Beerconomics: More on the economics at Reading Festival

Economics, simply, is the study of incentives. It’s absolutely fascinating to me because it’s a triumph of mathematical logic over subjective guesswork. It’s applicable to every day life and it answers the big questions on how we can solve the big issues facing society today.

enjoy
Creative Commons License photo: jared

Recently, I went to Reading Festival. It’s a weekend music festival with 80,000 people. And as you can imagine, there are some huge effects on the environment from such an event. People burn and dump all kinds of things around the site, leaving both air and ground pollution behind. Not only is it bad for the environment, it’s potentially harmful to the health of the music fans who attend the festival.

I want to focus on three specific issues at Reading Festival:

  • There is a huge amount of litter around the site. People don’t bother putting their rubbish in the bin.
  • Those who are more considerate for the environment often find the bins will overflow from the sheer amount of trash. Because of the overflowing trash, the busiest parts of the arena had a very pungent foul-smelling stench. And it cost a lot of money for the festival to employ people to regularly empty the bins.
  • Some revellers at the festival insist on throwing the contents of their drinks over huge crowds of people, especially in crowded tents. This is a huge nuisance and it’s highly unhygenic. Several friends of mine have told me of instances of people relieving themselves in paper cups and then throwing these over crowds of people – frankly a very disgusting and antisocial thing to do. There is also a risk of injury to the person hit by the bottle/cup.

The festival has a paper cup deposit scheme. The scheme is very simple and straightforward and in my opinion did a great job at changing some of the incentives to reduce litter and anti-social behavior.

It worked by placing a deposit of 10p on the cup which each drink was sold in. A pint of beer would cost somewhere in the region of £3.50 ($7) which would include 10p which would be refunded when the cup was returned.

This created positive incentives for several different groups of people.

Those who’d have littered:

easy money
Creative Commons License photo: bobcat rock

The 10p deposit multiplied by the number of drinks consumed over the whole weekend and the number of people in the group would have added up to a fair bit of money. I saw many people who had stacked up whole piles of cups in their backpacks, obviously with the intention of getting their deposits back at the end.

Some people would continue to litter. They would lose their 10p deposit which goes into the coffers to employ somebody who would tidy up the litter.

Those who were anti-social:

The deposit also creates a disincentive to throw the contents of your drink over large crowds of people for the same reasons: you’d never get your 10p back. I would say that this is actually quite a weak incentive as I still saw a fair amount of this happening. Whether me and my friends were drenched in cups of beer, water or urine I’ll never know. But whatever it was, I’m sure it would have been more of a frequent occurance if the deposit system didn’t exist to encourage people to hold on to their empty drink cups.

Those who were environmentally conscious:

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Creative Commons License photo: Matthew Johnston

I’d like to believe the vast majority of people would look for a bin to throw their rubbish into. For those people, it wouldn’t be any harder for them to hand them in to get a 10p deposit back instead. It’s a great way of rewarding environmentally conscious behaviour.

There are even more environmentally conscious people in society who would pick up other people’s litter in order to keep their own towns, cities and streets clean. Unfortunately, this doesn’t happen at festivals because nobody actually lives there – for 360 days a year, they don’t benefit from a cleaner environment at Reading Festival.

The 10p deposit rewarded these more environmentally conscious people and gave them incentives to keep the place tidy. I saw two enterprising girls who, in the interval between two acts, walked through the arena collecting the cups which people had left behind or thrown. They could probably have got a free lunch from the amount of deposit money recieved from returning the cups.

For the festival organisers:

The scheme costs very little. It saves the festival organisers money – the bins don’t fill up as quickly and litter in busy areas (where it would cause the most discomfort to revellers) would quickly be picked up by the revellers themselves. And there is no reason to think that the 10p price hike on all drinks would have caused a fall in sales, because everybody knew they’d get that money back.

Conclusions

Grapefruit Splash
Creative Commons License photo: Steven Fernandez

This, in my opinion, is economics at it’s best. A scheme which benefits everybody – the organisers who recieve additional funds towards cleanup and have less to cleanup, the music fans who benefit from a more hygenic festival experience and the entrepreneurs who benefit from free lunches at the same time as helping to keep the environment clean. Best of all, it barely costs anybody anything.

