Go to http://stat.eu.com
The blogs here may be revived at a future point in time, but it is strongly suggested to start surfing New Media Works News at http://stat.eu.com (and/or to visit New media works at http://traffic.de.com 
)
When you want to use the present tense
September 13th, 2009 | New Media WorksJust Another Online Business Model Blog Post
September 13th, 2009 | New Media WorksJay Rosen has been saying we need think about online business models (for news)…
Well here’s another place you can go:
Subscription to Write + Free to Read
That’s it. Of course this only makes sense if the market is one that people are interested in: a context that matters….
What Do Markets Have to Do with Science + Information — What Does Mean Mean?
September 13th, 2009 | New Media WorksA little aha insight for today. (plus a free bonus funny video 
Incommensurability Meets Translation
Take these two statements (related to Thomas Kuhn’s “Structure of Scientific Revolutions”, see e.g. Malcolm Forster’ s text, point #16 and point #23):
1. There Is No Such Thing as a Neutral Observation Language
and
2. Communication Breakdown Can Be Overcome by Inter-Group Translation
Markets (and/or “Marketplaces”) are Points of View (Perspectives on “Real” World Phenomena/Events/Transactions)
We can select the language we use to communicate / interact / do business with, but we cannot do anything without language (or in a “true” / objective language).
The survival of the fittest paradigm will be chosen according to the supply and demand of paradigms available.
If only one paradigm is available (for example, under totalitarianism), then the chosen paradigm is artificial, no “natural selection” takes place.
Technological sophistication (and economic development) is enhanced via the development of paradigm translation mechanisms, such that the market participant can easily choose which market / paradigm to utilize.
Regulation: Markets are related, therefore we (market participants) regulate each other
September 13th, 2009 | New Media WorksFor many centuries, beer has been brewed in Germany with water and various grains. There are, of course other inputs, such as energy, various kinds of apparatus needed for production, human labor, etc. More than 500 years ago, princes in various parts of Germany often regulated beer production, such that only specific ingredients were permitted. This was one form of “external regulation” of the beer market, but other kinds of regulation have been known since over 1000 years. (see also Brauordnungen ).
Instead, let’s now imagine a hypothetical entrepreneurial brewer in a hypothetically lawless country. He would do everything by himself, and then sell his finished product from his front porch without any external regulation whatsoever. He starts out selling beer for $1 per pint, and receives many happy customers. He decides to expand the business, and can now produce more beer — and due to economies of scale, he is able to offer the beer now for $0.50 per pint and still make a good profit. Now more people — especially poorer people — drink more beer.
Happy story, but of course the truth is more complex than this fictional scenario. In fact, the beer market is linked to all other markets, too. Note that I said all. I want to emphasize that point, but for now let’s just singl
e out 2 other markets: The market for fresh water, and the market for public restrooms. ![[IMAGE: Regulation: internal + external]](http://past.blog.com/files/2009/10/external-wide1.gif)
As beer production increases, so does the demand for water and also for public restrooms. And the markets for these other inputs are also linked, as are all inputs and outputs — much as the weather patterns are linked to a variety of other factors, down to the flapping of a butterfly’s wing.
What is the difference between internal and external regulation?
The whole notion that regulation might be either “internal” or “external” stems from the feeble intellectual capacity of humans. Since it is too complex to comprehend a world in which everything that happens is related to everything else that happens, humans tend to simplify the description of events. They pretend that events happen in isolation of one another, that they are not interrelated, and they call those things that are beyond their limited focus of attention “externalities”.
For example: Hurricane Katrina was one such “externality” — a natural disaster. Some people maintain that it could have been predicted, but it is nonetheless not considered to be related in any way to the amount of beer produced in Germany or the amount of beer consumed globally. Many Germans helped to alleviate in the disaster relief, but the German support is assumed to not have had any impact on the production or consumption of beer in any way. The invisible hand of free market economies is assumed to work without leaving any such trace whatsoever.
This is, of course, nonsense
We have simply gotten the fundamental economic theory wrong.
The truth is: There are no externalities. The entrepreneur who feels that there are any externalities is either innocent or ignorant (or perhaps just plain stupid — and certainly not rational).
Where do we go from here?
My hunch is that the focus of attention related to regulation ought to be on scale. It is unreasonble to devise rules that apply globally, being equally applied in all situations. For example, if there were a rule that all people should eat the same food, many people would probably suffer from allergic reactions.
On the other hand, if there are 9 million bicycles in Beijing, then if a bicyclist goes to a bike repair shop to fix a wheel or to renew the brakes, then it makes sense for the repair shop to stock a wide variety of parts — enough such that almost any bicycle could be repaired quickly and easily, and at a cost such that the cyclist will be able to afford the repairs. At the same time, perhaps bicycles in Beijing need to be different than bicycles in Amsterdam or Tokyo, or perhaps different in China than in the United States or in Nigeria.
