Web/Tech

So, I think the net neutrality issue is very difficult. I think it’s a lose-lose. It’s a good idea in theory because it basically appeals to this very powerful idea of permissionless innovation. But at the same time, I think that a pure net neutrality view is difficult to sustain if you also want to have continued investment in broadband networks. If you’re a large telco right now, you spend on the order of $20 billion a year on capex. You need to know how you’re going to get a return on that investment. If you have these pure net neutrality rules where you can never charge a company like Netflix anything, you’re not ever going to get a return on continued network investment — which means you’ll stop investing in the network. And I would not want to be sitting here 10 or 20 years from now with the same broadband speeds we’re getting today. So the challenge, I think, is to accommodate both of those goals, which is a very difficult thing to do. And I don’t envy the FCC and the complexity of what they’re trying to do.

The ultimate answer would be if you had three or four or five broadband providers to every house. And I think you actually have the potential for that depending on how things play out from here. You’ve got the cable companies; you’ve got the telcos. Google Fiber is expanding very fast, and I think it’s going to be a very serious nationwide and maybe ultimately worldwide effort. I think that’s going to be a much bigger scale in five years.

So, you can imagine a world in which there are five competitors to every home for broadband: telcos, cable, Google Fiber, mobile carriers and unlicensed spectrum. In that world, net neutrality is a much less central issue, because if you’ve got competition, if one of your providers started to screw with you, you’d just switch to another one of your providers.

The entire interview is interesting, including his discussion of the Obama administration and the possibility of a fragmented internet.  By the way here is Marc on EconTalk with Russ Roberts.

From an IGM/Booth survey:

Question B: Information technology and automation are a central reason why median wages have been stagnant in the US over the past decade, despite rising productivity.

Strongly agree, 0%

Agree, 33%

Uncertain, 29%

Disagree, 18%

Strongly disagree, 2%

No opinion, 11%

There are further results of interest here, via Carl Shulman.

Ezra Klein has a very good post on this topic.  He notes that for The New York Times:

…home page traffic has fallen by half over the last two years. This is true even though the NYT’s home page has been beautifully redesigned, and the NYT’s overall traffic is up.

The value of the company is up as well.  And then:

This is the conventional wisdom across the industry now: the new home page is Facebook and Twitter. The old home page — which is the actual home page — is dying a slow, painful death.

I’m skeptical. The thing about “push media” is someone needs to do the pushing. Someone has to post an article to Twitter or Facebook. That can be the media brand. It can even be the journalists. But when articles work it’s really coming from the readers.

Those readers of course are often the dedicated ones who find the article on your home page.  Ezra makes this additional point in passing, which I think is a neat example of how counterintuitive microeconomics can hold in the world of the internet:

Some of the most committed users are still clicking through the RSS feed (which is one reason Vox maintains a full-text RSS feed).

I would put it this way: the fewer people use RSS, the better content providers can allow RSS to be.  There is less fear of cannibalization, and more hope that easy RSS access will help a post go viral through Facebook and other social media.

When a blog is linked to the reputations of its producers, rather than to advertising revenue, the home page remains all the more important.  That is who you are, and many people realize that, even if they are not reading you at the moment.  I call those “shadow readers.”  For MR, I have long thought that the value of shadow readers is quite high.  (“Tyler and Alex are still writing that blog — great stuff, right?  I don’t get to look at it every day [read: hardly at all].  Why don’t we have them in for a talk?”)  In other words, a shadow reader is someone who hardly reads the blog at all, but has a not totally inaccurate model of what the blog is about.  For Vox or the NYT the value of a shadow reader is lower, although shadow readers still may talk up those sites to potential real readers.  For companies which run lots of events, such as The Atlantic, the value of shadow readers may be high because it helps make them focal even without the daily eyeballs.

What if everyone were a shadow reader?  What is the MRS between real readers and shadow readers?  And which are you?  Can a shadow reader sometimes be better to have?  After shadow readers don’t get so upset with you and don’t so much expect that you will write to please them!

And the internet is…

by on May 13, 2014 at 8:45 pm in Law, Web/Tech | Permalink

Mario Costeja González, the Spanish national who brought the complaint, said it was “not going to be a big problem for Google” because the ruling only required it to remove irrelevant information.

