Jeff DeChambeau

Instagram is insidiously pointless

Jeff — Tue, 24 Apr 2012 18:51:36 +0000

Instagram wasn’t sold for a billion dollars, it was sold for $300,000,000. The lion’s share of the billion dollar price tag was in stock, which was used to imply a hundred billion dollar facebook valuation. That’s not a bad move given that facebook, in its current form, isn’t worth remotely close to a tenth of a trillion dollars. #

Analysis following the acquisition seemed to cluster around a couple of points: 1) facebook’s really bad at mobile while Instagram has a solid mobile experience, and 2) since facebook is essentially a photo-sharing site, it makes sense to buy up a potential competitor before they become a problem. #

All of this taken together means that facebook gets to disarm a potential threat, hire some good mobile folks, and artificially buoy their valuation. I don’t like Zuckerberg, but that’s not a terrible move for $300M. If the ruse works and establishes the company’s value at $100bn, $300M was money well spent. #

Having said all that, to actually look at Instagram you can’t help but conclude that it’s completely pointless. But the fact remains that it’s very popular, and even if that facebook stock evaporates, $300M is a lot of money for something that seems so stupid. #

I just spent a half hour playing with the app. I have to say, despite being pointless, it is oddly gratifying to use. #

Like other Instagram users, I have nothing worthwhile to photograph. But, even when taking pictures of Subway napkins and garbage cans, it was interesting seeing which noisy filter made my photos look the least bad, or which border and blur effect combination best gave the illusion of skill. #

Above all else, all of the filters make the photos look old. I think this is the core psychological trick behind the service: in the ’70s, Polaroid shots were scarce and expensive, so they were only used to capture moments that the photographer thought might be worthwhile. Since the ’70s, most of these photos were probably lost or thrown out. It’s at the point now where if you see an aged photo in real life, it’s because someone went out of their way to hold onto it–which is to say that it was valuable. #

Instagram is playing with this expectation in a very interesting way: because we expect photos of this type to be of at least personal historical significance, we ignore the tedium its content. #

Combine this with the “popular now” page, which appears to be just a random sampling of shots, and users are encouraged to both take a lot of photos in the hopes that their art is deemed worthy to be featured. This looks an awful lot like a random reward schedule. Except with so many users, it’s easy to make everyone a winner–increasing use. #

There’s an awful lot of competence that’s gone into executing against something that might as well not exist. If these folks made taking photos of your cat so addictive and viral, I’m a concerned to see them go to work for a company as unscrupulous as facebook. #

LOST: TV’s FarmVille

Jeff — Tue, 10 Apr 2012 20:52:02 +0000

I’m still a little bitter about LOST. #

The show was addictive in a way I had never seen before. But when the final episode aired, it retroactively ruined the entire show. That episode irrefutable showed that the writers really had absolutely no idea what they were doing the entire time. As an audience we had been sold a mystery that couldn’t be solved. But up until that final reveal, the show was really compelling and watching each episode made you want to watch the next. So what was going on? #

In a sentence that has never before been written: I think we have to look to Micheal Bay for the answer. #

It’s really easy to accuse Michael Bay of being an idiot, but he isn’t. He’s one of the best at what he does, which is to say he’s perfected the art of adding explosions, fart jokes, and half-naked women to movies. This is a certain type of production value, which I’m generically defining as the choice of techniques used to tell a story. #

Michael Bay’s a testament to just how good special effects have gotten: you can graft them onto something that barely qualifies as a plot and reliably turn a profit. But story structure does matter, and when you take cutting edge special effects and graft them onto a structurally sound movie, you get a mega-blockbuster like Avatar. Explosions and naked bodies speak directly to primitive parts of our brain, and stringing enough of them together in quick succession is a pretty reliable way to keep someone–especially a teenage boy–staring at a screen for two hours. But explosions and Megan Fox aren’t the only type of production value. #

Shows like Rome and Game of Thrones are fantastic to watch because of how well-produced they are: it’s striking to see a world so radically different from our own rendered so plausibly and completely. This is production value at its best. But for all the lessons in learning how to light a set to make or make something look real, the industry has also come up with a number of less obvious but very reliable tricks and techniques to keep the audience at the edge of their seats, artificially. #

