Web/Tech

…blogging, for better or worse, is proving resistant to scale. And I think there are two reasons why.

The first is that, at this moment in the media, scale means social traffic. Links from other bloggers — the original currency of the blogosphere, and the one that drove its collaborative, conversational nature — just don’t deliver the numbers that Facebook does. But blogging is a conversation, and conversations don’t go viral. People share things their friends will understand, not things that you need to have read six other posts to understand.

Blogging encourages interjections into conversations, and it thrives off of familiarity. Social media encourages content that can travel all on its own. Alyssa Rosenberg put it well at the Washington Post. “I no longer write with the expectation that you all are going to read every post and pick up on every twist and turn in my thinking. Instead, each piece feels like it has to stand alone, with a thesis, supporting paragraphs and a clear conclusion.”

The other reason is that the bigger the site gets, and the bigger the business gets, the harder it is to retain the original voice.

That is from Ezra Klein, there is more here.  (I recall Arnold Kling making a related point not too long ago, does anyone have the link?)

If you haven’t already noticed, we have no plans to chase traffic from social media, at least not by changing our basic interests and formula.

Here is another thread I found online:

“The majority of time that people are spending online is on Facebook,” said Anthony De Rosa, editor in chief of Circa, a mobile news start-up. “You have to find a way to break through or tap into all that narcissism. We are way too into ourselves.”

There is more here, from David Carr, mostly about selfie sticks and Snapchat.  The human desire to be social used to be a huge cross-subsidy for music, as young people used musical taste to discover and cement social alliances.  Now we don’t need music so much to do that and indeed music plays a smaller role in the lives of many young people today.  This has been bad for music, although arguably good for sociability and of course good for Mark Zuckerberg.

The “problem” is that the web gives people what they want.  Those who survive as bloggers will be those who do not care too much about what other people want, and who are skilled at reaping cross-subsidies.

Addendum: Kevin Drum offers comment.

I’ve been puzzling through a thought experiment, and I hope it interests you enough that you will choose to address it on your blog…

The logical endgame of all this consumer data mining, web tracking, ad targeting, and loyalty clubs is what I am calling “omniscient sellers.” Omniscient sellers know with 100% certainty how effective an ad will be and what it will take to get a consumer to change consumption decisions. What happens then? Here are some bullets on what I’ve come up with:

* Consumers’ attention becomes even more valuable than it is now, and the rewards for controlling that attention even greater (Facebook, Google, the NBA salary cap all explode even more?).

* Consumers feel very happy because they are largely consuming products that marketers have made them (or discovered they would?) want very badly.

* Could attention-controllers start paying users to use their sites, since attention is so valuable now? Could there be an attention equivalent of credit card reward points?

* I can’t figure out who collects rents here, other than the platforms benefiting from network externalities.

* Does this increase or decrease market entry costs? It certainly will give startup companies something valuable to spend their capital on.

I would value any thoughts you care to share on this topic, or if you know of someone already addressing it.

All very good questions.  I would pose it this way: do consumers buy the ads, or do sellers/intermediaries bid for the attention of consumers?  If intermediaries are competitive and goods suppliers are monopolistically competitive, the surplus mostly goes to the consumers, who are paid to read the ads and then get exactly what they want.  If there is a dominant intermediary,  say Google or Facebook with unique information, that intermediary will extract surplus from both buyers and sellers.  People are happy with their purchases as they experience them, but both consumers and artistic producers have lower lifetime expected wealth, as the intermediary rather efficiently vacuums up those gains.  Not that this scenario in any way resembles our world today…

A hotel with robot staff and face recognition instead of room keys will open this summer in Huis Ten Bosch in Nagasaki Prefecture, the operator of the theme park said Tuesday.

The two-story Henn na Hotel is scheduled to open July 17. It will be promoted with the slogan “A Commitment for Evolution,” Huis Ten Bosch Co. said.

The name reflects how the hotel will “change with cutting-edge technology,” a company official said. This is a play on words: “Henn” is also part of the Japanese word for change.

Robots will provide porter service, room cleaning, front desk and other services to reduce costs and to ensure comfort.

There will be facial recognition technology so guests can enter their rooms without a key.

At least for now, the facial recognition bit means you cannot send your robot to stay there…

The story is here, alas I have forgotten whom I should thank for this pointer.

Here is some media coverage of a recent Facebook study of its economic impact in terms of revenue and jobs.  Facebook claims it added $227 billion to the global economy, but they approached the question the wrong way.

The correct method is to treat jobs as a cost of Facebook, not a benefit, admittedly that is not how politics works nor is it how corporate PR works.  We should measure the benefits directly by consumer time use studies, much as Austan Goolsbee and Peter J. Klenow did in their paper on the internet (pdf).

My question today is this: what is the most accurate one line back-of-the-envelope estimate you can come up with for the gross benefits of Facebook, not bothering to subtract for the costs of running the site?  Here is one (hypothetical and illustrative) example, for America only:

100 million regular users, one hour a day, time valued at $10 an hour, and multiply for $365 billion a year.

