The Man Who Sold the Metaverse

Keith Cagney
January 17, 2022
Mapping the Metaverse
Features
SaladCloud

The opinions and commentary expressed herein are those of the author, and do not necessarily reflect the views of everyone at Salad. We accept a diversity of viewpoints, flavors, and spices.


Under its former appellation, Meta built its social media empire on advertisements. In fact, funding from paid ad placements has been the cornerstone of Facebook's development since Mark Zuckerberg's dorm room dabble first went public. The introduction of premium "flyers" in 2004 gave way to a sordid history of marketing initiatives that leveraged platform real estate, and eventually evolved to incorporate user data.

Soon after the Facebook Ads platform arrived in 2007, independent researchers discovered that its affiliated Beacon service could track user activity on numerous third-party ecommerce sites. It led to the first of many public apologies from Zuck et al. but, like any corporate mea culpa, Facebook's resolution to do better really meant they'd try harder to get away with it in the future.

When the company hemorrhaged $65M in potential ad revenue during October's six-hour Facebook outage, the temporary fluctuation in its fabled stock price told the whole, alarming story: Facebook's lifeblood has always been its ability to exploit proprietary marketing channels. Despite the diversified revenue that comes with hardware offerings like Facebook Portal and the Oculus product line, advertising still forms a key pillar of Meta's business model.

In recent years, the brand's notorious conduct has earned it the scorn of international regulators, made it the target of FTC antitrust lawsuits, and given industry commentators something to fight about. Most of Facebook's challenges have withered under the brand's spirited legal defense, but inquiries begun in 2018 have recently forced the platform to nerf precision ad targeting.

The Metaverse may be the last unregulated frontier to exploit. As the fine line between reality and advertising grows thinner, we think it’s safe to assume that Meta will do everything it can to render it in 3D.


"I deal in information," he says to the smarmy, toadying pseudojournalist who "interviews" him. He's sitting in his office in Houston, looking slicker than normal. "All television going out to consumers throughout the world goes through me. Most of the information transmitted to and from the CIC database passes through my networks. The Metaverse—the entire Street—exists by virtue of a network that I own and control."

— Neil Stephenson, Snow Crash


TO MARKET WE GO

Earlier in the #MtM series, we discussed how platforms are born: successful web apps trade on convenience and adaptable feature sets to attract a sustaining user population, and then they develop API integrations with third-party web services that allow them to exert influence beyond their locus of natural control. A similar phenomenon occurs at the product level.

On a long enough timeline, nearly every successful web app follows the development cycle of the Facebook News Feed, where the core user experience has become interlarded with ads. The same thing happened to Twitter. What were once inelegant streams of social consciousness are now maximized content stacks whose sole purpose is to guide clicks to paid partnerships.

On Web 2.0, you pay to become the product—even if the service is free.

We should be frightened to think the Metaverse could resemble the contemporary Internet, where the price of consuming content is a bombardment of ads. Time and again, trusting webizens sojourn on a platform for its engaging content and tailor-made experiences, only to watch it fungus over with mercenary advertising channels. Platforms exist to collect their data, capitalize on their attention, and attempt to bait them with the Ever-Present Ad.

Before discounting that statement as unnecessary worry, take a good hard look at what major web services actually give you in exchange for your attention.

BREAK FOR COMMERCIAL

Try streaming something—anything. You can't queue up a YouTube video without hearing some wagging tongue at Luxury App Product explain their Brand Mission (to disrupt a market dominated by slow-to-adapt competitors like Other Luxury App Product).

Need a quick how-to? Google's got a video snippet that should do the trick, provided you can spare five ad seconds to view a six-second clip on decrumbing your toaster.

In just shy of a decade, Netflix devolved into a K-hole of inane mind fodder ("Naked B*tches Christmas Bake-Off") and B2C marketing campaigns tortured to resemble recommendations ("Top 10 in Gritty Date-Night Rom-Coms"). They've made it someone's job to drum up increasingly niche categories that market to certain sets of eyes.

We haven't even factored in the way they manipulate trends. No one really believes that every Netflix Original soars to the vaunted Most Watched list organically, right? Believe it or not, the company might just have a prurient interest in shoring up its latest multimillion-dollar franchise murder. It's fairly easy to snowball viewership on something when it's parked on the homepage—more so when you define a "view" as two minutes of watch time.

In case you missed it, you have paid to become the product.

CREATURE FEATURES

When they're not poisoning the core user experience with paid ads, they're disabling key features just to forge new marketing channels.

Here's a fun one: Google Maps has seemingly forgotten how to interpret string text. Try finding a Denny's among the twenty-five unreviewed "businesses" that paid Alphabet, Inc. to lure you to their parking lot. Frankly it comes as a surprise that they haven't figured out how to time a video advertisement for every stoplight.

Spotify managed to best competitors like Last.fm and Pandora with its superior recommendation algorithms. Nowadays you'd be hard-pressed to find your favorite flavor among all the marketing content on the homepage. Users are forced to sift through one awful podcast after another while a major corporation sheepishly tries to justify its down payment on Joe Rogan's sententious mid-witticisms.

These aren't the deranged rantings of t. podcast disrespecter. Go queue up a song and expand the context menu. How many of us would reel in horror to realize for the first time that the "Do Not Play This Artist" commandment—the once-sacrosanct ability to banish an artist from thine ears forever—has been replaced by the milquetoast suggestion to skip the offending track?

In the new status quo, disliked songs worm their way into your Discover Weekly with surprising regularity. They won't play during the next shuffle, but they'll remain affixed to personalized playlists like totems to your powerlessness. Charitable observers could view this as a conscious design choice to keep unsung artists in the mix, but it's probably less noble than it appears. Without this irksome feature, Spotify couldn't justify the price point of its premium listing service for wannabe rockstars.

