broadstuff

Sarah Lacy, writing in Businessweek says that Facebookers who opt to take 25% of their options now (there is a $100m share buyback scheme pre IPO in operation) are "mercenaries":

What has happened to the startup work ethic in Silicon Valley? Time was, the region was teeming with believers—be it believers in a company or believers in the sometimes naive, lottery-ticket hope that options would make them billionaires. People who work at the most highly valued startup in Silicon Valley and rush to sell for a smaller valuation—just as an IPO is starting to look likely—aren't believers. They are mercenaries. What's next? Giving up options altogether for a bigger paycheck?

Now, to be fair, Sarah is trying to debate the wisdom of giving employees cash early, and whether this is the End OF Days for the Silicon Valley model:

Silicon Valley was founded on the belief that stock options were worth something—and that something was a big windfall at an exit, when the whole company watched that ticker crawl across the Nasdaq for the first time, calculated their paper net worth, and popped open the champagne. Does it always work out? Of course not. But that is why it's considered high risk, high reward. How has this gotten so lost on people? Are we just so jaded that we can't believe in promises anymore, even at a company like Facebook?

But here's the acid test - a vote for all of you out there - would you:

(i) take 25% of your options now on an (over) valuation of $6 odd billion and wait for the (sure-fire) squillion dollar IPO in (insert your date for first pass profitability for Facebook) with the other 75%, or

(ii) put all you eggs in the basket for the IPO, knowing that for most Social Nets, time in the sunshine to date has been dazzling but brief and they may be yesterday's news before jam tomorrow comes.

Of course you would put all your eggs in one basket and vote for (ii). Not.

What is more interesting is to ask why founders, VCs and all are actually using these early payff models now - what has changed to make the old "Pot of Gold x very low probability" model falter. Why the moves to reduce the risks?. Given that Ms Lacy has apparently written the deep expose of how The Valley 2.0 works, its surprising that she hasn't talked about why this has occurred......

Thing is, in this year 9 AD (After Dotcom), employees aren't as naive and appreciate the risks far better. Once you are unlucky, twice you smarten up. There are mercenaries, and there are Enron employees......

And there must have been some form of power shift between founder and funder to create this change. My (top of digital napkin) hypothesis would be that:

(i) Consumer SocNet Tech is a butterfly game - they are all beautiful, but another more beautiful one will flit by any second now

(ii) The IPO market is far less certain, there is a Decession on

(iii) Most tech sales are trade these days, and no one is (probably) mug enough to hand over several billions for a SocNet after seeing the Friends Re-United, Bebo, MySpace, Friendster et a Great Depression in values.

(iv) There are many funders, all trying to shore up their portfolios, all chasing few founders of reasonable companies in this space, so the one with the biggest brib...- I mean, most jointly rewarding terms - wins

Update - interesting take on this over at CloudAve, who note:

....the vaunted “ecosystem” for startups in the Valley consists of two legs - 1) Capital and 2) talent that can be hired to build that innovation out. Number two has traditionally signed on for the long haul and been willing to hold out for the big win. But that group (in the Valley) appears to be changing; becoming more like the rest of the workforce.

That means there are now pockets where the community ecosystem is alive and growing (hire-able talent), and that the “distribution” of innovation out of the valley has really begun in force. You can see those pockets in places like the Twin Cities, Boulder, Austin, Portland, Boston, etc.

I must note that I use Enron as a graphic way of illustrating the perils of single baskethood (and my sympathy for its victims). This post in no way implies that Facebook is in any way run like........ By the way, the comments are worth a read too

Technology is forcing changes in the process of Innovation, says the MIT Sloan Review:

Technology is transforming innovation at its core, allowing companies to test new ideas at speeds—and prices—that were unimaginable even a decade ago. They can stick features on Web sites and tell within hours how customers respond. They can see results from in-store promotions, or efforts to boost process productivity, almost as quickly.

The result? Innovation initiatives that used to take months and megabucks to coordinate and launch can often be started in seconds for cents.

And that makes innovation, the lifeblood of growth, more efficient and cheaper. Companies are able to get a much better idea of how their customers behave and what they want. This gives new offerings and marketing efforts a better shot at success.

