Friday 13 August 2021 11:16 am

The influencer economy: online ranking systems are a purveyor of inequality

Paul Ormerod is an economist at Volterra Partners LLP, a Visiting Professor in the Department of Computer Science at UCL, and author of Against the Grain: Insights of an Economic Contrarian, published by the IEA in conjunction with City A.M.

To the victor the spoils. 

This well-known phrase might be thought to relate to the recent Olympics.  Except that it is not a really accurate description of the Games themselves.

True, the gold medallist gains more kudos than the silver or bronze.  But at future athletics meets, for example, all three can expect an increase in the amounts of monies the organisers will offer to tempt them to appear.  The winner does not sweep the board.

The American media downplay the distinctions even more.  Their medal tables are based upon a simple count of all three, rather than ranking countries by the number of golds.  

As it happens, the United States topped the table on both ways of counting.  This was thanks to a surge in golds on the very last day, America having trailed China on golds almost throughout the competition.

Rewards are typically much more concentrated on the internet.  There are of course many more “players” in any particular market on the web than there are runners in an Olympic final. But even so, an overwhelming proportion of total sales goes to a very small number of participants.

A fascinating illustration was recently provided in an article in the Guardian newspaper about the Only Fans website.

Amongst a few bands and comedians here and there, the site is dominated by women (though there do seem to be a few men) posting photos of themselves in various stages of undress to which only subscribers to the offer of any given individual get access.

During the pandemic, demand for the service seems to have boomed. In November 2019 there were an estimated 7.5 million subscribers worldwide. A year later, the number had swelled more than ten-fold to 85 million.

Ranking systems pervade the internet. Only Fans is no exception, and direct feedback is given by customers on the perceived merits of the suppliers.

This has led to a gross inequality of outcomes in the rewards of the providers. The principle of feedback means that even if one supplier has gained only a slight advantage over another, customers become much more likely to choose the one which is ahead.

As the Guardian puts it “established influencers and celebrities can make incredible money”.  But at least 98 per cent of those offering services barely, and indeed often do not, make enough money to live on.

The Google search algorithm gives rise to a very similar outcome. Well over 90 per cent of all clicks are on the first three sites which come up, with at least 60 per cent being on the first, even if the query generates hundreds of thousands of potential sites.

It is a delicious irony that the medium of the internet, beloved of the liberal left, is a major driver of inequality.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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