The Master Switch: The Rise and Fall of Information Empires - Tim Wu (2010)

Introduction

On March 7, 1916, Theodore Vail arrived at the New Willard Hotel in Washington, D.C., to attend a banquet honoring the achievements of the Bell system.1 Hosted by the National Geographic Society, the festivities were of a scale and grandeur to match American Telephone and Telegraph’s vision of the nation’s future.

The Willard’s dining room was a veritable cavern of splendor, sixty feet wide and a city block long. At one end of the room was a giant electrified map showing the extent of AT&T’s “long lines,” and before it sat more than eight hundred men in stiff dinner clothes at tables individually wired with telephones. Private power mingled with public: there were navy admirals, senators, the founders of Bell, and all of its executives, as well as much of Woodrow Wilson’s cabinet. “From the four corners of the country had come a country’s elite” wrote the Society’s magazine, “to crown with the laurels of their affection and admiration the brilliant men whose achievements had made possible the miracles of science that were to be witnessed.”

Then seventy-one years old, his hair and mustache white, Vail was the incarnation of Bell, the Jack Welch of his time, who had twice rescued his colossal company from collapse. As Alan Stone, Bell’s chronicler, writes, “Few large institutions have ever borne the imprint of one person as thoroughly as Vail’s on AT&T.” In an age when many industrial titans were feared or hated, Vail was widely respected. He styled himself a private sector Theodore Roosevelt, infusing his imperial instincts with a sense of civic duty. “We recognize a ‘responsibility’ and ‘accountability’ to the public on our part,” wrote Vail, as the voice of AT&T, “which is something different from and something more than the obligation of other public service companies not so closely interwoven with the daily life of the whole community.” Serving whatever good, his taste for grandeur was unmistakable. “He could do nothing in a small way,” writes his biographer, Albert Paine. “He might start to build a squirrel cage, but it would end by becoming a menagerie.” Thomas Edison said of him, simply, “Mr. Vail is a big man.”2

“Voice voyages” was the theme of the Bell banquet. It would be a riveting demonstration of how AT&T planned to wire America and the world as never before, using a technological marvel we now take for granted: long distance telephone calls.

After dinner, the guests were invited to pick up their receivers from the phones resting on the table. They would travel over the phone line to El Paso, on the Mexican border, to find General John Pershing, later to command the American forces in World War I.

“Hello, General Pershing!”

“Hello, Mr. Carty!”

“How’s everything on the border?”

“All’s quiet on the border.”

“Did you realize you were talking with eight hundred people?”

“No, I did not,” answered General Pershing. “If I had known it, I might have thought of something worthwhile to say.”

The audience was visibly stunned. “It was a latter-day miracle,” reported the magazine. “The human voice was speeding from ocean to ocean, stirring the electric waves from one end of the country to the other.”

The grand finale was a demonstration of Bell’s newest and perhaps most astonishing invention yet: a “wireless telephone,” the ancestor of our mobile phone, of which, by 1916, Bell already had a working prototype. To show it off, Bell mounted what might be called one of history’s first multimedia presentations, combining radio, the phonograph, the telephone, and the motion picture projector—the most dazzling inventions of the early twentieth century.

Miles away, in a radio station in Arlington, a record player began “The Star-Spangled Banner.” The sound came wirelessly to the Willard banquet hall over the eight-hundred receivers, while a motion picture projector beamed a waving Old Glory onto a screen. The combination of sight and sound “brought the guests to their feet with hearts beating fast, souls aflame with patriotism, and minds staggered.” AT&T, it seemed, had powers to rival the gods: “Perhaps never before in the history of civilization,” opined National Geographic, had “there been such an impressive illustration of the development and power of the human mind over mundane matter.”

It may seem a bit incongruous to begin a book whose ultimate concern is the future of information with a portrait of Theodore Vail, the greatest monopolist in the history of the information industries, basking in the glories of the nation’s most vital communications network under his absolute control. After all, these are far different times: our own most important network, the Internet, would seem to be the antithesis of Vail’s Bell system: diffusely organized—even chaotic—where his was centrally controlled; open to all users and content (voice, data, video, and so on.) The Internet is the property of no one where the Bell system belonged to a private corporation.

