Some notes on eBay,, and Internet markets in general,
plus a batch of recommendations and URL's.

The University of California has smiled, and now my department is
officially called the Department of Information Studies.  We don't
know what the phrase "information studies" means either.  But it's
better than being called, say, "sociology", where you have to fight
a lifelong battle of attrition to redefine what the field means.

Peter Kollock, coeditor of the valuable new collection "Communities
in Cyberspace", spoke in our Information Studies Seminar the other day
about his work on the construction of reputation in the eBay online
auction site.  This is indeed a fascinating phenomenon.  To Peter,
and to other students of self-organizing social systems, eBay is both
an incomparable laboratory and something of a promised land: here
you have a reasonably large and complex marketplace that is mostly
self-regulating through intensive informational feedback.  Of course,
everyone understands that it is early days for such schemes, that
state attorneys general have become interested in the proportionally
few cases of fraud that have been reported so far, that eBay has been
tightening its rules in response to those cases, and above all that
the same scumbags who keep gaming the Internet's e-mail and banner-
ad mechanisms to spread fraud and pornography have yet to descend on
eBay in enough numbers to really test the rules there.  Nonetheless,
we should give credit where it's due: when markets work, they work
great.  At the same time, we should also take a step back and look
at the market for marketplaces: the fact is, eBay is rapidly emerging
from the pack and becoming the dominant auction site, to the point
where it may well become a monopoly, at least for consumer-oriented
auctions.  Why is this?  Monopolies arise, for the most part, because
of structural barriers to entry in the marketplace, and one important
barrier to entry is network effects.  Sellers go to eBay because it
has the largest group of buyers, and buyers go to eBay because it
has the largest group of sellers.  This suggests that eBay's success
is exhibiting the same sort of positive feedback loop that brought
us a single (open, high-quality) internetworking standard, as well as
a single (closed, lower-quality) personal computer operating system
standard.  The market in marketplaces, in other words, may function
very poorly indeed, at least when reckoned by conventional economic
measures.  The question then arises of the incentives experienced by
a monopoly market-maker.  Of course eBay doesn't have an unlimited
incentive to rip off its customers.  It is bound by contract and by
law to a certain extent, and beyond a certain point an influential
group of sellers could organize to move en masse to a competitor and
take their buyers with them.  But economic theory predicts, it seems
to me, that a monopoly market-maker will extract rents proportional
to its barriers to entry.  That is, once eBay finishes its planned
advertising campaign and gathers a large enough audience, and once
its competitors all tank or discover practicable niches around the
periphery, eBay will be able to increase the cut that it takes on the
sales that it mediates, or at least it will not be pressed to lower
its cut as technology improves.  Should this concern us?  Perhaps we
can't get too exercised about it so long as eBay is mostly selling
Beanie Babies and other things that most of us have trouble taking
seriously.  But what about when it begins to leverage its monopoly
into more important, more consequential areas of the marketplace?
Economic theory also says that auctions are potentially a more
efficient way of selling many things than the fixed-price system to
which we are mostly accustomed, and as the Internet makes auctions
possible in more and more markets, the structure of the market for
auctions will begin to concern us more as well.

In response to my analysis of, some people wrote to suggest
that the company's stock price is so high because the new wave of
Internet-based investors are investing in what they know.  This is
the standard theory in the business press as well.  The problem with
this theory is that nobody who knows anything about the Internet
would invest in a so-called Internet bookstore that actually *touches
the books*.  Hello?  The great virtue of the Internet is supposed to
be price competition: people can compare prices on different sites.
And in business as it is conducted on Planet Earth, price competition
equals low profit margins, low profit margins equals a bad investment,
and low profit margins plus ever-deepening losses plus a much larger
competitor who can subsidize his online trades by using his profits
from his offline stores plus a stock price that's running at a serious
multiple of frigging revenues equals a major short-selling opportunity.

Still, part of my discussion of was fouled up because I was
trying to simplify the role of distributors, which already handle most
of the paper and money.  Like most people, I really want to believe
that small-batch book printing will revolutionize book distribution,
so that books don't ever go out of print, and so than an
can just send my book order to a regional printing facility that
manufactures both the book and the Fedex package in one step without
human intervention, instead of the multiple handling steps that we pay
for now.  That's the point when the model will have some
advantage, and when it be an Internet bookstore in reality, and not
just in name.

There's a larger pattern here: the world is full of great ideas for
business models based on information technology, but those business
models often underestimate the extent of the infrastructure that
needs to be established in the world before any such business will
work.  That's one reason why all of these computer industry fashions
have gone through such spectacular rises and falls: they are often
plausible ideas, but it will be five years, or ten, before they will
make anyone rich.  Of course, if you think that we are in the midst
of an instantaneous total revolution, a rapture-like transformation
of the entire productive infrastructure of the world, then you won't
even be able to conceive of such a delay.  But we're not.

