Inkling’s Dead Radiohead Market
Michael Giberson November 29th, 2007
Radiohead’s pick-your-own-price experiment, industry redefining move, publicity stunt for their album “In Rainbows” has had its 15 days or so of fame. Is there anybody out there still caring? Maybe not.
In fact, judging by Inkling’s own Radiohead prediction market, the answer is absolutely No. A few days after announcing their free pilot program smack in the middle of Radiohead’s few days in the media spotlight, the Inkling folks used their own tool to launch a Radiohead issues market:
Recently Radiohead announced there would be no set price for their new album “In Rainbows.” Instead they would let their fans decide what it was worth. When you go to download their album (and it’s only available by download, there are no CD’s) you say what you want to pay. Fans are elated, the music industry is horrified.
We thought it would be fun to set up a marketplace to try and predict what the average price is fans will actually pay. We also ask questions about other performance metrics such as unit sales and industry impact of this new pricing model.
You can get to the new marketplace by going here: http://radiohead.inklingmarkets.com
Fun? Not so much. Scanning through the four markets listed, trading was never substantial and all but dried up after about two weeks. (The static chart above shows two months of prices and activity in the “Will iTunes allow “crowd-defined” pricing like Radiohead is doing in the next year?” market, one of two remaining open markets.)
The Global Warming market set up in the Inkling pilot program by Caveat Bettor suffers from the same affliction, though unlike Radiohead’s short-lived moment in the sun, people still care about global warming. Maybe twice as many traders, a larger number of trades. Still the market is more or less dead – days go by with no noticeable activity. This week’s Top Ten traders all tied with a gain of exactly $0.00.
These public pilot markets do offer some advantages to the exchange manager in that the manager gains more access to trading data than is generally available to market managers in Inkling’s public exchange. The prediction market geek in me says, “Cool!” Of course, no trading = no trading data. Geek says, “Bummer.”
The problem is that this proliferation of little public markets makes very little sense from the trader’s point of view. There is a lot of activity in Inkling’s main public exchange. Almost everyday new markets are created, buying and selling is going on, lots of reason to come back to see what is new. In these little walled off public markets, nobody. Nothing new. No reason to go.
Inkling’s pilot program seems like a good way for organizations to dip their toes into prediction market waters (and therefore probably a pretty good marketing tool for Inkling). A well targeted public market could work, too, but only under rare circumstances: a large and relatively tight knit group with an active and communicative core.
Maybe a college alumni association wants to predict the basketball team’s wins and losses this season? Top predictor at the end of the season wins a prize. This is a good idea.
Radiohead pricing? Zzzzzzzz.
Exactly. I had told Cav that he should have put his markets within the bigger tent of the general Inkling exchange.
FYI
http://governmentfutures.inklingmarkets.com/
Government Futures looks like a more successful attempt at an open market, but they have been around for much longer than the new pilots, appear to have an “an active and communicative core,” and still show light volumes compared to the main Inkling public market.
In this case, though, their approach makes some sense as it appears to be an adjunct to a consistent set of services offered to clients. Offering the market under there own label contributes to the overall “brand name” they are developing.
Plus, they offer a chance to win a free lunch at the National Press Club in Washington D.C., which has to be better than paying for your own lunch.
I think it is more of a play/real money issue than the questions not being interesting. Real money markets in art (in the broad sense, e.g. cd/dvd/video game sales, film and concert tour grosses, Jeff Koons auction prices, impressionist indices) would attract attention.
Yes, liquidity should be pooled as much as possible, while the exchange tries to avoid dilution by creating too many markets.