Oddhead Blog

The absurdity of gambling laws in the US leads to such silliness as:

• In 2007, Google, Microsoft, and Yahoo! paid millions in penalties for placing gambling ads, something they haven’t done since they were told to stop in 2004.
• Yahoo! can quote prices from intrade, but can’t link to intrade.
• Google can’t advertise for intrade/tradesports, but can place AdSense ads on intrade.com and tradesports.com. In other words, Google can’t sell eyeballs to gambling sites, but can sell eyeballs on gambling sites.

I am happy to report that on my suggestion intrade has listed futures contracts for 2008 search engine market share.

Here is how they work:

A contract will expire according to the percentage share of internet searches conducted in the United States in 2008. For example, if 53.5% of searches conducted in the United States in 2008 are made using Google then the contract listed for Google will expire at 53.5…

…Expiry will be based on the United States search share rankings published by Nielson Online.

I think this could be a fascinating market because:

• Search engine market share is very important to these major companies, with dramatic effects on their share prices.
• Search engine market share is fluid, so far with Google growing inexorably. However, Microsoft has cash, determination, Internet Explorer, and the willingness to experiment. Ask.com has erasers, 3D, ad budgets, and The Algorithm. Yahoo!, second in market share, often tests equal or better than Google, and new features like Search Assist are impressive.
• The media loves to write about it.
• A major search company might use the market to hedge. Well, this seems far-fetched but you never know. Certainly, from an economic risk management standpoint it would seem to make a great deal of sense. (Here, as always on this blog, I speak on behalf of myself and not my company.)

Finally, I have to comment on how refreshingly easy the process was in working with intrade. They went from suggestion to implementation in a matter of days. It’s a shame that US-based companies are in contrast stuck in stultifying legal and regulatory mud.

Addendum 2008/01/26: Here are links to some market research reports:
Nielsen | ComScore | HitWise | Compete

(It seems that Nielsen Netratings homepage is down; getting 404 error at the moment)

Addendum 2008/03/07: If you prefer, you can now also bet on search share just for fun with virtual currency at play.intrade.com.

(Nielsen Netratings homepage is still down, now for over a month. It’s even more ridiculous given that their own Nielsen Online website points to this page.)

I’m happy to report the launch of the Yahoo! Election ‘08 Political Dashboard. Using the dashboard, you can navigate through a wealth of election-related data, including prediction market data from intrade.com, polling data from Real Clear Politics, search buzz data from Yahoo!, and financial contributions data, regional demographic data, and historical voting records from AP. You can view the election landscape from the national level or dive in deeper to investigate trends state by state.

Yiling, Tej, Lance, and I played supporting roles among a cast that includes fantastic teams at Yahoo! News, UI/Design, Ops, Q&A, and more.

We’ve come a long way since 2006.

See also coverage from TechCrunch and the Yahoo! corporate blog.

Earlier this month, I spent a few days in lovely Banff, Alberta, Canada, at WWW2007, the 16th International World Wide Web Conference. Here are my thoughts from the event. [See also: Yahoo! Research’s writeup.]

It’s becoming clear that other sciences beyond computer science, including economics and sociology, are necessary for understanding the web and realizing its full potential. This theme ran through both Tim Berners-Lee’s and Prabhakar Raghavan’s plenary talks. For every new advance in the web, once it reaches critical mass, the economic incentives to manipulate the system inevitably emerge. Email led to spam. Altavista led to keyword spam. Google led to link spam. Blogs led to comment and trackback spam. Folksonomies led to tag spam. Recommender systems and aggregators (e.g., Digg) led to shilling. It’s clear that a better understanding of incentives, game theory, and system equilibrium is needed, beyond just cool engineering feats. The University of Michigan calls this incentive-centered design and has a world-class research team exploring the topic; see Jeff MacKie-Mason’s blog ICD Stuff for an interesting and accessible discussion. Yahoo! Research is also betting on the importance of human incentives, building a group of economists and sociologists to complement our contingent of computer scientists.

