icm2re logo. icm2:re (I Changed My Mind Reviewing Everything) is an 

ongoing web column   by Brunella Longo

This column deals with some aspects of change management processes experienced almost in any industry impacted by the digital revolution: how to select, create, gather, manage, interpret, share data and information either because of internal and usually incremental scope - such learning, educational and re-engineering processes - or because of external forces, like mergers and acquisitions, restructuring goals, new regulations or disruptive technologies.

The title - I Changed My Mind Reviewing Everything - is a tribute to authors and scientists from different disciplinary fields that have illuminated my understanding of intentional change and decision making processes during the last thirty years, explaining how we think - or how we think about the way we think. The logo is a bit of a divertissement, from the latin divertere that means turn in separate ways.


Chronological Index | Subject Index

Look for money in the world, not in the journals

About the business model for online contents

How to cite this article?
Longo, Brunella (2018). Look for money in the world, not in the journals. About the business model for online contents. icm2re [I Changed my Mind Reviewing Everything ISSN 2059-688X (Print)], 7.1 (January).

How to cite this article?
Longo, Brunella (2018). Look for money in the world, not in the journals. About the business model for online contents. icm2re [I Changed my Mind Reviewing Everything ISSN 2059-688X (Print)], 7.1 (January).

Unlike gears and pulleys, you can never run out of HTML!
Hal R. Varian, 2001

Ignorance is like subzero weather: by a sufficient expenditure its effects upon people can be kept within tolerable or even comfortable bounds, but it would be wholly uneconomic entirely to eliminate all its effects. And, just as an analysis of man’s shelter and apparel would be somewhat incomplete if cold weather is ignored, so also our understanding of economic life will be incomplete if we do not systematically take account of the cold winds of ignorance
George J. Stigler, 1961

Markets do not exist in a vacuum.
Joseph E. Stiglitz, 2012

London, 26 February 2018 - Changing gear, again. I am afraid the test did not work very well: after an experiment that lasted almost two years I have to recognise that the pay-per-use version of this magazine introduced in 2016 (see icm2re 5.6) has been economically insignificant up to a point that it can be surely considered it a failure.

However, instead of discontinuing it completely, from this 2018 volume on, I will keep alive the payment option and I will seek to introduce also advertising or sponsorship opportunities.

The publication continues also to be registered and monitored for copyright royalties accrued through libraries and other corporate users.

Once again, an iterative and, hopefully, incremental approach to the matter seems the most reasonable way forward.

Waiting for the syndication right for online contents to become a reality, it seems reasonable to introduce here other changes and treat the basic idea of giving access to copyrighted content for a fee as an ethical choice.

In this article I explain why and how I changed my mind, again, about the fee versus free saga of digital copyrighted contents: this saga may be one day remembered as the drawing line between the industrial age and the digital age! So do not expect me to say the ultimate word on it.

But it looks like, from several streams of research, data analysis and more recent corporate moves, that the next future of revenues from digital content creation will continue to be necessarily very hybrid, and not at all heading towards a reduction of choices, for the very simple reason that everybody is maturing a feeling of being not only entitled to have a say on something, thanks to such huge freedom of expression and creativity we all enjoy, but also to have a share of the revenues made by major players - namely advertising and e-commerce intermediaries.

Wishful thinking of a bonsai-monopolist... at subzero temperatures?

Ignorance is like subzero weather (2).

There is no doubt that the price the reader is generally available to accept for digital contents is zero but... subzero costs have not disappeared at all because of the internet. On the contrary, the main reason why, if not the only one, we want to pay for information (or we are happy to spend hours, days and nights looking for it), remains the reduction of uncertainty and the support for better decisions. And that is true even at subzero temperatures or with poor visibility. Junk is junk, the history of junk is scholarship, the digitisation of junk is the internet said once Hal Varian (3) - more on this in a moment.

After all, digital creators may one day become bonsai-monopolists and decide extreme differential prices, who knows!

There are a number of studies that seem suggesting the reduction (or the gamification?) of asymmetries in financial innovations thanks to big data technologies: that could increase the trustworthiness in Fintech and generally speaking in the banking system and lead to innovations in products’ design and pricing, with more choices for intermediaries and end-users. A recent case study in e-commerce seems confirming that price dispersion, at least in Germany’s e-retailing, does not reduce as the sector matures. Such conclusion has been reached against the backdrop of data related to the sales of electronic, media and leisure-related products, only the 20% of which happens to be made online so far. It may be biased but I find quite interesting for the moment to trust the authors’s conclusion: price dispersion exists “both between online and offline grocery providers as well as across online retailers” (4).

