The economics of information (1)


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  • The economics of information (1)

    1. 1. Contemporary Economics ofInformationWAAL 2013 Conferenceby Tom Zillner
    2. 2. (Cartoon deleted due to copyright restrictions)
    3. 3. (Cartoon deleted due to copyright restrictions)
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    5. 5. What I’ll talk about• Introduction• The Long Tail• The Short Head• The Race to the Bottom• The Academic Tail (Tale)• Data vs. Information vs. Knowledge
    6. 6. Where is the Life we have lost in living?Where is the wisdom we have lost inknowledge?Where is the knowledge we have lost ininformation?--T.S. Eliot, The Rock, 1934Where is the information we have lostin data?
    7. 7. Knowledge is Power(Information and Data not somuch???)
    8. 8. Wikipedia InformationInformation, in its most restricted technical sense, is a sequence of symbols thatcan be interpreted as a message. Information can be recorded as signs, ortransmitted as signals. Information is any kind of event that affects the state ofa dynamic system. Conceptually, information is the message (utterance orexpression) being conveyed. The meaning of this concept varies in differentcontexts.[1] Moreover, the concept of information is closely related to notionsof constraint, communication, control, data, form, instruction, knowledge, meaning, understanding, mental stimuli, pattern, perception, representation, andentropy.
    9. 9. Doesn’t that sound a lot like data?
    10. 10. WikipediaDataData ( /ˈdeɪtə/ DAY-tə, /ˈdætə/ DA-tə, or /ˈdɑˈtə/ DAH-tə)are values of qualitative or quantitative variables, belonging to a set ofitems. Data in computing (or data processing) are represented in astructure, often tabular (represented by rows and columns), a tree (a setof nodes with parent-children relationship) or a graph structure (a set ofinterconnected nodes). Data are typically the results of measurements andcan be visualised using graphs or images. Data as an abstract concept canbe viewed as the lowest level of abstraction from which information andthen knowledge are derived. Raw data, i.e., unprocessed data, refers to acollection of numbers, characters and is a relative term; data processingcommonly occurs by stages, and the "processed data" from one stage maybe considered the "raw data" of the next. Field data refers to raw datacollected in an uncontrolled in situ environment. Experimental data refersto data generated within the context of a scientific investigation byobservation and recording.
    11. 11. These definitions are long andcomplicated.That’s because data and informationare complex concepts.
    12. 12. It’s all mental stuff(a suitably vague working definition)
    13. 13. The Economics of InformationChanged in the Digital World• Cheaper production costs• More people working for less money• Single-copy problem disappears• But not fungible
    14. 14. The Long Tail
    15. 15. Graph Source: WikipediaThe head (green part) is equal in size to the tail (yellow).
    16. 16. Source: The LeftClick Blog
    17. 17. The Book That Made the Long TailFamous:The Long Tail: Why the Future of Business Is SellingLess of MorebyChris Anderson(2006)
    18. 18. Beyond the Long TailDemandQuantityPriceSupplyA smaller number of blockbusters……And a growing number ofsnowballs…Create new value, which raises theequilibrium price of media, and alsoincrease demand elasticity
    19. 19. The Race to the Bottom
    20. 20. Disintermediation• Authors as self-publishers• Libraries as publishers• Kickstarter financing
    21. 21. Self-Publishing• Amazon– Kindle Direct Publishing• High royalty %. Publishing is free and you can earn up to 70%royalty while having the ability to set your own price.• Quick publishing. Publishing takes less than five minutes andyour book usually appears on the Kindle store within a day.• Easy. A final manuscript and an Amazon account are all thatyou need to publish your book on• Sell globally. Publish books written in English, German,French, Spanish, Portuguese and Italian and specify pricing inUS Dollars, Pounds Sterling, or Euros.Source:
    22. 22. Economics: Self-Published eBooks• Publication of eBooks allows quick access tothe marketplace.• Often no upfront investment• High profit is possible if sales are high.• Many authors aren’t in it for the money; theywant to get out a message or showcase theirwritten art.
    23. 23. Graph Source: WikipediaMany publishers want nothing to do with the long tail authors on the farright of the graph.But the subsidy publishers do.