Among conference events, nowhere was the convergence of economics and computer science more clear than at the Third Workshop on Sponsored Search Auctions. The workshop is a rare venue where terms like Nash equilibrium and NP-complete can coexist in harmony. The workshop explored the intricacies of web search advertising, a multi-billion dollar industry experiencing rapid growth. Contributions included new designs for auctioning off advertising space, new analyses of the systems currently used by search engines, new tools to help advertisers, and empirical studies of the industry. Participants included representatives from both academia and industry, including economists, computer scientists, search engine employees (including representatives from the “big three”: Google, Microsoft, and Yahoo!), and search engine marketers. Yahoo! had a large presence at the workshop: Yahoo! scientists (including me) served on the organizing committee, Yahoo! employees and interns presented six of the fourteen peer-reviewed papers, and many Yahoos attended, contributing to their voice to the discussion of this emerging field.

Bradley Horowitz’s talk also emphasized the new web order, where artists are needed as much as technologists: artists who can envision, create, and orchestrate online communities can be the difference between mass adoption and a flop.

An interesting addition to the WWW program was the Web History track and the Web History Center. Some of the talks were fascinating. Hermann Maurer recounted stories of interactive TV products that proliferated in Europe in the 1970’s and that mirrored almost everything that is done on the Web today in a primitive form. [Some keywords to search for if you’re interested: PRESTEL, Teletel/Minitel (France), MUPID (Austria).] For example, one massive multiplayer game, which involved social exploration of 64 million virtual planets, each with a hidden secret, was so wildly popular that it crashed the network. The apparent winner of the contest returned his prize, admitting that he didn’t actually solve for the secrets, but rather hacked into the system and reverse engineered the code. This pre-Internet system even featured some things I’m still waiting for on today’s web, like micropayments.

Same speculation. Same media and market frenzy. On CNNMoney, they used the almost identical title, subtitle, and URL. Exactly one year apart, almost to the day. Bizarre.

http://money.cnn.com/2006/05/03/technology/microsoft_yahoo/

http://money.cnn.com/2007/05/04/technology/microsoft_yahoo/

P.S. I have no special knowledge of the situation. The latest reports I’ve seen say no deal.

I felt bad about this. So I made sure to answer this. And whaddya know?: they like me, they really like me!

——– Original Message ——–
Subject: Yahoo! Answers: Your answer has been chosen as the best answer
Date: 24 Apr 2007 09:44:59 -0700
From: Yahoo! Answers
To: pennockd

	Hey, Dave, look what you got! Congratulations, you’ve got a best answer and 10 extra points! Your answer to the following question really hit the spot and has been chosen as the best answer: Who will win in 2008 and why (real answers)? Go ahead, do your victory dance. Celebrate a little. Brag a little. Then come back and answer a few more questions! Thanks for sharing what you know and making someone’s day. The Yahoo! Answers Team
Get the Yahoo! Toolbar for one-click access to Yahoo! Answers.

So now I’m 1 for 1! I can see how this gets addictive.

When one corporate fish swallows another, a lot can happen. Sure, temporary indigestion, remorse, culture clash, layoffs, posturing, Borg assimilation, chaos, panic, flight, or even disaster may ensue. More likely the carnivore hiccups and life moves on. But, in rare cases, the kid fish just so happens to be a visionary thinker and kickbutt coder with exactly the right skills and temperament to turn mama into a bigger, badder, better, and youthier fish, newly invigorated for survival in the pond. Witness Microsoft’s Ray Ozzie and Yahoo!’s Flickr-ization.

Now Yahoo! has a new Bixation.

I recently had the pleasure of visiting Bix at their (old) headquarters in the heart of downtown Palo Alto. These folks are impressive. Simply put, they build cool stuff, fast. The typical product cycle?: Two weeks. They grok the rinse and repeat development cycle of the new web world and, more importantly, have the experience and talent to pull it off. Oh, and this can never hurt: they’re supremely smart.

