The problem with online comments. Solved.

I read an article in the Guardian the other day calling for an end to online comments.

“On most sites – from YouTube to local newspapers – comments are a place where the most noxious thoughts rise to the top and smart conversations are lost in a sea of garbage.”

Prima facie, there’s something to this argument. There are a lot of downright scary comments online. YouTube is about the worst place for it. I figure that’s because videos are the main intellectual sustenance for people who can’t read well, so when it’s time for comment you get the blatherings of the intellectually incapable.

(Here, by contrast, the readers are shining beacons of erudition and compassion and the comments section is a delight. ;) )

So partly, the problem is that different sites have different readers and not everyone’s worth listening to.

But think about The Guardian. In theory it’s a thinking-person’s paper. But the comments section is a disaster. What’s the explanation?

(Nobody is going to die of surprise in the next paragraph as the economist reaches for the folder marked I for Incentives.)

The problem with online comments is the incentive structures! For some idiot with anti-social views, this is his one chance to get his views amplified. The pay-off here is high. Normally he can’t get anyone to listen. But if he quickly writes something inflammatory, he can spend a happy afternoon jousting with people he made angry.

The intelligent person looks at the animals head-butting each other in the comments section and can see no reason to get involved.

For the Guardian writer up above, there’s no solution to comments beyond chucking the whole system out. I know different because I spend a lot of time on Reddit. There’s a site with a wide variety of people on it, from all over the world, from all over the political spectrum, of all ages and of all levels of education. And the comments over there often genuinely brim with wit and intelligence.

Reddit is nominally a link-sharing site. But the value of it is actually in the comments. How do they do it?

Reddit’s comment section is ruled by two main incentive features. Upvotes and Downvotes. Users can upvote or downvote any link or any comment.

Upvoted comments rise to the top. Vile idiocy exists on Reddit, of course. But it sinks into the murky depths where it is little seen. And any comment that gets more than 5 net downvotes disappears from view.

So the incentive system is different. Instead of bad comments floating round riling people up, they disappear. That disincentivises trolls.

And good comments are rewarded.

Every user has a “karma” account that tallies their “karma” – simply the total upvotes they’ve ever received. This Karma is not exchangeable for gold, rubies or bitcoin. It has no value. But those status-seeking missiles we call human minds don’t give a damn. One of the problems on Reddit is actually people doing dumb stuff for karma.

While other sites do have incentives – e.g. the New York Times picks, the Reddit system is a more proven success.

Redditors can ask a stupid question on the site and see a dozen people go scurrying off to provide a well-written, well-researched answer provided with wit and goodwill.  Reddit’s growth is extremely rapid. The site has seen 1.7 billion comments so far.

This system is actually the goldmine lying beneath the land investors in Reddit purchased. They may have thought they were buying a succesful domain name or a winning web brand, but what they’ve got is a killer comment system they need to patent, ASAP.

And then preferably license out. The comment threads of the world need it desperately.

Your favourite government policy is going to make inequality worse.

According to a new working paper by economists at Stockholm University and the University of Chicago, a key factor making unskilled workers worse off is broadband internet.

That means the NBN (which may be the most popular infrastructure investment ever announced in Australia) won’t be good for everyone.

The study had access to amazing data on 80 per cent of firms and 70 per cent of employees in Norway in the period 2000-2008, during which time Broadband Internet was rolled out slowly in Norway, allowing meaningful comparisons.

“For every employee, we know his or her length of education, and annual labor income.”

By Heinrich Pniok. Source Wikipedia.
NORWAY.  By Heinrich Pniok. Source Wikipedia.

If you have a university degree, you are considered to be “skilled labor.” The premium for skilled labor increased very neatly alongside broadband availability as it rolled out in Norway.

return to skill

The result for unskilled workers is not so good:

“[T]he estimates imply that a 10 percentage point increase in broadband availability in a municipality raises wages of skilled workers in that local labor market by about 0.2 percent. By comparison, we find evidence of a decline in wages of low skilled individuals.”

The researchers constructed counter-factuals to measure what might have happened in the absence of high-speed internet. They show the gap between skilled and unskilled would have been lower if the optical fibres had never crossed the fjords..

Screen Shot 2015-01-20 at 10.54.46 am

The reason more educated people do better with the internet is that they tend to not be doing complex tasks

“The estimates suggest an important channel behind the skill bias of broadband internet is that it complements non-routine abstract tasks but substitutes for routine tasks…. the expansion of broadband internet re-enforced the wage premiums to workers performing abstract tasks. By comparison, the wages paid to jobs requiring routine tasks declined because of the broadband expansion”

Broadband internet is obviously putting the postman out of work, but it is apparently having a less obvious effect on a range of other routine but non-manual jobs. This is very much worth bearing in mind as the internet enriches and enlivens our lives in so many ways.

This is not an argument against the NBN. We need high-speed internet and we’re going to get it one way or another.

