Quote IconWhen a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed.

Chatham House Rule

Ah, life before Twitter.

Alex Winston - Medicine

Discovered some new music via my high school’s Wikipedia page. Let’s hear it for distinguished alumni.

Quote IconThe most productive uses of comparative analysis are to suggest hypotheses and to highlight differences, not to draw conclusions. Comparison can suggest the presence or the influence of variables that are not readily apparent in the current situation, or stimulate the imagination to conceive explanations or possible outcomes that might not otherwise occur to the analyst. In short, comparison can generate hypotheses that then guide the search for additional information to confirm or refute these hypotheses. It should not, however, form the basis for conclusions unless thorough analysis of both situations has confirmed they are indeed comparable.

Psychology of Intelligence Analysis - Richards J. Heuer, Jr. | Central Intelligence Agency

Quote IconThe tendency to relate contemporary events to earlier events as a guide to understanding is a powerful one. Comparison helps achieve understanding by reducing the unfamiliar to the familiar. In the absence of data required for a full understanding of the current situation, reasoning by comparison may be the only alternative. Anyone taking this approach, however, should be aware of the significant potential for error. This course is an implicit admission of the lack of sufficient information to understand the present situation in its own right, and lack of relevant theory to relate the present situation to many other comparable situations.

Psychology of Intelligence Analysis - Richards J. Heuer, Jr. | Central Intelligence Agency

Pattern matching: not the best basis for judgment.

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Here’s the scenario for the Commonwealth of Belle Isle that Lockwood and others want to see: Private investors buy the island from a near-bankrupt Detroit for $1 billion. It then would secede from Michigan to become a semi-independent commonwealth like Puerto Rico and the Northern Mariana Islands.

Under the plan, it would become an economic and social laboratory where government is limited in scope and taxation is far different than the current U.S. system. There is no personal or corporate income tax. Much of the tax base would be provided by a different property tax — one based on the value of the land and not the value of the property.

It would take $300,000 to become a “Belle Islander,” though 20 percent of citizenships would be open for striving immigrants, starving artists and up-and-coming entrepreneurs who don’t meet the financial requirement.

Among the citizenship requirements are a command of the English language, a good credit rating and no criminal record. Mogk adds that such a scenario would make the island “a drain of talent and resources” at the expense of Detroit.

Developer pitches $1B commonwealth for Belle Isle

Good luck with that.

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Building a Narrative for Premium Publishing

For better or worse, when I think about the future of premium content, this is the narrative I hold in my head. Corrections are always welcome.

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The last five years have seen massive investment in display ad technology, and not without reason. Scalable RTB and ad-serving platforms are complicated and costly to build, but they offer advertisers — and by extension, investors — the promise of extraordinarily attractive ROI. And, as usually happens when elevated investment offers elevated returns, a feedback loop emerged. The demand for display ad inventory quickly outstripped supply, creating an attractive imbalance that content farms rushed to address. At the same time, premium publishers rooted in the paper era languished, restrained by legacy cost structures and legacy management. Determined to fight for a dying model, many erected impregnable paywalls, locking away content from those who didn’t value it appropriately. Consumers, with no means of knowing the difference between the bird they held and the unseen bush, reasonably chose the former, and it soon became clear to everyone that premium news was a thing of the past.

But no matter how much we enjoy stories of disruption and death and extinction, the fact remains that the success of one model doesn’t preclude the success of another. Yes, the confluence of a maturing adtech ecosystem and a cost-effective means of generating low-quality content at scale had made content farming into a viable online business model, but that didn’t mean people were no longer willing to pay for premium content. Rather, it meant that when faced with a choice between content known to be good enough and content that might be better, the promise of better wasn’t worth the cost of discovery. Premium publishers had assumed the demand for online content to be as elastic as the demand for offline content, but by locking away their wares, they had deprived consumers of the information necessary to draw a demand curve. The end was in sight.

And then a funny thing happened on the way to the funeral. Obsolete printing, delivery, sales, and subscription operations were pruned away, freeing up capital from overweight balance sheets; senior managers from the Dead Tree era aged out of decision-making roles, replaced by junior colleagues with a completely different set of expectations; and news organizations built for the online world began to emerge in earnest, unencumbered by the costly demands of yesterday’s infrastructures. With available capital, fresh ideas, and a willingness to experiment, the industry has begun to express its needs in the particularized manner entrepreneurs love to hear. Consequently, a stable of startups purpose-built for publisher monetization have emerged (e.g., NewsCred, Visual Revenue, Outbrain, Tinypass, et al.). At the same time, visible and influential publishers such as the NYT and Andrew Sullivan are experimenting with new pricing models. I expect we’ll soon see a world where pricing models run the gamut from purely ad supported to purely paywalled, with infinite native variations in between.

On the consumer side, though, the question remains: will people pay? Can consumer price expectations ever evolve beyond the “zero marginal cost goods should be free” mentality? I believe the answer is yes. Sure, some portion of the population will forever loudly declare that they will never pay for anything, but the beauty of a large market is that you don’t have to capture it all to succeed. Given a sufficiently frictionless buying process and re-anchored expectations of what constitutes a reasonable price, the market can most certainly grow to venture scale. But while the buying process is nearly there (for all the reasons noted above), it’s very hard to judge how far consumer psychology has left to go. If we take purchasing behavior in mobile apps stores as a proxy, there’s ample reason for optimism:

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When I think about this data in the context of what’s happened in music and video, I see a pattern wherein the combination of depth of exposure and ease of consumption determines a consumer’s willingness to pay. Pricing, after all, is a relative concept: the more exposure someone has to an industry’s product offerings, the greater their ability to assess each product’s relative value. Eventually, the difference in relative value breaches the penny gap, and it’s all downhill from there. Couple this dynamic with simpler and more available means of distribution, and now you have a formula for turning looters into customers.