Another message about Marshall's stuff from David Farber's IP list.
From: "David Farber" <firstname.lastname@example.org>
Subject: [IP] Economics vs. spam
Date: Tue, 17 May 2005 18:17:12 -0500
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Subject: Re: [IP] Economics vs. spam
Author: "James H. Morris" <email@example.com>
Date: 17th May 2005 5:12:24 pm
Advertising is Flirtation
I liked the van Alstyn and Loder paper on how to fight spam. It is actually=
being used by a start-up, Vanquish.com. I've sampled their software and it=
works as a challenge response system, at least.
Based on the premise that a message can have value to both the sender and=
receiver, they present an elegant argument to show that even a perfect=20
filter is not a good idea. Economists say that these unilateral solutions=
are bad because they decrease net social welfare, and they look for=20
mechanisms that promote the transmission and reading of those messages=20
where the sum of the value to sender and receiver is positive. To do so,=20
they recommend the obvious: exchange money to pay the partner who is=20
reluctant to communicate. This works fine when you're paying the sender,=20
but paying the receiver is more dubious.
Alladvantage.com tried this scheme in the 90's and failed miserably.
Apparently economists don't frequent singles bars -- notwithstanding the=20
bar scene in "A Beautiful Mind" in which John Nash discovers Nash=20
equilibriums. Paying someone to read an ad doesn't work anymore than=20
offering a woman $5 to talk with you does. You can pay for her drink, but=
don't offer to pay her. Either she is offended; or, worse, she takes the=20
money and blows you off. Van Alstyn embellishes this scheme by suggesting=
you escrow the $5 and she take it only if she doesn't like your line. This=
seems unproductive, too.
The point is: advertisements are not one-time "information transactions";=
they are inducements to learn more and eventually pay for something far=20
more expensive than the ad. They are flirtations; and, as any frequenter of=
singles scenes knows, where and how you flirt is very important because you=
are signaling about the kind of relationship you seek. Thus, it is much=20
better to simply buy her a drink, include a quarter in a junk mailing, or=
throw money away in some other visible way. It makes you look generous,=20
Advertisers don't want to force their material on unwilling readers. Nobody=
wants to show ads the reader no interest in. So if he know that an item was=
ultimately not interesting, he wouldn't send it.
The essence of communication is that A tells B something B didn't know.=20
Thus the sender/receiver relationship is very non-symmetric. First, the=20
sender knows precisely what the information is and why he would like=20
someone to read it. He also is economically motivated, either to take money=
for information or pay for advertising. The receiver, of course, doesn't=20
know what the information is. She might pay for it if she expects it to be=
valuable, but is reluctant to read information for payment. More precisely,=
if she does read it simply for payment; the sender is unlikely to receive=
what he ultimately wants. Economists called this adverse selection.
But let's not ignore the economists' main point: the arms race between=20
spammers and browsers is wasteful because it leaves social welfare on the=
table. We need to find ways to get more of those messages through. Bundling=
is a better approach than direct payments.
Magazines are a way of bundling information in a way that accomplishes=20
this. The magazine pays authors for content that might interest the readers=
and it charges advertisers. The reader pays the magazine, presumably for=20
the content; but maybe also for the ads that come along.
What is the the value of an item in a magazine to the writer and reader?=20
The crucial measure is reading time, how long the reader spends looking at=
the item. It reflects the cost to the reader, her time, but also the value=
to the sender, how much attention he's getting. Of course, the ultimate=20
value to an advertiser is the profit on something the reader buys; but=20
reading time should be correlate
The new idea here is that the value to both the sender and receiver=20
increases with reading time.
Whether something is content, advertising, editorial, op-ed, or a letter to=
the editor, is really just a question of labelling the author properly so=
that the reader can judge the content. The value of an article to the=20
sender rises with the level of rhetoric; i.e. the degree to which the=20
reader is persuaded to do something. But it is not a zero-sum game. Maybe=
I'd be happier with a penis enlargement. :-)
James H. Morris
Professor of Computer Science
Dean, Carnegie Mellon West
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