That is from the FT story, note that the scope and applicability of this new ruling does still remain up for grabs.

It suggests a world where an automated guardian manages our lives, taking away the awkward detail; the boring tasks of daily existence, leaving us with the bits we enjoy, or where we make a contribution. In this world our virtual assistants would quite naturally act as barriers between us and some brands and services.

Great swathes of brand relationships could become automated. Your energy bills and contracts, water, gas, car insurance, home insurance, bank, pension, life assurance, supermarket, home maintenance, transport solutions, IT and entertainment packages; all of these relationships could be managed by your beautiful personal OS.

Brands in these categories could find themselves dealing with the digital butler (unless we, the consumer, step in and press the override button), in which case marketing in these sectors could become programmatic in the truest sense.

It’s entirely possible that the influence of our virtual minders could reach far further. What if we tell our OS that we’ll only ever buy products that meet certain ethical standards; hit certain carbon emission targets or treat their employees in a certain way? Our computer may say no to brands for many different reasons.

There is more on that idea here.

Eli Dourado has a new piece of note:

In much of the world, the net is not neutral, thanks to companies like Facebook and Google.Facebook Zero is an initiative launched in 2010 to give customers of 50 carriers, mostly in the developing world, access to a lightweight version of Facebook on their WAP-enabled feature phones at no charge. Users can post, like, poke, and comment to their hearts’ content, but if they want to view photos or access non-Facebook sites, they incur the usual data charge. The model has been so successful at growing Facebook adoption in Africa that Google followed suit with a competing offering, Google Free Zone in 2012. Lest anyone think that this is a cruel ploy by evil, for-profit corporations to trap the poor inside their walled gardens, the non-profit Wikimedia Foundation also copied Facebook’s idea with Wikipedia Zero, to great effect.

…non-neutrality can also help to fund necessary network buildouts on an ongoing basis. By giving access to Facebook, Google, and Wikipedia away as a loss-leader, carriers are serving with their basic tier of service those who can’t afford more, and habituating those who can afford to click beyond the walled garden to using the mobile web. This price discrimination not only increases access but also raises more revenue than a neutral strategy would. Developing-world carriers need that revenue if they ever intend to build the kinds of networks that will support widespread Internet use. Net neutrality, in other words, would not only keep the poorest offline, it would keep investment in poor-country telecom infrastructure down for longer.

A similar, but less stark, dynamic is playing out in rich countries. Anyone who has ever used their Kindle’s included 3G service has benefited from network non-neutrality; after all, you can’t use it to access non-Amazon services. Absent Amazon’s non-neutral arrangement with wireless carriers, you’d have to pay a nontrivial monthly fee to access books via the cellular network, which would mean that most people would forgo cellular and stick to Wi-Fi. Again, we observe a non-neutral arrangement expanding access and saving people money.

Read the whole thing.

Melissa Bell surveys three weeks of Vox and asks what you think.  A few things strike me:

1. One of their innovations — which has occasioned lots of hostility — has been to shift the window of what is considered “reportable as accepted truth.”  A MSM article does not put defenders and opponents of evolutionary theory on the same footing.  Vox presents the workability of a health care mandate as something — if not quite to be taken for granted — as a matter where a pro-mandate journalistic stance can be considered a matter of fact.  By no means do I agree with all of their judgments, but I see them as ahead of the curve and outflanking their critics.

2. The site looks great, works great, and they are consistently finding interesting topics to report on, at a higher rate than most better-established MSM outlets.  If I go to the site I will find something new I didn’t know about, every day.  I don’t feel a need to push them into an RSS feed.  By the way, the site looks especially good on an iPad.

3. When I was in fifth grade, I was pulled out of some of the more boring classes and give “SRAs” to work with.  SRAs were color coded material laid out on a series of cards and boxed tabs, which could be manipulated and re-ordered if the student so chose, and which allowed progression to increasing levels of difficulty.  Vox.com reminds me of SRAs, and of some of the instructional theories of the 1960s, although of course on the web and thus with a superior presentation.  I preferred SRAs to class, but anything I like is to be considered suspect from a broader market point of view.  By the way, IBM eventually sold the SRA brand name and content to McGraw-Hill.

