The Long Tail

Announcing The Free! Summit

Mike Masnick beats me to it:

“As regular readers of this site know, I'm pretty passionate about how businesses need to understand the economics of "free" in figuring out how to create business models that work. So, I'm excited to announce that I'll be hosting and emceeing the newly announced Free! Summit, to be held in Silicon Valley on May 11th.
Chris Anderson (whose book on "Free" will be coming out in just a few months) will be keynoting, and we're pulling together the rest of the participants as well.

The event is being produced by the fine folks from Tech Policy Central, and works as a nice lead-in to their Tech Policy Summit that will start immediately after the Free! Summit concludes. In fact, attending the Free! Summit gets you access to the opening session of the Tech Policy Summit as well. And, yes, registration to The Free! Summit is, in fact, free. But... there are a limited number of seats, so sign up now. Also, we're very much looking for individuals or organizations interested in presenting case studies on how they've used free as a part of their business model. We already have a few lined up, but feel free to suggest others of interest.

I hope that many of you can join us for what I'm sure will be a great series of discussions on "free" and what it means for business models, policy and the economy.”

The Rise and Fall of the Gaussian Copula Function

Felix Salmon has a terrific cover story in this month’s Wired on the all-too-seductive Gaussian Copula function, which made it easy to calculate risk on Wall Street. Take a big basket of financial instruments, each with their own risks, through them into the Copula function, and presto: you get the net risk. It was so beautiful and apparently bulletproof that investors began treating it like a black box. Then it all went wrong.

This story profiles David X. Li, the inventor of the formula (now living in China), and how its adoption led to the chronic mispricing of risk that toppled some of the largest banks.

It’s a hell of a story, for students of Wall Street and mathematics alike. Here’s the function, annotated (yes, we’re aware that it seems to be missing a parenthesis, but that’s in the original paper, too):

“Matter”: Marketing by sending people free stuff

Britain’s Royal Mail is trying something new with direct mail: sending people a box of free stuff. Called “Matter”, the first one went out in mid-December to 30,000 people who had signed up to receive it. The box contained books, DVDs, CDs, shower products, a candybar, a pre-paid SIM card and a few other goodies.

The idea is that you try them, maybe give some to your friends, tell people about the one you like and otherwise interact with products in a way that’s more interesting than traditional direct-mail advertising.

The project was a collaboration with Tim Milne, who started the arts collective Artomatic. He says that the challenge so far has been getting advertisers to look past traditional direct mail. He told me:

“I've long believed that printed matter will gain new value in a digital world as everyone begins to crave the more physical / tactile / emotional nature of printed stuff.

Matter is revealing some interesting, unexpected behaviours. Matter is very social–people take the items (and sometimes the whole box) to work, to the pub and tell their friends and family about the cool things
they'd been sent. It fact, even though it's a physical medium, it behaves more like a digital channel.

The underlying concept–that if you give people nice things they'll better towards you is certainly true. What we're beginning to discover is how the simple act giving people something nice triggers a whole range of responses–using the objects, telling their friends and telling us what they think.”

The next box goes out in April.