There is an interesting conflict between new and traditional media when it comes to global sport events, the biggest of which being the summer Olympic games. Old media buys broadcasting rights and airs events punctuated by advertising. As long as events are aired in real time there is no problem. However, if the audience happens to be in a different time zone media want to air the most important events in prime time (for best advertising returns). However, the experience might be spoiled by social media that operates in real time and may reveal results and key content by the time mainstream media broadcasts events. If you want your audience to watch Usain Bolt win the 100m sprint there is a problem: chances are people will check the event at work using their iPhones or YouTube on their desktops at work.
Data seems to indicate that for now this is still a contained problem: only a few percent of the (mostly young) audience abandons the core sport channels because of the time difference but with social media becoming mainstream this should change fast. For the next Olimpics, traditional media will need, not only be present online, but also, develop a smart bundle for its customers so they can benefit from the thrill of sports news as well as the benefits of picture quality, coverage, commentary, all in one's home comfort. How to price such a bundle and how to extract advertising revenues from it is a fascinating problem.
Thursday, 9 August 2012
Saturday, 23 June 2012
Is Wikipedia biased?
A very interesting study about Wikipedia appeared in the recent issue of the American Economic Review (Greenstein and Zhu, 2012). The article tries to establish if Wikipedia is biased in a political sense? Are articles more left or right leaning? The question is interesting because Wikipedia is the prototypical medium built entirely on user-generated content. But Wikipedia is not just a social network where personal information constitutes the overwhelming majority of uploaded content. Wikipedia is an encyclopedia meant to summarize the collective knowledge of mankind.
The article finds that Wikipedia was indeed biased towards the left (Democratic) in the early years. This bias however, comes from the publishing of more left leaning articles and seems to disappear over time. Essentially, the change doesn't come from the revision of existing articles (this effect is marginal) but rather, from the publishing of new articles in the with an opposite slant (Republican).
The result is comforting: collectively we generate valuable and relatively objective information. The 'wisdom of crowds' is supported in this natural experiment. Yet, it is interesting that, individually, we are quite biased and have a strong need to express this. The study also provides great empirical support to the behavioral assumptions of the entire 'media bias' literature. There, the main argument is that media is biased to cater to the preferences of biased individuals who only want to hear information that is consistent with their views. This, in turn explains a hoard of industry dynamics when media outlets are set out to compete with one another. Those studies only assume biased behavior from individuals. The present study however, shows that indeed, individuals do have a need to reaffirm their biases as opposed to seek objectivity. The good news is that, somehow the market seems to correct for this.
The article finds that Wikipedia was indeed biased towards the left (Democratic) in the early years. This bias however, comes from the publishing of more left leaning articles and seems to disappear over time. Essentially, the change doesn't come from the revision of existing articles (this effect is marginal) but rather, from the publishing of new articles in the with an opposite slant (Republican).
The result is comforting: collectively we generate valuable and relatively objective information. The 'wisdom of crowds' is supported in this natural experiment. Yet, it is interesting that, individually, we are quite biased and have a strong need to express this. The study also provides great empirical support to the behavioral assumptions of the entire 'media bias' literature. There, the main argument is that media is biased to cater to the preferences of biased individuals who only want to hear information that is consistent with their views. This, in turn explains a hoard of industry dynamics when media outlets are set out to compete with one another. Those studies only assume biased behavior from individuals. The present study however, shows that indeed, individuals do have a need to reaffirm their biases as opposed to seek objectivity. The good news is that, somehow the market seems to correct for this.
Sunday, 10 June 2012
Oracles again
There is a good article in The Economist, June 9th, 2012 about expert advice. The article provides evidence that such advice remains very highly on demand despite clear evidence that it's quality is bad. One of the key reasons mentioned is that people need psychological reassurance: "we believe in experts the same way our anchestors believed in oracles; we want to believe in a controllable world and we have a flawed understanding of the laws of chance." ends the article with a quote from a recent author (Philip Tetlock: Expert political advice).
The issue is complicated as I try to argue in my book (also mentioning oracles :-)) but it is clear that psychology has an important role in seeking advice. The article describes an experiment where clearly the advice is bogus (it is about the outcome of coin tosses) yet people pay for it and more so if they find it consistent with their payoffs. This is quite depressing yet very revealing about the market.
Still, there is more to advice than just psychology. In a complex world we do have experts of certain important details (tax advisors, etc.). Most advice is really teaching decision makers what the decision is about not trying to forecast the future. Furthermore, there is good evidence that in high uncertainty, while individual advice is likely to be too unrealizable, multiple sources of information combined (the wisdom of crowds) can be hugely effective in arriving at a good conclusion. All these forces, especially the fact that experts' advice needs to be pooled will massively rise the demand for these services. Could this also be an explanation for the thriving of the information industry, be it in finance, health, politics or other matters?
Friday, 18 May 2012
Google's Knowledge Graph
Google has just announced that it will completely reshape the presentation of its search results. Instead of listing websites where people can find the answer to their queries, it will present data, links, pictures, etc. from its own databases, some 500 million "items". The redesign is said to represent the biggest change in search for the last five years, not just conceptually but also in terms of business impact.