You will notice this method implicitly captures the value and disvalue of the ads on Facebook.  The better and more useful the ads are, the more time people will spend on the site.

I don’t devote time to Facebook (I can thank MR for that), so surely you can do better than I in building a plausible one-line estimate.  Please leave your answer in the comments.

Here is the new paper by Akerman, Gaarder, and Mogstad on how Norwegian broadband access has helped the higher earners and largely hurt unskilled labor:

Does adoption of broadband internet in firms enhance labor productivity and increase wages? And is this technological change skill biased or factor neutral? We exploit rich Norwegian data to answer these questions. A public program with limited funding rolled out broadband access points, and provides plausibly exogenous variation in the availability and adoption of broadband internet in firms. Our results suggest that broadband internet improves (worsens) the labor outcomes and productivity of skilled (unskilled) workers. We explore several possible explanations for the skill complementarity of broadband internet. We find suggestive evidence that broadband adoption in firms complements skilled workers in executing nonroutine abstract tasks, and substitutes for unskilled workers in performing routine tasks. Taken together, our findings have important implications for the ongoing policy debate over government investment in broadband infrastructure to encourage productivity and wage growth.

The emphasis is added by this blogger, not from the authors.

Here is a very interesting piece by Claire Cain Miller, here is one excerpt:

The Pew and Rutgers researchers measured stress levels in a representative group of people by using a standard stress scale that ranks people’s responses to questions about their lives. Then they measured their frequency of digital technology use. They controlled for demographic factors like marital and education status.

They found no effect on stress levels among technology users over all. And women who frequently use Twitter, email and photo-sharing apps scored 21 percent lower on the stress scale than those who did not.

That could be because sharing life events enhances well-being, social scientists say, and women tend to do it more than men both online and off. Technology seems to provide “a low-demand and easily accessible coping mechanism that is not experienced or taken advantage of by men,” the report said.

Social media, particularly Facebook, increased stress in one way: by making people more aware of trauma in the lives of close friends. This effect was strongest for women. The finding bolsters the notion that stress can be contagious, the Pew and Rutgers researchers said.

But when such users of social media were exposed to stressful events in the lives of people who were not close friends, the users reported lower stress levels. Researchers said that was perhaps attributable to gratitude for their own lives being free of these stressors (the joy of missing out, offsetting the fear of missing out.)

Do read the whole thing.

A new computer algorithm can play one of the most popular variants of poker essentially perfectly. Its creators say that it is virtually “incapable of losing against any opponent in a fair game”.

…That means that this particular variant of poker, called heads-up limit hold’em (HULHE), can be considered solved. The algorithm is described in a paper in Science1.

The strategy the authors have computed is so close to perfect “as to render pointless further work on this game”, says Eric Jackson, a computer-poker researcher based in Menlo Park, California.

“I think that it will come as a surprise to experts that a game this big has been solved this soon,” Jackson adds.

…Bowling and colleagues designed their algorithm so that it would learn from experience, getting to its champion-level skills required playing more than 1,500 games. At the beginning, it made its decisions randomly, but then it updated itself by attaching a ‘regret’ value to each decision, depending on how poorly it fared.

This procedure, known as counterfactual regret minimization, has been widely adopted in the Annual Computer Poker Competition, which has run since 2006. But Bowling and colleagues have improved it by allowing the algorithm to re-evaluate decisions considered to be poor in earlier training rounds.

The other crucial innovation was the handling of the vast amounts of information that need to be stored to develop and use the strategy, which is of the order of 262 terabytes. This volume of data demands disk storage, which is slow to access. The researchers figured out a data-compression method that reduces the volume to a more manageable 11 terabytes and which adds only 5% to the computation time from the use of disk storage.

“I think the counterfactual regret algorithm is the major advance,” says computer scientist Jonathan Shapiro at the University of Manchester, UK. “But they have done several other very clever things to make this problem computationally feasible.”

The computer does engage in a certain amount of bluffing, full story here, via Vaughan Bell.

Of all the moderns who have written on automation and rising joblessness, Martin Ford is the original.  His Rise of the Robots: Technology and the Threat of a Jobless Future is due out this May, you can pre-order here.  Self-recommending.

Here is my earlier post Will you lose your job to a robot?

The progress of Bitcoin

by on January 5, 2015 at 2:49 pm in Economics, Web/Tech | Permalink

Timothy B. Lee has a good short essay on that question, here is one piece of it:

Between January 2013 and today, the amount of money invested in Bitcoin startups has grown more than 100-fold. Even after 2014’s declines, Bitcoins today are worth 20 times what they were worth at the start of 2013. The number of Bitcoin ATMs has gone from 0 to 342. Yet during the same two-year period, the number of Bitcoin transactions each day has not even doubled.

In short, there’s a lot of excitement among Bitcoin hackers, Bitcoin investors, and other insiders. But normal people are hardly using the network at all.

Recommended throughout, he argues that 2015 will be a make or break year for Bitcoin.

