New Release 2.0 on Money 2.0

One year ago, we published an issue of Release 2.0 entitled "When Markets Collide" (download a PDF), in which we considered what Wall Street and Web 2.0 might have to teach one another. Quite a bit, it turned out: the key parallels we uncovered include latency (both have to do their jobs more or less instantly), connectivity (it's the liquidity of Web 2.0), sensors and actuators (and how to use them), and reputation (stockbrokers are no longer curators -- they're rated).

So it's a ripe time to consider the status of the relationship. What's new? What's changed? The amount of financial data available publicly is astonishing. That doesn't mean it's all useful. There's plenty of data out there, but it's plenty confusing. You can't extract alpha until you understand what you're looking at. As Michael Simonsen, president and CEO of Altos Research, puts it, "free data on the internet is a mess."

If anyone doubts that financial markets and technology markets are deeply intertwined, consider this: the same day that JPMorgan Chase revealed its "purchase" of Bear Stearns, a Gartner Group analyst released a report showing that "the financial services industry continued to lead all vertical markets in server revenue, as it accounted for 25.3 percent of worldwide server revenue in 2007." As goes one set of markets, so goes the other.

In this issue of Release 2.0, we consider the Wall Street/Web 2.0 mashup from a number of angles. We talk to Paul Kedrosky, chair of our Money:Tech conference and an influential blogger on the topic (as well as others), about why some on Wall Street hate Web 2.0 -- and what Web 2.0 can do to infiltrate Wall Street nonetheless. Entrepreneur Marc Hedlund, now chief product officer for OATV-funded personal finance startup Wesabe, examines what happens when hidden data gets surfaced. Cathleen Rittereiser talks to hedge fund managers to discover what they want from Web 2.0 -- and what they're actually getting. Longtime Radar contributor Nathan Torkington digs deep into prediction markets and spells out both how to manage them and what companies can gain from implementing them.

It's a truism that alpha lasts longest when it's hidden. That may have been true in the past, but the growing use of Web 2.0 tools means that less data will stay hidden, and what's hidden will stay hidden for a shorter period of time. As James Altucher of Stockpickr said at Money:Tech, "When it comes to data nowadays, closed source is a myth."

You can purchase the current issue of Release 2.0 or, even better, subscribe to the newsletter.

SpongeBob SquarePants Supports O'Reilly Research Finding

In O'Reilly Radar's recent reseach report, Virtual Worlds: A Business Guide, we contend that virtual worlds will go mainstream. The most powerful data point supporting our argument is that the most active and popular virtual worlds nowadays tend to be those populated by children. The next generation is growing up playing virtual worlds.

And now one of the biggest purveyors of virtual worlds for children, Nickelodeon (which owns Neopets), is going in deeper. It's adding more virtual world features to Neopets and developing a virtual world around its SpongeBob SquarePants franchise. Companies not paying attention to virtual worlds are not paying attention to where the market is going.

Goodbye, New York Times

I love The New York Times. I've read it almost every day of my life since I was in high school. For all its recent flaws -- the weirdo profiles of the major presidential candidates are the most high-profile -- it is still full of the most outstanding reporting. And, on the days that Gail Collins files, it offers up the most penetrating and entertaining opinion.

What's that? It's the last print copy of the Times I'll ever have delivered to my front door. Over the years, I've slowly weaned myself off subscriptions to physical newspapers, but it was hard to say no to the Times. The quality was high, the thump of the paper on the sidewalk was a pleasant sound to hear first thing in the morning, I liked the serendipity of walking through a print section, and I felt obligated to pay for the paper at a time when print subscribers were becoming an endangered species. But, after years of wavering, I'm done. The environmental argument alone should have been enough for me, but the simple fact is that I do more and more of my reading on a screen (the only holdouts: fiction and poetry). And plenty of that reading has been from the Times. What finally made me give in to the inevitable was realizing, one barely-dawn morning last week when I was reading the paper at our kitchen table, that I had already read much (most?) of it online. For all the pleasure of holding and print, the Times on paper is just too late. In 2008, today's paper is yesterday's news.

So now I'm a freeloader, although you could argue that my personal information, sent to the Times in return for a username and password, may have some value. I rarely, if ever, click on an ad on the Times's website. I would gladly pay for the pleasure and convenience of reading the paper online, just as I do for The Wall Street Journal, but I don't have that option. In this era of advertising-is-the-only-business-model, management at the Times Company has decided that I've decided that the value of what it sends to me is zero. I disagree -- and I'm not going to pay a premium for the proprietary and little-used Times Reader to make my point.