It’s an argument for being aware that some people get left behind. The smartest policy we can institute to deal with that is high quality, universal education. This should start with high quality earl childhood education (this is extremely important to ameliorate skill-gaps that can develop in disadvantaged populations even prior to starting school), extend through good quality public schooling (needs-based funding as per the Gonski Report is a good start), and culminate in excellent universities that remain highly accessible (this would probably preclude the deregulation currently being proposed by the federal government).

As the New York Times cuts jobs, we need to consider radical ideas to save news.

“What Newspaper do you read?”

This was once a fair question. But if I asked it in earnest now, you’d laugh. Nobody reads just one. Not any more. We harvest good articles from across the web.

Just this morning I’ve read content on two blogs (1 2 ) , six different news sites, (1 2 3 4 5 6) a think tank and visited seven social media / forum sites ( 1 2 3 4 5 6 7 ). But I only have a couple of online subscriptions.

We are reading more content than ever. And yet venerable institutions like the New York Times are still cutting jobs.

“The job losses are necessary to control our costs and to allow us to continue to invest in the digital future of The New York Times, but we know that they will be painful both for the individuals affected and for their colleagues,” said the company in a statement.

Everyone knows that eyeballs are now online, and everyone knows that the rivers of gold that were classified advertising have dried up. News sources are combatting these issues by building terrific websites, and by doing a range of smart but suspect things to raise money, like native advertising.

But I say there is a third trend that is wreaking havoc on the newspaper business. It is not hidden but its implications are not widely discussed.

That is that people don’t just read one news source any more. They won’t subscribe because they can’t choose which one to subscribe to.

Instead of talking about this, the debate about winning subscriptions to online journalism is crazily caught up in the weeds:

e.g. Boston Globe drops paywall, adds meter instead. 

Each individual news company is wringing its hands, frowning and wondering why nobody will pay $400 to subscribe.

This focus on what you individually can do better leads to worrying about the micro scale. For example, fussing over how much content you reveal before the jump:

“But I wonder if we’re about to see news writing being taken in a new direction as paywall journalism takes over. For the wrong reasons, the rules are being rewritten. Most publications with paywalls allow the reader to see the headline and the first paragraph or two. To read more you have to pay. So with a one fact story – Fred X has been named as the new boss of Company Y – there might be insufficient motivation for the non subscriber to subscribe – unless they can be tantalised. Instead, we’re moving to a situation where intros absolutely cannot get straight to the key fact. Instead, it must be written to intrigue the reader. Company Y has named its new boss. To read more, please log in…” – Mumbrella

But if they want to answer why loyal readers don’t seem to be willing to pay the same to access the same stories when they are presented in digital format, just look at consumer behaviour. We are no longer loyal.

In the 1980s, the remote control and cable TV spread across America like wildfire. The internet is to news what the remote control was to TV. We don’t just watch one station any more. I believe the lesson of TV can be applied to online news – big money can be made by bundling.

Put it this way: would you pay to subscribe to just one TV channel? How would you choose which one?

Cable TV works by selling you lots and lots of channels. That’s what online news sources need to do.Our budgets to spend on online news are unlikely to have shrunk. News sites need to find a middle man that can bundle their product up and capture all those individuals’ budgets.

Here’s the core of a perfect bundle to sell to me:

  • The Age
  • The AFR
  • The Australian
  • The Economist
  • NY Times
  • ESPN
  • The Times
  • South China Morning Post
  • Bloomberg
  • Reuters
  • Crikey
  • New Matilda
  • Wall Street Journal
  • Financial Times
  • The Atlantic
  • The Washington Post
  • Forbes
  • The Guardian
  • Vox

There would also be lots of other sites in the mix that I never look at, and which I constantly grump about “paying for”. That’s the cable TV model and it works.

But it won’t be easy. Here’s why it hasn’t been implemented yet.

Putting competing newspapers behind a single paywall would make the owners and editors of those newspapers extremely nervous and uncomfortable. From an institutional perspective, it feels both ridiculous and impossible to achieve. It requires looking at the news business from a totally different angle. It also has significant start-up and coordination problems.

But from a reader perspective, it would be completely natural and neat and helpful to be able to subscribe to everything you want to read and neither run into paywalls nor constantly expect your preferred titles to disappear.

Furthermore, bundling could help the news industry improve. In cable TV, each channel tries to specialise to earn its place in the mix.

The process of stealing breaking news, features and soft stories, which is currently consuming the news industry, could be diminished if the financial security of each channel depended more on differentiation than same-ification.

You could imagine the middle man that solves the question of news subscription bundling being a Murdoch. But it would not have to be.

Twitter already serves as a kind of news site aggregator. Imagine a world where twitter filtered tweets into two columns: those that link to sites that you subscribe to, and those that link to other sites. You’d never have to hit a paywall again, and even better, you could share paywalled material without feeling like you let your social media followers down.

