the economics of information (1)

Contemporary Economics of Information

WAAL 2013 Conference

by Tom Zillner

(Cartoon deleted due to copyright restrictions)

(Cartoon deleted due to copyright restrictions)

(Cartoon deleted due to copyright restrictions)

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

Where is the Life we have lost in living?Where is the wisdom we have lost in knowledge?Where is the knowledge we have lost in information?

--T.S. Eliot, The Rock, 1934

Where is the information we have lost in data?

Knowledge is Power

(Information and Data not so much???)

Wikipedia Information

Information, in its most restricted technical sense, is a sequence of symbols that can be interpreted as a message. Information can be recorded as signs, or transmitted as signals. Information is any kind of event that affects the state of a dynamic system. Conceptually, information is the message (utterance or expression) being conveyed. The meaning of this concept varies in different contexts.[1] Moreover, the concept of information is closely related to notions of constraint, communication, control, data, form, instruction, knowledge, meaning, understanding, mental stimuli, pattern, perception, representation, and entropy.

Doesn’t that sound a lot like data?

WikipediaDataData ( /ˈdeɪtə/ DAY-tə, /ˈdætə/ DA-tə, or /ˈdɑːtə/ DAH-tə) are values of qualitative

or quantitative variables, belonging to a set of items. Data in computing (or data processing) are represented in a structure, often tabular (represented by rows and columns), a tree (a set of nodes with parent-children relationship) or a graph structure (a set of interconnected nodes). Data are typically the results of measurements and can be visualised using graphs or images. Data as an abstract concept can be viewed as the lowest level of abstraction from which information and then knowledge are derived. Raw data, i.e., unprocessed data, refers to a collection of numbers, characters and is a relative term; data processing commonly occurs by stages, and the "processed data" from one stage may be considered the "raw data" of the next. Field data refers to raw data collected in an uncontrolled in situ environment. Experimental data refers to data generated within the context of a scientific investigation by observation and recording.

These definitions are long and complicated.

That’s because data and information are complex concepts.

It’s all mental stuff

(a suitably vague working definition)

The Economics of Information Changed in the Digital World

• Cheaper production costs• More people working for less money• Single-copy problem disappears• But not fungible

The Long Tail

Graph Source: Wikipedia

The head (green part) is equal in size to the tail (yellow).

Source: The LeftClick Blog

The Book That Made the Long Tail Famous:

The Long Tail: Why the Future of Business Is Selling Less of More

by

Chris Anderson

(2006)

Beyond the Long Tail

Demand

Quantity

Pric

e

Supply

A smaller number of blockbusters…

…And a growing number of snowballs

…Create new value, which raises the equilibrium price of media, and also increase demand elasticity

The Race to the Bottom

Disintermediation

• Authors as self-publishers• Libraries as publishers• Kickstarter financing

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 and your book usually appears on the Kindle store within a day.

• Easy. A final manuscript and an Amazon account are all that you need to publish your book on Amazon.com.

• Sell globally. Publish books written in English, German, French, Spanish, Portuguese and Italian and specify pricing in US Dollars, Pounds Sterling, or Euros.

Source: http://www.amazon.com/gp/seller-account/mm-summary-page.html?topic=200260520

Economics: Self-Published eBooks

• Publication of eBooks allows quick access to the marketplace.

• Often no upfront investment• High profit is possible if sales are high.• Many authors aren’t in it for the money; they

want to get out a message or showcase their written art.

Graph Source: Wikipedia

Many publishers want nothing to do with the long tail authors on the far right of the graph.

But the subsidy publishers do.

Subsidy Publishing

• Amazon– Advantage• Advantage is a self-service consignment program that

enables you to promote and sell media products directly on Amazon.com.• You supply the product. They sell it.

