Value in AI Pt 1

Here’s a framework to understand the upcoming disruption caused by AI. It starts with a story on the historical arc of information.

Unscalable beginnings

In the beginning there was information in the purest ephemeral sense - information was no more than an idea - and ideas were transmitted through language. Early humans invented symbols, and then writing, and then transmitted information in more practical but still unscalable methods:

Speaking and gesturing to one another: methods subject to real time and same space constraints

Drawing on cave walls: relaxing the real time constraint, maintainining the same space constraint

Hand writing books: information can travel across both space and time, but producing portable information incurs a high fixed cost in the form of hand writing the book

Replication revolution

Producing written information is expensive, laborious and slow. Armies of monk scribes shutter in monasteries to spend their lives learning and then writing for a lifetime. The monk is the nexus - and the bottleneck - through which all knowledge flows.

The Bible is generally the only writing that is being produced, and its only consumers are royals and nobles. Differentiation and specialization takes the form of modifying the form of the Bible - an intricate first letter to a chapter, a decorative flourish on the margin of the page - rather than its written content.

The printing press is invented. The cost of replicating information approaches zero. Now Bibles can be produced en masse. “But the Count will not see his special perferred lettering style, a custom style which only I can add to the page!” exclaims the monk. And the monk is right! But the monk misses the point. The consumer doesn’t care so much for that intricate bespoke touch. The consumer would prefer a greater selection of content over more copies of the Bible.

The collapse in the cost of replication leads to an explosion in the production, dispersion, and consumption of knowledge - knowledge which previously was not shared (and advanced upon) because it was not worth the insurmountably high cost to replicate and distribute it.

The Enlightenment emerges as a consequence of this explosion of knowledge availability. Originators of ideas, the authors and the academics, produce orders more than at any point since Classical times.

Where previously the monk was the power center of information, now the power lies with the owner of the printing press. Although the cost of producing the incremental Nth copy of a book is very low, the fixed cost of a press and the incremental cost of compiling and preparing the next manuscript for print remains relatively high. The printer, as the producer of the book, also takes on the role of deciding what to print. The publisher emerges as an idea, but really what we mean by publisher is gatekeeper.

The cost constraint on the global information system becomes the instances of information which are produced. In this world the publisher becomes the nexus of the system, deciding which knowledge is “worth” putting more out of in the world.

Distribution revolution

20th century breakthroughs and their ongoing commercialization beget a progressive and rapid change in the way that information is transmitted. Beginning with the telephone, then radio waves, cable, and, ultimately, the internet, information can be transmitted at both increasingly lower cost and also at higher density throughput.

At first the commercial adoption of these electronic technologies entrenches the power of the publisher. In a world with a continually increasing volume of content, but one in which content is usually “pushed” to the consumer (TV and radio channels, books on store shelves, academic journals which are periodically mailed to institutions), the owners of those distribution channels act as important curators of knowledge and paternalistic guardians of their audience.

At first - and I must emphasize, only at first - the distribution revolution further entrenches the power of the publishers. The winners of the first phase of this world are the Penguins and the CNNs and the Scientific Americans and the Warner Brothers and the New York Times.

Then comes the internet.

The internet vastly widens the pipe for information such that it can be transmitted, effectively, both instantaneously and at limitless volume. Critically, and differently from the previous technologies, information can now be selected, retrieved and delivered by individual consumers on demand without the hassle of bundling and beaming it on discrete rails. The final embedded cost in distribution - the packaging of information - falls away as a constraint.

The cost of distributing information approaches zero.

Embedded in this latter phase of the distribution revolution is the emergence of search in the first order and then algorithmic selection as its successor. Where previously information was pushed down onto the consumer on discrete rails, such as a daily printed newspaper or a numbered television channel, now the quantity of available information and the speed at which it is immediately available is such that the consumer is in control of the information they consume as long as it exists.

This second phase of the Distribution Revolution pulls power away from the publisher and toward the producer of content. “Content is King” becomes the mantra for a short period in the 2010s, the phrase representing the rise of the independent content studio’s negotiating leverage over the publisher pipes through which their content is transmitted. Winners include Shonda Rhimes, Fox News, Buzzfeed. But still the trend to empowering fast moving and nimble creators continues.

The ultimate winners of the distribution revolution are the Charlie D’Amelios and the Joe Rogans and the Pod Save Americas and the Ninjas and the Donald Trumps and the Mr Beasts. These content originators do not have the staying power that the institutional publishers enjoyed. Information moves fast and collective taste evolves quickly. The creator who has mindshare falls to irrelevance as quickly as they rose. But the world is theirs for those that have the talent and the luck to strike a chord tightly resonant with a wide audience in that exact moment.

Origination revolution

Scaling advances in computing capacity are applied to seemingly benign statistical inference principles to create a remarkable result: machines that generate novel content non-deterministically. Where previously machines were able to ingest and transform information numerically and computationally, now machines seem to be able to ingest information which is qualitative and nuanced and output information which is also nuanced and feels qualitatively significant to humans. The result is machines that can seemingly read, write and reason. The information machines can output began with plain text but has expanded to reflect the gamut of ways humans share information: visual, auditory, and text.

We are currently in the phase in which (1) it seems clear that, while the technology is currently expensive, the cost of generation will decrease substantially and (2) we will find out how far and deep the reasoning well goes.

In this phase, the cost of originating novel information will approach zero.

What does it mean

This post is proving longer than I anticipated and I’m out of time. Tomorrow I’ll speculate about who the winners might be in a world where the cost of originating, replicating, and distributing content have all collapsed to zero.