4. With any site you have to ask where the “pandering element” comes in.  With MR the TC pandering is to yours truly — the unpaid author — and it comes in the form of puffins, Japan, movie reviews, and obscure Straussian references, among other things which make me giggle.  With Vox the pandering is highly factual and tonally neutral coverage of some hot button issues, such as the racism of Donald Sterling or telling your parents your true profession (porn star).  This strategy likely will succeed, although those articles tend not to interest me personally.  I think they will do pretty well on Facebook and other social media sites.

5. I am most worried about a certain uniformity of voice across the articles.  Think of the headings, photos, and prose style as geared to put the links high in eventual Google searches.  But readers miss the presence of distinctive voices, including Matt and Ezra themselves, who of course have served this role in the past.  I’ve liked all of Matt’s articles for Vox so far, but I miss hearing Matt.  You know, the Matt of mattyglesias.typepad.com and wisecracks about the Wizards.  Slate and Salon are full of voices, and they have found this to be a successful formula, at least relative to the alternatives if not always in terms of net revenue.

I’ve liked Joseph Stromberg’s science coverage, and been impressed by his depth, but he does not (yet?) ring as a distinct voice in my mind.  I don’t even have an illusory picture of what he might be like, and I wonder if their writers can continue to attract readers with such a relatively low level of vividness.  (On the other hand, this limits the bargaining power of the writers!)  Yet can the writers be given greater voice while keeping the Google maximization strategy in place?

Over time this uniformity of tone also will make it hard for them to recruit or keep top writers or writers looking for a path to the top.  And every outlet needs a few of these writers, even if many of the pieces are to be more cookie-cutter in presentation.

6. Costs will rise when they send people outside of the office to do stories, as eventually they must.

7. I am still a pessimist about the long-term economics of media, and I remain unconvinced they have solved the key problem of a weak advertising market for on-line material.  Still, I am keen to see how they will extend the site.

The citation is here:

Matthew Gentzkow has made fundamental contributions to our understanding of the economic forces driving the creation of media products, the changing nature and role of media in the digital environment, and the effect of media on education and civic engagement.

Matt is at the Booth School of Business at the University of Chicago and there is much more at that link.  Here is Matt at scholar.google.com.  Matt’s well-known paper on ideological segregation, with Jesse Shapiro, is here (pdf).  Our class on the economics of the media at MRUniversity.com considers Matt’s work, for instance see this video on ideological segregation.

Here is A Fine Theorem on the Bayesian persuasion paper.

An excellent choice, of course, and hearty congratulations are in order.

Here is what I had to say:

Tyler Cowen, a professor of economics at George Mason University, argues that the very definitions of labor and capital are arbitrary. Instead, he looks around the world to find the relatively scarce factors of production and finds two: natural resources, which are dwindling, and good ideas, which can reach larger markets than ever before.

If you possess one of those, then you will reap most of the rewards of growth. If you don’t, you will not.

There you go, you can tell I studied with Ludwig Lachmann.  The article is interesting throughout.  Here is a slightly earlier post, “Joseph Nocera calls me on the phone.”

From a report from today’s WaPo:

No examples have surfaced of anyone actually exploiting the vulnerability.

Of course that is no longer true, as The Royal Canadian Mounted Police are investigating the cases of 900 Canadian identity theft victims.  And there are likely undetected further cases.  Still, when I hear this crisis described as “On the scale of 1 to 10, this is an 11,” I conclude that economists think about risk differently than do most people, including tech consultants.  (To flip this coin on its other side, I am not especially reassured about the web sites judged as “safe” — should we now start trusting such judgments so strongly?)

What can the deadweight loss be of a previously unnoticed crisis?  And if that is an 11, what does a 12 look like?  How many Canadian victims would be needed to get us up to 13?

A restaurant with three Michelin stars is now trying to up its customer service game by Googling its customers before they arrive. According to a report from Grub Street, an Eleven Madison Park maitre d’ performs Internet recon on every guest in the interest of customizing their experiences.

The maitre d’ in question, Justin Roller, says he tries to ascertain things like whether a couple is coming to the restaurant for an anniversary, and if so, which anniversary that is. If it’s a birthday, for instance, he wants to wish them “Happy Birthday” when they arrive. He’ll scan for photos of the guests in chef’s whites or posed with wine glasses, which suggest they might be chefs or sommeliers themselves.