I used to listen to the Battlestar Galactica commentary track. In one episode the show-runner, Ronald D. Moore, freely admitted that the plot as written wasn’t as strong as he would have liked. To make the episode presentable / keep people interested, he had the episode edited to open with a later scene, leaving the rest of the episode to explain how the character got there and then escaped. He explained that this was an old trick that could be used to cover up sloppy writing. Once this is pointed out, you see it everywhere. It’s also one of many tricks. #

Shows like LOST and Battlestar Galactica perfected the use of music to ratchet up the emotional stakes leading into a commercial break. In other J.J. Abrams properties like Mission: Impossible 3, you can usually expect some soft piano music to accompany situations where one character is at their wit’s end trying to save the life of another. Community did a great job making fun of Glee with a Christmas episode that explained step-by-step how musical TV shows manipulate the audience. These cheap trucks can be used to make great stuff even better, which is why even though it annoyed me that Battlestar Galactica was addictive, it never cheated me out of my time. #

LOST did. It masterfully used these and other tricks more effectively to advance what appeared to be a structurally valid mystery: one with answers. But each mystery was solved by introducing another mystery, resulting in an infinite regress of explanations. It turned out that all of this incredible production value did nothing to advance the story or make us care about the characters: it was all just to keep us tuned the next week. We were cheated by some very talented professionals. #

In essence, this is why gamification is garbage: just as movies have production value that can be applied to empty, meaningless experiences, video game designers have invented and discovered a number of tricks and techniques to keep users “engaged”–that is, staring at the screen. And it’s the application of this type of production value outside the context of an worthwhile experience that leaves us with a completely pointless product. Like Foursquare. #

So, you can do anything. Now what?

Jeff — Wed, 21 Mar 2012 15:52:48 +0000

Slides from a presentation to an undergraduate consumer behaviors class at Ryerson University. Broadly the talk was about mobile marketing, but given how quickly the world is changing, mobile marketing is many, many things. #

Mythology, Gamification, and the TV show Community

Jeff — Wed, 21 Mar 2012 15:30:21 +0000

Lately much of my work has been converging on mythology. This is kind of weird given that I’m a technology writer. But mythology, specifically the way mythic and non-mythic stories are structured, has cropped up in gamification, customer experience design, and even picking where to aim a business model. Before I can move on to those topics, I need an argumentative Lego block that I can plug into future arguments. This is that block. #

There’s a reason why James Cameron’s Avatar made a ton of money. People accuse Avatar of having the same plot as Pocahontas, FernGully, Dances With Wolves, The Last Samurai, Titanic and many others, but this isn’t really accurate. Instead, Avatar and the others have the same structure: they’re all about a man who leaves home, discovers a new way of life, changes, and rejects his origins. This is a very old–and very reliable–story structure. In other words, a myth. #

Today we think of myths as fairy tales–which is to say we think of them very little, and think very little of them. That’s a shame. Myths are narrative structures that often deliver worthwhile messages: don’t take candy from strangers, help people out when they’re hurt, and don’t ever give man fire. These stories aren’t factual, but in their fiction is truth about the human condition. They’ve survived for thousands of years because they deliver powerful messages competently. #

It was in 1949 that English professor Joseph Campbell published The Hero with a Thousand Faces and unified almost all of mythology under one framework, the monomyth. Once you learn about the monomyth, an optional checklist of 17 plot points, you see it everywhere–here’s a quick overview that uses The Matrix as an example. But the monomyth is typically at the core of fantasy stories and most stories aren’t fantastical. If we strip away the fantasy elements, we’re left with a structure that’s about a person doing something new and changing. Dan Harmon, the man behind the outstanding TV comedy Community, has boiled the monomyth down to its core. By examining the plots of countless movies and television shows, Harmon has derived the eight steps that structure a satisfying story. If you watch the show you’ll probably agree that he’s on to something. #

These structures are probably the product of something like evolution. Before we had the written word, myths had to be told and retold orally, and were invariably tweaked from generation to generation and teller to teller. Stories with bad changes weren’t retold, and those with good changes were told more. Our minds both crave and create meaning, and these narratives structure events into a causal order that makes sense to us and resonate powerfully–probably because our language and psychology evolved alongside the stories we tell. #

Despite their ubiquity, myths are seldom acknowledged and rarely appreciated. But they’ve lept from static media like books and movies into interactive media like video games. Video games are at their core experiences, so it stands to reason that mythic structures have a place in the “consumer experiences” that marketers are now obsessed with designing in search of margin. It’s something vaguely similar to mythology that’s also resulting in the pile of bullshit that’s popularly referred to as “gamification.” #