The goal, of course, is to make sure that web surfers remain on Google properties instead of clicking away to another site for answers. Internet companies all over the world already complain and regulators can add the move to their list of Google features to investigate from an antitrust perspective. The announcement is also a subtle tactical move, just one day before Facebook's IPO. It reinforces Google's positioning as the owner of the "knowledge network" as opposed to the "social network".
It is hard to anticipate what the new 'product' will really be but there are a few important pointers. First, it will make connections between the different information elements. At the moment, search provides a list of sources but does not really categorize them. Knowledge Graph will and may even link the sources to one another. People (not least Tim Berners-Lee) have always argued for the, so called 'semantic web' to replace the traditional web. Google's Knowledge Graph is a fine approximation of the idea. Another aspect of the service will, hopefully, have to do with formatting. We may get a more standardized presentation of the information, which is quite important for rapid processing. Will Google look more like Wikipedia then? I think that the answer is 'yes'. The difference is that the voluntary human element in building knowledge will be taken out of the equation and be replaced by a few algorithms.
And now for some fun: I always thought that Google is building a giant brain, the cells of which being living web pages constantly built and animated by human beings. Is it possible that this brain will one day wake up to consciousness? It is hard to believe that this will not happen, actually. Maybe the alarm clock has just gone off....
The goal, of course, is to make sure that web surfers remain on Google properties instead of clicking away to another site for answers. Internet companies all over the world already complain and regulators can add the move to their list of Google features to investigate from an antitrust perspective. The announcement is also a subtle tactical move, just one day before Facebook's IPO. It reinforces Google's positioning as the owner of the "knowledge network" as opposed to the "social network".
It is hard to anticipate what the new 'product' will really be but there are a few important pointers. First, it will make connections between the different information elements. At the moment, search provides a list of sources but does not really categorize them. Knowledge Graph will and may even link the sources to one another. People (not least Tim Berners-Lee) have always argued for the, so called 'semantic web' to replace the traditional web. Google's Knowledge Graph is a fine approximation of the idea. Another aspect of the service will, hopefully, have to do with formatting. We may get a more standardized presentation of the information, which is quite important for rapid processing. Will Google look more like Wikipedia then? I think that the answer is 'yes'. The difference is that the voluntary human element in building knowledge will be taken out of the equation and be replaced by a few algorithms.
And now for some fun: I always thought that Google is building a giant brain, the cells of which being living web pages constantly built and animated by human beings. Is it possible that this brain will one day wake up to consciousness? It is hard to believe that this will not happen, actually. Maybe the alarm clock has just gone off....
Wednesday, 25 April 2012
SEC considers civil case against Egan-Jones, an independent CRA
Egan-Jones is a relatively young, independent credit rating agency (CRA), one of few such institutions where investors pay for the agency's services not the institutions whose securities are being rated. As I have written many times before, this difference is important as it has been shown that the conflict of interest so fundamental to traditional large CRAs (like Moody's, Standard & Poor's, etc.) has been one of the reasons for the recent financial crisis and previous stock market bubbles.
I am not sure what the charges are (according to the April 20, 2012 issue of the WSJ they concern the provision of misleading information about the number of ratings provided and the amount of time Egan-Jones performed such ratings) but the possible consequences may essentially mean the (temporary) suspension of Egan-Jones' license as a CRA.
As we have no details about the evidence it is not possible to decide whether the SEC is right or wrong. Nevertheless, I find the case extraordinary. Despite broad criticism of the leading CRAs and their obvious role in the financial crisis no case was ever brought against them. Conflict of interest together with the lack of competition have been clearly identified as the main issue with the CRA industry, yet the SEC never really went after any of the top three firms, which together control the ratings industry in a tight oligopoly. In this context, making such a strong move against a small, barely 5-year old, independent agency that prouds itself not to be plagued by the fundamental problem of conflict of interest is a major statement and casts doubt on the SEC's willingness to reform the industry. We'll see -the SEC may well have a case. But given its behavior over the last decades in this matter, and in particular, its incapacity to foster competition I see little hope for fundamental change.
I am not sure what the charges are (according to the April 20, 2012 issue of the WSJ they concern the provision of misleading information about the number of ratings provided and the amount of time Egan-Jones performed such ratings) but the possible consequences may essentially mean the (temporary) suspension of Egan-Jones' license as a CRA.
As we have no details about the evidence it is not possible to decide whether the SEC is right or wrong. Nevertheless, I find the case extraordinary. Despite broad criticism of the leading CRAs and their obvious role in the financial crisis no case was ever brought against them. Conflict of interest together with the lack of competition have been clearly identified as the main issue with the CRA industry, yet the SEC never really went after any of the top three firms, which together control the ratings industry in a tight oligopoly. In this context, making such a strong move against a small, barely 5-year old, independent agency that prouds itself not to be plagued by the fundamental problem of conflict of interest is a major statement and casts doubt on the SEC's willingness to reform the industry. We'll see -the SEC may well have a case. But given its behavior over the last decades in this matter, and in particular, its incapacity to foster competition I see little hope for fundamental change.