Indeed, thanks mainly to this open character of the Internet, it has become a commonplace of the early twenty-first century that, in matters of culture and communications, ours is a time without precedent, outside history. Today information zips around the nation and around the globe at the speed of light, more or less at the will of anyone who would send it. How could anything be the same after the Internet Revolution? In such a time, an information despot like Vail might well seem antediluvian.

Yet when we look carefully at the twentieth century, we soon find that the Internet wasn’t the first information technology supposed to have changed everything forever. We see in fact a succession of optimistic and open media, each of which, in time, became a closed and controlled industry like Vail’s. Again and again in the past hundred years, the radical change promised by new ways to receive information has seemed, if anything, more dramatic than it does today. Thanks to radio, predicted Nikola Tesla, one of the fathers of commercial electricity, in 1904, “the entire earth will be converted into a huge brain, as it were, capable of response in every one of its parts.” The invention of film, wrote D. W. Griffith in the 1920s, meant that “children in the public schools will be taught practically everything by moving pictures. Certainly they will never be obliged to read history again.” In 1970, a Sloan Foundation report compared the advent of cable television to that of movable type: “the revolution now in sight may be nothing less … it may conceivably be more.” As a character in Tom Stoppard’s The Invention of Love, set in 1876, remarks, “Every age thinks it’s the modern age, but this one really is.”3

Each of these inventions to end all inventions, in time, passed through a phase of revolutionary novelty and youthful utopianism; each would change our lives, to be sure, but not the nature of our existence. For whatever social transformation any of them might have effected, in the end, each would take its place to uphold the social structure that has been with us since the Industrial Revolution. Each became, that is, a highly centralized and integrated new industry. Without exception, the brave new technologies of the twentieth century—free use of which was originally encouraged, for the sake of further invention and individual expression—eventually evolved into privately controlled industrial behemoths, the “old media” giants of the twenty-first, through which the flow and nature of content would be strictly controlled for reasons of commerce.

History shows a typical progression of information technologies: from somebody’s hobby to somebody’s industry; from jury-rigged contraption to slick production marvel; from a freely accessible channel to one strictly controlled by a single corporation or cartel—from open to closed system. It is a progression so common as to seem inevitable, though it would hardly have seemed so at the dawn of any of the past century’s transformative technologies, whether telephony, radio, television, or film. History also shows that whatever has been closed too long is ripe for ingenuity’s assault: in time a closed industry can be opened anew, giving way to all sorts of technical possibilities and expressive uses for the medium before the effort to close the system likewise begins again.

This oscillation of information industries between open and closed is so typical a phenomenon that I have given it a name: “the Cycle.” And to understand why it occurs, we must discover how industries that traffic in information are naturally and historically different from those based on other commodities.

Such understanding, I submit, is far from an academic concern. For if the Cycle is not merely a pattern but an inevitability, the fact that the Internet, more than any technological wonder before it, has truly become the fabric of our lives means we are sooner or later in for a very jarring turn of history’s wheel. Though it’s a cliché to say so, we do have an information-based economy and society. Our past is one of far less reliance on information than we experience today, and that lesser reliance was served by several information industries at once. Our future, however, is almost certain to be an intensification of our present reality: greater and greater information dependence in every matter of life and work, and all that needed information increasingly traveling a single network we call the Internet. If the Internet, whose present openness has become a way of life, should prove as much subject to the Cycle as every other information network before it, the practical consequences will be staggering. And already there are signs that the good old days of a completely open network are ending.

To understand the forces threatening the Internet as we know it, we must understand how information technologies give rise to industries, and industries to empires. In other words, we must understand the nature of the Cycle, its dynamics, what makes it go, and what can arrest it. As with any economic theory, there are no laboratories but past experience.

Illuminating the past to anticipate the future is the raison d’être of this book. Toward that end, the story rightly begins with Theodore Vail. For in the Bell system, Vail founded the Ur—information network, the one whose working assumptions and ideology have influenced every information industry to follow it.

