virtualeconomics

MySpace goes down as fast as it went up

The collapse of MySpace proves that network effects work both ways.

It is not, in fact, amazing that the decline of the site's traffic is accelerating. The value of the site as a social network will diminish exponentially for its users as other users leave, just as the usefulness of the site increased exponentially as everyone joined.

The first telephone in the world is no use at all. The second one makes the first one a way for two people to talk; the third, then the fourth and the fifth, increase the possible connections exponentially. But the last telephone in the world is no use either, and as people leave MySpace in a trickle the trickle becomes a flood because the number of possible connections falls below the level that is useful to anyone. The last MySpace account, of course, is no more use than the last telephone. It is only to be expected that the network effect collapses as quickly as once it grew. 

I don't expect to talk about MySpace again until they sell it for pennies or close it down.

News International seeks to establish a print/online equivalence that simply isn't there

So the latest numbers are in for the Times paywall. Now eight months old it deserves, perhaps, to no longer be dubbed an experiment. Charging for people to look at the Times online is now business as usual in the Wapping fortress, and business as usual is doing...ok. Over at Paidcontent there's a copy of the full release and Robert Andrews takes a more detailed look at what the numbers mean.

At the end of the first four months behind a paywall they'd racked up 50,000 actual subscribers (people paying £2 a week) plus 105,000 other "digital purchase events" - people buying a one-day pass. Four more months on, at the end of Feb, they have a total of 79,000 monthly subscribers and a total 222,000 "sales of digital products" - people buying a one-day pass, plus sales of the Sunday Times iPad app. So, as Paidcontent notes, subscription sales have slowed down but sales overall have increased.

Well that about wraps it up for offline cameras

If Color is all it's claimed to be, offline cameras are on their way out even faster than we thought.

Taking photos and not being able to immediately upload and share them already seems absurd - I still have my DSLR, cos it takes good pictures, but having to download photos from it manually hours after the event has the feel of setting hot metal type by hand or binding my own books.

Amazon dating

It occured to me yesterday that Amazon should offer a dating service.

They have all the information that it could possibly be useful to know about a prospective partner. How much do they spend on books? Which books do they buy? How close to publication date do they buy the important ones? Their reviews record would probably be handy too, just to make sure they understood what they were reading. Amazon has locational data for all its customers of course, so all they'd need to do is tweak some privacy settings, add a photo upload facility and let people search for cute potential partners near them who love the same books.

New York Times experiments with perverse incentives

The New York Times paywall (don't call it a paywall? Right...) is a strategic error, and not even a very complicated one.

So there's some science behind it, and the number of articles you can see before you have to pay (20) has been calculated from actual traffic data rather than just pulled out of the air, which is a good start. And it's always good to see a news org putting in some serious R&D, which at $40 million just to develop NYT's paywall definitely counts. It's not as if there's nothing about the move to like - it's considerably more thoughtful and nuanced than TimesSelect or the other, many, failed experiments in charging for (non-porn, non-finance) content that have failed over the past decade and a half.

Car insurance ruling will expose and rationalise a basic profiling shortcut

The ECJ in Luxembourg declares cheaper car insurance for women "discriminatory", so it must be gone by December 2012. Apparently this will see car insurance premiums for women go up by as much as 25%.

It is usually claimed that the difference in premiums is because women are safer drivers. They are not - they simply drive less.

According to the 2009 Annual Travel Survey (pdf), "overall in 2009, females made 5% more trips than males. However, males travelled 19% further than females, averaging 7,380 miles a year compared with 6,193 miles respectively." Would a 19% difference in average miles travelled per year account for the difference in insurance premiums between the genders? Why, yes, it would.

Women crash less because they drive less, not because they drive safer. Insurers have, to date, simplified their response to this phenomenon by offering women cheaper premiums than men. Now they're not allowed to use this basic profiling shortcut my initial guess is that the fairest way to achieve the same outcome will be to price insurance on the basis of miles driven, since this will reflect much the same basic insight - that the more you drive, the more you crash and the greater the risk your insurer bears.

Another missing secondary market

Last week Victoria Coren wrote that she hopped on a train with an advance purchase ticket, got caught and had to buy a new, expensive ticket. So far so unremarkable, that's how train tickets work now and while yes it's sad that a natural monopoly got privatised by pseudo-Thatcherite zealots who didn't understand the basics of Thatcherism, and yes it's a shame that instead of public transport Britain has a semi-regulated non-market that's little more than a license for train companies to steal, there's no real trick to catching the train you bought a ticket for. 

What's so bad about content farms anyway?

At Techdirt guest blogger Chas Edwards writes that the problem with content farms (and by content farms, let's be clear, we mean Demand Media) is about ownership. "Even if Demand Media keeps most of the money they’re making from their websites, they might dodge the Google bullet if they can improve content quality by giving their contributors a sense of ownership over what they create." 

I think it's about the motive. The desire to create (and share) good content is motivated by knowledge, enthusiasm, passion. The writers on the content farms might occasionally, by sheer statistical accident or serendipity, be asked to write about something that moves them, but generally the motive is pure profit. The farm identifies a content niche that it wants to fill because people are searching on that term right now. The writer gets paid a tiny amount of money for knocking out a few hundred words that are just good enough to fill that need (see here an account of one writer's summer on a content farm). And so, necessarilly, the average content is poor because the motive is poor.

Photo by Steven Ashman on Geograph.