In sum, I wonder, could it not be the case that everything we buy on the internet is just the right thing for us at the right time and we pay for the uniqueness of such experience, and in some circumstances we do not care if exactly the same thing is offered at a cheaper price somewhere else or with a more convenient bundle? Who do we think we are to dismiss such hypothesis of evolution in consumer’s attitude as just wishful thinking, instead of taking it seriously as the foundation of an entire new world of economic laws?

At the end of the day, if behavioural economists can mark their experiments with celebrities gossips and students' datasets as the “new new economics of information”, everything is possible in economics!

Ethical payments and the syndication right

My idea was - and still is as I am going to clarify in a second - quite funny if not folly at first: to ask you to make the ethical choice to pay for the information and insight I provide with icm2re articles. Totally frozen air!

The idea followed up, in a complementary more than consequentially way, my 2015 vigorous campaign to introduce a universal syndication right. That stemmed from the demise of Google Authorship and the 2012 UK Government initiative to establish a digital copyright hub: in a nutshell, I saw the idea of ethical payments and voluntary donations as a possible bridge towards the legal, operational and technological mechanisms very much needed to redistribute among creators shares of the advertising revenues collected by search engines and other third parties (icm2re 3.12 and 4.9 will explain you more about this backdrop).

So, I would charge you one pound to access each icm2re article for one month, ten pound to send you a single issue in the printed (PDF) version or one hundred pounds to give you access to the entire archive up to the whole of the issues published in the year in which you make the decision to pay.

In sum, I would leave it to you the amount to pay. The proposed three different pricing options should satisfy some expectations of flexibility, accommodating other moral and practical choices, such as how much to pay to make photocopies or re-distribute the articles among your colleagues and students, but without disclosing your identity or projects publicly (that would require you, to be fair, the choice of paying me copyright royalties through my collecting society or using the newly established, public lending right in libraries - though this is still quite immature).

A similar opportunity of ethical choices has been offered by other various types of websites and online services in recent years: for instance, the global social science research network SSRN sells now the right to make copies of the papers they host for five dollars each. A newspaper like The Guardian asks you to give your support paying just one pound after you read or while you are reading an article online. The Financial Times now offers also volume discounts for distributed teams with access through third parties’ platforms. I myself might have been inspired by Jimmy Wales’s appeal to make donations to Wikipedia in 2009. And so on and so forth (I am being reminded while I am writing this article that even the Royal Statistical Society is going to solicit donations, so that begging for ethical payments for online contents is becoming the new normal).

Waiting for the syndication right to become a consistent reality so that the immense inequality in the distribution of online advertising and e-commerce revenues can be reduced, it is convenient to ask ourselves if we have not missed any other lesson learned for past experiments.

Does information, or money, rule the world?

While I was writing Otzi and the secrets of ranking (see icm2re 6.6), I recalled how many times in the last twenty or more years I have dealt with the question of how to make money from the internet.

In 1994, Hal Varian started one of the first if not the first internet collection of scientific papers, other interesting documents and links on the subject of economics as a University Gopher server. I kept an eye on his initiatives and studies since then.

In 1995-1996 his amazing collection of links, “Economics of the Internet”, inspired me the design of contents for the italian economic paper “Il Sole 24 Ore”, that was one of my first big internet projects. I called the collection “L’economia italiana su internet”: it was an extremely useful resource for a generation of journalists, academics and internet entrepreneurs to whom a trusted source (the Country major economic newspaper) was implicitly recommending to learn what the internet was about because they were also coming there very soon. In other terms, my idea was a proactive stakeholders management initiative: we were offering contents and learning opportunities for free, in exchange for a chance to lock a very relevant segment of audience and early adopters into a long lasting new frame of reference.

Most of my pioneering web development projects in the 1990s exploited that type of trick and were similar in their fundamental technological and organisational constraints: the publisher’s editorial system as well as the entirety of the organisation, human resources and supply chain were years behind any realistic possibility to migrate contents to a Web platform straightaway. Even when they had adopted common languages (SGML) and the best technical standards, their legacy systems had a number of other system, networking, security and legal constraints.

So, I made the magic of inventing my job from nothing but an idea of the next future: I would provide contents to be published, give directions about things to learn and prepare for the transition.

At a certain point I had the hunch I’d better start looking at something else to earn a living. And I decided to divert much of my entrepreneurial energies from the first generation of internet services towards technologies of learning or e-learning. The hunch came in 1997 thanks again to a talk that Hal Varian gave to some university librarians in Michigan. The video of that talk was streamed online and I either had a chance of watching it from my office in Milan (very likely, as we were experimenting streaming online with a technology called Real for another customer whilst I was investigating recent overseas initiatives for professional development and training of information specialists) or I read an account of it, I cannot remember exactly.