I'll miss the paper on paper, and I bet I'll buy it when I'm on vacation, as a treat, an indulgence. But if even people like me -- who adore The New York Times -- can no longer justify a print subscription, how can its print version survive, except as a high-priced, scarce product for an increasingly elite audience?

Dan Roam's "The Back of the Napkin"

I can't draw. Really. I'm a competent interaction designer, but my graphic design skills are those of a plankton. I can't draw on the right side or the left side of my brain.

Yet, like everyone else in business and technology, I need to communicate. As so many studies -- and common sense -- show, we make decisions better (or, at least, faster) when there are pictures involved. I've written awkward stick figures and embarrassingly asymmetric circles on whiteboards and the backs of napkins and envelopes to make points. And now there's a book to support those of us who have to communicate visually but shouldn't be allowed to. Dan Roam's The Back of the Napkin (Portfolio) is breezy in presentation but rigorous in approach. Essentially, it's a framework for understanding why presenting problems in visual form makes it easier to solve them and presenting ideas in visual form makes it easier to develop them and convince others that they're good ideas. Most important, it shows you how to show things, walking through some vivid examples and well-worn metaphors. Chances are you won't pick the same visual metaphors -- but you will think in terms of visual metaphors and that's what will stick.

I hope I've made the case for this book, although I realize I would have done it more effectively if I had drawn something.

Penguin's Missed Ebook Opportunity

I've seen several softball pieces (such as this one) praising Penguin's decision to release, on Amazon's Kindle and Sony's Reader, some classics of English literature, starting with Jane Austen, with certain extras, in multiple ebook formats. Austen's Pride and Prejudice, for example, "will come with recipes from the era, copies of the book's first reviews, and a primer on social etiquette circa 1813." Another source adds "rules of period dancing, and illustrations of fashion, home decor, and architecture."

I'm guessing that the etiquette primer will not be what makes ebooks mainstream. Although ebooks should have extras, those extras should take advantage of the interactive medium, not merely deliver more -- and inferior -- text. This reminds me of the early days of CDs, when all sorts of trivial extras (outtakes, alternate takes) were added to discs as selling points. More recently, it's like the "deleted scenes" stuffed into DVDs. People, do you think those scenes were deleted because they were good?

What's most galling, of course, is that Penguin isn't attempting to increase interest in ebooks as a medium by making these classics, long past copyright, available in free, un-DRM-encumbered formats. In an old-meets-new mashup, publishers could use free distribution of still-in-demand classics to generate interest in a form, ebooks, that is still only in the earliest days of its potential public acceptance. Wouldn't you be more likely to try something new if it was free?

Jill Bolte Taylor's amazing TED talk

At least three of this year's TED talks were flat-out amazing: Tod Machover's, Benjamin Zander's, and Jill Bolte Taylor's. The first of them has just been posted:

Jill Bolte Taylor, a Harvard neuroanatomist, eavesdropped on her own stroke. As I wrote the day of her talk, she walked us through what she felt and thought while her brain was going wild, from the borderline-metaphysical ("I can't define where I begin and where I end") to the borderline-hilarious ("I'm a busy woman. I don't have time for a stoke"). Her description of her time in that strange state, caught between two worlds, the rare researcher who has been able to chronicle a brain-changing event from the inside, was astonishing.

And now you can see and hear it, too:

The brain she's holding there is a real one, by the way.

We'll alert you to the other two classics when they're published.

New O'Reilly Radar Report: a Business Guide to Virtual Worlds

Virtual worlds, particularly Second Life, have generated much excitement -- and much skepticism. In Virtual Worlds: A Business Guide, the newest O'Reilly Radar report, Ben Lorica, Roger Magoulas, and the O'Reilly Radar team get past the hype (and the anti-hype), detail what is happening in Second Life and other virtual worlds, and lay out what businesses need to do to succeed in these worlds, now and in the future. It examines business opportunities, evaluates what has been successful and what hasn't, and what trends are starting to emerge. Those interested in the present will finds an in-depth study of Second Life; those interested in the future will be most interested in what we've learned about children's engagement in virtual worlds. Indeed, the most active users of virtual worlds aren't adults yet. Regardless of how Second Life ends up as a business, there are plenty of reasons to be bullish about virtual worlds as a business category. This report shows why and what to do about it.

Order the report.

See all the O'Reilly Radar reports.

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