The Frontal Cortex

Monetizing Networks

There’s one other angle to the social network story that I wasn’t able to mention in my Wired essay. Right now, retail companies are investing a pretty penny in consumer preference algorithms, that AI software which suggests books to buy on Amazon, and DVD’s to rent on Netflix, and songs to purchase on iTunes. The assumption is that human preferences are predictable – if you like Bob Dylan, you’ll probably like Astral Weeks; if you like How We Decide, you might like Predictably Irrational; if you like The Wire, you might like Homicide, or The Shield.

These algorithms have their limitations, but they can be useful prompts for browsing. (When I’m forced to shop in an actual physical store, which is as rarely as possible, I feel rather lost and adrift. Where is the helpful “Customers Also Bought” window?) But these software programs are missing one crucial source of data – your social network. After all, the best way to figure out what kind of music you like, or whether or not you’ll enjoy Napoleon Dynamite, is to study your friends. If they’re looking forward to the new Monsters of Folk album, then so are you; if they enjoy old kung-fu movies, then you probably do as well.

How would this work? Before long, I bet we’ll have simple preference tools installed on our phones. These tools will track our social network – that’s easy to do on a phone, since our network is stored in the contacts folder, thus bypassing the mess of Facebook – and then give us advice based on the feedback of our friends. I imagine one day we’ll simply be able to walk into a mall and ask the phone where we should go. It will think for a second before suggesting a particular clothing store selling vintage shirts, or a quaint cafe serving a good tuna sandwich, or that poster store on the ground floor. It will be like word-of-mouth, only transmitted indirectly – the hearsay of an algorithm. Your preferences will be calculated as a function of your network, and not as an abstract human island, which strikes me as much closer to the social reality of preference formation.

Comments

  1. #1 Michael F. Martin
    September 17, 2009

    The most interesting consequence of the fact that our preferences are, in part, a function of our neighbors’ preferences, is that preferences may spontaneously synchronize without explicit communication. I’ve sketched out an illustration of the simplest mathematical model of how this can occur (the Ising Model) using an identification with consumption/savings decisions on my blog here:

    http://brokensymmetry.typepad.com/broken_symmetry/2009/08/a-systems-theory-of-animal-spirits-an-application-of-the-1d-ising-model.html

  2. #2 royniles
    September 17, 2009

    With advertising practitioners already leading the pack, all this helping to continue the building of a society to be governed in large part by the new elite of competitive manipulatory preference practitioners.

  3. #3 Ben
    September 18, 2009

    I’m certainly looking forward to the new Monsters of Folk album.

    In a world as you imagine, if it penetrated most of our daily lives, our decisions would originate from a sort of collective bank of preferences or options. To me its the difference between a multiple choice test and a short-answer or essay question. You walk into the mall. If you want to buy pants that your “friends” buy go here, for ties go here, check out this album, or eat at this restaurant. You choose based on a rather finite number of options-you certainly have the option to choose not to go with one of the options, but then what’s the point.

    In life now, for the most part, our choices are our own (obviously not without motivation or pressure, etc.). Nonetheless, when are options are constantly presented to us, it appears from this side of things that there would be a sort of collective conscience–an algorithm ‘Virgil,’ which guides our way. Or a statistic generator that analyzes and reports the very fabric of our lives–our choices.

  4. #4 Theo
    September 18, 2009

    Netflix does allow you to add friends and it compares your interests with theirs.

  5. #5 scottrcrawford
    September 18, 2009

    power to the tweeple

  6. #6 Valdis Krebs
    September 18, 2009

    What it looks like when we make choices according to the networks we are embedded in; this is about our “political choices”

  7. #7 Jim
    September 18, 2009

    I think what you suggest would be an ideal method of advertising (it would be purely based on your purchasing history, and your friends histories). The cynical part of me expects that there would be an extra factor in how your phone directs you: who has paid the most for advertising. As an algorithm, its all about weighing preferences, so I’m sure those who would operate such a system would have great incentive to allow companies to increase the weight in their factor, for a fee.

  8. #8 Max Ventilla
    September 18, 2009

    Have you looked at Aardvark and the Aardvark Mobile iPhone app. Take a look at vark.com.

  9. #9 David
    September 19, 2009

    Is this a parody? Or do you really live in some sort of hive? What’s the most time you ever spent in solitude? Jonah, you cute little brat you, you seriously need to find yourself a good dog and get lost in the woods for a few years.

  10. #10 xxxxxxx
    September 20, 2009

    “I imagine one day we’ll simply be able to walk into a mall and ask the phone where we should go.”

    Why would we need this functionality? I mean, Banana Republic is the same wherever you go, you need an app for that? The entire *point* of malls is that they deliver a consistent and predictable consumer experience.

    With respect to finding off-the-beaten-path, indie stores, yeah there’s already an app for that. Several, in fact. We live in the Future!

  11. #11 JB
    September 28, 2009

    Jonah, with Amazon what you are talking about is colaborative filtering and it can be quite useful and has been for big online retailers with rich product catalogs and lots of sales. Your social networking notion is already in place with social advertising companies like 33 Across, Lotame and Media 6. True friends due tend to have a lot in common. Casual friends, business colleagues and socialnet friends, maybe yes maybe no. I do think it’s an interesting space.

    We, Peerset, have a fun tool on our website that you should check out. We don’t do what any of these companies do but it is on the same theme. Have fun with it.

    JB

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