    24. 24. Subsidy Publishing• Amazon– Advantage• Advantage is a self-service consignment program thatenables you to promote and sell media productsdirectly on• You supply the product. They sell it.Source:
    25. 25. Subsidy Publishing• Lulu– A smorgasbord of book preparation options– Printing– Marketing opportunities/services• Other Subsidy Publishers Offer Range ofServices
    26. 26. Libraries as Publishers• Print is not done very much.• Most likely to be databases, e.g., digitalcollections or information repositories (whichseem to be blending into single presence)• Access may be free or free but restricted.• On the public library side there is muchinterest in exposing local resources via print ordigitally.
    27. 27. Kickstarter• Many media projects are found on Kickstarter.• The principles of Kickstarter.
    28. 28. Economics012345678Category 1 Category 2 Category 3 Category 4Series 2Series 1
    29. 29. Does everything Apple cost 99 cents or$1.99?iTunes storeApps store
    30. 30. Making Apps for a Profit• The race to the bottom pushes prices downwardin the apps store.• It takes an investment to make apps.• Good apps are hard to make.• Most apps created by individuals will not beprofitable.• Traditional game makers are also hard hit.
    31. 31. “On the one hand information wants to beexpensive, because its so valuable. The rightinformation in the right place just changes your life.On the other hand, information wants to befree, because the cost of getting it out is getting lowerand lower all the time. So you have these two fightingagainst each other.”—Stewart Brand
    32. 32. Some information wants to be cheap
    33. 33. Lots of “free” information
    34. 34. “If you’re not paying for it, you are theproduct.”
    35. 35. Googlenomics
    36. 36. Big Data
    37. 37. Big Data• Internet of Data• Internet/Web of Things– RFID  generate data through sensors– Sensors  generate data– Actuators  accept data– Will see much more data from the Internet ofThings from, e.g., hobbyists• Locally-Generated Data
    38. 38. Big (and not-so-big) Data• The web allows us to produce, consume andaggregate more and more data• Libraries hold lots of data in electronic andnon-electronic form• The data has value only as it allows us to askand answer questions (i.e., to forminformation and knowledge)
    39. 39. Big Data• Institutional and other repositories will seelarger and larger datasets.• Tools will be needed to manipulate andanalyze this data accurately and effectively.
    40. 40. Data Is What You Make of It• Undifferentiated data is useless.• Require “analytics” to spottrends, regularities, irregularities, connections(and other relationships).• Discovery tools may be useful.• Data visualization tools may be useful.• Specialized tools exist for subjectdomains, e.g., viewing genomic data
    41. 41. Much of Big Data Is Free…• …and it’s worth every penny.• Why are so many datasets freely availablewithout cost when articles about them may bequite expensive?• It’s the difference between data andinformation.
    42. 42. Free Big Data• Much of the data will never be processed aftercollection, e.g., environmental sensor data• Collection and storage is cheap, so store itjust-in-case.
    43. 43. Government Free Data• More data is becoming available online fromgovernment at all levels.– City of Chicago Data Portal(– New York City Data Sets(– Federal Data (
    44. 44. Federal Data• 373,029 raw and geospatial datasets• 1,209 data tools• 309 apps• 137 mobile apps• 171 agencies and subagencies
    45. 45. Government Free Data• Data usually available in a single format foreach dataset.• May be tools to export, view and manipulatethe data.
    46. 46. The Short Head
    47. 47. The Short Head• Most big trade publishers make most of theirmoney from some highly-marketable booksfrom highly-marketable authors.• There is a decline in the number of “mid-list”authors that get published.• Sometimes authors who can’t find an agent orpublisher turn to other channels.
    48. 48. The Academic Tail (Tale)
    49. 49. The Scholarly Publication ProcessSource: The Business of Academic Publishing
    50. 50. Costs of Publication“In justifying the margins earned, the publishers, Reed Elsevier (REL)included, point to the highly skilled nature of the staff they employ(to pre-vet submitted papers prior to the peer review process), thesupport they provide to the peer review panels, including modeststipends, the complex typesetting, printing and distributionactivities, including Web publishing and hosting. REL employsaround 7,000 people in its Science business as a whole. REL alsoargues that the high margins reflect economies of scale and thevery high levels of efficiency with which they operate.We believe the publisher adds relatively little value to thepublishing process. We are not attempting to dismiss what 7,000people at REL do for a living. We are simply observing that if theprocess really were as complex, costly and value-added as thepublishers protest that it is, 40% margins wouldn’t be available. ”Source: Deutsche Bank AG, “Reed Elsevier: Moving the Supertanker,” Company Focus: GlobalEquity Research Report. (January 11, 2005), 36.
