Prediction Markets for Media Trends and Planning

As John Maloney blogged ^* I mentioned the use of prediction markets to inform future of media strategies at the summit.

If you don't know about prediction markets please skip over to the Wikipedia article and Chris F. Masse's industry reporting.

How can prediction markets help with media future strategy:

• Information aggregation/discovery - use the 'wisdom of crowds' to get a handle on where road trends are going or whether your specific initiative will be pan out.
• Risk management - hedging and speculation.

Public and internal corporate markets have uses. Examples:

• Contract pays if NYT daily circulation declines 2005-2006.
• Contract pays if redesign of xyz.com launches by 2006-08-22.

Both of these are pretty mundane. The second is probably an internal market used to as a check on what the redesign team is telling management.

Since nobody knows what the future of media holds, using prediction markets may give you a critical edge (until their use becomes common, in which case navigating without prediction markets will put you at a critical disadvantage).

There are now many ways to try prediction markets: public real money markets, public play money markets (you can set up your own), open source software for running internal markets and consulting outfits ready to ... consult. Chris F. Masse has a comprehensive guide to these categories and more.

I've posted about prediction markets on my personal blog several times, though usually with a policy or technology focus.

As I said at the summit I'd love to hear about how media organizations and agencies that play in the media field are using prediction markets or ideas how they might -- including ideas for claims related to Creative Commons or more broadly the impact and role of peer production and related on media and vice versa.

^* Actually John wrote "... the critical question on how information markets will be used in the creation, use and syndication of media in the future." As worded that's a separate but very interesting and more speculative topic. The implication is that PMs could be an integral part of media production and consumption at a very low level.