According to forecasts from Match.com and Plenty of Fish, two of the country’s largest dating sites, the single most popular time for online dating — the window when the most people sign up, log on and poke around — will be Jan. 4, from roughly 5 to 8 p.m. Zoosk, another data-focused dating site, backs that estimate up; in 2014, it’s most trafficked time was on the Sunday after New Year’s.

The full article is here, via Ninja Economics.  Might it mean that a) online dating is a kind of palliative against holiday depression?  Or that online dating is a kind of New Year’s resolution, a willingness to undergo a brutal experience for a supposed potential long-run benefit?  Or a bit of both?  Personally, I engage in some of my least productive work on Sunday evenings.

Your model, by the way, should not neglect these corollary facts:

Interestingly, this cycle doesn’t just play out on dating sites — in fact, it’s far broader than that. Researchers have also observed a post-holiday spike in searches for porn, for instance, and a 2012 study by Facebook’s data team found that people are far more likely to change their relationship status in January or February than they are at any other time of year. Offline, the holiday season tends to see a jump in both condom sales and conceptions.

I talked about this phenomenon in Average is Over, here are some recent developments:

In two nonfiction books, scheduled to be published in January, technology experts examine similar consumer-ranking techniques already in widespread use. Even before the appearance of these books, a report called “The Scoring of America” by the World Privacy Forum showed how analytics companies now offer categorization services like “churn scores,” which aim to predict which customers are likely to forsake their mobile phone carrier or cable TV provider for another company; “job security scores,” which factor a person’s risk of unemployment into calculations of his or her ability to pay back a loan; “charitable donor scores,” which foundations use to identify the households likeliest to make large donations; and “frailty scores,” which are typically used to predict the risk of medical complications and death in elderly patients who have surgery.

That is from Natasha Singer, interesting throughout.  And I just received a review copy of the relevant Bruce Schneier book Data and Goliath: The Hidden Battles to Capture Your Data and Control Your World.

…”the internet is now a major driver of the growth of cognitive inequality.” Or in simpler terms, “the internet makes dumb people dumber and smart people smarter.”

The post is here, Kevin’s earlier post on that theme is here.

Just two months ago, e-commerce company Markhor, which works with local artisans to produce high-quality men’s leather shoes, became Pakistan’s most successful Kickstarter campaign, raising seven times more than its intended goal, catching the attention of Seth Godin and GOOD Magazine.

There is no greater evidence of this positive change than in Pakistan’s burgeoning technology ecosystem. In a new report released by my company, Invest2Innovate – which was commissioned by the World Bank’s Consultative Group to Assist the Poor (CGAP) – we mapped the number of startup competitions, incubators, university programs, coworking spaces and forums, and analyzed the gaps and challenges entrepreneurs continue to face in the country.

Three years ago, the ecosystem was relatively nascent, with just a handful of organizations. Today, the space is unrecognizable and brimming with constant energy and activity.

That is from Kalsoom Lakhani, there is more of interest here.  Here is my earlier post on Pakistan as an underrated economy.

“Digital preservation is really just an oxymoron at this point,” says Jan-Christopher Horak, director of the UCLA Film and Television Archive. “It’s really just putting plus and minus electronic charges on plastic — and that plastic has an extremely short half-life. So that most digital media, even if you take it and store it correctly, is probably not going to last more than eight or ten, maybe 15 years.” By contrast, with 35mm film, “we just need to put it into a cold, dark, dry place, pay the electricity bill, and it will last for 500 to a thousand years.”

In one of the most famous examples of the perils of digital preservation, when the makers of Toy Story attempted to put their film out on DVD a few years after its release, they discovered that much of the original digital files of the film — as much as a fifth — had been corrupted. They wound up having to use a film print for the DVD.

From Bilge Ebiri, there is more here.

Felix Salmon writes:

Facebook’s algorithm is already working overtime on trying to slim down a virtually infinite range of possible News Feed posts to a much smaller number. A significant chunk of the NewsFeed is already ads, so in order to make it into the News Feed if you’re not an ad, you need to be really, really good. Like, one close friend announcing her engagement, or a video of another friend pouring a bucket of ice water over her head, or a long and hilarious comment thread on a third friend’s status update. What’s not really, really good? A link to some random website which has a user experience which Facebook can’t control, and which is probably suboptimal on mobile.

In 2015, then, the winners of the Facebook attention lottery are going to be more videos, as well as genuinely native, in-app content from advertisers. The losers are going to be external websites who have become reliant on the Facebook traffic firehose. That traffic is going to start falling, in 2015, for the first time. And the repercussions are likely to be huge.

And here is a very good Nicholas Carson piece on the future of Google, I found this point (among others) interesting:

The only reason search makes money for Google is that people use it to search for products they would like to buy on the internet, and Google shows ads for those products. Increasingly, however, people are going straight to Amazon to search for products. Desktop search queries on Amazon increased 47% between September 2013 and September 2014, according to ComScore.

I often find that people take the current landscape of the web for granted when they try to imagine the future of media.