Google ad revenue falls – what does it mean for the internet economy?

The internet economy is developing before our very eyes. Is it a gold mine? Looking only at the Silicon Valley Ferraris, you might conclude yes.

Or is it going to destroy value and jobs everywhere? Looking only at the newspaper industry you might conclude that every job that involves storing, processing and weighing information – from lawyers to bankers, doctors to teachers – is in deep trouble.

The internet reduces a lot of costs. As consumers we are comfortable with the concept of zero marginal costs. We breathe the air, look at the views, bask in the sunshine.

But as producers, as workers, we get worried. There are no jobs in the “Air Industry.”

The internet means a lot of work is about to be done at zero marginal cost. You build a system that teaches kids their time tables, you can roll it out across the English-speaking world. Teachers quake. Build a system that retrieves data from legal cases and roll it out across the jurisdiction. Lawyers will quake. Build a system that uses symptom data to develop diagnoses and hospitals will take it up while Doctors rend their garments.

But all this is a long way off.

For now, the internet is a lot simpler. The only industries that have been transformed so far are ones where data is simply displayed, not manipulated. Industries like advertising. 

Google shows you ads all over the internet – in your email, when you surf the web, etc. And this transformation has reaped it a large and growing pile of money. 

Until now.

Google revenues have fallen in all categories in the first quarter of 2014.


Meanwhile, costs rose and operating margins fell to 27 per cent. This was quite a surprise and the stock fell sharply in after hours trading.

Of course Google is still profitable, and Q1 2014 beat Q1 2013, but the movement in the trend provides another data point to support the second hypothesis above, that the internet-isation of our economy will not involve a lot of money.

The internet is just a distribution mechanism. Making information for distribution still takes work, at least for now. But economic theory says the cost of a good will fall to its marginal cost. The predictive power of economics is pretty impressive when you look at how many newspapers are free, how many TV stations are free, and how many movies get pirated.

Whether companies will find ways to get people to pay for information products is an open question.


But if the “zero marginal cost” feature of the internet economy proves to be decisive, investors will lose a lot of money. Evolving views on this “big question” may explain why the Nasdaq – the technology stock index – surges and falls with more volatility than other bourses.


Some investors clearly already worry about the profitability of technology companies.

But money is not everything. The world in which zero marginal cost is decisive could be a good one.

Imagine if air was made in big O2 factories, and you had to buy a subscription. Would you be better off, or worse off?

So it could be with a lot of technology. We may be better off in an economy where there are slightly fewer jobs but much more that you can consume for free.

Even if the robots don’t get up to scratch and we need people to make information products for free, will we be able to expect them to do so? Let’s look past the evidence that they will (YouTube, blogs, most short films, most bands, Open Office, a lot of apps, Wikipedia, etc.) to the theory.

The concept rests on the idea that people have a “cognitive surplus.” You can meet your basic needs (food / housing) without using up all your week. Then you have time you can spend doing things that look like work. 

This cognitive surplus may come in a certain phase of life. You may be a child or a student or retired. Or you may have a cognitive surplus because you work part-time, or because you are still full of beans in the evening when you get home from your “real” job.

The you use that cognitive surplus to do things that look, to the outside observer, like “work.”

The fact that a cognitive surplus needs to be defined and explained, really shows the incredible power of one of economics simplest models: breaking your day up into Leisure and Labour. 

The model is pervasive. People use it to do all sorts of calculations about how much they should pay to save an hour of leisure, etc. But it’s also kind of stupid. Commuting is neither leisure nor labor. Neither is washing your work shirts. The category of unpaid labour is invented. For washing the floors, sure. But does it include baking a cake? Digging in the garden? Building a treehouse? You can enjoy unpaid labour.

Slate economics blogger Matthew Yglesias goes on and on about the enjoyment of your job, calling job amenity value the most neglected subject in economics. Of course you can enjoy paid labour too. This is just another way in which the binary “paid labor vs unpaid leisure” model of life is defunct. 


The internet could end up making the leisure/labour model look even more stupid, if people accept they won’t get paid for things that were once deemed work, and do them anyway.

They’re spending their cognitive surplus. Is it leisure or labour? Wrong question.

If the zero marginal cost economy takes hold, quality of life may even go up, because people can consume more. It’s the same sort of change that came upon society when the printing press was invented – a huge decrease in the cost of distributing information, and a lot fewer book-binding jobs for monks, which caused a fuss at the time.(And of course the printing press itself wrecked a few legacy institutions.)

But a zero marginal cost economy won’t wreck the whole economy. There will always be plentiful jobs in things that are not zero marginal cost. Humans need food and housing and transport and always will.

If you’re worried about the rise of the internet, invest in something concrete. Like iron ore mining, or potato farming, or logistics. These industries will continue to sell things, hire people, and make money.