones. This is the cloud world we know.

Cloudflare wants to change that. The company is selling a concept called “Web3,” in which every server can be a node on the cloud network.

The offering is based on distributed technology already used for cryptocurrency like Bitcoin and Ethereum. Cloudflare supports these efforts with gateways. The idea is that distributed software can now support cloud storage for less than what Amazon (for instance) charges to move data out of its S3 repository. It’s in moving data out that Amazon Web Services sees its biggest profits. Cloudflare says it can disrupt that. Amazon calls its storage offering S3. Cloudflare calls its new one R2.

Great theory. Harnessing the edge to take on the center makes sense. Letting anyone with unused space play in cloud markets sounds great. Exporting data with S3 is expensive.

What If Steve Jobs Were Evil?

If Steve Jobs were evil, he would be Mark Zuckerberg.

Zuckerberg was born in 1984, the year the Apple Macintosh was introduced. He founded Facebook in 2004. He launched Facebook’s program to build cloud data centers in 2011. His fortune was estimated October 5 at $117 billion, but that underestimates him. That’s because he controls the voting stock of Facebook, now worth $913 billion, so his power is greater than his money.

Facebook isn’t its eponymous service. It’s not Instagram. It’s not WhatsApp. Facebook is its 16 data centers, the thousands of miles of fiber cables connecting them with local centers, and with the world. About 1.6 billion people use Facebook services every day, according to its most recent quarterly report. Americans can take or leave Facebook, but people in the “Global South” depend upon it.

The Decade of Immersive Technology

Back in 2019, while at the Heidelberg Laureate Forum in Germany, I wrote about three key trends that would define the 2020s.

They were the end of oil, the Machine Internet, and DNA as a programming language .

Since then, there has been progress in all three areas. The pandemic, and resulting parts shortages, have delayed but won’t prevent the end of oil. You can see the Machine Internet in all the hype over 5G. The Moderna vaccine is indeed using DNA as a programming language.

Turns out there’s a 4^th trend, and there may be more.

BNPL Will End in Tears

The hottest trend in payments today is Buy Now, Pay Later (BNPL).

The idea is simple. The consumer agrees to pay a bill over a few months rather than immediately. The merchant gets their money upfront. There’s no interest charge, just a bigger discount (up to 8%) to the merchant, plus more big orders. Everyone is happy, right?

What it means is that the BNPL provider, whether it’s Afterpay or Affirm, Klarna or Sezzle, is stepping in for the credit card bank, where interest rates can be 20% or more. If you’re buying stock in Affirm right now, you’re buying a consumer finance company.

There are protections for the BNPL guys, but they’re limited. They could hammer the credit ratings of consumers who don’t pay. They could raise discounts on merchants. Since the field is new both sides need to read their contracts closely.  They won’t.

Cloudless Cloud Czars

Over the last half-decade, I have used the term “Cloud Czars” for what other reporters call big tech.

That’s because what distinguishes our economic leadership today is the ownership of “hyperscale” cloud data centers. Cash flow of $1 billion/quarter was just the ante into this game. The Czars’ capital budgets are now reaching $25 billion/year. That’s why Apple, Microsoft, Amazon, Google, and Facebook are now the 5 most valuable companies on the planet, with a combined value of about $8 billion.

The Czars have become so dominant that governments want to take them down harder than they do Bitcoin. So do media and telecom companies, both supplanted in recent years by the Czars. Calls to “break up” (Amazon, Google, Facebook) ring out in the night, as losers use government to destroy what they can’t compete with.

But change is constant, and change continues to accelerate. You no longer need $1 billion/quarter of free cash flow to become a cloud player. Now you can become a cloudless cloud.

The Dictator’s Internet Advantage

“Credibility is the coin of the realm.”

That’s what Northwestern’s Medill School taught me, when I was getting my Master’s in Journalism back in 1978. (That's also when this picture was taken.)

This was reinforced during our school trip from Chicago to the media capital of New York. I literally sat at the feet of William Shawn, then still editor of The New Yorker. We were paraded through the offices of Time. We sat for a spell at the Top of the Week, a bar on top of Newsweek’s headquarters building. The lesson was that someday all this would be ours if we were just loyal to our employers.

I’m the last member of my graduating class still be working a beat because I didn’t believe a word of it. Credibility is a personal value, I argued. It’s not something that can be granted, like a knighthood.

But American media companies remain wedded to the idea of credibility as a corporate value. It’s why so few are international in scope. That’s because credibility, in media, is mediated. It’s a continuing negotiation among media companies, their audience, and government. It’s a balancing act.

Misunderstanding China

I think we fundamentally misunderstand China.

First, it’s not communist. Autocratic, yes. Authoritarian, certainly. Capricious and racist and a danger to its neighbors? Why, yes!

But China is capitalist as fuck. It’s a lot more capitalist than America. I was reminded of this recently writing about a company called SOS Limited. 

SOS is a Bitcoin miner. You can’t get more capitalist than that. When you visit SOS’ Web site , it’s a collection of gobbledygook and Internet buzzwords that will make you swoon. In America, SOS would have been shut down by regulators or judges years ago. In China, it’s business as usual, capitalism red in tooth and claw. I compare Chinese capitalism to Deadwood , the TV show. As Randy Newman might put it, “If Mao Zedong were alive, he’d be rolling around in his grave.”

China has been capitalist for less than half a century. A teenager in Shanghai lives in a futuristic world of apps and instant gratification. His grandmother, younger than even I am, grew up amid grinding poverty and arbitrary power. Talk about a generation gap!

Facebook and Bro-Tech

I sold out of my Facebook stock over the weekend. I bagged a big profit. I could have bagged more.

But that would be blood money.

Facebook has done amazing work. It has brought the full benefit of cloud to the developing world. As I like to tell critics, Facebook is the first free global telecommunications company. This has raised a billion people out of poverty because Facebook’s services are free. Mobile services are also much cheaper than in the U.S., as low as $15/month.

It means the average South African worker, making under $16,000/year, can afford a used $150 Android phone and, with Facebook, become part of the global marketplace. You can’t do that with Apple. You can’t afford it with paid services.

Next Stage of the Cloud Boom

It’s cheaper for most businesses to rent a cloud than own one. But it’s even better to be one.

That’s why Apple, Microsoft, Amazon, Google, and Facebook are the five most valuable companies in America. Each is worth over $1 trillion. Each put the “ante” of $1 billion/quarter into cloud construction in the last decade. Each continues to pour $3-5 billion more of cash flow into their networks every 90 days.

Policymakers focus on the services these companies provide, but it’s the cloud that makes them powerful. Microsoft isn’t software. It’s cloud and software, which lets it take cash from competitors. Google isn’t services, it’s services and software, which also let it take cash from its competitors. Only Facebook, so far, is refusing to rent capacity, and even it sells access to what’s becoming a global fiber network.

That’s where we are today. Where will we be in 2025, if man is still alive?