That talk anticipated themes and topics Hal Varian would then elaborate with Carl Shapiro in Information Rules , a book published in 1999 that I promptly reviewed for an italian journal (5). The main message of the 1997 talk and then of the book was that in spite of all the hype created by the WWW, the digital economy was expanding and growing following very well known dynamics typical of the publishing and media industry of the last century.

Under such light, each information product or service started as a website (or converted into it) including football datasets, books, journals, music, stock quotes and so on and so forth, would be sooner or later become subject to economic laws, to the pressure of new technological standards and become something else or simply turn into a commodity and disappear. Nothing really revolutionary, but a big warning for the over-excited and fanatical internet media entrepreneurs.

More than fifteen years later, little progress has been made in order to make new digital products and services less volatile and more resilient, while old lessons to manage change through continue improvements and incremental adaptations still work quite well.

At the end of the day, the Encyclopedia Britannica made massive changes without too much clamour and it is still on the market as a reputable brand, whereas its terribly scaring competitor of 1999, Encarta, was discontinued and closed down by Microsoft in 2009 because it was not credible at all that Microsoft could provide an Encyclopedia - and it simply did not find any way to enter that market.

Indeed, Hal Varian made a warning in his talk about the Economics of searching in 1997 about the production of knowledge: it is a very tricky thing! but I did not understand from that wit, and he possibly did not have such deep intention neither, that I should be worried about the rising importance of political economy for the digital economy, that was just about to deflagrate passed the corner of the new millennium.

After 9/11, we have actually seen the landscape for digital to become more complex and the awareness of such complexity to slowly permeate at least some areas of research in history and the social sciences: new legislation, government policies, antitrust interventions, consumers associations became very relevant in respect of the influences they might have as subtle stakeholders of the future.

The apparently unrelated and technical matters of predicting, designing and shaping imminent variations in the use of a technology of communications have been contaminated with editorial intrusions and vested interests in the ways in which people spend time in the media mix, following successful examples of “invisible” engagement strategies in television productions (6). The public opinion still does not have, most of the times, a clue of these economic interests and the way in which they contribute - or not - to the financial success of digital entrepreneurs. Not there are many heard voices on the issue, with the exception of Baroness O'Neill's occasional tirades on the absence of disclosure on media vested interests in public discourses.

In sum, there is a very important interdisciplinary dimension of economics of information that is still pretty much a rarity to see at least acknowledged in the internet sector as well as in other data science and engineering fields - but possibly for the theory of Max Boisot, on which I will return with the next article.

The model does not exist or it is fundamentally broken

I eventually had the opportunity to watch the video of that Hal Varian 1997 talk (3) after I took the initiative of commissioning the acceleration of the digitisation of its VHS tape held at Michigan State University. So I could trace back from where I got a kick to start my ambitious (and for somebody infamous!) Palestra Internet Panta Rei programme, and I wondered if I missed anything, or if there was any business model I did not understand or I should have followed or imagined at the time. I am afraid I did not.

Meanwhile, I came across a fanny “little article”, as he himself called it, that Hal Varian wrote in 1997 too. That was perhaps the “B” side of the talk given to University librarians. And yes, this is something I had missed.

Luckily enough, the little article entitled How to build an economic model in your spare time was republished in a commemorative issue of “The American Economist” journal in 2016, very wisely, and the same author, again, publicised it through his UC Berkeley old personal page.

Extraordinarily brief and colloquial, this little article is meant to give young economists advice and directions to self-assess and control their personal productivity but it is possibly useful in my opinion to everybody who is dealing with digital and data models.

It is all about five tasks:

  1. Look for ideas in the world, not in the journals
  2. First make your model as simple as possible, then generalize it
  3. Look at the literature later, not sooner
  4. Model your paper after your seminar
  5. Stop when you’ve made your point.

It seems to me these five tasks can also be the cornerstones of any agile data engineering project.

Perhaps I should also note that apparently it was an electric engineer, Richard Hamming, author of several textbooks, who firstly advised Hal Varian on how to write his memorable book on Microeconomics: “Get together the problems that you want your students to be able to solve after they’ve read your book - and then write the book that will teach them how to solve them.”

Conclusions

I really do not have any other advice, model and not even any further idea or answer but the syndication right to address the question of how to make and share money from activities such as online content creation, publication and distribution.