Vail was but one of many speakers that evening at the Willard, along with Alexander Graham Bell and Josephus Daniels, secretary of the navy. But among these important men, Vail was in a class by himself. For it was his idea of enlightened monopoly in communications that would dominate the twentieth century, and it is an idea whose attraction has never really waned, even if few will admit to their enduring fondness for it. Vail believed it was possible to build a perfect system and devoted his life to that task. His efforts and the history of AT&T itself are a testament to both the possibilities and the dangers of an information empire. As we shall see, it is the enigma posed by figures like Vail—the greatest, to be sure, but only the first of a long line of individuals who sought to control communications for the greater good—that is the preoccupation of this book.

Vail’s ideas, while new to communications, were of his times. He came to power in an era that worshipped size and speed (the Titanic being among the less successful exemplars of this ideal), and in which there prevailed a strong belief in both human perfectibility and the unique optimal design of any system. It was the last decades of Utopia Victoriana, an era of faith in technological planning, applied science, and social conditioning that had seen the rise of eugenics, Frederick Taylor’s “scientific management,” socialism, and Darwinism, to name but a few disparate systematizing strains of thought. In those times, to believe in man’s ability to perfect communications was far from a fantastical notion. In a sense, Vail’s extension of social thinking to industry was of a piece with Henry Ford’s assembly lines, his vision of a communications empire of a piece, too, with the British Empire, on which the sun never set.4

Vail’s dream of a perfected, centralized industry was predicated on another contemporary notion as well. It may sound strange to our ears, but Vail, a full-throated capitalist, rejected the whole idea of “competition.” He had professional experience of both monopoly and competition at different times, and he judged monopoly, when held in the right hands, to be the superior arrangement. “Competition,” Vail had written, “means strife, industrial warfare; it means contention; it oftentime means taking advantage of or resorting to any means that the conscience of the contestants … will permit.” His reasoning was moralistic: competition was giving American business a bad name. “The vicious acts associated with aggressive competition are responsible for much, if not all, of the present antagonism in the public mind to business, particularly to large business.”5

Adam Smith, whose vision of capitalism is sacrosanct in the United States, believed that individual selfish motives could produce collective goods for humanity, by the operation of the “invisible hand.” But Vail didn’t buy it. “In the long run … the public as a whole has never benefited by destructive competition.” Smith’s key to efficient markets was Vail’s cause of waste. “All costs of aggressive, uncontrolled competition are eventually borne, directly or indirectly, by the public.” In his heterodox vision of capitalism, shared by men like John D. Rockfeller, the right corporate titans, monopolists in each industry, could, and should, be trusted to do what was best for the nation.6

But Vail also ascribed to monopoly a value beyond mere efficiency and this was born of a high-mindedness that was his own. With the security of monopoly, Vail believed, the dark side of human nature would shrink, and natural virtue might emerge. He saw a future free of capitalism’s form of Darwinian struggle, in which scientifically organized corporations, run by good men in close cooperation with the government, would serve the public best.

Henry Ford wrote in My Life and Work that his cars were “concrete evidence of the working out of a theory of business”; and so was the Bell system the incarnation of Vail’s ideas about communications. AT&T was building a privately held monopoly yet one that pledged commitment to the public good. It was building the world’s mightiest network, yet it promised to reach even the humblest American with a telephone line. Vail called for “a universal wire system for the electrical transmission of intelligence (written or personal communication), from every one in every place to every one in every other place, a system as universal and as extensive as the highway system of the country which extends from every man’s door to every other man’s door.” As he correctly foretold at that dinner, one day “we will be able to telephone to every part of the world.”7

As he spoke at the National Geographic banquet, Vail was just four years from death. But he had already realized an ideology—the Bell ideology—and built a system of communications that would profoundly influence not just how people spoke over distances, but the shape of the television, radio, and film industries as well: in other words, all of the new media of the twentieth century.