It goes deeper: if a particular guest appears to hail from Montana, Roller will try to pair up the table with a server who is from Montana. “Same goes for guests who own jazz clubs, who can be paired with a sommelier that happens to be into jazz,” writes Grub Street.

Obviously, the restaurant is just trying to be better in tune with the people sitting around eating its food and drinking its wine. But it seems like a reasonable assumption to believe people posting their birthday dates online aren’t doing so in the hopes that someone they’ve never met before will know, as if by telepathy, to wish them the best on their special day.

There is a bit more here, and for the pointer I thank Donnie Hall.

I am now curious what they would do for me.  Any ideas?

Addendum: Here is what happens if you buy a scale on Amazon.

Should we regulate Bitcoin?

by on April 11, 2014 at 9:16 am in Economics, Law, Web/Tech | Permalink

There is a new paper by Jerry Brito, Houman Shadab, and Andrea Castillo, the abstract is here:

The next major wave of Bitcoin regulation will likely be aimed at financial instruments, including securities and derivatives, as well as prediction markets and even gambling. While there are many easily regulated intermediaries when it comes to traditional securities and derivatives, emerging bitcoin-denominated instruments rely much less on traditional intermediaries. Additionally, the block chain technology that Bitcoin introduced for the first time makes completely decentralized markets and exchanges possible, thus eliminating the need for intermediaries in complex financial transactions.

In this article we survey the type of financial instruments and transactions that will most likely be of interest to regulators, including traditional securities and derivatives, new bitcoin-denominated instruments, and completely decentralized markets and exchanges. We find that bitcoin derivatives would likely not be subject to the full scope of regulation under the Commodities and Exchange Act because such derivatives would likely involve physical delivery (as opposed to cash settlement) and would not be capable of being centrally cleared. We also find that some laws, including those aimed at online gambling, do not contemplate a payment method like Bitcoin, thus placing many transactions in a legal gray area.

Following the approach to Bitcoin taken by FinCEN, we conclude that other financial regulators should consider exempting or excluding certain financial transactions denominated in Bitcoin from the full scope of the regulations, much like private securities offerings and forward contracts are treated. We also suggest that to the extent that regulation and enforcement becomes more costly than its benefits, policymakers should consider and pursue strategies consistent with that new reality, such as efforts to encourage resilience and adaptation.

Along related lines, you might consider Adam Thierer’s excellent new book Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom.

In mathematics at least the answer appears to be yes:

A computer has solved the longstanding Erdős discrepancy problem! Trouble is, we have no idea what it’s talking about — because the solution, which is as long as all of Wikipedia’s pages combined, is far too voluminous for us puny humans to confirm.

A few years ago, the mathematician Steven Strogatz predicted that it wouldn’t be too much longer before computer-assisted solutions to math problems will be beyond human comprehension. Well, we’re pretty much there. In this case, it’s an answer produced by a computer that was hammering away at the Erdős discrepancy problem.

Fortunately,

…it may not be necessary for humans to check it. As Gil Kalai of the Hebrew University of Jerusalem, Israel, has noted, if another computer program using a different method comes up with the same result, then the proof is probably right.

There is more here, via Gabriel Puliatti on Twitter.

INTIMACY is a high-tech fashion project exploring the relation between intimacy and technology. Its high-tech garments entitled ‘Intimacy White’ and ‘Intimacy Black’ are made out of opaque smart e-foils that become increasingly transparent based on close and personal encounters with people.

Social interactions determine the garmentsʼ level of transparency, creating a sensual play of disclosure.

INTIMACY 2.0 features Studio Roosegaardeʼs new, wearable dresses composed of leather and smart e-foils which are daringly perfect to wear on the red carpet. In response to the heartbeat of each person, INTIMACY 2.0 becomes more or less transparent.

There is more information here, and for the pointer I thank Samir Varma.

Vox is up!

by on April 6, 2014 at 8:40 pm in Current Affairs, Education, History, Web/Tech | Permalink

You will find the introductory video here.

Here is an explainer for Game of Thrones.

Here is Ezra on how politics makes us stupid.

Those two articles are very good, and “work” in the intended manner.  Here is the regular home page www.vox.com.

Is it possible their real competition is Coursera?