Well, yes - but in fact historically that has not been the real barrier, its changing hearts and minds. Now MIT reckons this is all changing too:

Companies will also be willing to try new things, because the price of failure is so much lower. That will bring big changes for corporate culture—making it easier to challenge accepted wisdom, for instance, and forcing managers to give more employees a say in the innovation process.

Put bluntly, we believe this is largely wishful thinking. We did a piece of work for NESTA on Innovation in the 1930's depression earlier this year, and what we found was fascinating - it needs a major crisis like the Depression to overturn old "we've always done it this way" models and allow innovative new things to happen, even if they are blindingly obvious (we're doing a piece of work on this at the moment by the way, my cup runneth over with examples of blindingly obvious innovations that were vigorously resisted for ages, or even culled).

Likewise, in various guises I have been involved with creating change in enterprises for 20 odd years, and I can't think of one occurrence where cost alone and of itself stopped a company trying something out. Far more typically I have seen things like:

- Unwillingness to adopt new things because of "not invented here" and/or "we tried it before, didn't work" (aka no-one gets fired for saying No)

- Political Sensitivities internally - either no one has the motivation to go up against the existing power base, or the baby is strangled at birth by the big divisions

- The company is structurally/culturally unable to capitalise on the innovation (you often see this with companies that acquire new technologies, even Google struggles)

- The total cost allocations make new things look unattractive as they attract full development costs upfront, whereas old things have a lot of costs amortised. (I know of one hardware company that had better Unix kit than Sun but whose cost allocations told it that mainframes were more profitable. Result - Sun took the Unix workstation market)

- The "will this be an issue on my watch" mindset - the person who needs to make the decision knows the chickens don't come to roost until he/she is out the chair. Why make a controversial decision and risk being seen to have erred?

It has been possible to cheaply simulate many things for at least 20 years (I recall running SIMAN models on IBM PC-AT's 20 years ago - took all night, but we knew the results by morning). Machiavelli noted the reasons for innovation failure 500 years ago, long before Web 2.0 tech made things cheaper, when he said:

`` We must bear in mind, then, that there is nothing more difficult and dangerous, or more doubtful of success, than an attempt to introduce a new order of things in any state. For the innovator has for enemies all those who derived advantages from the old order of things, whilst those who expect to be benefited by the new institutions will be but lukewarm defenders. This indifference arises in part from fear of their adversaries who were favoured by the existing laws, and partly from the incredulity of men who have no faith in anything new that is not the result of well-established experience. Hence it is that, whenever the opponents of the new order of things have the opportunity to attack it, they will do it with the zeal of partisans, whilst the others defend it but feebly, so that it is dangerous to rely upon the latter.''

This has little to do with trying things out a bit more cheaply, and everything to do with Being Human.

The real breakthrough in forcing innovation outside of depressionary times (apart from warfare) has come from 2 models:

- Funding innovation in new companies that force the issue with the status quo one way or another

- Incremental innovation developed by Japanese "Lean" manufacturers. What they did was reduce the fat in the system - inventory, batch sizes, dwell times etc and thus forced innovation to cope with the new situation. ("We drain the river a bit each time, new rocks appear, we clear those and then we drain the river a little more" is a standard analogy.

Now to be fair, MIT Sloan is focussed only on innovating digital rather than physical goods, but I think they are being naive if they think that a skunkworks project is going to be adopted even if is successful in pilot (never mind cheap to do). I am sure every reader of this blog who has been around a bit has seen a sure fire winner pilot being taken out beyond the corporate bikesheds and clubbed to death because it upset some status quo.

So, alas MIT Sloan, but I think you are talking out of your academic hat. Cost is a factor, but not the factor. Unless one can force an environment where those little experiments will become adopted - and break the inertia - they will go the way of SIMAN models, scenario studies, breakthrough discoveries etc and sit on the shelf unloved and unused.

Now finding out how to create that environment sustainably, AND get it adopted as best practice, is an excellent use of academic time in my view.

By the way, Innovating Innovation Part 1 is over here......