Another explanation for the run-up of Internet stocks is that the many
investors looking for a quote-unquote "pure Internet play" have so few
stocks to choose from.  That wouldn't be because the supposedly very
entrepreneurial and decentralized Internet industry is in fact highly
concentrated, would it?  Seriously, someone should gather all of those
amateur Internet investors into a room and explain some basic facts
to them before they get hurt.  One of those facts is that
is not a way to bet on the success of the Internet.  If you want to
bet on the success of the Internet, bet on a company that will prosper
no matter which Internet applications succeed.  Companies like Cisco
and the new-generation broadband and long-distance companies are all
probably overpriced too, but at least you can make a rational case
for them in the long term.  See the current issue of Fortune for some
other mostly sensible suggestions

If you must invest in applications, invest in a company like eBay
that benefits from network effects.  The online auction space looks
pretty crowded, but (as I've just explained) I bet it'll narrow down.
Of course, it'll take some years of sustained growth before the real
size of the company justifies its current stock price.  But at least
you can make a rational case.

Why do I go into this?  The evening after I sent out my
analysis, it occurred to me that I might have triggered the collapse
of civilization.  After all, it cannot take much of a pin-prick to
burst the absurd bubble of Internet stocks, whose collapse would
surely cause enough of a panic to burst the vastly larger bubble of
the rest of the overpriced stock market.  And when the stock market
collapses, the paper wealth of the United States will no longer be
available to absorb all of the goods that are pumped out by the excess
capacity in the world's industrial system.  At that point quite a
few economies being kept on artificial respiration by bankers who are
practiced at projecting an illusion of control will finally implode,
leading to famine and riots and fascism and a new generation of world
leaders whose hair is even scarier than Trent Lott's.  Fortunately,
though, shortly after I sent my message the January 30th issue of
the Economist hit the newsstand with the Internet bubble on its cover.
Some of the inflated stock prices have since deflated a bit, and the
students who have been skipping our classes to engage in day-trading
will now hopefully return before they've gambled away their tuition
money.  So even if civilization does collapse, at least nobody will
blame me for it.  I will have done my very small part to stop the

Recommended: Peter Weill and Marianne Broadbent, Leveraging the
New Infrastructure: How Market Leaders Capitalize on Information
Technology, Boston: Harvard Business School Press, 1998.  This isn't
the sort of book that I normally recommend, with chapter titles
like "Identifying opportunities to create value" and "Checking your
level of alignment".  It's interesting, though, for its methods of
construction rationalizations for information technology investments.
The usual problem, of course, is that the technical people buy and
build stuff that's not rationally connected to the business, and then
they start issuing accusations such as "resistance to change" when
the stuff isn't useful.  The solution, Weill and Broadbent argue, is
to construct an elaborate rhetorical scaffolding that connects overall
business goals to detailed system requirements, so that the different
parts of the company can have an actual conversation about the purpose
of the computer systems.  This scaffolding is made out of "maxims".
For example, a "business maxim" such as "know what is selling and
where it is selling" is turned into an "IT maxim" such as "centralized
information to quickly and easily spot trends", which then turns
into an "IT infrastructure feature" such as "firmwide data standards
and data management and applications systems to process point-of-sale
data and provide management information".  Computers are made out
of language, and now these folks are explaining how to build the
language.  One needn't like the language, of course, but at least
the discursive construction of the machinery is brought into the open.

Recommended: Ruth Padel, In and Out of the Mind: Greek Images of the
Tragic Self, Princeton: Princeton University Press, 1992.  Although
we have come a long way from the complacently obvious ethnocentrism
of the Victorians, it is still hard to appreciate just how differently
the ancient Greeks saw the world.  Ruth Padel's goal is to communicate
a sense of just how alien to anything in the modern world the Greeks'
worldview was.  To this end, she wrote a whole book, often detailed
and technical but grippingly strange, about the Greek understanding
of innards.  She asks, for example, "How many of us hold a calf's
entrails in our hands, realize the liver lobe is missing or how
markings vary on the 'portal vein', believe this matters, and apply
words for what we are holding to the inner equipment with which we
feel and think?"

