Industry Standard as prediction market
As I was finishing a prediction markets article for Release 2.0 so I can go to ETech with a clean conscience, I saw TechCrunch cover the Industry Standard's rebirth as prediction market. The trouble with markets is that all the fun's in playing them—you enjoy the financial pages a lot more when it's your retirement fund you're reading about the progress of.
Prediction markets in particular are hard to make a spectator sport, yet the magazine and media business is all about spectator sports. As Bradley Horowitz famously pointed out, 90% of people just want to read, 9% feel strongly enough to leave a comment, 1% actually create something for you. Industry Standard has adopted a three-pane approach to their homepage: industry news on the left, bets in the middle, miscellaneous crap on the right. None of it grabs the reader, not even the current state of the markets, which are share prices expressed as "community odds" (this is good, given hat making sense of markets is not your average consumer's strong point). At the moment, they're all hovering around 50%, which is hardly penetrating insight. "INTERNET CAN'T DECIDE ABOUT ANYTHING" would be the headline there, and is unlikely to rake in a Pulitzer.
TechCrunch's Erik Schonfeld ended his piece with "When it is play money and anonymous usernames, as is the case here, my prediction is that it will be seen as nothing more than a gimmick." I think he's wrong, actually. Prediction markets can work fine with anonymity and play money—my article is about Google's internal prediction market Prophit and it has both those attributes. However, the one thing that'll kill a prediction market is being boring. Markets need liquidity, which comes from active traders reading, thinking, and trading accordingly. I don't see much return visit appeal in the new Industry Standard at the moment, so in the prediction market of life, consider me shorting it.
tags: web 2.0
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Great analysis.
We just launched Hubdub (www.hubdub.com) which is a news forecaster and prediction market.
One of my biggest surprises of the past 2 weeks is that the people who follow web 2.0 aren't really that engaged in creating content around it. If you take a look at our categories you will see of the 850 open questions that we are carrying, about 220 are sport, 190 are politics, 150 in world and then about 130 for both entertainment and business. Tech only carries about 120 questions and I have yet to find one user generated one that is like the ones on The Industry Standard (I created a couple and they were pretty much ignored :-( ). And that is after being Techcrunched and launching at DEMO. The average time on site from a Techcrunch visitor is about ¼ of a visitor from a mainstream news site.
Of course it may be that The Industry Standard can build a different user base to us. I'd open a market on it on Hubdub but I know our users don't really care!
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Mike Malone [02.07.08 04:33 PM]
To be effective, prediction markets do need to provide some sort of incentive for being correct, and disincentive for being incorrect... the incentive could be cash, bragging rights, a promotion, or something else, but there has to be something.