Category: Web/Tech

Has Google peaked?

by  Tyler Cowen in

The economic theory of adverse selection suggests that we should be suspicious when companies go public. Here is a summary of some research on the topic. If your big idea has such a stunning future, why let other people in on the action?

Google.com will be going public, and John Gapper at The Financial Times has his doubts. Are they trying to cash out at their peak? Here is part of his critique:

The more pertinent question is whether its business model will retain the lead. To start with, it can no longer rely on others failing to grasp the importance of search. Algorithmic search engines are tough to design and maintain but others such as Teoma, owned by Ask Jeeves, and Yahoo’s Inktomi are catching up.

So is Microsoft, which is developing an algorithmic search engine that may be launched by spring next year – the likely time of Google’s IPO. By 2006, it will be bundled into the next generation of Windows – Microsoft’s usual tactic when faced with superior technology owned by others.

The biggest uncertainty is whether its focus on internet searches to the exclusion of anything else will remain the best strategy. Although it has clearly been popular so far – Google performs 200m searches a day and is responsible for an estimated 75 per cent of all referrals to websites – it could become an Achilles’ heel. It means that Google has no unique content, and no long-term customer relationship with the individuals who use its technology; it is only as good as its last search. That contrasts with sites that have their own databases and customer networks, such as Yahoo, with its 100m registered users, or Amazon, which holds a mass of data about the products that it sells.

The difficulty for Google will come as rivals combine search with other resources in ways that it will find hard to match. The launch of Amazon’s “Search Inside the Book”, which allows customers to search pages on its database for references and information, is one example of how search technology can be applied to data within internet sites.

Yahoo is augmenting internet search with its own information. Its Yahoo Shopping service not only allows users to search for the cheapest outlet for different models of digital cameras but also combines the results with its own guide to buying cameras, and with user reviews. Google’s own shopping service, known as Froogle, also displays the cheapest prices but looks flat by comparison.

My take: I’m not buying any shares. My understanding of the technical issues is weak. But I understand the theory of adverse selection pretty well.

Blogs make media more personal

by  Tyler Cowen in

Personality is a key reason why blogs will continue to gain readers. Consider this:

Media was institutional. Now it is personal.
By personalizing media, I don’t mean customizing it (My Yahoo, Your Yahoo, All God’s Children Got Yahoos).
I mean humanizing it, taking on the personalities of people, not of institutions. Consider:
: The success of FoxNews can be attributed to the rise of the personalities and opinions of its anchors…People magazine personalized all news, for now every story has a People angle. I was at the magazine at this tipping point. Once was, a big TV show on the cover yielded big sales. That ended with the remote control and its revolution of choice. The institution — the show — no longer mattered. Now what sold was the event in the star’s life. It was personal. And soon, it wasn’t just entertainment but news of any sort that got that treatment in People and everywhere. News was personal.

Reality TV is a similar phenomenon. For the full opinion, with links, read here.

Many people love the idea of getting their news from Glenn Reynolds as a filter, with his personal commentary, rather than looking to an institutional filter. We all want celebrities or authorities of one kind or another, and blogs help to fill this demand.

All Music

by  Tyler Cowen in

For information, reviews, links, and commentary, here is the best music site I know, AllMusic.com. It covers everything in music, not just the major stars.

Check out this page on the Byrds, for one illustrative example. Here is everything you ever wanted to know about Zakir Hussain.

Addendum: Thanks to Eric Dixon for helping to correct the links. He relates:

It’s a quirk of allmusic.com’s search engine that it will return pages with a generic “amg.dll” URL for any page that pops up directly from a search (as opposed to choosing the correct page from a list of possible matches after a search). If you want to get a replicable URL you need to click on a link for the artist, or album, or song, you want. And it’s probably a good idea to then remove the “&uid=”… database query from the URL, which is user-specific.

Blogs and the private production of public goods

by  Tyler Cowen in

Blogs are a remarkable example of the private supply of public goods. The writers are highly motivated, and often highly intelligent. They produce opinion and commentary on just about everything, with remarkable speed and timeliness. Yet few of these authors are paid directly. They write either for love, or in the hope of converting their fame into profit. Well over four million blogs have been created.

Yet as we might expect, not all bloggers contribute much to the public good. To put it bluntly, many of you out there are slackers. Here are some results from a recent study:

Some highlights: about a quarter of all blogs created are abandoned after only one day. Men tend to abandon their blogs slightly faster than women do, while women are slightly more likely to create a blog in the first place. More than 90% of all blogs were created by people under 30 years old. The average active blog is updated only once every 14 days.

The summary remarks are from www.2blowhards.com.

Canadian loopholes for file-sharing?

by  Tyler Cowen in

Is it legal to download music from Canada? Maybe. Read this update on the debate. The author, Jay Currie, also offers an excellent update on file-sharing and the RIAA suits, plus some analysis, consider this:

The record companies could use the P2P networks to publicize their clubs. They could flood Kazaa with current tunes, branded with their label, with a five to ten second promo at the beginning and end of the file. If you want to download Trick Daddy you can get a clean copy with the Trickster himself shilling for his record company’s club.

Adapting to the new digital, P2P reality may be painful. But in this case it is adapt or die. There will, no doubt, be deaths. I would not want to be in the retail record store business at the moment. But the creative destruction unleashed by new technology is already creating new alternatives for artists to reach their audiences.

As Terry O’Reilly pointed out in his 2002 article on P2P “Obscurity is a far greater threat to authors and creative artists than piracy.” And, as 32 time Grammy Award nominee John Snyder suggests in his Salon article, P2P file sharing represents the greatest marketing tool the music industry has ever come upon.