I’ll look at these topics in future blog posts, and probably use this thinking to make fun of Michael Bay. #

Here’s how you kill hollywood

Jeff — Sun, 18 Mar 2012 19:30:34 +0000

There’s a problem with television that’s keeping us from enjoying our favorite shows on our own terms: the business model is really stupid. So stupid in fact that we should take a minute to reflect on just how stupid it is. #

If your favorite show is on network TV, you are not that show’s customer. Production houses make shows and sell them to networks. Networks broadcast the shows they think can get them the largest or most valuable audiences. Networks then sell the attention of those audiences to advertisers. This means that there are two layers of middle-men adding cost between you and the shows you love. The problem with Hollywood isn’t the content, it’s the middle-men. Why not cut them out? #

So here’s the idea: #

Though it doesn’t yet get enough credit, but Kickstarter is a huge, huge deal. Kickstarter has implemented the generic model of crowdfunding in a way that works for certain types of products. With some tweaking, we could collectively fund TV shows. #

With Kickstarter, each project has just one funding threshold–this isn’t sufficient here. Instead, we need to break a television budget into a collection of sub-budgets and crowdfund each of them. For each category–writing, acting, production, editing, marketing and so on–three budget alternatives should be prepared: bare-bones, comfortable, and dream. #

Funders can then support the project in up to two ways: they can pour money in to get the entire show to a minimum viable budget, or they can spend money on parts of the project that they care about most. If I want special effects, I can kick some money into the VFX budget. If I really care about the actors, I can kick in some money so that the project can afford Hugh Laurie. Like Kickstarter, if the total pot never gets big enough, I’m never charged. Funders set the conditions under which their money is unlocked. #

It may work out that out that people care more about writing and Bryan Cranston than cameras, but you know what, I’d watch a show with him that was shot and edited on an iPhone. So long as each part of the project reaches the minimum required funding, the show can be made. Writers and stars can still demand whatever salaries they like, and the crowd will decide whether or not they’re worth it. Since whatever is produced is released online, distribution costs are very very low. #

This model also pushes the cost of marketing onto the audience: if I’ve put $20 into a show and want it to be great, the best thing for me to do is to convince my friends to watch and fund it too. Shows with supportive audiences would grow quickly. If you wanted to get fancy, you could even do some sort of revenue sharing so that good taste early-on is rewarded–this would really encourage people to talk up their shows to their friends. Funders could use their dollars to directly impact the content of the show. #

There’s also an opportunity for marketers at the table here too. By donating wardrobe, props, equipment and the like, marketers can take cost out of the production, meaning that every fan-funded dollar goes that much further. If I knew that Mad Men was better because of Banana Republic, that increases how much I value their brand. #

That’s the core idea. It’s still rough and I’ve left a lot of thinking and nuance out, but it’s still far less stupid than what we have now. For whatever it’s worth, I release this business model under the GPL, though if you do think it’s good enough to do, I hope you pay me to come talk with you. #

And if the folks behind Community ever tried this, I know a bunch of people who would fund them. #

Perverse outcomes of Kony 2012

Jeff — Mon, 12 Mar 2012 16:10:52 +0000

So the Kony 2012 video doesn’t exactly jive with reality. There’s still some really interesting and important stuff at play here: we’re in danger of letting slacktivism appear legitimate. #

It used to be that if you cared about something enough to share your thoughts with your elected representative, it took a good deal of effort to do so: you picked up the phone, wrote a letter, or visited them at their office. That’s to say, you paid for the message to be delivered with your time. #

Today, and in the Kony 2012 example, the information delivery cost is basically zero: it’s not at all inconvenient to send a message to the powers to be “demanding” action. This means a whole lot more messages are going to be sent–and people will speak up about issues that they cared about, but not enough about to write a letter. Given how easy it is to write a letter, we need to be honest with ourselves about how little we actually care about most of what happens in the world. #

The Kony 2012 campaign risks making slacktivism appear legitimate in two ways: politically and socially. #

Slacktivism will be politically legitimized if politicians actually respond to the campaign and instigate military involvement. Clearly this is the goal, but given that the campaign requests going into Uganda for a guy who hasn’t even been there in six years, this kind of response would be to placate misinformed constituents rather than to actually do good. The situation overseas is far too nuanced to be solved by a populist reaction before attention drifts to the next thing.
No matter what happens in reality, if Kony’s caught, social media will credit itself for capturing him. If he were captured today by people not even aware of the campaign, social media users would pat themselves on the back even though their behavior had no causal link to the outcome they seek. This socially legitimizes slacktivism in the minds of the participants, meaning that we’ll see more of this behavior. It’s dangerous to incorrectly ascribe consequences to your behavior.