To see specifically how Vail’s ideology shaped the course of telephony and all subsequent information industries—serving as, so to speak, the spiritual source of the Cycle—it will be necessary to tell some stories, about Vail’s own firm and others. There are, of course, enough to fill a book about each, and there have been no few such volumes. But this book will focus on chronicling the turning points of the twentieth century’s information landscape: those particular, decisive moments when a medium opens or closes. The pattern is distinctive. Every few decades, a new communications technology appears, bright with promise and possibility. It inspires a generation to dream of a better society, new forms of expression, alternative types of journalism. Yet each new technology eventually reveals its flaws, kinks, and limitations. For consumers, the technical novelty can wear thin, giving way to various kinds of dissatisfaction with the quality of content (which may tend toward the chaotic and the vulgar) and the reliability or security of service. From industry’s perspective, the invention may inspire other dissatisfactions: a threat to the revenues of existing information channels that the new technology makes less essential, if not obsolete; a difficulty commoditizing (i.e., making a salable product out of) the technology’s potential; or too much variation in standards or protocols of use to allow one to market a high quality product that will answer the consumers’ dissatisfactions.

When these problems reach a critical mass, and a lost potential for substantial gain is evident, the market’s invisible hand waves in some great mogul like Vail or band of them who promise a more orderly and efficient regime for the betterment of all users. Usually enlisting the federal government, this kind of mogul is special, for he defines a new type of industry, integrated and centralized. Delivering a better or more secure product, the mogul heralds a golden age in the life of the new technology. At its heart lies some perfected engine for providing a steady return on capital. In exchange for making the trains run on time (to hazard an extreme comparison), he gains a certain measure of control over the medium’s potential for enabling individual expression and technical innovation—control such as the inventors never dreamed of, and necessary to perpetuate itself, as well as the attendant profits of centralization. This, too, is the Cycle.

Since the stories of these individual industries take place concurrently and our main purpose in recounting them is to observe the operations of the Cycle, the narrative is arranged in the following way:

Part I traces the genesis of cultural and communications empires, the first phase of the Cycle, and shows how each of the early twentieth century’s new information industries—telephony, radio broadcast, and film—evolved from a novel invention.

By the 1940s, every one of the twentieth century’s new information industries, in the United States and elsewhere, would reach an established, stable, and seemingly permanent form, excluding all potential entrants. Communications by wire became the sole domain of the Bell system. The great networks, NBC and CBS, ruled radio broadcasting, as they prepared, with the help of the Federal Communications Commission, to launch in their own image a new medium called television. The Hollywood studios, meanwhile, closed a vise grip on every part of the film business, from talent to exhibition. And so in Part II, we will focus on the consolidation of information empire, often with state support, and the consequences, particularly for the vitality of free expression and technical innovation. For while we may rightly feel a certain awe for what the information industries manage to accomplish thanks to the colossal centralized structures created through the 1930s, we will also see how the same period was one of the most repressive in American history vis-à-vis new ideas and forms.

But as we have said, that which is centralized also eventually becomes a target for assault, triggering the next phase of the Cycle. Sometimes this takes the form of a technological innovation that breaks through the defenses and becomes the basis of an insurgent industry. The advent of personal computing and the Internet revolution it will eventually beget are both instances of such game-changing developments. And though less endowed with the romantic lore of invention, so too is the rise of cable television. But sometimes it is not invention—or invention alone—that drives the Cycle, but rather the federal government suddenly playing the role of giant-slayer of information cartels and monopolies that it had long tolerated. In Part III, we explore the ways in which the stranglehold of information monopoly is broken after decades.

Through the 1970s each of the great information empires of the twentieth century was fundamentally challenged or broken into pieces, if not blown up altogether, leading to a new period of openness. And a new run of the Cycle. The results were unmistakably invigorating for both commerce and culture. But like the T-1000 killer robot of Terminator 2 the shattered powers would reconstitute themselves, either in uncannily similar form (as with AT&T) or in the guise of a new corporate species called the conglomerate (as with the revenge of the broadcasters and of Hollywood). In Part IV we will see how the perennial lure of size and scale that led to the original information leviathans in the first half of the century spawned a new generation in the latter part.