Update - rather nice article echoing some of this from Bankervision.

SAI reports that Bing increased its market share from 8.4% to 8.9% (about 5% increase) last month:

ComScore released its July search query data today, JP Morgan's Imran Kahn says in a note. It says:

- Google's share was 64.7%, down from 65.0% in June
- Yahoo's share was 19.3%, down from 19.6% in June
- Bing's share was 8.9%, up from 8.4% in June

This means Bing has gained 90 basis points of market share in two months -- or a 11% market share gain. This is not terrible, but not a remarkable success, given how much Microsoft has been advertising it. Bing was supposed to be a big game-changer for Microsoft, and so far, it isn't. We'll have a better idea of Bing's longer-term success in a few months.

Au contraire, if they can grow at 5% a month for a year or so, that is quite scary for Google. Think of it as a tank parked on their lawn that is getting bigger...and Bigger....and BIGGER.

As we pointed out awhile ago, this is Microsoft's strategic response to Google's attempt to nail Microsoft in it's own backyard of operating systems. officeware and browsers with Chrome et al.

A few weeks ago there was a rather good article on the GYMA club's competitive positions, in the WSJ called "Techdom's Two Cold Wars" which looked at in terms of Game Theory / International Relations:

Why didn’t the U.S. and the USSR just ignore each other and save themselves the cost of an arms race? Answer: Each had the potential to do such serious damage to the other, they dared not risk it.

Microsoft and Google also have the power to damage each other, and are better off if they don’t. They too spend a lot of money on deterrence—a puzzle since both are inevitably owned by many of the same shareholders, including large mutual and pension funds. Even more than the Cold War superpowers, they have every incentive quietly to agree to be deterred without investing quite so much on an arms race.

These are thoughts designed to trouble the naïve delight of many who heard Google’s announcement last week that it intends to roll out an operating system to compete with Windows. Partisan Google fans imagine Google finally is preparing to go toe-to-toe with its nemesis. They couldn’t be more wrong.

Google might do so if Microsoft were unilaterally to disarm in some way. That’s not going to happen. Microsoft merely is being reminded that its fat Windows margins are vulnerable to attack.

Microsoft sent the parallel message to Google when it spent millions to launch Bing, a new search engine that’s receiving good reviews even from Microsoft haters. Bing, Microsoft hopes, will finally prove a weapon that can seriously threaten Google’s margins, though only to keep Google from raiding Microsoft’s.

By the way, there was another paragraph on the Apple front:

Naturally, the fondest wish of both companies’ shareholders is that they find a cheaper way to deter each other, or better yet strike a cease-fire. In short, they wish Google and Microsoft would reach the kind of condominium that Google and Apple have reached.

For, whatever the advertised purpose of Google CEO Eric Schmidt’s presence on Apple’s board, the obvious purpose is to manage competition between the two companies. Of all the dabbling Google has done, notice that it hasn’t dabbled in music-playing software, in cataloging music files (though Google says its mission is to “organize all the world’s information”), or even in allowing users to create playlists of YouTube music videos. Google’s dabbling has been restricted to markets where Microsoft, Nokia or others are dominant, not where Apple is dominant.

How long the Apple-Google cold peace can last is, in some ways, a more interesting subject than the latest dustup between Google and Microsoft.

This was before Schmidt resigned from the Apple board, which - in the above terms - looks like a withdrawal of Ambassdors as a prelude to hostilities.

It does rather look like Google is committing itself to a war on 2 fronts - and potentially 3 if a revitalised Yahoo comes back into the fray (and the Yahoo-Microsoft alliance tells you whose entente is cordiale). Now any strategist can tell you fighting on 2 fronts is hard, and fighting on 3 is near impossible. (Just ask one N. Bonaparte). But, to further the military analogy, after several years of Google advances, Bing is the first landing of the Microsoft marines into Fortress Google turf. It remains to be seen whether its Dieppe or D-Day, but its a sign of the turning of the strategic tide.