The instigating video itself was incredibly well produced, and the fact that a 30-minute video has been watched over 100 million times is remarkable. The problem is that stuff like this only works the first time. Invisible Children found a new formula for social media secret sauce, and soon everyone will find it tastes bland. The solution proposed by the Kony video isn’t systemic or sustainable; this one shot campaign has been used on the wrong issue. #

A country only has so many resources, politically legitimized slacktivism means those resources will be at the whim of whatever issue is currently à la mode. People want to do good and make the world better and social media is probably the second-best tool for them to do so. #

Social media is a lever, not a magic wand. There’s a big difference between clicking share on facebook and actually investing in growth, like through Kiva. #

Seriously, go sign up on Kiva right now, they’ll even give you $25 to get started. #

The need for solid tech journalism

Jeff — Tue, 14 Feb 2012 15:17:58 +0000

I’m a big fan of Dan Lyons. Like many, I read and enjoyed his blog, The Secret Diary of Steve Jobs. Lyons understood Jobs and Silicon Valley well enough to put himself in the CEO’s shoes, but didn’t deify the man the way fanboys tend to; he clearly respected Jobs, but didn’t take him (or himself) too seriously. It’s a shame that Jobs died, but doubly so for Lyons: it would have been in bad taste to channel Steve from beyond the grave. Every journalist needs to specialize in something, and Lyons’ lens through which to write about the world was taken off the table. So he needed something new. I couldn’t be happier with the direction he’s chosen. #

The world is changing at a speed never before seen, and it’s getting faster. Technology is the driving force behind this change, and Silicon Valley is one of several hotspots where this technology is being built and transformed into businesses. Facebook has changed how people all over the world connect with one another, Kickstarter is fundamentally changing how a business can get off the ground, Path did something very bad by going out of their way to download people’s address books. We need real journalists and real watchdogs to report critically on these businesses, how they’re making money, and weighing in on whether those business models, revenue streams, and ethical decisions make sense. #

TechCrunch, the de-facto homepage for “news” about tech, does absolutely none of this. Lyons gets full points for pointing out, Jon Stewart style, just how terrible the state of tech journalism is–if TechCrunch and the like are any indication. #

I won’t spend too much time complaining about TechCrunch, it’s terrible and has been for a while. Clicking a link and seeing techcrunch.com resolve in the address bar is always unpleasant, and sometimes morbid curiosity keeps me around to see just how bad the article is going to be. Siegler’s posts probably being the worst–he can neither think nor write. #

In terms of reading tech news, nothing makes me happier than seeing that the URL I’m loading resolves to bloomberg.com, you know, real journalists. But Lyons is a real journalist too, and his opinion pieces are well-reasoned and take a stab at the big picture. We badly need more of this. Tech is too important to be left to the bloggers. #

The problem is of course money. So far journalism has failed to adapt to the internet. The intermediate solution, or rather the one that’s currently working online, is the Gawker/TechCrunch business model: you can monetize page impressions, so do whatever you need to to get them. The result is a fast and continuous stream of sensational drivel. #

People take information for granted. There’s a reason why companies like Gartner and Forrester can charge companies tens of thousands of dollars a year for information and expertise: at its best, this research helps them make better decisions. With techblogs, we’re getting what we’re paying for. #

This isn’t a problem unique to the Valley, and no one but The Economist is having much luck staying afloat. While I agree with Paul Graham’s call to Kill Hollywood, I think an even more important project is to Save Journalism. There’s a lot of benefit to those of us who care about tech, like getting access to high quality, reliable, considered analysis, and what works in tech may work for journalism in general. #

Access to good information is a public good, we all have a role in making it available. #

Business strategy lessons from religion

Jeff — Thu, 09 Feb 2012 16:46:09 +0000

There’s a great TED talk by essayist and Philsopher Alain de Botton called Atheism 2.0. Setting aside the atheism content of the talk, there’s a tremendously powerful idea at the heart of this talk: religious organizations have been around for a very very long time, clearly they’re doing something right in terms of organizational design. Business could learn a lot by looking at the organization and behavioral structures that make up religions. As a quick way of making this point, there’s a reason that BusinessWeek wrote a long-form piece on how efficiently run the Mormon church is: seen as a business, the church of latter day saints is masterfully run. #