By the dawn of the twenty-first century, the second great closing will be complete. The one exception to the hegemony of the latter-day information monopolists will be a new network to end all networks. While all else was being consolidated, the 1990s would also see the so-called Internet revolution, though amid its explosive growth no one could see where the wildly open new medium would lead. Would the Internet usher in a reign of industrial openness without end, abolishing the Cycle? Or would it, despite its radically decentralized design, become in time simply the next logical target for the insuperable forces of information empire, the object of the most consequential centralization yet? Part V will lead us to that ultimate question, the answer to which is as yet a matter of conjecture, for which, I argue, our best basis is history.

Reading all this, you may yet be wondering, “Why should I care?” After all, the flow of information is invisible, and its history lacks the emotional immediacy of, say, the Second World War or the civil rights movement. The fortunes of information empires notwithstanding, life goes on. It hardly occurred to anyone as a national problem when, in the 1950s, a special episode of I Love Lucy could attract more than 70 percent of households. And yet, almost like the weather, the flow of information defines the basic tenor of our times, the ambience in which things happen, and, ultimately, the character of a society.

Sometimes it takes an outsider to make this clear. Steaming from Malaysia to the United States in 1926, a young English writer named Aldous Huxley came across something interesting in the ship’s library, a volume entitled My Life and Work, by Henry Ford.8 Here was the vivid story of Ford’s design of mass production techniques and giant centralized factories of unexampled efficiency. Here, too, were Ford’s ideas on things like human equality: “There can be no greater absurdity and no greater disservice to humanity in general than to insist that all men are equal.”9 But what really interested Huxley, the future author of Brave New World, was Ford’s belief that his systems might be useful not just for manufacturing cars, but for all forms of social ordering. As Ford wrote, “the ideas we have put into practice are capable of the largest application—that they have nothing peculiarly to do with motor cars or tractors but form something in the nature of a universal code. I am quite certain that it is the natural code …”

When Huxley arrived in the States, Ford’s ideas fresh in mind, he realized something both intriguing and terrifying: Ford’s future was already becoming a reality. The methods of the steel factory and car assembly plant had been imported to the cultural and communications industries. Huxley witnessed in the America of 1926 the prototypes of structures that had not yet reached the rest of the world: the first commercial radio networks, rising studios for film production, and a powerful private communications monopoly called AT&T.

When he returned to England, Huxley declared in an essay for Harper’s Magazine called “The Outlook for American Culture” that “the future of America is the future of the World.” He had seen that future and been more than a little dismayed by it. “Mass production,” he wrote, “is an admirable thing when applied to material objects; but when applied to the things of the spirit it is not so good.”10

Seven years later, the question of the spirit would occur to another student of culture and theorist of information. “The radio is the most influential and important intermediary between a spiritual movement and the nation,” wrote Joseph Goebbels, quite astutely, in 1933. “Above all,” he said, “it is necessary to clearly centralize all radio activities.”11

It is an underacknowledged truism that, just as you are what you eat, how and what you think depends on what information you are exposed to. How do you hear the voice of political leaders? Whose pain do you feel? And where do your aspirations, your dreams of good living, come from? All of these are products of the information environment.

My effort to consider this process is also an effort to understand the practical realities of free speech, as opposed to its theoretical life. We can sometimes think that the study of the First Amendment is the same as the study of free speech, but in fact it forms just a tiny part of the picture. Americans idealize what Justice Oliver Wendell Holmes called the “marketplace of ideas,” a space where every member of society is, by right, free to peddle his creed. Yet the shape or even existence of any such marketplace depends far less on our abstract values than on the structure of the communications and culture industries. We sometimes treat the information industries as if they were like any other enterprise, but they are not, for their structure determines who gets heard. It is in this context that Fred Friendly, onetime CBS News president, made it clear that before any question of free speech comes the question of “who controls the master switch.”

The immediate inspiration for this book is my experience of the long wave of easy optimism created by the rise of information technologies in the late twentieth and early twenty-first centuries, a feeling of almost utopian possibility and idealism. I shared in that excitement, both working in Silicon Valley and writing about it. Yet I have always been struck by what I feel is too strong an insistence that we are living in unprecedented times. In fact, the place we find ourselves now is a place we have been before, albeit in different guise. And so understanding how the fate of the technologies of the twentieth century developed is important in making the twenty-first century better.