Your double-digit dose of songs has been diluted by reserved ad space. Repeat after us: you have paid to become the product.

MONETIZE ME, SENPAI

The key to surviving Web 2.0 is to never underestimate the desire for new marketing channels. Once you've stomached that, grab a barf bag for the realization that the worst offenses of today's Internet have already come to the Metaverse.

Established brands like Gucci and Nike are installing pop-up shops in The Sandbox, Decentraland, and other metaverse experiences. Gamers attending these limited-time events can "try before you buy" with virtual versions of real-life products. If they're sporting, they can even subjugate themselves to Inception-grade brand cache by giving their avatar a Free NFT Hat™ or other freebies at branded shindigs like the Atari casino launch.

This ain't Joe Camel. Nor are we talking about the vaguely-remembered jingle that guides your hand as you wander the aisles. Epic Games may have crafted the perfect metaverse on-ramp by incorporating third-party IPs, but it's hardly fun and games when Crest Whitestrips starts buying up LAND around Tominoya Casino.

The Metaverse will take the monetization of attention to its absurdist conclusion. Soon the Ever-Present Ad may blend so seamlessly into your perceptual experience as to be indistinguishable from an original thought. And when it's finally possible to jump from one user-generated experience to the next, these advertising practices may metastasize into something even more pernicious.

Whether you call it the "social web," the "mobile web," or "Web 2.0," you can't argue that today's Internet has effectively commodified human passion. This era also gave us the addictive excesses of video streaming. A theoretical metaverse will emerge at the confluence of all three technological vectors—and may accordingly suffer all their symptomatic ills.

Facebook didn't invent the black hat tactics of digital advertising by its lonesome, but it did set the example for the other major players of our Dark Timeline Internet. If we allow Meta to build the Metaverses from its current departure point, we might be in big trouble.

TAKEN AT FACE VALUE

In June of last year, Facebook began testing ad placements in its Oculus experiences as a means to create a "self-sustaining VR platform." This development came eighteen months after the company began using Oculus VR data for targeted advertising, and just one month after it rolled out ads on the Oculus mobile app.

According to a developer blog from Oculus, this is just the beginning:

This is a new innovation in the advertising industry, and it’s still early days. We’re currently investing in unobtrusive ads as a new way for developers to build businesses—and though we’re not quite ready to test them yet, we’re also exploring new ad formats that are unique to VR.

While this is an early test, we’re excited by the opportunity to open up new revenue streams for developers and as a result, broaden the type of apps and content on the Oculus Platform. A more profitable content ecosystem is a critical step on the path to consumer VR becoming truly mainstream. And that’s something we think is worth celebrating.

Ads are paving the way to Meta's victory in the hardware arms race. Unless another VR product can compete with Oculus at its lower price point, competitors will ultimately lose out to what HTC Vive GM Dan O'Brien calls Facebook's "artificially subsidized" business model.

Without a sizable market force to dissuade Meta from this course, there's a real possibility that, one day, you will suffer pop-ups "projected onto the physical world" while some smug corporate mouthpiece tries to sell it as "something that can only happen in VR!"

Hence why Meta is doing its utmost to distract its users with the illusion of choice:

Ads are most effective when they’re high-quality and relevant—because of that, Oculus ads will follow Facebook’s advertising principles, the first of which is “build for people first.” It’s also important that people can manage the ads they see, so we’re including controls to hide specific ads or hide ads from an advertiser completely. (source)

Something is glaringly absent from that statement. Lost in the public relations jargon (and the holier-than-thou appeal to Facebook's ad standards) is the affirmation that, while you can always control what ads you see and from whom you see them, you cannot object to ads in toto.

When did we negotiate that away, exactly?

FUNNEL VISION

Proponents of Web3 speak knowledgeably about the ways blockchain solutions might restore privacy and sovereignty to the Internet—but there are few prescriptions for a holistic renewal of web marketing. The call to regulate social media platforms is, in fact, a referendum on digital advertising. Our data and attention have become currencies to a legion of shadow brokers who ask more and more.

Corporations like Facebook usually get by on the defense that ads provide a relatively unobtrusive way to fund platform development, which would be a reasonable claim for most free web apps. But you'd be naive to think anybody settles for mere subsistence (except the folks here at Salad), and the argument loses all puissance when you start schlocking up the feeds of a pricy piece of hardware.

A pimply Zuck might have needed to advertise when he was running servers in a bathrobe. Now that every third post on the platform comes from a corporate sponsor, we have assuredly left the middleground for the realm of excess. Facebook has historically displayed a ruthless protectiveness over its marketing funnels. In addition to perfecting social media's deleterious effect on our attention spans, the company has allegedly inflated video metrics to boost ad revenue, and obscured the way Instagram erodes teens' self-esteem to keep serving ads to a profitable tweenage demo.

The Facebook News Feed's continuously "improved" algorithms illustrate how readily features can be twisted to augment ad sales. Meta knows that the longer you use its platforms, the greater the chance you can be served an ad—so their engineers refine the ranking system to display "high-value" posts that will retain your eyes for fractions of a second more.

Even the most starry-eyed proponents of the Metaverse must acknowledge its propensity for misuse. We will socialize in real time from a shared video arena that broadcasts to every device on the planet. If we're to live sanely there, we have to judiciously support only those experiential economies that respect our digital sovereignty.

Meta's rollout campaign came branded with the wholly sexless tagline "This is going to be fun." With the future of its core platform advertising model threatened by regulatory pressure, the million-dollar question for Meta is: will it be fun, or will it be a funnel?