If we look at all religions as businesses, they have a great cost structure: many incumbents own the property they operate out of, their core product is information, and their main costs are labour, educating new labour, and property maintenance. It’s probably not a stretch to say they have no money tied up in inventory. It’s probably also fair to say that newer churches spend a bit more lavishly on marketing, which just another name for R&D about how to get young people to join up. Organizationally, most religions are bureaucracies, as are most companies. It just so happens that a bureaucracy is a very efficient way to organize employees and direct their efforts towards one specific goal or another. #

Their revenue structure is variable, ranging from optional donations to the 10% tithes that many faiths expect of their adherents. They also have the enviable status of being tax exempt, meaning that each dollar of revenue is a real dollar of profit. I would also not be surprised if churches were involved in financial services or investing in some low-risk capacity. #

Churches offer people a good deal of value, and we’re now seeing competition as other vendors offer those same values in one capacity or another. Here’s an incomplete list along with some pseudo competitors. #

Religions offer people a powerful message about what each of our places is in the world and helps us to feel better about it. So does Starbucks. For every sermon delivered on the good life, there are probably as many customers who fully buy into the marketed belief that by patronizing their local Starbucks and paying fair trade prices for coffee, they’re using their spot in the world to do some good. There’s a fantastic short video where Slavoj Žižek explains how this practice is morally bankrupt, and the economics aren’t favourable either. The fact is that by messing with prices fair trade causes food shortages in developing economies. This is not good. All the same, people clearly want a way to feel good about their place in the world and the impact they’re having on it. #

Continuing with the Starbucks example (although Apple is another great candidate), religion gives people a sense of community. Companies are now looking at ways that they can build communities engage customers for the purposes of marketing, innovation, and research and development. My friend and colleague Mike Dover wrote the authoritative book on doing this online. Research and development is great, but if people are willing to buy into a likeminded community for both the big questions of existence and their personal philosophy on coffee, surely there’s some middle ground about other important personal issues. Even software design can do this, 37signals is open about their very specific beliefs around what software should do and how it should work, and they have a vibrant community of people who feel the same way. #

Clearly there are benefits to getting people involved in a community like this, as people don’t go door to door explaining something to strangers if they don’t feel strongly about the content they’re sharing. These people are also unpaid, and in fact pay their local organizations in addition to taking on marketing costs. Think how many iPhones Apple has sold because of peer pressure alone. #

One of the defining characteristics of modernity is a loss of the feeling of enchantment with the world. We see this everywhere: our smartphones are so magical that we’d have been burnt at the stake in past times simply for checking facebook on one in public, yet we’re entirely blasé about the incredible things they do for us. For thousands of years, religion has catered to some core needs that people have, and religions are, for better or worse, losing their monopoly position as the vendor to supply those needs. #

As we look forward to make new businesses, we should recognize this truth about the world, people don’t just want products that solve problems or make them feel good, we should be building companies that solve hard, personal problems, and make us feel good by doing real good. This there is tremendous opportunity here, both for society and business. #

Business needs Philsophers

Jeff — Tue, 07 Feb 2012 23:04:32 +0000

This week’s Facebook IPO is the start of something strange: soon everyday people will own parts of a company whose stated mission is to undermine their privacy. As a publicly held company, Facebook really only has two ways to boost their share price: add more users, or use data mining to make each user more profitable through advertising. They’ll be doing both. #

At its core, Facebook is built on the assumption that people are willing to have their private lives intimately examined by marketers in order to talk to their friends online for “free.” Is this a valid assumption? Facebook is hoping it is. #

Other businesses have come and gone because their core assumptions about the world were invalid or outdated. Kodak, Blockbuster, and (soon enough) The Yellow Pages were all companies that just couldn’t accept that the world was no longer what they believed it was. These once-vibrant companies started down a hill of decline because they didn’t ask and answer the hard questions at the heart of their businesses. Given the right moment each of them could have been saved—by Philosophers. #

But first, some background. #

For most of history, the future looked more or less exactly like the past. This is no longer the case. The world has seen as much change in the past 50 years as it did in the previous 500. Capitalism has an interesting side effect: progress. But all this scientific, technological, and social progress has a side effect of its own, complexity and confusion, which can easily lead to incorrect assumptions about the world. Said another way, all this change has made the world easier than ever to misunderstand. Businesses need to understand the world as it is, because capitalism rewards understanding. #

