virtualeconomics

AOL's big bet that advertisers will get a bit (but not a lot) smarter

So AOL buys HuffPo for $315m, valuing (as Chris Tolles points out) their 26m ComScore users at $12 each. We're not (yet) in the Broadcast.com league but it's still an excitingly bubbly valuation at ten times 2010 revenues, five times even management's own 2011 revenue forecast and god knows what multiple of the presumably nominal profitability they claim the site achieved in the fifth year since it launched.

AOL is betting the farm on monetising professionally-created content via display advertising. That's a big bet, but of course for AOL it's not a new one - acquiring HuffPo is simply a continuation of the strategy that AOL has been pursuing since it parted company with Time Warner. Engadget, Politics Daily, Techcrunch and especially Patch are all long bets on paying writers and then serving display ads over the results, and if that's the strategy this is a smart push for more of the same.

How we remembered to be afraid

From an excellent piece on climate change by John Lanchester in the London Review of Books, HT the Guardian's Charles Arthur

"Our material culture is based on science in a way so profound that our attitude to it approaches a kind of faith. Arthur C. Clarke said that ‘any sufficiently advanced technology is indistinguishable from magic.’ This is a remark beloved of SF fans, and endlessly quoted in discussions of what might happen if there were ever to be contact between humans and aliens (or time travel etc). Its real sting is that it is a description of the world we already inhabit. Electric light and power, and television, and computers, and fridges, not to mention cars and planes and lasers and CD players and dialysis machines and wireless networking and synthetic materials, are things we take on trust: we don’t know how they work, but we’re happy to benefit from using them. We may have a rough understanding of scientific method, and even a rough Bill Brysonish sense of some of the science involved, but that is about it; our attitude contains significant components of faith and trust and incomprehension, while at the same time we are grateful for the wonders modern science has brought us."

So true. The relationship between tech support and everyone else increasingly reminds me of that between priesthood and laity - they intercede on our behalf with the incomprehensible and capricious forces that govern our lives. (This can't be a remotely original thought: still, I don't recall where I might have seen it before.)

I strongly recommend the whole article, which isn't really about our slightly dysfunctional relationship with technology but our profoundly dysfunctional relationship with global warming. Another favourite bit:

"I don’t think I can be the only person who finds in myself a strong degree of psychological resistance to the whole subject of climate change. I just don’t want to think about it. This isn’t an entirely unfamiliar sensation: someone my age is likely to have spent a couple of formative decades trying not to think too much about nuclear war, a subject which offered the same combination of individual impotence and prospective planetary catastrophe." 

Futurescanner

I've just been sent details of a new content aggregation front-end - FutureScanner, "a link aggregator that organizes future-focused content and...allows users to search the future by year and category". Nice idea - I'm often looking for predictions on specific topics and dates. The interface also manages to pull that trick of looking dated in a futuristic way, which may or may not be deliberate but nonetheless vaguely appeals to me.
 

Pretend to be a time traveller day

A fun and self-explanatory bit of futurism from Koala Wallop - Pretend To Be A Time Traveller Day. Not unlike International Talk Like a Pirate Day (perhaps best known as the official holiday of the Pastafarian movement) which falls on 19th September every year, Pretend To Be a Time Traveller Day is scheduled for December 8th and suggests participants spend the day wandering around London (or presumably wherever) acting as if they've just stepped out of their time machine. The day offers three flavours of participation: Utopian/Cliche Future (think the brave, bright, shininess of The Gernsback Continuum); Dystopian Future (Mad Max); or Time Traveller From the Past.

Lovely idea. There's no better cure for the thoroughly dangerous delusion that your own culture is right and normal than making a sincere effort to look at it from the outside.

(Via this splendid fellow)

William Gibson on Second Life and corporate futurism

On the growing impossibility of forecasting: "The trouble is there are enough crazy factors and wild cards on the table now that I can't convince myself of where a future might be in 10 to 15 years. I think we've been in a very long, century-long period of increasingly exponential technologically-driven change...In corporate futurism they are really winging it - it must be increasingly difficult to come in and tell the board what you think is going to happen in 10 years because you've got to be bullshitting if you claiming to know. That wasn't true to the same extent even a decade ago."

And on Second Life: "What I find most interesting about Second Life is that I've noticed now, very occasionally, I'll see on the street someone who looks as though they have escaped from Second Life. There are people who look all too much like Second Life avatars and I don't know if they were there before or whether I just hadn't notice them."

