I am not a fan of the prediction market business. I know that many game and social theorists think they're valuable predictors of crowd behavior, but I've seen too many prediction start-ups turn into intellectual wastelands, with a few people controlling the "price" of opinions that are either pointless on the face of it, or bizarrely tilted in one direction or the other.
So I took Parker Barrie's recent pitch for a new feature on Predictify with a grain of salt. On Wednesday, the company is launching a prediction market for the U.S. presidential election, called the Election Showdown. Users will be able to enter their predictions for the election outcomes in 14 battleground states, and the most accurate users will, after the election results are in, divide a pot of $100,000.
Upon hearing this, my hackles rose. Users may predict one thing but vote another, I said, especially when money enters the process. To which Barrie had an answer that rescued the concept for me: "When you ask people to predict what will happen, you separate them from their personal biases and make them consider additional information."
The Election Showdown feature is not, I'm led to believe, so much about predicting the election results as it is about making people think about predicting the election results. "We provide a forum to research, discuss, and predict what you think will happen," Barrie said. And anyway, "We don't position Predictify as precisely accurate as to what will happen." There are polls for that, I guess.
Predict a state, win some money. But mostly, learn something.
(Credit: Predictify)Over the past year, since I first covered the company, Predictify has in fact shifted its focus from providing precise predictions to creating a platform for community engagement. That works for me. I still don't like prediction markets. But I do like sites that encourage people to think in new ways.
Other political prediction markets (thanks, Peter Norvig): Intrade, Iowa Markets, Rasmussen Markets, Betfair, Newsfutures, Inkling.
See also: The Journal of Prediction Markets.
Predictify is a survey engine cleverly masquerading as a prediction market. On the site, users can answer questions that test their predictive abilities in various fields. If they prove to be right, they can win actual real money. Users even get a small payout for answering a question if they end up being wrong.
People and companies wanting to do market research can submit questions to the Predictify audience--for a fee--and the answers that prove to be most accurate split the bulk of "pot" that is attached to the question.
Answer this question right and earn some bucks.
The money is ingenious misdirection. The point of rewarding accuracy is not to actually pay people for being right. The money is there, rather, to ensure that people who answer questions try to be right. Data from a Predictify survey is broken down in many ways for its users who pay for results, and it's that demographic breakdown that Predictify is really selling, not absolute predictions.
For example, suppose a company wants to know how to price a product. It can ask a question, "What do you think the price of this product will be when it hits the market?" The answers will be correlated with demographics, revealing what different groups (gender, age, ZIP code, etc.) think the item is worth. The "winners" who select the right price aren't predicting the price so much as determining it, and the people who select the price point are basing it not on the aggregate wisdom of the crowd but on the pricing level their target demographic has zeroed in on.
It's one of the cleverest Web 2.0 mind games I've seen in a while, and it just might work. Like many prediction markets, though, the community will run out of gas unless there's a strong incentive to keep people engaged. Money is just part of it on this system. Predictify also ranks users, and pays out more to the more accurate ones.
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At the Office 2.0 conference, I met Paul Pluschkell, the CEO of Spigit. Spigit is a marketplace for ideas, reminiscent of a prediction market. But it's not quite one, since prices are set by an algorithm that takes more into account than just market demand. "It looks really complicated," I told Pluschkell. He told me that if I gave the site 5 minutes of concentration, it'd be crystal clear.
I gave it more time than that, and found the site very interesting. It's not what I would call clear, though.
A Spigit participant's company page.
Users can see which companies have the best business models and ideas behind them.
The main site is a gathering place for people exchanging ideas and feedback for new businesses. (There are separate Spigit sites discussing politics and college campus life.) People starting with a business idea can put it to the community for comment and review. It can move from this "incubation" phase into "validation" by meeting certain milestones, such as earning enough positive votes, called "spigs," and passing a threshold in the number of people who view the idea. Milestone progress is represented on each company page by a serious of achievement badges. Finally, a company can move into the "emergence" stage, after which community members can buy into it with idea stocks called spocks (no relation). Prices in this "spock market" are determined not just by buy and sell activity but also by the scores awarded by people who write reviews. However, users can't write reviews until they level up by first posting on a few idea feedback threads.
All users can see which members are smartest (based on the values of spock portfolios) and which ideas and companies are worth the most in spocks and in average user rating.
It's quite possible I have misrepresented some of the details above. As I said, I found Spigit's flow confusing.
As companies go through the game, they earn badges for benchmarks.
But I also found it fascinating. It is indeed much more than a prediction market. It's more like a complex board game, but with real ideas, egos, and hopes on the line. There is a community of people on this site who are involved enough to learn (or at least play in) the system, and the feedback on ideas is often worth reading and no doubt valuable to the people putting their companies on to the site. I plan on scouting for Webware coverage candidates on Spigit. Perhaps I'll help game players earn future merit badges for press coverage. And that's cool, I'm game.
It's worth a look, but don't beat yourself up if you don't get it.
See also: ThotMarket, one guy's experimental prediction market that's trying to add currency, in more ways than one, to social bookmarking.
(Credit:
CNET Networks)
Trendio is a new prediction site that blends the feel of a stock market with that of fantasy football. Instead of using actual companies, Trendio places value on people or words as they show up around news sites on the Internet. Trendio users can purchase word stock using Trendillions (the site's fake currency) and manage their stocks within portfolios. Your goal as a Trendio user is to create a portfolio with words that interest you (so you can track their popularity) or that you simply think will do well on the market (so you can earn fake money).
Trendio isn't the first prediction market. The Hollywood Stock Exchange has been around several years; it lets its users keep a portfolio of actors and films whose values fluctuate based on news presence. There are also sites that use actual dollars, such as Betfair and HedgeStreet. Sites like these pull their results from a large group of media sources, although most (including Trendio) won't provide a full list.
What sets Trendio apart is that you can actually use the funds you have amassed to buy into site-sponsored contests. One of the more interesting contests was a technology competition, which challenged users to create portfolios specifically with techie words. There have also been contests about sports, business, and politics. During the contests you can view the rankings on a leaderboard and take a look at the contents of their portfolios. The top-ranked participants at the close of a contest get a prize, ranging from site prestige to actual money. These prizes are few and far between, though, leaving the spoils to those who have used the site long enough to have large accounts and thus make the biggest gains. If Trendio wanted to step it up a notch, they'd let users sell some of their Trendillions for actual cash or convert them to products and services from affiliate sites. Whether or not the casual user would want to go through such a scheme is questionable.
Trendio's newsfeed is updated live.
(Credit: CNET Networks)Browsing Trendio's categories is similar to looking at a stock site such as Yahoo Finance. There's a graph charting the day's most popular word in the past 72 hours, along with five of the biggest stories that get pulled in from Google News. There's also a live newsfeed at the bottom of the screen. In this box you can see what words are being bought or sold, along with the latest user comments in that genre of word.
Is there a point to a site like this? Potentially. If you're into the idea of fantasy sports but don't like sports themselves, there's the opportunity to test your expertise and analysis skills. As far as adding value to your day, Trendio frankly comes across as a time waster. Marketers, however, could have a field day looking at the portfolios of the site's top users. Trendio's interface is pleasing to the eyes, but I honestly question how long users will keep using a service without added incentive such as the opportunity to make real money. In the meantime, it's in a strange limbo between being fun and business that doesn't quite fit in either genre.
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