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Chris F. Masse March 25th, 2007

Here’s Chris Masse‘ s suggestion to The Economist regarding the Project Red Stripe.

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ABOUT THE ECONOMIST:

The Economist is a weekly news and international affairs publication owned by “The Economist Newspaper Ltd” and edited in London, UK. It has been in continuous publication since September 1843. As of 2006, its average circulation topped one million copies a week, about half of which are sold in North America,[1] and is consequently often seen as a transatlantic (as opposed to solely British) news source. According to its contents page, its goal is “to take part in a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.” Subjects covered include international news, economics, politics, business, finance, science and technology and the arts. The publication is targeted at the high-end “prestige” segment of the market and counts among its audience influential business and government decision-makers. It takes a strongly argued editorial stance on many issues, especially its support for free trade and fiscal conservatism; it thus practises advocacy journalism. Although The Economist calls itself a newspaper, it is printed in magazine form on glossy paper, like a newsmagazine. [...]

ABOUT PROJECT RED STRIPED:

[...] This is a call to send in your idea (or ideas) about truly innovative services we could offer online. These are times of rapid change, that’s why The Economist Group has set up an innovation team, called “Project Red Stripe”. In a nutshell, The Economist Group has picked a small team of employees, moved them to London, and allowed them to come up with whatever they want, even something entirely unrelated to The Economist Group – as long as it is innovative and online (for details go here). We already have some ideas, of course. But as champions of free markets, we abhor the concept of a closed system. This is why we would like you to submit your idea by filling out the form at ProjectRedStripe.com. The deadline is March 25th, 2007. Your idea can be as simple or complex as you like. It could be a product, a service or a business model. Before you jot your idea down, think about how best to describe it (here are some hints for doing this). If you want to track our progress, please visit our blog, where we would love to hear from you. [...]

THEIR QUESTIONS AND MY ANSWERS:

Question: What problem are you solving? (On the Internet, ideas seem to spring eternal, but often they are solutions in search of a problem.)

Answer: Forecasting outcomes regarding socially relevant issues.

Q: Why is your solution innovative? (Inventing “smell-o-vision” is certainly innovative, but so is cleverly repackaging what is already out there.)

A: The solution is based on the nascent and developing prediction market technology, used by many real-money and play-money betting exchanges.

Q: Does your solution use content owned by The Economist Group? (We are allowed to use all of the Group’s content.)

A: The solution would use the content published by The Economist and the resources of The Economist Intelligence Unit.

Q: Who will use your product? (Think hard about the audience you would like to reach.)

A: The Economist readers and the EIU customers, and Web visitors with the same demos.

Q: Will this idea make money? (Not that you must: doing good may be even more valuable.)

A: Indirectly. The idea will enrich the offline and online content of The Economist and the services provided by The Economist Intelligence Unit. The Open Institute for Prediction Markets will generate free publicity.

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The Economist should set up The Open Institute of Prediction Markets

by Chris Masse

Keyword: “prediction markets”

Brief Summary

Don’t spend any money on setting up a prediction exchange (betting exchange) designed only for The Economist subscribers. Instead, premiere a weekly webspot and column on socially relevant prediction markets (politics, business, finance, technology business, applied science, etc.) and quote widely the odds generated by any liquid exchanges.

Detailed Description

Don’t make any deal with any betting exchange in particular: just use your media power to highlight and publicize (and thus, reward) the (play-money or real-money) prediction exchanges that would have listened to your weekly bet proposals.

Monitor and report the market-generated forecasts. As Mike Linksvayer suggested, link each prediction market reporting (chart and odds) to a set of news articles and opinion pieces from The Economist. Suggest interesting event derivatives (in the form of very short, short or mid-term bets), and quote the odds generated by the prediction exchanges that accepted to float your proposed bets and that have liquidity —regardless of whether they use play money or real money, or where they are based.

The great people from The Economist and The Economist Intelligence Unit should focus on minding the issues and hatching interesting bets. You should completely outsource the administration of the prediction markets to THE EXISTING prediction exchanges and THE UPCOMING ones. What is important on the Web is user experience and The Economist has no business competing with the Web 2.0 start-ups on this one.

The road map:
- Monitor the most liquid, socially relevant prediction markets.
- Talk with the prediction market experts and the experts in the vertical fields (politics, economics, industries, finance, technology, science, etc.).
- Suggest some pertinent, potentially popular, socially relevant event derivatives for flotation.
- Cajole all the play-money and real-money prediction exchanges into floating them.
- Write a weekly webspot and column on socially relevant prediction markets (thus giving free publicity to the prediction exchanges that both accepted your suggestions and have the most liquidity).

Prediction markets are not new to The Economist Intelligence Unit. The EIU was part of the 2000–2003 DARPA’s PAM project hatched by GMU professor Robin Hanson. In short, the idea was to predict some key indicators about the Middle East.

Maybe The Economist Group should pick up from that.

For your information, Robin Hanson wrote a paper on DARPA’s PAM media coverage that shows that the “socially relevant prediction markets” thread is considered by smart media people something worth picking up. (PDF file)

More formally, The Economist Group should set up a Web-based outlet, “The Open Institute of Prediction Markets”, for the purpose of stimulating and focusing the energies of prediction markets on the creation of superior global business intelligence.

Thanks to Mike Linksvayer and Jason Ruspini for reviewing this proposal and giving me input.

Previous: OUR MIKE LINKSVAYER HAS SUCCEEDED IN GETTING THE ECONOMIST INTERESTED IN PREDICTION MARKETS.

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• Entrepreneurship , Journalism & Prediction Market Journalism , X Groups
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