Source: https://www.amazon.com/gp/seller-account/mm-product-page.html?topic=200329780&ld=AZAdvanMakeM

Subsidy Publishing

• Lulu– A smorgasbord of book preparation options– Printing – Marketing opportunities/services

• Other Subsidy Publishers Offer Range of Services

Libraries as Publishers

• Print is not done very much.• Most likely to be databases, e.g., digital

collections or information repositories (which seem to be blending into single presence)

• Access may be free or free but restricted.• On the public library side there is much

interest in exposing local resources via print or digitally.

Kickstarter

• Many media projects are found on Kickstarter.• The principles of Kickstarter.

Economics

Category 1 Category 2 Category 3 Category 40

1

2

3

4

5

6

7

8

Series 2Series 1

Does everything Apple cost 99 cents or $1.99?

iTunes store

Apps store

Making Apps for a Profit• The race to the bottom pushes prices downward in

the apps store.• It takes an investment to make apps.• Good apps are hard to make.• Most apps created by individuals will not be

profitable.• Traditional game makers are also hard hit.

http://www.nytimes.com/2012/11/18/business/as-boom-lures-app-creators-tough-part-is-making-a-living.html?pagewanted=all

“On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

—Stewart Brand

Some information wants to be cheap

Lots of “free” information

“If you’re not paying for it, you are the product.”

Googlenomics

Big Data

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 of Things from, e.g., hobbyists

• Locally-Generated Data

Big (and not-so-big) Data

• The web allows us to produce, consume and aggregate more and more data

• Libraries hold lots of data in electronic and non-electronic form

• The data has value only as it allows us to ask and answer questions (i.e., to form information and knowledge)

Big Data

• Institutional and other repositories will see larger and larger datasets.

• Tools will be needed to manipulate and analyze this data accurately and effectively.

Data Is What You Make of It

• Undifferentiated data is useless.• Require “analytics” to spot trends, regularities,

irregularities, connections (and other relationships).

• Discovery tools may be useful.• Data visualization tools may be useful.• Specialized tools exist for subject domains, e.g.,

viewing genomic data

Much of Big Data Is Free…

• …and it’s worth every penny.• Why are so many datasets freely available

without cost when articles about them may be quite expensive?

• It’s the difference between data and information.

Free Big Data

• Much of the data will never be processed after collection, e.g., environmental sensor data

• Collection and storage is cheap, so store it just-in-case.

Government Free Data

• More data is becoming available online from government at all levels.– City of Chicago Data Portal (

https://data.cityofchicago.org/)– New York City Data Sets (

http://cupop.columbia.edu/research/signature-research-areas/new-york-city-data-sets)

– Federal Data (http://www.data.gov/)

Federal Data

• 373,029 raw and geospatial datasets• 1,209 data tools• 309 apps• 137 mobile apps• 171 agencies and subagencies

Government Free Data

• Data usually available in a single format for each dataset.

• May be tools to export, view and manipulate the data.

The Short Head

The Short Head

• Most big trade publishers make most of their money from some highly-marketable books from 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 or publisher turn to other channels.

The Academic Tail (Tale)

The Scholarly Publication Process

Source: The Business of Academic Publishing

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), the support they provide to the peer review panels, including modest stipends, the complex typesetting, printing and distribution activities, including Web publishing and hosting. REL employs around 7,000 people in its Science business as a whole. REL also argues that the high margins reflect economies of scale and the very high levels of efficiency with which they operate.

We believe the publisher adds relatively little value to the publishing process. We are not attempting to dismiss what 7,000 people at REL do for a living. We are simply observing that if the process really were as complex, costly and value-added as the publishers protest that it is, 40% margins wouldn’t be available. ”

Source: Deutsche Bank AG, “Reed Elsevier: Moving the Supertanker,” Company Focus: Global Equity Research Report. (January 11, 2005), 36.

Costs of Publication

• Journals that cost upward of $40,000 per year• Do the vendors’ explanations account for this

predatory pricing?• Are they worth it?

A Particularly Good Article

• “Is the Academic Publishing Industry on the Verge of Disruption?”