    51. 51. Costs of Publication• Journals that cost upward of $40,000 per year• Do the vendors’ explanations account for thispredatory pricing?• Are they worth it?
    52. 52. A Particularly Good Article• “Is the Academic Publishing Industry on theVerge of Disruption?”• US News•• Source for a number of the slides that follow
    53. 53. How Journals Became a CaptiveMarket• Most journals are published by scientificsocieties.• In recent history they have been acquired byprofit-making entities, e.g., Elsevier.• The scientific societies’ motives are to providea consistent revenue stream and eliminate thework associated with publishing journals.Source:
    54. 54. The Harvard Letter to Faculty• Harvard is paying $3.75 million annually injournal subscriptions and they make up "10%of all collection costs for everything theLibrary acquires.“• "Major periodical subscriptions, especially toelectronic journals published by historicallykey providers, cannot be sustained."Source:
    55. 55. More on the Process• Faculty and staff do the research and write thepapers.• The submitted papers are vetted (refereed) byscholars in the same field, who are usuallyunpaid.• The articles are published.• The academic library must pay for the journal.
    56. 56. Irony Time• The university or the government pays for the faculty/stafftime to do the research and write the papers.• The university pays salaries to the referees who review thepapers.• The author of the paper often pays the publisher a fee tocover expenses of publication.• The university pays for subscriptions to the journals inwhich the research is published.The Quadruple Whammy
    57. 57. The Illusionary Solution• Abolish tenure.– Scholarly publishing would not disappear.– There would still be pressure for faculty topublish.– Thus, predatory practices would not beeliminated, although they might be ameliorated toa minor degree.
    58. 58. A Better Solution: Open Access (OA)Journals• The Directory of Open Access Journals (DOAJ)lists some 8,976 journals.• Of these 4,573 journals are searchable to thearticle level, with 1,074,850 articles.• So, there are lots of OA journals with lots ofarticles.Source:
    59. 59. Problems : Open Access Journals• OA journals still don’t get all of the respect ofother scholarly journals.• Many journals require payment by theauthor(s) of production costs. (However, this isalso true of many non-OA journals.)Source:
    60. 60. Public Library of Science (PLOS)• Began publishing in 2003, with PLOS Biology• Peer Reviewed Journals (7 of them)• Fully open access• Funded through memberships andgrants/contributions
    61. 61. NIH• Policy forces grant recipients to deposit theirarticles in PubMed within a year of themanuscript’s publication.• Many medical researchers rely on PubMed forsome of their information needs.
    62. 62. Fair Access to Science and TechnologyResearch Act (FASTR)• Introduced in current (113th) Congress• Successor to Federal Research Public AccessAct (FRPAA)• “Both bills would require open access (OA) topeer-reviewed manuscripts of articlesreporting the results of federally-fundedresearch.”Source:
    63. 63. Distribution• Print Journalsstill expensive ||{examples}||• Aggregators (e.g., Ebsco, ProQuest)• Publishers as “aggregators”• Economics? Journals and databases cost a lot.
    64. 64. [Potential] Conflict of Interest• American Chemical Society (ACS) sells apackage of journals and databases.• ACS grants “approval” of Bachelor’s programs.• One of the requirements of approval is“modern chemical information resources”.• You be the judge.• Economics? Approval as driver of sales
    65. 65. Granularity• Publishers and aggregators can sell objects assmall as individual papers or book chapters.• Identification by Digital object Identifier (DOI)• “I want to get those like buying an iTunesplaylist,” says head of an academic press.• Is there more money to be made that way?Source:
    66. 66. Poster SessionWhen Free is Enough: Locating Quality ChemicalInformation With and Without SubscriptionDatabasesAriel Neff, UW-Madison, Chemistry Library
    67. 67. Someday, like GeorgePeppard, you too may be able tocount existentialism among yourhobbies.
    68. 68. This presentation may be the first stepalong that path.
    69. 69. Or not.
    70. 70. Swan SongCest la vie
    71. 71. Tom ZillnerRe: this presentation or other WiLS-relatedcorrespondence:tzillner@wils.wisc.eduConsulting or job