Tuesday, 3 April 2012
On the media by the media
Kaifu Zhang, a doctoral student at INSEAD has highlighted a great article in the LA times that laments about the opposing perspectives that various media outlets gave on Trayvon Martin's tragic death: see
The article is a great testimony of classic media bias with quite surprising levels of divergence in the expressed views. But it is not just that. It is also a great testimony of agenda setting: media's capacity to focus hundreds of millions on a particular issue.
Monday, 2 April 2012
Social publishers: a new paradigm for online media
Many of my recent readings of the business press give the impression that a consensus seems to emerge among professional content providers (also called "content mills") - online newspapers (e.g. Huffington Post, The Business Insider), online tabloids (e.g. BuzzFeed) or blogs. The consensus is: "the thing to maximize is Facebook Likes!". This is interesting because it acknowledges a shift in the way people consume or "use" online media content. Under the previous paradigm, the idea was to build a portal where people spend time because the portal represents a large bundle of their online information needs. The bundle is designed to maximize the time spent or page views on the site, which then provides higher advertising revenues. Customer acquisition often meant search-engine optimization with the objective to become the "go to place" for a certain topic or fashionable buzz word.
The new paradigm sees the consumer as a social player on the Web rather than someone searching for news, entertainment or other information. People use social networks to promote themselves with an inherent need to build "relevance" in their community. Much more attention is given to the generation of content than to the consumption of content. In this context, the goal is to provide raw material for people to share. The content generated by online publishers - increasingly called social publishers - is an invaluable source for people to find material to share. If we manage to grab the attention of our peers and generate buzz around a piece of funny or touching content or news, we promote our relevance and eventually our social status. But, it is hard to do this with the pictures of our dog or cat or the random experiences that we report on our life. Breaking the news on a good story or a gossip just buys us so much more relevance.
Clearly, if this is the purpose of content search on the Web then the social publisher's objective is to generate as many "Likes" or positive feedback as possible with the posted content pieces. This will make the content pieces viral in social media (mostly Facebook) with the potential to reach a huge crowd. Each visitor spends little time on the social publisher's page but there will be many of them. Moreover, this viral phenomenon might also work for a new form of advertising where instead of showing banner ads to people, brand-specific content (that entertains) is shared between members of the community. There is evidence that ads seen in a social context (e.g. recommended by a friend) work much better than ads "on the periphery" of other content.
But, is it true that our social media use is essentially based on our 'narcissism' with the goal of promoting ourselves? Aren't we just trying to stay in touch and interact with our friends? Research indicates that our inherent tendency to compete for relevance is in many ways the essence of our humanity. The newest theory (by Jean-Louis Dessales) on the origins of human language - arguably one of the top candidates to define our uniqueness as humans - convincingly suggest that speech has evolved to improve individuals' capacity to build coalitions. Speech is a medium to advertise the person in an eternal competition for relevance with other members of the community. More relevance provides us with more capabilities to build useful coalitions. In this sense, similarly to our jokes at a party, our Facebook posts are 'performances' with the aim to build social capital (and at the risk of losing it). Social publishers pretend to help us by providing the raw material.....
The new paradigm sees the consumer as a social player on the Web rather than someone searching for news, entertainment or other information. People use social networks to promote themselves with an inherent need to build "relevance" in their community. Much more attention is given to the generation of content than to the consumption of content. In this context, the goal is to provide raw material for people to share. The content generated by online publishers - increasingly called social publishers - is an invaluable source for people to find material to share. If we manage to grab the attention of our peers and generate buzz around a piece of funny or touching content or news, we promote our relevance and eventually our social status. But, it is hard to do this with the pictures of our dog or cat or the random experiences that we report on our life. Breaking the news on a good story or a gossip just buys us so much more relevance.
Clearly, if this is the purpose of content search on the Web then the social publisher's objective is to generate as many "Likes" or positive feedback as possible with the posted content pieces. This will make the content pieces viral in social media (mostly Facebook) with the potential to reach a huge crowd. Each visitor spends little time on the social publisher's page but there will be many of them. Moreover, this viral phenomenon might also work for a new form of advertising where instead of showing banner ads to people, brand-specific content (that entertains) is shared between members of the community. There is evidence that ads seen in a social context (e.g. recommended by a friend) work much better than ads "on the periphery" of other content.
But, is it true that our social media use is essentially based on our 'narcissism' with the goal of promoting ourselves? Aren't we just trying to stay in touch and interact with our friends? Research indicates that our inherent tendency to compete for relevance is in many ways the essence of our humanity. The newest theory (by Jean-Louis Dessales) on the origins of human language - arguably one of the top candidates to define our uniqueness as humans - convincingly suggest that speech has evolved to improve individuals' capacity to build coalitions. Speech is a medium to advertise the person in an eternal competition for relevance with other members of the community. More relevance provides us with more capabilities to build useful coalitions. In this sense, similarly to our jokes at a party, our Facebook posts are 'performances' with the aim to build social capital (and at the risk of losing it). Social publishers pretend to help us by providing the raw material.....
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