Subject: Re: near/medium future digital media economics
From: "Stephen J. Turnbull" <>
Date: Fri, 19 May 2006 10:50:37 +0900

>>>>> "Ben" == Ben Tilly <> writes:

    Ben> Given the known power laws governing the distribution of
    Ben> articles of interest for researchers, it is extremely
    Ben> unlikely that Metcalfe's Law applies in Tom's setting.

Get out of your ivory tower, man!  The fact that it's not interesting
to you doesn't mean that it's not interesting to somebody.

The point that Tom is making is that from the point of view of the
distribution network, documents become a homogeneous commodity since
finding "something interesting to the customer" is O(1), not O(N)
(where N is the number of documents).

That is the assumption you need to discuss.  But on the basis of that
assumption, your "known power laws" do not apply to the distribution

    >> Tom isn't talking about a mature network, he's talking about
    >> one in its infancy.

    Ben> True, but I suspect that doesn't matter much.  My point about
    Ben> mature vs immature is one of size, not age.

    Ben> That is, there is a significant difference between being part
    Ben> of a network of 1000 people and one of 100,000 people.  But
    Ben> the difference between 100,000 and 10,000,000 is not just a
    Ben> big gap.  So until you hit significant size, the larger
    Ben> competitor has a significant advantage.  After you both hit
    Ben> significant size, this advantage becomes fairly small.

No.  The *absolute advantage* continues to increase as size increases.
The fact that rate of increase is *positive* is what matters at the
margin.  In the contexts where your argument makes sense the absolute
advantage *decreases* at the margin.

    >> Also, you should remember that in terms of dynamics, a mature
    >> industry will be increasing with the rest of the economy, ie,
    >> exponentially.  In an industry where costs can be expected to
    >> fall while prices are rising linearly with time ... I'm sure
    >> you can draw the picture, too.

    Ben> In a competitive industry, sometimes falling costs result in
    Ben> falling prices and profits that might go up and might go
    Ben> down...

This industry is not going to be competitive unless its organization
changes radically.  That's Tom's thesis.

    Ben> However size is not the only factor.  While collaborative
    Ben> content is big and will get bigger, there are limits to what
    Ben> you can do with it.  For instance wikipedia has a
    Ben> demonstrated history of accidentally *discouraging* experts
    Ben> from getting involved

It's not an accident, it's essential (cf. Fred Brooks).  I won't touch
Wikipedia in my areas of expertise.  I didn't need to experience it in
that context to know what I would be getting into.  And it's quite
clear that Wikipedia is mostly written by wannabes, incompletely
researched and content-biased.  Often enough there's a clear political
bias, too.

It is nonetheless extremely useful, because for any given human the
set of knowledge for which he has even wannabe status is of measure
zero.  And it may be successful enough to evoke a Gresham's Law of
Encyclopedias unless somebody figures out a way to take advantage of
the medium for high quality encyclopedias.  That's where Tom is going.

However, it is that "Gresham's Law" that convinces me that copyright
will continue to have a role indefinitely.  It is just wishful
thinking to believe that people in general will contribute their
expertise to *others'* areas of interest unless they are directly
compensated for not blathering about what interests them most.

Graduate School of Systems and Information Engineering   University of Tsukuba        Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
        Economics of Information Communication and Computation Systems
          Experimental Economics, Microeconomic Theory, Game Theory