Case in point: Two supremely smart Bixies — John Hayes and Mike Speiser — developed a supremely cool prediction market from the ground up in about two weeks of spare cycles. (To predict the American Idol winner, of course: what else?) Check out the brilliantly simple one-page UI, powered by ajax-ian magic. The attention to detail is clear, from the inline sparkline graphs, to the minimalist yet clear descriptions.

Under the hood, the site is running independent Hanson market makers for each contestant. The payoff structure is designed to predict a full ranking, projecting the eventual winner as well as the expected losers each week. Play around with it and see what you think. John and Mike would love your feedback — to a large extent user reactions will drive where this project goes next.

I finally read Time Magazine’s 2006 Person of the Year issue (as usual, I’m a month behind this guy). By now you know that the Person of the Year is “You”, meaning Internet users, meaning that user-generated content (UGC) is King.

There are some high points. Brian Williams, an old-media icon, clearly gets how his industry is changing, though his main point — that society is splintering into information silos where people “consume only what [they] wish to see and hear” — feels overblown: is the silo effect really any worse than it used to be when information was less accessible? Another op ed by Steven Johnson argues that UGC is largely filling a new niche rather than displacing professional content, and I tend to believe him. The YouTube creation story is fascinating, and seems more carefully done than the typical tales, which apparently leave out one of the three co-founders. The most entertaining piece is by Joel Stein about his foray into Second Life: hilarious!

My main complaint lies in Time’s choice of exemplars of the new world order. While YouTube is a no-brainer selection, a wonderful service, and a global phenomenon accelerated by Google’s name and $1.65 billion, Time appoints YouTube the protagonist and crown jewel, to the point where it feels like YouTube, not You, is the real Person of the Year. Meanwhile, MySpace and Yahoo! actually serve more videos to more people. Although these numbers reflect all videos, not just user-generated videos, the most popular items on YouTube are mainly not user-generated either. And it’s too early to judge YouTube’s monetize-ability and legal standing. Time even declares NetFlix a representative company. While NetFlix is certainly a great LongHighNew TailTechMedia company (I’m a subscriber), it’s not exactly indicative of UGC.

Flickr and del.icio.us are highlighted, though I don’t believe either is explicitly identified as a Yahoo! company (whereas the GooTube marriage figures prominently). In fact, I don’t recall Yahoo! being mentioned by name at all in the issue. (At this point readers may chalk up my complaint as a petty defensive gripe, and I don’t blame you: it’s certainly partly that.) So is Yahoo! failing in its publicly avowed strategy to embrace UGC and social media in a big way?

I don’t believe so. The *.yahoo.com family (still the #1 web property worldwide) is brimming with UGC: Answers, Finance, GeoCities, Groups, Local, Movies, Music, My, MyWeb, 360, Video, etc.

Yahoo! Answers by itself is now the 100th most visited web domain, capturing a 96% share of Q&A services, a growth area that already dominates traditional web search in some Asian countries. Yahoo!’s UGC strategy is perhaps most clear in its acquisitions: Flickr, del.icio.us, Konfabulator, JumpCut, Bix, MyBlogLog, etc. Mix in Yahoo!’s developer network, RSS fanaticism, and open spirit, and I find it hard to think of a company more representative of the user-genera-nation.

Here is a fluffy post for a fluffy (but important) topic: the economics of attention.

Yahoo! is in the business of monetizing attention: that’s essentially what advertising is all about. We (Yahoo!) attract users’ attention by providing content, usually free, then diverting some of that attention to our paying advertisers. Increasingly users’ attention is one of the most valuable commodities in the world. This trend will only accelerate as energy becomes cheaper and more abundant, and thus everything we derive from energy (that is, everything) becomes cheaper and more abundant, on our way to a post-scarcity society, where attention is nearly the only constrained resource.

Today, users generally accept content and entertainment in return for their attention, though likely in the future users will be more savvy in directly monetizing their own attention. I’ve heard a number of companies and organizations large and small discuss direct user compensation. Beyond advertising, the economics of attention is important for the future of communication in general.