(From Silicon.com, via LunchoverIP)

Tales from the future #34,612

Direct Neural Interfaces are now undergoing clinical trials in the US. The thought that we'll be using direct mental links to our computers sometime in the foreseeable future almost makes up for the disappointment that we won't be using perpetual motion machines to generate free, unlimited energy. Also, I rather like the idea that getting computers to understand and respond to speech may therefore turn out to be a dead end. Having grown up with computers that crashed as often as they stayed up, usually taking hours of work with them, I've never liked the idea of having them understand many of the things I say to scream hysterically at them.

Fear of the future

I'm very much enjoying Brian Caplan's The Myth of the Rational Voter. Favourite bit so far has actually been a quotation from Arthur Lovejoy and George Boas's Primitivism and Related Ideas in Antiquity:

"It is a not improbable conjecture that the feeling that humanity was becoming over-civilised, that life was getting too complicated and refined, dates from the time when the cave-men first became such. It can hardly be supposed - if the cave-men were at all like their descendants - that none among them discoursed with contempt on the cowardly effeminacy of living under shelter or upon the exasperating inconvenience of constantly returning for food and sleep to the same place instead of being free to roam at large in wide-open spaces."

The book's central theme is that voters (people) have a systematic bias against well-understood economic facts: that, for example, people distrust foreign trade that would almost invariably be to their long-term benefit and tend towards an unfounded future pessimism. I'm not that far through it. So far though; excellent, thought-provoking stuff. Also...if people are systematically predisposed to misapprehend basic economic truths, and if media concentrates on telling people the news they want to hear, presumably we get a feedback loop. Caplan argues thus:

"...for all the power ascribed to them the media are also consumer-driven. Competition induces them to cover news that viewers want to watch. In the standard rational choice account, this reduces political information costs and so helps democracy work. Yet I am sceptical that much useful information flows from media to viewers. Instead, like politicians, the media show viewers what they want to see and tell them what they want to hear."

If it is true that voters are systematically irrational, and true that a market for media obliges media providers to report the news the audience likes (and in the way the audience likes), the whole way in which the news is currently reported might represent a market failure. I'm still thinking about what that means.

TechForX - a technology forecast market

Those of us inclined to predict the future of technology - and I confess that I am not immune from this vice - would do well to try our hands at TechForX, "the technology foresight exchange".

Developed and operated by Andreas Graefe, a PhD student at the German Institute for Technology Assessment and Systems Analysis, this is a highly sophisticated trading-based predictions market in which participants can buy or sell positions in potential future events.

For example, the market "taxes on virtual worlds" lets participants trade the hypothesis "A value added tax (VAT) for transactions within virtual worlds (like Second Life) is raised" by buying or selling in seven positions, from "never" to "after 2030" at the prevailing market rate. (A word of warning - the interface is relatively complex. I used to sell trading systems for a living and this looks more like the systems use by brokers than the ones used by their clients.)

Prediction markets are, of course, an increasingly mainstream way of tapping what James Surowiecki called The Wisdom of Crowds and experiments have included the World Economic Forum's Global Risks Prediction Market as well as the Pentagon's entertainingly contentious terrorism futures market (CNN). What Andreas has put together is a way for those of us with an eye on the future of media and technology to put our (nominal) money where are mouths are and bet on the likelihood and timing of specific outcomes.

Ray Poynter of The Futures Place has more thoughts, and links to some of the theoretical framework behind prediction markets thinking, here.   
 

Predicting yesterday's future

There's something endearing about predictions for the year 2000 written in 1900 - if you haven't seen them yet, do. Of particular note and relevance:

"#18 Wireless telephone and telegraph circuits will span the world. A husband in the middle of the Atlantic will be able to converse with his wife sitting in her boudoir in Chicago. We will be able to telephone to China quite as readily as we now talk from New York to Brooklyn".  

"#19 Grand Opera will be telephoned to private homes, and will sound as harmonious as though enjoyed from a theatre box."

And my favourite:

"#9 Photographs will be telegraphed from any distance. If there is a battle in China a hundred years hence, snapshots of its most striking events will be published in the newspapers an hour later". (Spot on really, apart from the newspaper part and the idea that a delay of as much as an hour might be involved). 

Digital networks as countries

Fascinating bit of futurology at Crunchnotes yesterday, with a video pointing out such nuggets as "if MySpace were a  country it would be the 11th largest in the world (in between Japan and Mexico)."

There's something about web services that seems to impel Americans to compare their userbases to the population of Mexico. Back in the day, Microsoft's Yusuf Mehdi told us that Hotmail's domination of the webmail market made it (the equivalent of) the 9th largest country on earth, just ahead of Mexico. And both estimates make the same error - the registrants equals active users. MySpace, with it's maybe 40 million active users, is probably closer in population to Spain or the Sudan.