My take: I agree, but let’s get ready for a music industry with far lower marketing expenditures. This will not be pleasant or convenient in every way, as middlemen are not mere parasites, and property rights are not easily disposable. Our best hope is that Internet marketing can replace costly marketing campaigns, which will become increasingly unprofitable.

Addendum: Today’s Wall Street Journal, Money and Investing section, had some interesting figures on Apple’s iTunes service. You are charged 99 cents per song. It costs about 65 cents to license the song. Credit card fees are about 25 cents a transaction (which can include several songs), minus the two or three percent. Right now the service, extrapolated across a year, would bring in only $25 million in annual revenue. When the service is extended to Windows users, this could boost revenues to the store by as much as $600 million, profit by about a tenth as much.

Forbes poll on the best blogs

by  Tyler Cowen in

Here is the link for a Forbes article, listing well-known blogs in a number of areas, including food, medicine, politics, and media. The economics selection is very small but includes some of our favorites. It is, however, about time to allow for write-in voting, or at least list more voting options. Brad DeLong, probably the most widely read economics blog, isn’t listed at all, and that isn’t the only economics blog missing from the list….

Addendum: One knowledgeable correspondent told me that the economics blog selections were done in March, before MR was started I might add, and that some blogs were ruled out for being too political, not strictly economics.

New economic policy blog from England

by  Tyler Cowen in

The Adam Smith Institute has recently started its own blog. The focus is on current events, in both Britain and around the world, the perspective is market-oriented.

Friedrich Hayek is well-know for writing an essay “Why I am Not a Conservative,” here is Madsen Pirie’s take, from ASI, entitled Why F A Hayek is a Conservative. Pirie is one of the main bloggers on the site.

Smart credit cards: markets in self-constraint

by  Tyler Cowen in

The bottom line is simple:

Researchers at the University of Pennsylvania have one-upped “smart” credit cards with embedded microchips: They’ve developed a technique that lets ordinary card users program in their own spending parameters…The technology could let employers better manage spending on corporate cards or permit parents to get teenage children emergency credit cards usable only at locations like car repair shops, hotels or pay phones.

Programmable credit cards could let cardholders limit expenditures, for instance, to $100 a day or to spending only on certain days or at certain establishments, Gunter said. The programmable card’s added layer of security could also help cut fraudulent online use of credit cards, which has grown into a significant problem for consumers and industry. The same technology could be used in cell phones that use a smart card, Gunter said, to provide owners with ways to regulate the use of the phone by others.

For the full account click here.

One man’s vice…

by  Tyler Cowen in

Here is a new blog devoted to the economics of public policy for the vices, namely the regulation of drugs, gambling, and prostitution, see vicesquad.blogspot.com. I am reading a bit in here, but overall the perspective rings sympathetic toward various methods of legalization or decriminalization. Click here if you wish to read about the attempt of Los Angeles to ban lap dancing.

Here is the blogmeister’s self-description: “My name is Jim Leitzel and I am an economist and co-chair of the public policy concentration in the undergraduate college at the University of Chicago. For the past five years I have taught a course on vice policy, and I have recently started to write a secondary text for the class.”

Thanks for Peter Boettke for the pointer.

Is love predictable?

by  Tyler Cowen in

The advent of Internet dating has led rapidly to a search for better matching results, as detailed by a recent story. After all, reductionists may wonder just how many dimensions the problem can have. Consider the following:

[Researchers] decided to employ computer technology to find a few “simple, logical rules” that make up, well, the recipe for love. For help on the technical side, they turned to Michael Georgeff, director of the Australian Artificial Intelligence Institute. During his work on a NASA project at Stanford Research Institute, Georgeff had developed a methodology to teach Space Shuttle Discovery computers how to anticipate unexpected problems. Working with Thompson and Hutchinson, he applied the same principles to the design of dating software, employing many of the statistical methods common to social science research. “Say you score a 3 on the introvert scale, and a 6 on touchy-feely. Will you tend to like somebody who’s practical?” Using Georgeff’s software, Thompson and Hutchinson then developed an online quiz. Match.com, the highly popular online dating site, began using weAttract.com’s software this year to give users a rough sense of what proportion of the dating population might be attracted to their particular array of personality traits.

The new algorithms are designed to measure not only initial attraction, but also how well the would-be couple can live in harmony. Ten thousand people a day are signing up for eharmony.com, which also tries to do some simple lie-detecting. According to some accounts 30 percent of on-line daters are in fact married, and often lying about that fact.

Meredith Hanrahan, at Matchmaker.com, invokes a market metaphor:

If you want to buy a car, you get a lot of information before you even test-drive,” she says. “There hasn’t been a way to do that with relationships.”

Perhaps one web-dating entrepreneur put it best:

“Everyone is high maintenance. The trick is finding the precise sort of maintenance you need.”

The Eric Rasmusen controversy

by  Tyler Cowen in

Eric Rasmusen of Indiana University has long been well-known as an excellent microeconomist. I taught from his Games and Information for many years, I still have his article “Stock Banks and Mutual Banks” on my Industrial Organization reading list.

Lately Rasmusen has been the center of much controversy. Usually I like to summarize the links I use, however briefly. But in this case I am not sure how to explain events without offending anybody, I know Rasmusen a bit plus I have numerous gay friends. So just read here on the episode. Here is Rasmusen’s frequently interesting blog. Here are Rasmusen’s views on religion. Thanks to Eugene Volokh for the Chicago Tribune link.