I haven’t found much academic writing on the topic, though I haven’t looked thoroughly. John Hagel’s piece “The Economics of Attention” is a good start, and he looks to have compiled some nice resources on the topic, though I haven’t yet investigated closely.

An organization that has garnered some attention of their own (of the Web 2.0 buzz variety) is Attention Trust. I find the description on their own website vague and impenetrable. The best explainer on Attention Trust I could find is PC4Media’s, though questions remain. The basic concept is simple enough: users should be empowered to control and monetize their own attention, including the output of their attention (e.g., their click trails, personal data, etc.). Just how Attention Trust plans to hand this power to the people seems to be the hand-wavy part of their story.

Another interesting company in this space is Root Markets, whose business is to connect both sides of the attention market in an attempt to commoditize attention. Their first product is much more specific than that: an exchange for mortgage leads.

If the absence of formal models of the economics of attention is real — and not simply a matter of my own ignorance — than it may be that some economist can make a career by truly tackling the topic in a precise and thorough way.

Thanks to all two hundred and seventy (!) of you who attended the confab.yahoo last Wednesday, as far as I know a record audience for an event devoted to prediction markets. [View pictures]

Thanks for spending your evening with us. Thanks for waiting patiently for the pizza and books! Thanks to the speakers (Robin, Eric, Bo, Leslie, myself, Todd, Chris, and Adam) who, after all, make or break any conference: in this case IMO definitely “make”. The speakers delivered wit and wisdom, and did it within their allotted times! It’s nice to see Google, HP, Microsoft, and Yahoo! together in one room discussing a new technology and — go figure — actually agreeing with one another for the most part. Thanks to James Surowiecki for his rousing opening remarks and for doing a fabulous job moderating the event. Thanks to the software demo providers Collective Intellect, HedgeStreet, HSX, and NewsFutures: next time we’d like to give that venue more of the attention is deserved. Thanks to Yahoo! TechDev and Yahoo! PR for planning, marketing, and executing the event. A special thanks to Chris Plasser, who orchestrated every detail from start to finish flawlessly while juggling his day job, making it all look easy in the process.

Many media outlets and bloggers attended. Nice articles appear in ZDNet and CNET, the latter of which was slashdotted yesterday. The local ABC 11 o’clock news even featured a piece on the event [see item #35 in this report]. I’m collecting additional items under MyWeb tag ‘confab.yahoo’.

CNET and Chris Masse (on Midas Oracle) provide excellent summaries of the technical content of the event. So I’ll skip any substantive comments (for now) and instead mention a few fun moments:

• Bo began by staring straight into the camera and giving a shoutout to Chris Masse, the eccentric Frenchman who also happens to be a sharp, tireless, and invaluable (and don’t forget bombastic) chronicler of the prediction markets field via his portal and blog.
• Todd had the audience laughing with his story of how a prediction market laid bare the uncomfortable truth about an inevitable product delay, to the incredulousness of the product’s manager. (Todd assured us that this was a Microsoft internal product, not a consumer-facing product.)
• I had the unlucky distinction of being the only speaker to suffer from technical difficulties in trying to present from my own Mac Powerbook instead of the provided Windows laptop. Todd later admitted that he was tempted to make a Windows/Mac quip like “Windows just works”.
• Adam finished with an Jobsian “one more thing” announcement of their latest effort, worthio, a secret project they’ve been hacking away at nights and weekends even as they operate their startup Inkling at full speed ahead. (Yesterday Adam blogged about the confab.)

Our Yootles currency seems to have caught the public’s imagination more than any of the other various topics I covered in my own talk. (What’s wrong with you folks? You’re not endlessly fascinated with the gory mathematical details of my dynamic parimutuel market mechanism? ) And so a meme is born. The lead on the Yootles project is Daniel Reeves and he is eager to answer questions and hear your feedback.

I enjoyed the confab immensely and it was great to meet so many people: thanks for the kind words from so many of you. Thanks again to the speakers, organizers, media, and attendees. I hope the event was valuable to you. Archive video of the event is available [100k|300k] for those who could not attend in person.