Search engine futures!

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Cross posted from Oddhead Blog.

I am happy to report that on my suggestion intrade has listed futures contracts for 2008 search engine market share.

Here is how they work:

A contract will expire according to the percentage share of internet searches conducted in the United States in 2008. For example, if 53.5% of searches conducted in the United States in 2008 are made using Google then the contract listed for Google will expire at 53.5…-

…-Expiry will be based on the United States search share rankings published by Nielson Online.

I think this could be a fascinating market because:

  • Search engine market share is very important to these major companies, with dramatic effects on their share prices.
  • Search engine market share is fluid, so far with Google growing inexorably. However, Microsoft has cash, determination, Internet Explorer, and the willingness to experiment. Ask.com has erasers, 3D, ad budgets, and The Algorithm. Yahoo!, second in market share, often tests equal or better than Google, and new features like Search Assist are impressive.
  • The media loves to write about it.
  • A major search company might use the market to hedge. Well, this seems far-fetched but you never know. Certainly, from an economic risk management standpoint it would seem to make a great deal of sense. (Here, as always on this blog, I speak on behalf of myself and not my company.)

Finally, I have to comment on how refreshingly easy the process was in working with intrade. They went from suggestion to implementation in a matter of days. It’-s a shame that US-based companies are in contrast stuck in stultifying legal and regulatory mud.

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17 thoughts on “Search engine futures!

  1. Chris. F. Masse said:

    Very interesting. You said that the media “loves to write about it”. Indeed, but they base their write-ups on web stats reports —that is, on the past. If you were a trader on these event derivatives, you’d like to monitor advanced indicators that would forecast what those web stats will be in the future. Do you know any? How can one anticipate one search engine’s surge or demise, other than to bet on a continued tend?

  2. David Pennock said:

    Similar to election markets:

    * See which you like best and which you think others will like best

    * Ask (”poll”) others, read blogs, join webmasterworld

    * Look at how much each company is spending

    * Look at refer logs

    just off the top of my head

  3. Chris. F. Masse said:

    With elections markets, the polls are very good advanced indicators. Do you have the equivalent for your search engine event derivative markets?

  4. David Pennock said:

    Probably the equivalent of polls would be the reports from the likes of comscore, hitwise, nielsen, etc. I imagine there are agencies out there that count more frequently than quarterly, though I’m not aware off the top of my head.

  5. Chris. F. Masse said:

    “Expiry will be based on the United States search share rankings published by Nielson Online.”

    .

    Are the Comscore and HitWise reports published just before the Nielsen Online reports?

  6. Chris. F. Masse said:

    Great.

    .

    Now a question for you, the researcher. Could we rate the pertinence of the advanced indicators (used to inform transactions on some specific prediction markets), and from there, forecast whether those prediction markets will be popular?

    .

    For the American Idol markets, I remember that advanced indicator, a website that quantified supporters’ phone calls (don’t remember its name). Sounded perfect for the active traders.

    .

    Shouldn’t the people making market proposals be compelled to list the URLs of some related, great advanced indicators? Shouldn’t the prediction exchanges list those on the market pages?

  7. David Pennock said:

    Personally, I’m not sure the existence of good advanced indicators correlates with popularity. I believe popularity comes either if people are fascinated by the topic (entertainment, sports), or if there is sufficient money to be made.

    I disagree that it’s the responsibility of the market proposer or market organizer to provide links to information.

  8. Chris. F. Masse said:

    “popularity comes either if people are fascinated by the topic (entertainment, sports)”

    Yes, I agree with that.

    .

    “or if there is sufficient money to be made”

    Yes, but that’s how come the advanced indicators. If there aren’t any, then there’s no “money to be made”, coz it’s pure gambling, not informed betting.

    .

    “I disagree that it’s the responsibility of the market proposer or market organizer to provide links to information.”

    A matter of taste. I think if they were compelled to provide the URLs of the primary sources of information, then they would be compelled to walk into the market makers’ shoes, and thus produce better marketing, and hence create more profitability for the exchange firms.

    .

    Voila. Thanks for your comments.

  9. Chris. F. Masse said:

    So, I re-ask my question: Doesn’t the presence of good advanced indicators (primary sources of information) correlates with the popularity of the related prediction market?

    .

    If so, then shouldn’t the prediction exchanges make a rule for the prediction market proposals to contain the URLs of those good advanced indicators?

    .

    He he he… :-D

  10. David Pennock said:

    I agree it is a nice service to provide, but don’t agree it should be “compelled”.

    If all traders are aware of all the same advanced indicators, then again in some sense “there’s no money to be made”.

    The info is out there within easy reach of a Yahoo! search query, whether the market operator specifically links to it or not.

  11. Chris. F. Masse said:

    “I agree it is a nice service to provide”

    Yes, in a free and “open” society. I thought that Yahoo” was an “open” company, since you support open-source software and some other open knowledge initiatives.

    .

    I am systematically in favor of “open” knowledge. Everywhere. Including in prediction markets.

    .

    “If all traders are aware of all the same advanced indicators, then again in some sense “there’s no money to be made”.”

    Only the active traders will have the time to monitor those good advanced indicators. (And sometimes, these resources are not provided for free.) The fact that only a few active traders will use those resources does not mean that all the other traders should be left ignorant of them. Too much information is good. :-D

    .

    “The info is out there within easy reach of a Yahoo! search query, whether the market operator specifically links to it or not.”

    Hummm… Dubious claim. If your statement were true, then the satisfaction rates of search engines would reach 100%. I don’t think it’s the case, and that’s why search engines employ smart researchers like to you to concoct improvement. :-D

    .

    Anyone on the Web enjoys a set of good links. It’s my opinion that the URLs of good advanced indicators should always be provide on the related prediction market page.

  12. Chris. F. Masse said:

    “The info is out there within easy reach of a Yahoo! search query”

    .

    QUOTE

    TechCrunch reported recently on a study by the University of Southern California’s Center for the Digital Future. The finding uncovered that a growing number of people believe that search results are unreliable and inaccurate.

    http://www.techcrunch.com/2008…..-the-rise/

    UNQUOTE

    .

    Found here:

    http://www.conversationagent.c…..f-the.html

  13. Chris. F. Masse said:

    And, you, too, can go and get yourself a gravatar (a face picture published near your comments on every WordPress blog enabled with this capability):

    http://www.gravatar.com/

  14. David Pennock said:

    I agree with nearly everything you say: information is good, openness is good, & it would be nice if markets came with links to lots of information.

  15. Chris. F. Masse said:

    Those are values that you and others carry around. :-D

  16. Chris. F. Masse said:

    A related discussion would be the coupling of any prediction exchange with a news aggregator. Jed C. has some lite thoughts here:

    http://blog.mercury-rac.com/20…..on-hubdub/

    The Midas Oracle readers remember that I have been bullish on HubDub.

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