Each product or service, each input or output, will have an appropriate scale of regulation – just as the tolerances of standardization vary, so will their scopes. As technical complexity increases, so does the complexity of regulation — whereas some aspects of regulation may very localized, other aspects may be very far-reaching.
During the industrial revolution, it was not readily apparent to what degree industries were interrelated. Today, ignoring these relationships is foolhardy. It is time for everyone to give up on the bogus distinction between internal and external regulation.
Ricardo Revisited — How to Get More Specific
August 5th, 2009 | nmwI didn’t sleep well last night
I got out my Henderson / Quandt (“Microeconomic Theory: A Mathematical Approach”) and revisited theories I haven’t looked at in many years — I actually read it in paper!! 
“Risk-averse consumers will pay a premium for insurance to convert an uncertain outcome into a certain one”
That’s as close as I could get to a text to address the issue I merely scratched the surface of yesterday. It’s the concluding statement of chapter 3 (“Topics in Consumer Behavior”, p. 61)
Basically: Economic Theory has a Very Big, Wide Open Gaping Hole in It!
And what is more: IMHO having found this whole explains a lot about how some of the world’s current biggest crises have come about.
So What Does this have to do with Ricardo?
Well, let me back up a bit. I have spoken with a small sample of friends and colleages. Economists, business men, stock market traders, futures traders, … — and the resounding reply is: “By golly: You’re right!
We all agree that markets are inherently regulated institutions, and IMO the conclusions of von Neuman / Morgenstern’s game theory treatment of risk and uncertainty are different. According to that theoretical approach, markets already exist, and risk-aversion is an afterthought. After discussing this at length with my sample of experts, we have come to the conclusion that the regulation of markets is definitely not an afterthought, but rather: Regulation is a sine qua non for markets.
Now the next step is to recognize that there is in fact no global market — but rather there are a vast multitude of overlapping markets across the globe. Most of the traditional economic theory is based on an assumption of descriptive standardization (incidentally, “standardization of descriptive practice” is what I wrote my master’s thesis about . I was indeed amazed when I asked my friend Clemens “what is a market?” he said that product (or service) specification is integral (he volunteered this information, without having me suggest it beforehand). But since he trades on the exchange nearly every waking moment of his life (I’m lucky he had the time to speak with me , I think he is especially sensitive to this issue – but I’m digressing. The point is: basic economic theory apparently assumes descriptive standardization. For example: that a facelift done in Germany or England or the United States or Pakistan or China or India are all the same product/service. That is, IMHO, a gross error — such a gross error that it’s even ludicrous that it has survived in the theory of economics textbooks to this day! It should be obvious that the specifications for “facelift” may very well differ from country to country, hospital to hospital, and so forth.
So my wheels were turning all night — and now I’m coming up with a hunch (it’s very far from a solution – it’s not even a hypotheis yet). I’m guessing that it has become easier (as the Internet spreads) for the consumer (in aggregate: the people behind the demand curve) to select the (level and kind of) regulation they wish to receive: ebay.de and ebay.com and ebay.fr and ebay.co.uk are not all the same market, but rather each of these markets runs according to different rules. Likewise: hotels.com and hotels.de differ. Likewise movies.com and news.com are regulated differently. Each and every domain follows different rules and regulations about the kinds of transactions permitted at those markets. Another example: twitter.com does not allow posting content other than plain text, and each individual transaction is limited to 140 characters.
Since each of these markets follow different regulations, the transactions in one marketplace cannot be easily compared with the transactions in another marketplace (thanks for waiting – this is, finally, where Ricardo comes in . In order to compare goods and services offered in different marketplaces, it is imperative to compare the regulations that apply in each marketplace.
That’s Easier Said than Done!
True — and it’s also the reason why you get different results when you search for “money” at Google.COM or Wikipedia.ORG, and these results are also different from the result of typing money.com into the URL bar.
How to Do It
Obviously, specifying such specifications according to the Wisdom of the Language (as I intimated yesterday) follows a federated approach (from “top level domain” downwards). This is the basic foundation upon which further specifications can be defined (in this regard, see also my post last year about the proposed expansion of top level domains: Apple Farmers Unite? .LOL, .ROFL, .LMFAO…).
What other methods of cross-site specification might be available in the online setting? This is something I would like to learn more about. I expect that this is an extremely complex matter — we must acknowledge that even the Wisdom of the Language has it’s limits: Not only must the regulatory mechanisms of brand-name websites such as google.COM versus nytimes.COM (.COM web sites) and/or slashdot.org versus wikipedia.org (.ORG web sites) be specified, but also such regulatory measures as the specification of “hotels” at keyword websites (e.g. hotels.COM versus hotels.DE) need to be specified.