Helienne Lindvall, whom I saw speak at a recent Chinwag event on music (and whom I thought was fairly sensible) has written an interesting article in the Grauniad about Spotify's business model - or lack thereof. She first got suspicious when she realised all the major labels loved it:

The major record labels – and the bigger indies – that I spoke to seemed unusually positive about Spotify, which made me think that they must have received a pretty hefty payment and/or equity in the company. Sure enough, the other week some of my suspicions were confirmed when it was reported that the majors received 18% of Spotify shares. Merlin, who represent a larege portion of the independent labels, received 1% (as their labels represent 11-12% of Spotify plays, it appears this is a bit disproportionate to the value of their content). What they paid for their shares is still under debate, with ComputerSweden reporting that it was as little as $10,000. Regarding payments, the labels I spoke to said that they're not allowed to divulge these details. But, as it's common for majors to demand such payments, I'd say it's likely they did.

I can see why this puts Spotify in their good books. One of the main reasons why majors have been hesitant to offer their music to start-ups is that they've seen companies like YouTube and Last.fm build businesses, only to sell them off for big bucks without sharing the money with the copyright owners whose music they used.

And following the money, something didn't quite add up:

A source close to Spotify told me he has serious doubts that their business model will add up and that it's a case of "spot the idiot", ie "find somebody stupid enough to buy it before realising that it's too costly to run and that the numbers don't add up to making a profit"

And of course, this goes hand in hand with the traditional "top-of-hype-curve" massive overvaluation based on Jam 2.0 tomorrow:

Spotify is currently valued at $250m, despite, according to The Register, only having an advertising income of £82,000 and just 17,000 UK users signing up to pay £120 a year for Spotify Premium. Having equity in the company ensures that the labels get paid if Ek and his colleagues find said "idiot" and decide to sell up (Ek says they have no intention of selling up, by the way). But what does this all mean for the artists?

Of course they won't sell, this is an attempt to build a family business that will last for generations - to even imply that its just another 2.0 pump 'n dump play using VC wonga is just sordid and unkind . And even worse, Helienne implies that the money is made by withholding the musicians fair share! Another Web 2.0 play practicing Digital Sharecropping Shock Horror!

There are indie labels that, as opposed to the majors and Merlin members, receive no advance, receive no minimum per stream and only get a 50% share of ad revenue on a pro-rata basis (which so far has amounted to next to nothing).

and....

For artists who "signed up to a label" there's a tangible risk that revenue which comes from a possible sale of shares by the label would end up in the proverbial "blackbox" (non-attributable revenue that remains with the label). There's growing concern about this in the artist management community and, a few weeks ago, Bob Dylan decided to pull his back catalogue from UK streaming services.

In other words, the picture emerging is that Spotify is an interesting reconciliation of the standard "de facto" Web 2.0 business model (use other people's stuff and give it away free to build a business and then sell to the dumb money before they twig you're going bust), combined with the standard Music Label model (use the artist's stuff to build a business but scre...ensure you extract the maximum contractual benefit from the artist wherever possible).

Now to be fair, the model of having your big suppliers invest in you is a time honoured one, especially in risky new areas. And if you have labels as your owners, they may well be prepared to give you a bit of a break on the cost per song. You have to admire the logic. Only fly in the ointment is that the labels' suppliers may not get paid. Problems I can see with this type of play therefore are that:

- the number of dumb money players for a quick exit is falling - they've either been stung already or are in dire straits themselves, so the 2.0 approach may not work in the near future (though the P T Barnum thesis implies it will). The "traditional" Web 2.0 model is to sell before the chickens come home to roost, but if time to sell stretches out, the model has to be sustainable.

- Unfortunately, this model is potentially more overt artist screwing, in that in the past the artist has legally signed away a large chunk of their future income for the opportunity to ride on the Label's marketing machine, whereas this is more like a 3-pot shuffle, and may well be challengeable legally by various artists' representative bodies to get dibs on the value being created. User Generated Content has very little legal representation which is why Bebo et al saw little challenge at point of sale, but using Artists directly as the free UGC is different. (In fact I suspect this will be one of the areas of Rights legal conflict going forward)

- Listeners to free music streaming services are by and large young and still (in their terms) enthusiastically ethical. Being seen to stiff the struggling artist is bad PR juice.