It is up to all of us to build a new sustainable economy for online contents.

Perhaps we should start seriously considering the warning that the model does not exist or it is fundamentally broken. Some money for my articles could support me whilst I keep on looking for it.

Notes

(1) Varian, H. (2001), Economics of Information Technology. Rffaele Mattioli Lecture, Bocconi University, Milano, Italy, November 15-16. Research support from NSF grant SES-9979852.
(2) Stigler, G. J. (1961), The Economics of Information, Journal of Political Economy, 69, 191-214.
(3) Varian, H. (1997) The Economics of Searching, Lecture, Internet Catalogers Workshop, Michigan State University, 22 May. Accessible here.
(4) I refer here to a number of studies about asymmetries in big data analytics, P2P lending and e-commerce I do not feel I have sufficient experience and knowledge of to make an accurate assessment but for taking note of some observations, including: Weber, T.A. (2016), Product pricing in a Peer-to-Peer Economy, Journal of Management Information Systems, 33:2, 573-596; Yan et al. How signaling and search costs affect information asymmetry in P2P lending: the economics of big data, Financial Innovation (2015) 1:19; Fedoseeva, S. et al. (2017) Was the economics of information approach wrong all the way? Evidence from German grocery r(E)tailing, Journal of Business Research, 80 (2017), 63-72.
(5) Longo, B. (1999), Information rules [Book review], Scienza & Business, 1 (1999), n. 3-4, p. 106).
(6) Charaudeau, P. (2011). Les medias et l’information : l’impossible transparence du discours. 2nd ed. rev et augm. Brussels: Editions De Boeck; Paris: Institut national de l’audiovisuel, 2011. I noticed in my review of the second edition of this book that the author changed his perspective talking about the social role of the media moving from a linguistic to an engaging stance. See Longo, B. (2012) Les médias et l'information: l'impossible transparence du discours [Book review]. In Liber Quarterly, 22 (2012), n.3.

Acknowledgments and disclosure of funding, sponsorship or conflicts of interest:

While checking references and preparing this article, I have been supported with a £245.60 fund by Hal Varian, Professor Emeritus and former 1995-2002 Dean of UC Berkeley’s School of Management and Systems (then School of Information), currently Chief Economist at Google. But it would have not been possible to recover the tape of the video of his 1997 talk if the author himself had not quoted it in his academic web page and... he had not forgotten to delete the reference to a RealVideo stream of the talk itself that I remembered I might have watched live from my office in Milan in 1997. Retrieving the name of the author and the year of the lecture, following the links of my personal memories through the Internet Archive’s Wayback Machine, was the first step that eventually allowed me to search for, commission and access the digital version of the video tape.

I could eventually access the video of Hal Varian's 1997 talk thanks to the collaboration with the Archives & Historical Collections Department of Michigan State University (East Lansing, Michigan). In particular, I want to thank Ed Busch, Electronic Records Archivist, that made several journeys to “the other building” to verify the Computer Laboratory’s records and to recover the VHS tapes of the 1997 Internet Catalogers Workshop, sponsored at that time by a Network for Excellence (NEM) in Manufacturing, associated with or started by the Department of Engineering of the same University in the 1990s (that does not exist anymore, MSU has now a different organisation of their Engineering departments and research). After various attempts to share and access the video, digitised by Ed's AV Archivist colleague, via YouTube, Google Drive and Sharepoint, the MSU Archives department have now created a more detailed record for that series of Internet Catalogers Workshop talks in the Computer laboratory register, with at least some essential metadata such as the names of the speakers. They have also catalogued the digitised material. Hal Varian's video is now accessible from within its entry into the online public access catalog of the Archives & Historical Collections available here. The digitisation of the other tapes of the series is in progress.

Many thanks also to Doreen R. Bradley, Director of Learning Programs and Initiatives at the Library of University of Michigan in Ann Arbor, who first helped me via their Library Reference Chat service to exactly identify where Hal Varian could have given that 1997 talk. I reckoned it must have happened in Michigan and it was in fact at the MSU's Kellog Center in East Lansing and not at the University of Michigan in Ann Arbor. Doreen also found there was a generic note about some tapes of the Internet Catalogers Workshops in the register of the computer laboratory records created at the MSU in 1997. I could not have found these traces without chatting with Doreen through her library online live reference service.

Finally, I should not forget to acknowledge that a trace of the 1997 MSU Workshop remained in the public domain and I could find it exactly because the MSU Library newsletter of May 19 1997 volume 19 number 20 advertised Varian’s talk and that, for the sake of their Chief Economist!, has been indexed by Google Books.