Recommended: Rob Kling, ed, Computerization and Controversy: Value
Conflicts and Social Choices, second edition, Academic Press, 1996.
I spend so much time ranting against the publicly prominent forms
of hyperbole about computers and their place in society that I don't
always plug the serious, sensible, sober work that is being done on
the subject by academics.  Here is the best place to start.  Rob Kling
is a computer scientist -- a lapsed AI person like myself, actually --
who quickly moved from computer work to sociology.  He has published
an astonishing stream of lucid and empirically grounded papers on
the ways in which computers and computer work are embedded in their
institutional environments.  For example, he drew attention to the
fact that personal computers, far from being personal, are invariably
embedded in a web of social relationships, for example the people
who maintain them and the fellow users who pass along files and tips.
Together with his studen Suzanne Iacono, he also drew attention to
the recurring phenomenon of "computerization movements" -- millenarian
social movements that promote the adoption of this, that, or the other
type of computer systems.  These movements are remarkably similar in
their doctrines, and in the ways their doctrines diverge from reality.
"Computerization and Controversy" is intended as a textbook for an
introductory course on social aspects of computing, and I have used
it quite successfully in this fashion myself.  It includes several
dozen articles by Kling and others on workplaces, online environments,
safety, ethics, and other topics.  Now that we're shaking off the
illusions of the most recent wave of computerization movements, it's
a good time to pick up Kling's volume and get ourselves intellectually
prepared for the serious work that lies ahead.

Recommended: Koo Koo Roo.  For those not privileged to live in our
bizarre country, I will explain Koo Koo Roo.  It is far and away the
best fast-food chain.  It serves little more than skinless barbecue
chicken with actual fresh vegetables.  It's healthy, in other words,
but it also tastes incomparably better than its bankrupt competitor
Boston Market.  Of course, Koo Koo Roo itself is nearly bankrupt
as well, but that's probably because its founded is an entrepreneur
rather than a captain of industry.  No less a business statesman than
Lee Iacocco took it over temporarily and installed new management,
and here's hoping that the new managers succeed in keeping it going.

Recommended: This American Life, National Public Radio.  This is a
very simple weekly radio show that consists of people telling mostly
autobiographical stories.  For all its simplicity it is incredibly
affecting.  Its host, Ira Glass, speaks in a quizzical monotone,
and his ads for the program consist of strange, understated jokes.
It's hard to describe, but it works.

Recommended: Michael Baxandall, Painting and Experience in Fifteenth
Century Italy: A Primer in the Social History of Pictorial Style,
second edition, Oxford University Press, 1988.  This is a classic work
on art in its social context.  It considers two genres of paintints
from 15th-century Italy, one found in churches and the other found
in the homes of wealthy merchants.  Art historians have analyzed these
paintings without much consideration of the uses that contemporary
Italians actually made of them.  Baxandall demonstrates that both
types of paintings were meant to be looked at in very particular ways.
The religious paintings (much like their equivalents in Tibet) were
meant to be employed as part of certain types of systematic prayer,
in which one looked at a certain image when praying upon a certain
aspect of, say, the Virgin Mary, and then one looked at another image
when praying upon another aspect.  The merchants' paintings celebrated
their owners' abilities to estimate by eyeball, in a day long before
the rise of standardized measures, the quantities and qualities of
goods in ships arriving at the docks.  The larger point is that ways
of seeing, thinking, learning, talking, interacting, and generally
comporting oneself as a sapient being are, to some considerable degree
anyway, historically and culturally specific.  Baxandall's discussion
is filled with examples and is marvelous fun to read.

Some URL's.

Ben Shneiderman's war on agents

media theory web site

The Case for Government Promotion of Open Source Software

Distance Learning: Promise or Threat?

Risks digest messages on "list-bombing":
Someone forging a message that subscribes you to a mailing list

Indonesia suspected of attacking Web site

ICANN Draft Materials for Public Comment

W3C's XML page

Intercultural Email Classroom Connection

User Identification and Privacy Protection:
Applications in Public Administration & Electronic Commerce
14-15 June 1999 in Stockholm

Boies Puts on a Legal Clinic at Microsoft Trial

Internet Privacy Concerns Confirm the Case for Intervention

Anti-Boxology: Agent Design in Cultural Context

controversy about intelligence agencies in New Zealand

radio stations (some of which) broadcast audio on the net

Golfe FM -- cool bitcasting radio station in Benin

FDIC "Know Your Customer" regulations

Active Networking and End-To-End Arguments

Judge's decision in the Child Online Protection Act case

online encyclopedia of graphic symbols

my article on privacy for the Encarta Yearbook

Establishing Standards and Fair Practices
for Electronic Publishing in Science

Document Design journal

InfoDesign conference, 11-13 July 1999 in Cambridge, England

Freedom, from Zero Knowledge Systems

Lucent Personalized Web Assistant

Improving Management in Non-Profit Organizations

politics of connectivity in Africa

Buying into the Computer Age: A Look at Hispanic Families

Internet and Latino identities

resources on new media and identity

The European Surveillance Union

Secrecy in Science:
Exploring University, Industry, and Government Relationships or

Andrew Shapiro's course on New Media, Law, and Democracy

Competition and Cooperation:
Libraries and Publishers in the Transition to Electronic Scholarly Journals

Rob Slade's reviews of technical books

Culture, Class and Cyberspace

What is Social Informatics and Why Does it Matter?

my dissertation in postscript

Ontario Consultants on Religious Tolerance

Are Biometrics Too Good?

"Windows Refund Day" movement