- For Spotify, the issue is that the labels are better off splashing it around a bit, ie getting their hooks into a number of such businesses or even doing it themselves once things start to take off. Still, being early and getting great publicity on a shoestring (and funding) is a good asset.

This model fits in with our model of how the new mediums will evolve - the "Pirate World" of small startups scraping the digital sharecroppers is not sustainable, so one way or another they have to find sustainable models (or sell to a sucke...sorry, company that can achieve strategic synergies). In the early days, many of these will be offset models because the emerging "New Media" industry just does not have enough money. The problem Old Order players have is if these competitors are all giving someone else's stuff away for Free!, they cannot follow suit. Thus, a rational business model only occurs if they can both invest in the growth of the new order and create some form of option value for themselves. Investing a small amount in such a play works well if they can argue they then do not have to pay their downstream suppliers.

And this way, if the labels are the owners, then just having a vehicle that drives other (un-owned) players out the free streaming business is probably a "good enough" reason for funding its existence in the early stages. We expect to see quite a few copycat plays (in a way, its not that different from YouTube's play before selling to Google - the Labels are learning).

Every so often, someone asks us about the viability of dating sites (they're viable, but competition is huge....) and the last time I was asked (a few weeks ago) I was looking over a few papers when Futurist Iain Pearson's 2005 article "The Future of Flirting" popped up. I recall reading it at the time as we were researching types of SocNets and dating sites were early entrants. Its been on my spike the last few weeks, so here it is (abridged), for your enjoyment on what must be one of the really slow news days of the year:

On Flirting:

Flirting has certainly moved on in the last decade. People today can flirt with each other in chat rooms, in on-line games, via email and text messaging (flirting actually accounts for most text messaging). A few people use Bluetooth to send anonymous messages to other peoples’ phones. None of these were in significant use 15 years ago and even by 1995, only a fraction of the population had email or mobile phones. Now, most people have had some experience of electronically mediated flirting. People often say things in a text that they wouldn’t dare say face to face. They can squeeze in a little smiley or an LOL at the end of a message to test the water without any serious risk. Did the LOL really mean ‘lots of love’ or was it the ‘lots of laughs’? If the person plays along, they can safely proceed to the next level, sneaking in a little x at the end of the text. But the ambiguity gives a welcome path of retreat without loss of face in case of rejection.

On Mobile Games:

Mobile device technology is improving rapidly. Messaging technology is becoming multimedia, so video clips, photos, cartoons and games can now all be used to flirt via a mobile phone. Soon, we will be able to send directional messages, so that provided you have reasonable aim, you could send a compliment to someone you fancy across the room, even without knowing who they are. Various forms of ego badges will communicate automatically with ones other people are wearing, electronically exchanging details of our personality, sexual preferences, availability, willingness, and maybe desperation level.

Anyone ever read Brian Aldiss's book The Primal Urge, which explores the effects on society of a forehead-mounted Emotion Register that glows when the wearer experiences sexual attraction. (Tsk, thats Science Fiction, not Futurism ). Anyway..........

Software would work out compatibility level, and if appropriate, would alert both people that they should chat, maybe by beeping, vibrating, flashing lights, romantic music, perfume, whatever. With virtual air concepts developing, we might even be able to leave virtual pheromone trails as we wander around, so that people can track each other down. I’ve often heard people remark that a difficult pursuit is half the fun, even if that’s not my personal experience. Well, it can be made as difficult as they like. A person could make themselves the prize at the end of a really tough treasure hunt, or detective game, where only potential suitors are even allowed to play at all.

But this passage is my favourite:

Artificial intelligence will also play a part in flirting in the future. If you have a number of flirty relationships, you might not have time to invest properly in each one, so AI will be essential to stand in for you when you can’t interact personally. You may be able to convey much of your personality to an AI, and it could then pass of as you sometimes. So you could get a lot more fun, with little extra personal effort. But I wonder how often we will then see AIs just flirting with each other. If neither of the people are available, or both have lost interest but just didn’t want to hurt the other person, their AIs could be flirting away madly in the background, with no-one watching.