• US News• http://www.usnews.com/news/articles/2012/07/23/is-the-ac

ademic-publishing-industry-on-the-verge-of-disruption

• Source for a number of the slides that follow

How Journals Became a Captive Market

• Most journals are published by scientific societies.

• In recent history they have been acquired by profit-making entities, e.g., Elsevier.

• The scientific societies’ motives are to provide a consistent revenue stream and eliminate the work associated with publishing journals.

Source: http://www.usnews.com/news/articles/2012/07/23/is-the-academic-publishing-industry-on-the-verge-of-disruption

The Harvard Letter to Faculty

• Harvard is paying $3.75 million annually in journal subscriptions and they make up "10% of all collection costs for everything the Library acquires.“

• "Major periodical subscriptions, especially to electronic journals published by historically key providers, cannot be sustained."

Source: http://www.usnews.com/news/articles/2012/07/23/is-the-academic-publishing-industry-on-the-verge-of-disruption

More on the Process

• Faculty and staff do the research and write the papers.

• The submitted papers are vetted (refereed) by scholars in the same field, who are usually unpaid.

• The articles are published.• The academic library must pay for the journal.

Irony Time

• The university or the government pays for the faculty/staff time to do the research and write the papers.

• The university pays salaries to the referees who review the papers.

• The author of the paper often pays the publisher a fee to cover expenses of publication.

• The university pays for subscriptions to the journals in which the research is published.

The Quadruple Whammy

The Illusionary Solution

• Abolish tenure.– Scholarly publishing would not disappear.– There would still be pressure for faculty to publish.– Thus, predatory practices would not be

eliminated, although they might be ameliorated to a minor degree.

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 the article level, with 1,074,850 articles.

• So, there are lots of OA journals with lots of articles.

Source: http://www.doaj.org/

Problems : Open Access Journals

• OA journals still don’t get all of the respect of other scholarly journals.

• Many journals require payment by the author(s) of production costs. (However, this is also true of many non-OA journals.)

Source: http://www.usnews.com/news/articles/2012/07/23/is-the-academic-publishing-industry-on-the-verge-of-disruption

Public Library of Science (PLOS)

• Began publishing in 2003, with PLOS Biology• Peer Reviewed Journals (7 of them)• Fully open access• Funded through memberships and

grants/contributions

NIH

• Policy forces grant recipients to deposit their articles in PubMed within a year of the manuscript’s publication.

• Many medical researchers rely on PubMed for some of their information needs.

Fair Access to Science and Technology Research Act (FASTR)

• Introduced in current (113th) Congress• Successor to Federal Research Public Access

Act (FRPAA)• “Both bills would require open access (OA) to

peer-reviewed manuscripts of articles reporting the results of federally-funded research.”

Source: http://cyber.law.harvard.edu/hoap/Notes_on_the_Fair_Access_to_Science_and_Technology_Research_Act

Distribution

• Print Journalsstill expensive ||{examples}||• Aggregators (e.g., Ebsco, ProQuest)• Publishers as “aggregators”

• Economics? Journals and databases cost a lot.

[Potential] Conflict of Interest

• American Chemical Society (ACS) sells a package 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

Granularity

• Publishers and aggregators can sell objects as small as individual papers or book chapters.

• Identification by Digital object Identifier (DOI)• “I want to get those like buying an iTunes

playlist,” says head of an academic press.• Is there more money to be made that way?

Source: http://chronicle.com/blogs/profhacker/interview_dukeup_2/48527

Poster Session

When Free is Enough: Locating Quality Chemical Information With and Without Subscription DatabasesAriel Neff, UW-Madison, Chemistry Library

Someday, like George Peppard, you too may be able to count

existentialism among your hobbies.

This presentation may be the first step along that path.

Or not.

Swan Song

C'est la vie

Tom ZillnerRe: this presentation or other WiLS-related

correspondence:tzillner@wils.wisc.edu

Consulting or job tips: tzillner@live.com