Human Intervention: markets in the makingBy
So I spent some time understanding a little more the impact of social media over the holidays, basically in response to the online norm piece and a comment on art from gapingvoid guy, [tag]Hugh MacLeod[/tag]. People who interact online can impact online markets and untimately offline concerns as well. O’Reilly had a [tag]Bill Janeway[/tag], from [tag]investment banking[/tag] firm [tag]Warburg Pincus[/tag], quote on the [tag]Money:Tech[/tag] conference which is fairly relevant in context of human interaction’s impact on financial activity:
The timeliness of this Conference is NOT only because “web 2.0″ technologies and business models have reached critical mass in the financial markets. It is also because, as driven by the web more generally, the frontier between human and machine-decision making has become radically problematic. First, quantitative approaches in trading, pricing, valuation, asset definition vastly expanded the domain for machine decision-making. But then the humans struck back, by refusing to act like the mindless molecules that the models driving machine decision-making required. The self-reflective, behavioral attributes of human market participants is now driving back that frontier, requiring innovations in every aspect of financial market processes, beginning with techniques of risk measurement and risk management. When price is an inverse function of [tag]liquidity[/tag] and liquidity is an inverse function of price certainty, the recursive loop can only be broken by human intervention and action
Wow – what a mouthful and insightful – people impact markets. The significant investment in optimized algorythm based business models online may have a challenger – human interaction as it relates to online advertising.
Changed search models, content availability and pervasive shared content may ultimately make Feedburner’s (Google) adverpublishing platform which best serves as a sliver markets to a high value market channel at some point in the future? While not necessarily the mainstream population, active online human decision makers continue to collectively impact markets, one might say communities. Facebook, Twitter or others represent segments of market influencers and makers. Most [tag]Facebook valuation[/tag] discussions all essentially acknowledge a significant market segmentation asset.
Communities as Market Makers
The current underpinnings of the global social media infrastructure (Xobni, [tag]Utterz[/tag], Twitter, [tag]Plaxo[/tag] [tag]LinkedIn[/tag], [tag]Flickr[/tag], [tag]Flock[/tag]…) are establishing market definitions, definitions of buyer classes in their highly attributed/user extended data model. So that begets the question as to how does a collective commonality define a market? Are there bookmark markets? Blog markets? “Group” Markets?
It’s reasonable to infer this is in fact the case. Sites/Platforms such a Digg, writing cabals creating content and individuals bring together friends and randoms around a common set of attributes which should they sustain overtime may in fact create micro-markets. Not a believer? Go to Gizmodo – That IS a Gizmodo market.
Sure advertising is inherently audience biased and to that end the delivery vehicle has just changed, but can the vehicles actually begin to deliver value add services – access to branded public information, focusedcontent and web service community tools across an interoperable network. Imagine it – share attributes (friends, content, services…) could be managed through a unified market based UI – the Facebook user who likes cooking, the Truemors reader who looks up his 401k balance on the truemors interface – there are all kinds of abstract concepts and extensions. Once the social media markets mature from their currently narrowly banded spiky reality, these may be the only advertising markets – community focused views of online commerce, communication and service consumption.
So now on to the the abstract thought to end the article. Does an individual define the market or an individual’s relationships? If it’s the latter, Facebook may be under valued and the usability race has begun!