Yes, the Flirtbot will be the must have thing of 2015, you heard it here first. Actually, I suspect very soon on Twitter the pimps will be talking directly to the bots.....

By the way, I filed this piece under Online Advertising, as that of course is what this all is......

Looks like we are in for a few more cycles of Moore's Law, despite the worries that it is coming to an end - BBC:

Shapes of DNA have been used to enhance the production of circuits for next-generation computer chips.

Researchers reporting in Nature Nanotechnology have now shown how to get engineered "DNA origami" to self-organise on silicon.

The origami can be designed to serve as a scaffold for electronic components just six billionths of a metre apart.

Making chips with components closer together leads to smaller devices and faster computers.

The six nanometre mark is nearly eight times better than the current industry produces.

I added the Italics - thatis another 3 cycles of Moore's Law just there...............

From Brand Republic, reporting on a study by Peer Analytics

Tweets were studied for two weeks and categorized into six areas: news, spam, self-promotion, pointless babble, conversational and pass-along value.

More than 40% of tweets were found to be pointless babble, followed closely by conversational tweets at 37%.

Pass-along value, or re-tweets, accounted for 8.7% of the total, a distant third.

Self-promotion tweets, typical corporate tweets about products, services, or "Twitter only" promos were fourth on the list at 5.85%. Spam and news, rounded out the bottom at about 3% each.

So, news at 3%, and lets assume "the rest excluding spam and babble" - about 57% - has about 1/6th relevance (a figure derived by a quick count on Tweetdeck) gives about a 10% signal, the rest is pretty much noise. A lot if it is diverting noise of course, and herein lies the problem - poor filtering!

But given that many people seem to still lap it up, and I'd bet Facebook is far worse (seen this - buying virtual goods with slebs on them on Facebook?), is Social Media the new Opiate of the Masses?

Update - some feel that more of the stuff that I didn't count as relevant to me is useful in a sort of river of "small-cap news" way - I had another look and thought OK, I can see another c 10% that may be relevant to me (in the light of general background stuff not aimed at me) , for a S/N ratio of 20% - thoughts?

Update II - excellent set of discussions over Twitter and at Tuttle on Friday on this, 3 big takeaways:

- Some of the "noise" is social grooming and "stamp giving" (to quote the social transactional analysts) - but where to draw the line on "relevance"?
- We need "hard" metrics like these in order to build useful filtering systems, especially those that are in some way predictive and automateable
- There is an ideological battle at points like this between "hard" and "soft" social network scientists - I come down on the "hard" science side given my background, it is incomprehensible to me that people would not want to quantify these phenomena, bit it is clearly incomprehensible to others that one would want to

So, here is an argument that a lot of the claimed "its not noise" is actually voyeuristic stuff that we don't want to turn off now we can see it, and here is an argument that it is relevant.

Update III - story seems to have hit Twitter today (Monday) after some harrumphing blogs - and resultant twts - about how the "MSM" don't "get" Twitter. I see it more as evidence of resistance to the concept of "hard" metrics from mainly "soft" SocNet types.

UpdateIV - quite a nice corollary argument using a Shannon's Law type argument from Devin Coldeway over on TechCrunch:

What can be said in 140 characters is either trivial or abridged; in the first case it would be better not to say it at all, and in the second case it would be better to give it the space it deserves.

(Shannon's Law is another cornerstone of Information Theory, and essentially looks at how bandwidth limits the amount of information one can transmit vs noise)

Readers of this blog will know we think robotics and sensors are about to "Tip" and create the "Internet of Things" and that this will be the real Next Big Thing in Internet-speak. One of the the things we track are small robots - the miniaturisation of technology is allowing ever smaller devices to operate independently. Here's the newset smallets one - New Scientist::

Aeronvironment has released video that shows its "nano air vehicle" (NAV), which is the size of a small bird or large insect, hovering indoors without such crutches and under radio control. "It is capable of climbing and descending vertically, flying sideways left and right, as well as forward and backward, under remote control," says the company.
Pentagon support

The Pentagon's Defense Advanced Projects Research Agency commissioned the flying bug in 2007 and has rewarded the firm's success with a further development grant. It wants a version rugged enough to cope with wind and the other challenges of flying outdoors.

