Prediction Markets as Content, Part 2

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Cross posted from UsableMarkets

Back in April I started talking about how Prediction Markets will be part of many news organizations&#8217- &#8220-citizen-generated&#8221- content strategy going forward.

To quote myself (which seems kind of a rude thing to do, doesn&#8217-t it &#8230-?):

It seems as if no self-respecting news organization can ignore the Web 2.0 movement these days. Many now have some sort of &#8220-wisdom of the crowds&#8221- style content, in addition to RSS feeds, blogs, and so on.

Midas Oracle has covered some of the new relationships that are developing. I recently talked about MarketWatch.

Expect more to happen &#8230- and perhaps quickly, too.

That was nine months ago. Since then we&#8217-ve seen the WSJ, the FT, Reuters, CNN, and others (perhaps everyone can think of a couple or three) begin to dabble in or seriously consider prediction markets. With Inkling and InTrade in the white label prediction market business, the barriers to setting one up are obviously low enough that a certain amount of me-too-ism can easily prevail.

But there is a risk, and those of us who care about the success of the prediction market industry shouldn&#8217-t get too excited about these developments just yet.

First, it remains to be see whether these new prediction markets can attract significant numbers of users. The prediction market industry is already saturated with prediction markets and games. So, despite their powerful brands, I&#8217-m not confident that the FT or the WSJ can attract large followings (although I&#8217-d be happy to be wrong about that).

Ah ha, you may say, we don&#8217-t need a lot of users to generate accurate predictions. The MSR, and automated market makers will help solve the problem. But the problem is not one of generating accurate predictions, but about generating page views. Newspapers (even online) are advertising driven. If you can&#8217-t generate sufficient page views, and you&#8217-re paying too much to manage the prediction market on your site, then it&#8217-s vulnerable to being cut. In fact, I wouldn&#8217-t be surprised if once this US election cycle is over that some of these markets fall away.

And, if the news organizations are really interested in the predictions for predictions sake, they can always simply use someone else&#8217-s.

As always, thanks for listening.
~alex (UsableMarkets)

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