You’ve Lost Me — Whatever Happened to the “Real” World?
LOL: Wake up and smell the coffee! This IS the real world!
I’ve Got News for You: I’m Not Going to Buy a Bagel Online
Good for you! You prefer to get them fresh and warm? Not interested in making your own bagels? Do you know how to make bagels? Hmm… I wonder how you might find recipes or tips for that, but never mind….
(to be continued…)
Get Out of the Box!
August 4th, 2009 | nmwLet Me Explain
You may see a link between this post and the Wisdom of the Language and/or On the Web, It’s Freedom 2, Publishing 0 — and I wouldn’t blame you. But in those posts I was painting quite close up views of traditional publishing / advertising / information retrieval (also known as “search”).
Here, I want to take step back and think more “out of the box” (or at least out of that box) — presenting a more “birds eye view” of the way publishing + advertising could / should work in the wider economy.
Why We Need to Talk on a Very Fundamental Level
These industries are undergoing change like hardly never before. Clay Shirky has recently compared these current changes to the revolutionary and far-reaching changes that took place 4-5 centuries ago with the advent of the printing press as an agent of change (citing Elisabeth Eisenstein’s seminal work in this area). Professor Shirky, in his post “Newspapers and Thinking the Unthinkable” suggested that we have no idea where we’re headed — but I do.
In order to describe what Professor Shirky claims is unthinkable, I want to zoom out to such a wide overview level that much of what people consider “here and now” will become infinitesimally small details — they will in fact become indiscernible minutiae, not out of oversight but rather out of the design of being able to see the “bigger picture“.
So please put aside all of your books, put down your pens and pencils, stop thinking about what you thought might matter and create a tabula rasa to go on this quick and easy fundamental “new deal” view of the publishing and advertising industries (and their role in the economies of nations and also internationally / globally).
What is a Market?
Traditional economic theory views markets very abstractly. In this abstract view, marketplaces are simply places where buyers and sellers can meet to exchange information freely. Decades of economic writing have shown that such “perfect” markets do not exist, but very little has been done to revise the basic economic theory. Now I hope to change that!
Go back several thousand years, or simply imagine yourself in a very simple and traditional farmers’ market somewhere on the globe today. You will indeed find yourself in a marketplace with buyers and sellers. However, there is also something that you will probably not see: The presence of a regulator. Each and every farmer at the market has closed an agreement with the person or institution running the market. If, for example, there were a farmer at the market who claimed to be selling apples but instead sold balls of wax, then that farmer might very well be prohibited from offering his/her wares and/or taking part in any kind of market transactions at this market. He/She could perhaps go out on the wide-open field and try to sell his/her wares to anyone who happens to pass by and trust him/her to offer good products — that are worth a “fair” price. But here, any transaction that occurs is only between 1 buyer and 1 seller. The buyer and the seller may form some kind of mental image of what they consider to be fair, but such images are mainly psychological constructs derived from past experience (which may lead to “rational expectations” or “irrational exuberance” or indeed a wide variety of different possible psychological states). [ps 15:42 GMT actually, in my opinion this hypothetical example with only 1 buyer and 1 seller resembles a barter exchange more than what I would consider to be a "market"]
Let’s for the moment leave this more or less idyllic notion of simple transactions directly between buyers and sellers alone behind, and instead go back to the community where the marketplace is in fact a communally regulated construct. The regulator of the marketplace usually charges a fee to sellers and the sellers traditionally need to factor this fee into the cost of doing business. Besides that, the regulator will normally restrict market transactions in some way — though at some farmers’ markets today, you may occasionally find a salesperson who seems to push these boundaries, nonetheless nearly all such marketplaces today are regulated in some way. Not only are farmers’ markets regulated this way, but also supermarkets and grocery stores, mechanics / service shops,… indeed close to 100% of products and services are regulated this way (perhaps one exception might be transactions that are prohibited by law and therefore are assumed not to take place).
Freedom of Speech
There seems to be 1 very significant exception to this rule: The right to freely express ideas means that there is assumed to be no regulation of expression — in other words: publishing and advertising industries should (at least in theory) be unregulated. Let us simply overlook the exceptions to this rule (such as laws regulating copyright, decency, libel and related issues) and assume this to be true. What do we see in the “real world”?
We see newsstands offering a wide variety of publications for sale (such newsstands are actually regulated marketplaces). Each publication may contain other publications (and in that sense the publications are also marketplaces — and they are regulated by their publishers, editors and teams of journalists, etc.) and so on until we reach the author in his or her room who is permitted to write freely — apparently free of any regulation whatsoever.
