virtualeconomics

Advertising archaeology, part #2

I've mentioned before how much fun it is to see the old, old posters that appear on the Underground when they get around to scraping off the years and sometimes decades of accumulated poster ads. Yesterday they were doing this at King's Cross, revealing primarily 1995 ads - one for now-defunct Tower Records, amusingly enough, most of the rest for shows of one sort or another or for the Underground itself.
 

Bankrupt Britain

After Jim Rogers advised US investors to pull out of UK equities and sterling on grounds that Britain is finished we've seen a lot of speculation surrounding the possibility of actual national bankruptcy. Here's some from today. Here's some from, err, last November. Here's some from a few days ago. Here's some from mid-2007 (if you begin to get the feeling this really isn't a new idea you're not alone).

Are we - UK Plc - potentially bankrupt? Better than that - we're already, actually bankrupt. Here's Mencius on Maturity Transformation, the underlying design error of the global financial system (I'd read the whole post, or this won't make any sense). Here's Arnold Kling discussing the same concept. According to the Maturity Transformation view, UK Plc is solvent only by the extraordinary accounting fiction that it can buy money from the future and pay for it with money it has only borrowed today. In other words - and as Taleb said of banking profits a couple of years before the crash - it is obvious that UK Plc's solvency is "simply cash borrowed from destiny with some random payback time". A financial system operating Maturity Transformation (MT) is always a bank run in potentia because under MT the short-term liabilities (massively) exceed short-term assets and you merely hope that everyone won't ask for their money back at once. For potential bankruptcy to become actual bankruptcy only requires that hope not to be realised, once. Don't get me wrong - I'm hoping. But I wouldn't want to put any money on it.

"On a more sobering note, President Obama has killed his first civilians..."

...that we know of since taking office. More here.

Invite which friends?

Now I know Mark Z said it would be a few years yet before Facebook came up with a business model, but still...I haven't seen a more gratuitous waste of valuable online real-estate for a while than the "invite friends" ad on Facebook. Invite which friends? Everyone's already there! If that's the best use they can make of the space they really are scratching around for a way to make money off the site.

(Also, try to picture for a moment the sort of conversation you would have with someone you tried to invite to Facebook right now, halfway through January 2009. "Hey Bob, I've found this website, you should try it out." "Oh cool, I like trying out new websites. What's it called?" "Facebook. It's a 'social network' where you can see what your friends are doing and post photos and...Bob? Bob are you still there?")

The gap between news and life

Comment on the news found on a friend's personal blog I thought some of you would enjoy:

"The newspapers are making me dispirited and sad. Reading stuff like the column in the Independent by a resident of Gaza (his dad died ten days ago, and he just found out his house was destroyed on the day his wife's due to give birth), and the whole Heathrow runway thing, makes me feel like there's no place for optimism and that all idealism is doomed. But the bits of the world near me seem like a giant toyshop full of fascinating new things and exciting plans. It's a confusing business."

And we really wonder why fewer and fewer people buy the things.

"An iTunes for news" - the greatest of the failed analogies for the new news

If iTunes is the salvation of music, why can't the same model save news? This is an easy one. In fact, we've done this one before.

Media has exploded. Digital exploded music, with albums fragmenting into tracks and the old gateways - albums, and HMV - rapidly cut out of the equation. P2P exploded film and TV, with channels fragmenting into on-demand and BitTorrent, the smartest distributors now selling content on-demand or embedding commercial upsides (unskippable ads, better yet product placements) right into the narrative and the old gateways (channels, HMV again) likewise disintermediated.

News originators have tried to learn precisely the wrong lesson from the analogy and the experience of the music, film and TV industries - that news must also explode, the fragments (articles, headlines, photos) being made available everywhere.

The right lesson is that for fragmentation of content to work as a business model, there has to be some inherent commercial value in the fragment. iTunes isn't just a distribution platform, a facility for giving music away - it sells fragments (tracks) to buyers. On-demand isn't giving TV and film away but selling it. Even p2p offers opportunities, perhaps the most robust opportunities, for smart TV and film makers who can get product placement into the distributed fragments, measure exposure and charge "advertisers" commensurately.

There is, as yet, no commercial upside to the distributed news. Sure, use it as a hook to get people back to the originating site and serve ads to eyeballs. (You can't knock a strategy that will now pay for the Los Angeles Times' (drastically reduced) newsroom.) But the analogy with iTunes is desperate, misleading, unhelpful, simply false. iTunes is a business model for distributed content, a way of monetising the fragment itself. Until every news article, every photo, every headline costs something (even a fraction of a fraction of a penny) to read or includes a paid-for ad we do not and will not have an iTunes for news. 

Livejournal losing money?

News today (via Abi of, amongst other things, the excellent Craftycrafty blog) that SUP, the Russian mediatech group that acquired Livejournal from SixApart for a hefty $30m at the top of the bubble, is laying off staff. Valleywag speculates that it is even more difficult to monetise the home of a Harry Potter erotica circle than some other social nets as advertisers are wary of association.

Well and good - big news that there's not a lot of money in running mass-market brand ads over an unmoderated - and in this case virulently anti-censorship - social net.Personally I have five years of almost daily journal on Livejournal; five years of journal I'd be loathe to simply lose and which it would be a considerable hassle to download or move elsewhere. So, at least as a one-off, it should be pretty easy for SUP to monetise LJ before, if, it closes the site down - I'd pay for an easy way to keep a long-standing personal blog, more for somewhere else to put it, and I expect others would too.

Today, I will save you two miserable hours

Last night, saw The Fountain (present from my dear friend, indeed Best Man, Adam). It is clever and incredibly elegant and has Ridley Scott or even Coen Brothers level production values but it is a horrifyingly miserable film (beaten into second place only by Jude for the most depressing film I've ever seen). Today I will save you the two miserable hours it takes to watch it by summarising its central message via a paraphrasing of an exchange between Rincewind and the Ponce da Qurim in Terry Pratchett's "Eric":

"I've been searching for the fountain of youth my entire life. Ever since I was a young man."
"In that case wouldn't it have been a bit more sensible to just, you know, get on with things?"

And that's The Fountain. Incidentally Adam Duritz of Counting Crows also got the central message of the film down to two lines in A Long December:

"I can't remember all the times I tried to tell my myself
To hold on to these moments as they pass"

Sure, I'll be the last scoundrel

This from Timothy Garton Ash in the Guardian: "It must be obvious that the planet cannot sustain 6.7 billion people living as does today's middle class in North America and western Europe - let alone the projected 9 billion world population in mid-century. Either a large part of humankind has to be excluded from the benefits of prosperity or our way of life has to change."

So, let's try and answer that question honestly. Are you planning (and therefore by implication are you pushing your elected leaders towards planning) to radically change your way of life, voluntarily becoming in material terms very much poorer? Or are you planning (etc) to leverage your current political, economic and above all military advantage to make sure that some other portion of humanity gets excluded from the benefits of prosperity? Honestly...I'm going for option 2. The alternative is trusting everyone else on earth to match what sacrifices I make for the common good and I don't fancy my odds. Looks to me like a big - indeed the biggest, humanwide - collective action problem, an enormous tragedy of the commons played with energy sanctions and, ultimately, nuclear weapons to preserve a way of life that even if we are all willing to give up we have to trust everyone else to be willing to give up too.

Cheery stuff for the New Year? We've all read bleaker today already. Happy 2009.