This may sound abstract, but everything in the world started out as an idea: democracy, capitalism, even the computer you’re reading this on right now. Ideas are tools that we use to model the real world and structure events around principles that our minds can grasp. Businesses are ideas too—in a much more significant way than a balance sheet or shareholder report might suggest. And businesses, like all ideas, are built. #

Like building a house, there are right and wrong ways to build an idea. A house needs to reflect facts about the real world to survive earthquakes, floods, and keep the people inside warm and alive. In the same way, an idea or business model needs to be consistent with itself and the world at large. And like a poorly built house, an idea that isn’t consistent with reality will collapse under its own weight. A successful business is built on the competent execution of good assumptions; it’s able to recognize and adapt to changes in the world. #

For bad ideas and business models, it used to be that failure from inconsistencies took some time; competition was slow and expectations were low. But the speed of progress and the accompanying intensity of competition have put all business models—and all ideas—under tremendous pressure. Companies that make bad assumptions about the nature of the world are quickly punished for doing so. This is where Philosophers come in. #

Far from being a bunch of crusty old men debating the minutiae of obscure terms, Philosophy is two things. First, it’s the process that structures serious attempts to understand reality—to create a consistent mental model of the world. Second, it’s the surviving record of those attempts. It’s a shame that when people think of the discipline it’s the second quality that comes to mind because the first one is exciting and essential: Philosophy is the set of tools that test ideas to make sure they’re properly built. These tools work very well; they gave us mathematics, economics, psychology, and of course science to name a few. #

When a Philosopher sets about answering a question, they start at the start and nothing is off limits. This is a characteristic of those in the Liberal Arts, but given how seldom these skills are explicitly celebrated is it any wonder these students chronically undervalued—both by employers and often themselves? But with some slight tweaking each can offer much to the other. Businesses need to recognize that there are right and wrong ways of looking at the big picture, and Philosophers (and Sociologists, Historians, Political Scientists and others) need to recognize the merits of what they do—outside of the historical record. #

Given the amount of time, energy, and money that’s needed to bring the ideas to life as companies and products, why not test-drive them first? Besides, the world is far too exciting a place to be run by only MBAs. #

This is a repost of something I wrote for T4G’s Ideas & Insights. See the original here. #

Reddit isn’t a popularity contest, it’s a fitting-in contest

Jeff — Tue, 07 Feb 2012 04:19:37 +0000

Karma is the arbitrary currency that reddit users can give to one another. Every user has an unlimited supply of karma, but only if they give it away one unit at a time on a per-post basis. I’m not an economist, but that sounds like the start of an inflation problem. #

Because having higher karma is desired, users behave in ways that will get them karma (karma-whoring). Similarly, users who do not agree with the fat part of the bell curve are punished by losing karma. Posts with low karma are sorted to the bottom and are less-read and set out from the chorus. #

It follows that the way to get the most karma is to say stuff that most people will agree with, that is, to be average. #

It’s therefore in the interests of reddit users to be as agreeable and indistinguishable as possible from the average voice, giving us the hive-mind of tedium and mediocrity that we see. #

It’s also worth noting that there’s a massive selection bias inherent in participating in a web community that calls itself “the frontpage of the internet,” so this pressure to conform is applied an already pretty homogenous mixture of people. It’s a bit chicken and egg, but the result is bad photoshops either way. #

Edit: A bit more. Doing some armchair economic analysis on this. #

While massive inflation is probably a problem, the fact that nothing is being bought with this currency probably takes a big part of the downside off the table, it’s not like the goods that people would buy with their karma are getting more expensive, because there are no goods. #

It’s the signaling that’s messed up. In normal money economies, money acts as a production signal. When money is paid for a good, if the price is “too high” the price acts as a signal to produce more of that good. If you’re selling something and people will spend whatever price you set, you’re clearly going to want to make more–and anyone who witnesses this will want to get in and get a piece of the action. The result is that the price is bid down. #

Karma however is not scarce, therefore people will give it away readily–there’s no downside to doing so. This means that posts/users who would not have been good enough to get karma if karma was scarce will be given some, resulting in an “overproduction” of that type of post. There’s therefore an overproduction of the type of average posts, and an incentive to make average posts in order to get more karma. #