Free Speech and Free Markets are a Hoax
If I have made my point well, then you are now “with me” – you recognize (as I do) that “free markets” and “free speech” are in fact both so far-fetched ideals, and that it seems ludicrous to subscribe to theories that are based on such notions as the foundations upon which the theoretical constructs of economics and journalism are built.
Crisis? What Crisis?
Have you noticed? There’s this thing people keep talking about — they call it a crisis. They talk about banks, and they call it a crisis. They talk about news, and they call it a crisis. What do such crises have in common?
Are you ready for the punch line? It’s the fact that regulation is viewed as an “externality” to market transactions.
And simply because the underlying theory is screwed up, the business model is screwed up — and the ultimate result is that the market participants (the buyers and sellers) are screwed.
Why has this happened now?
Simple! What economists call a technological shift — a quite significant one — has occurred: it’s called the Internet. The Internet puts the wide open (“wild west”) “liberal” quasi-markets [which actually behave more like barter exchanges - as described above] right next to “regulated” markets — and because most people do not understand how to tell the difference, they treat them as the same. Most people cannot recognize that whereas one product is being sold from a table set up in an open field — more or less without any regulation whatsoever — the product right next to it — which seems to be identical — costs more because the regulatory tax must (somehow) be factored into the unit cost. So why take the one that costs more?
How to Solve this Problem
The answer is that we must teach people that regulation is an integral part of the way that markets work. We need to rewrite the books: We do not need a theory about unicorns, we need a theory about horses.
They Don’t Know — Like I Don’t Know
August 2nd, 2009 | nmwDave Winer keeps talking about how there should be more websites like twitter.com
Well what he don’t know is: the website doesn’t matter — what matters is the web site. The distinction is simple — I’ve said this for years already: it’s the same distinction as that between a building and a property. Someone tells you to “go to 100 Main Street”, but what they really mean is go to the building located at 100 Main St. — and whether the building is a log cabin or a skyscraper or a resort villa or a king’s palace doesn’t matter.
What’s the difference between the names for the locations of buildings or car registrations and the location of information?
When the location / name is merely a label (as for a car or a building), it is merely to identify something. In contrast, information cannot be identified, because it is not a thing. Information is a change in knowledge — a knowledge transfer (yes: it’s very abstract). So the name we attribute is basically an intangible good: a concept… — what kind of concept? Online, it is the common concept that all members of the community subscribe to (and that is normally a quite compex amalgamation of several facets, including a legal structure, a language and most crucially a subject / topic / interest / context — and perhaps a few things more).
So What?
Well, so when someone says (like Dave Winer keeps doing) that it’s time for 1000 twitters to bloom, then OK: Let’s see how that works in a practical way.
If there were 1000 twitters, which one would you visit?
[tick... tock... -- silence]
When I Paint My Masterpiece
The web will continue to change – after all: printing presses didn’t stay the same as Gutenberg’s first press, did they?
IMO, the most significant change from the point of view of information storage + retrieval is already happening — namely: the transition from arbitrary + meaningless labels such as msn.com + bit.ly to more meaningful ones such as to more meaningful ones such as twitter.com + bing.com. Ultimately, when we get back to the original raison d’etre of the internet (namely to function as a distributed network), we will no longer care so much about global hegemeny (much as the Dutch East India Company or similar trading conglomerates of many centuries ago) in publishing or media conglomerates. Such conglomeration is now over. Anyone who doesn’t see this is simply missing the boat.
If you don’t want to miss the boat
then start using the Wisdom of the Language today!
Have your heard about Homeless Nation?
July 29th, 2009 | nmwIf not check out this interview with National Coordinator and the Head of Development + Strategy at FIR.
Add comments, ideas, links — and maybe I will bring them up into the post.
Thanks!
nmw
Nothing Social about Social Networking
July 21st, 2009 | nmwIf there were Something Social about Social Networking, then it Would Have a Social Impact
but it doesn’t.
In Fact, Most of the Websites that Offer “Social Networking” Merely Channel Cliques — Very Similar to Network Marketing and/or MLM Schemes
The interesting question is, I guess: What is the litmus test?
My hunch is that a social network might be measured by the degree of social impact it has. So far none of the websites that call themselves social networks have had any significant social impact.
What are some Historical Examples of Social Impact?
95 Theses (Martin Luther), Common Sense (Tom Paine), others like this (e.g. Copernicus, Newton, countless others)….
What are some Contemporary Examples of Social Impact?
Maybe the problem is: there aren’t many. Perhaps Karl Marx was right after all: Maybe humans have been turned into instruments of the capital they have idolized. Maybe we have alienated ourselves not only from our own labor but even also from that social cohesion that used to be part and parcel of our membership in society. So, to allude to Rousseau: People are born free, yet everywhere they have lost sight of humanity.