About 12 months ago we showed a Dutch device the size of a pigeon, well here (above) is one the size of a sparrow - thats' Moore's Law for you - now go forward 3 years and imagine what we will see......

Techfluff TV (Hermione Way's video vehicle for capturing the fluf... - I mean vibrant and lively - side of Eurostartup technology) has landed on the Torygraph online blogs. First Videoblog is that above. We wish the venture well.

Apart from giving Techfluff.tv the oxygen of publicity they would never get otherwise, (You owe us bigtime, Hermione ) we blog this as it also nicely illustrates a trendlet - ie the non-appearance of Web TV on "print" organs' sites compared with say the BBC's move to online "print" media. The endgame for all media is multimedia we would suggest, and its interesting to see how dominated by text the print media's online sites still are.

Research on using Medical Virus maths for email memes, from the New Scientist:

The viral spread of information online has conventionally been modelled using epidemiological tools developed to analyse the spread of biological viruses. One of the concepts borrowed is that of an infection's Ro, or basic reproductive number, which describes how many other people someone with the virus can be expected to infect.

Knowing the Ro number help predict the likelihood and extent of real life epidemics, such as H1N1 swine flu. But models that apply the idea to online information can only indicate whether an internet meme is likely to be successful or to die out quickly, says Esteban Moro at the Carlos III University of Madrid, Spain.

Moro, working with José Luis Iribarren at IBM in Madrid, used IBM's company email newsletter to show the importance of variations between people's infectiousness in propagating memes online.

They started a reward scheme offering prize draw tickets for recommending the newsletter by providing email addresses of other people and tracked how widely and quickly the recommendations spread. After two months it had reached 31,000 people.

But while people took 1.5 days to respond to a recommendation email on average, there was a huge variation at the individual level: some users responded within minutes, other in months, says Moro.

And only by combining some expectation of that variation with the Ro number is it possible to build a model able to predict the meme's spread. The team use a small chunk of the initial data on the content's spread to predict how many people it will reach in total, and how fast. "Our model can give predictions within 1 per cent error once secondary reproductive number and human activity are estimated," Moro says.

But, you have to measure from early performance in the wild:

The model cannot predict whether a piece of content will go viral before it has been released; only its likely reach once it starts spreading. And the researchers think their approach to modelling should apply to information spreading via social networking sites and other online services as well as email.

The really interesting question, of course, is to try to break down the "DNA" of a viral meme and work out which bits really can infect effectively. But this area of study is called memetics and has been around for at least 20 years (I've been on the discussion groups at least 10 years....)

So apologies if If I may be a bit disrespectful - but there is a certain element of old wine, new bottles here - Memetic Algorithm wonks have been trawling this field for at least a decade - just try Wikipedia for a starter class, and there have been discussion groups, learned journals and conferences on the subject for at least 10 years. And you'd never believe it, but one of the first things they looked at were medical virus models. I don't know if this is just one branch of science rediscovering what another has known for ages, or just confirming work over bigger internet than before (unlikely as its based on representative samples), but it seems - yet again - a fascinating example of how, even in our connected age, great chasms and barriers occur in knowledge transfer from one arena to another

Update - nice pointer from Adriana Lukas, looking at diffusion of memes in Facebook (See video of lecture here), synopsis is:

Using a dataset of 262,985 Facebook Pages and their associated fans, this paper provides an empirical investigation of diffusion through a large social media network. Although Facebook diffusion chains are often extremely long (chains of up to 82 levels have been observed), they are not usually the result of a single chain-reaction event. Rather, these diffusion chains are typically started by a substantial number of users. Large clusters emerge when hundreds or even thousands of short diffusion chains merge together.

This paper presents an analysis of these diffusion chains using zero-inflated negative binomial regressions. We show that after controlling for distribution effects, there is no meaningful evidence that a start node’s maximum diffusion chain length can be predicted with the user’s demographics or Facebook usage characteristics (including the user’s number of Facebook friends)

.