Linked List: May 23, 2020

Saturday, 23 May 2020

Luminary Raises Another $30 Million to Flush Down the Toilet ★

Speaking of the business of podcasting, here’s Lucas Shaw and Priya Anand, reporting for Bloomberg:^*

Luminary Media, the money-losing podcasting startup, has raised more than $30 million in a new round and is seeking more funding as it tries to ride out the global pandemic, according to people familiar with the matter.

The funds were raised at a level below last year’s $200 million valuation, said the people, who asked not to be identified because the process is private. The company, which is also cutting costs after struggling to attract subscribers, plans to use the money to fund operations and future programming.

This current round of investment would bring Luminary’s total fundraising to more than $160 million, comparable to the value of the entire company.

I called this a year ago, when I said Luminary’s initial funding of $100 million was being flushed down the toilet:

It might be a great idea to start a company to produce podcasts with celebrity hosts like Lena Dunham, Russell Brand, Trevor Noah, and whomever else Luminary has signed. Those shows, if done well, could be hugely popular and make tons of money — from ads. But a company bringing that talent together does not need $100 million in funding and will never be worth 1/100th of Netflix.

Part of the nature of podcasting is that the cost overhead is remarkably low. You can produce a truly professional show with a few hundred dollars worth of equipment and software. That’s fundamentally different from the cost structure of streaming video. Now Luminary is trying to recover the money they’ve already flushed down the toilet by flushing some more. This isn’t a good idea that just needs more time — it’s a terrible idea predicated on a complete misunderstanding of how both the podcasting and streaming video industries work. Trying to build “the Netflix of podcasting” is like trying to build the “the PlayStation of sudokus”.

When’s the last time you even heard about Luminary? Whoever is funding this round is the proverbial fool soon parted from their money.

* Again: you know.

The Square Small Business Hackathon ★

My thanks to Square for sponsoring DF this week to promote their Small Business Hackathon.

You can help small businesses adapt, recover, and innovate in these challenging times by participating in the Square Small Business Hackathon, running now through June 22. Categories include Retail, Food & Beverage, Healthcare, and Services & Other. You may build for web or mobile using one of Square’s APIs and/or SDKs, in whatever programming language you prefer.

First place category winners get: $3,000 for themselves, $3,000 to donate to a small business of their choice, a Google Home, Square swag, and promotion on Square’s Twitter and YouTube channel. You can get started today.

Hertz Files for Bankruptcy, Somehow Accumulated $17 Billion in Debt ★

Niraj Chokshi, reporting for The New York Times:

Though it had piled up $17 billion in debt, Hertz, which also owns the Dollar and Thrifty brands, was reporting healthy sales at the start 2020. The company’s revenue rose 6 percent in January and February.

How in the world does it make sense for a company in a low-margin, long-established business with financials like this to rack up $17 billion in debt? When times were good this amount of debt would consume decades of Hertz’s profits. This is bananas.

Carnegie Mellon Researchers: Half of Twitter Accounts Discussing COVID-19 Are Disinformation Bots ★

Karen Hao, writing for MIT Technology Review:

Kathleen M. Carley and her team at Carnegie Mellon University’s Center for Informed Democracy & Social Cybersecurity have been tracking bots and influence campaigns for a long time. Across US and foreign elections, natural disasters, and other politicized events, the level of bot involvement is normally between 10 and 20%, she says.

But in a new study, the researchers have found that bots may account for between 45 and 60% of Twitter accounts discussing covid-19. […] Through the analysis, they identified more than 100 types of inaccurate covid-19 stories and found that not only were bots gaining traction and accumulating followers, but they accounted for 82% of the top 50 and 62% of the top 1,000 influential retweeters. […]

Unfortunately, there are no easy solutions to this problem. Banning or removing accounts won’t work, as more can be spun up for every one that is deleted. Banning accounts that spread inaccurate facts also won’t solve anything.

I don’t understand this conclusion at all. If a team at Carnegie Mellon can do this research, so too could a team at Twitter itself. Or Twitter could just use outside teams like the one at Carnegie Mellon.

What we know is that bots are harmful — they spread misinformation with disastrous real-world effect. And we know that both bot accounts and disinformation in the content of posts can be identified at scale, algorithmically. On a social network, anti-disinformation software wouldn’t have to eradicate all disinformation to be radically effective — it only needs to start with the posts that are reaching the most people and work down the popularity graph from there.

The argument that Twitter and Facebook can’t beat disinformation by banning it is like arguing that email providers can’t beat spam. Spam hasn’t been eradicated but it has been effectively diminished. There’s absolutely no reason Twitter and Facebook can’t defeat social media disinformation to the same degree we’ve defeated spam email. They haven’t done so because they don’t want to, presumably because they consider the “engagement” generated by these bots worth the social destruction they cause.

Update: Maybe it’s not “engagement” but “active users”. Or both. What matters is that so long as looking the other way at bot activity increases the metrics used to value Twitter and Facebook, Twitter and Facebook have perverse incentives not to combat bot activity to the extent that they could. The email spam analogy holds — conversely, email providers have zero incentive to allow spam into your mailbox because no one values the worth of an email provider by the number of messages in its user’s inboxes. (Also, you don’t find anyone yelling about spam filtering being a suppression of “free speech”.)