Some of the big problems facing society today such as the environment can be solved with bottom-up approaches, harnessing the power of crowd-sourcing and economic incentives. These solutions are simpler, cheaper and infinitely more effective than the centrally-planned approaches such as employing huge armies of litter pickers. That, to me, is the beauty of good economics.

Great Prank: Scaring people with Flash Fullscreen

This is an absolutely hilarious prank.

Flash 9 comes with a fullscreen mode. It’s used in the YouTube player, BBC iPlayer and so on. When fullscreen mode is opened, Flash displays a semi-transparent message telling you full screen has been activated – the reason for this is so somebody couldn’t spoof a user interface using Flash to steal your personal information.

This prank distracts you from that message and proceeds to scare you using full screen mode. Press Escape to exit.

The only way this could be improved would be with a message saying “Press any key to restart your computer”. That would scare anybody out of pressing Escape. Although it would certainly cross the line of being very evil!

Stargate Atlantis Cancelled

Woah. Just as Stargate Atlantis season 5 begins to air on Sky One in the UK, we have news that Stargate Atlantis will not be renewed for a sixth season.

Gateworld reports that Atlantis will screen it’s final and 100th episode “Enemy At the Gate” in January in the USA. It will then conclude with a two-hour movie with the possibility of more movies if the first is successful.

SG-1 Onion Face Project
Creative Commons License photo: Steve Webel

At 100 episodes, Atlantis will have screened two more episodes than Star Trek: Enterprise but falls well short of SG-1’s 214 episode run.

It’s not all bad news for Stargate fans. Producer Joseph Mallozzi has said there could be three or four Stargate movies a year based on the SG-1 and Atlantis franchises. And the third Stargate series I’ve mentioned in the past has been given the green light. It’ll premiere in summer 2009 with a two-hour movie.

According to a SCIFI Channel press release:

After unlocking the mystery of the Stargate’s ninth chevron, a team of explorers travels to an unmanned starship called the Destiny, launched by The Ancients at the height of their civilization as a grand experiment set in motion, but never completed.

What starts as a simple reconnaissance turns into a never ending mission, as the Stargate Universe crew discovers the ship is unable to return to Earth, and they must now fend for themselves aboard the Destiny.

The crew will travel to the far reaches of the universe, connecting with each of the previously launched Stargates, thus fulfilling the Destiny’s original mission. Challenges will arise though as the ship comes into range of Stargates placed centuries ahead of the Destiny and the crew is unable to control the ship’s navigational schedule. If someone is left behind, there is no way to go back for them, adding to the drama of encountering new races, enemies and adventures.

To be honest, I have been getting a bit bored with Atlantis lately so this doesn’t come to me as too much of a disappointment. With Universe, the producers say they will re-invent the format “in a whole new way”. Perhaps this will breathe some new life into the franchise.

Silent Disco – Great Clubbing Concept

DSC00577
Creative Commons License photo: coco빈

I just got back from Reading Festival and had a fantastic time. Saw some great bands like Pendulum, MGMT, Rage Against the Machine, The Killers and more.

One really interesting feature at the Reading Festival was the silent disco. It’s a really novel and interesting take on the clubbing concept where everybody is provided with a set of wireless headphones (as pictured). Simply instead of music being pumped out through speakers, it’s played through personal headphones.

At Reading, the silent disco was set up as a battle between two DJs. The headphones can pick up two different channels and a different DJ played on each channel. This was pretty hilarious at times – you could be rocking away to Barbie Girl whilst your friends may be dancing away to Metallica.

Sometimes a tune will come on one of the channels which everybody will start singing – you can take off your headphones and find out how well (or badly) your friends really can sing. And if you walked into the tent without headphones, you’d wonder what everybody was doing.

Silent Disco originally came to the UK at Glastonbury Festival because of complaints about noise coming from the disco. Since then, it’s evolved into quite a concept in it’s own. It’s certainly an experience and lots of good fun! I don’t know whether it’s the novelty quickly wearing off or the high costs of providing headphones to everybody but I don’t know of any “silent discos” outside of the various music festivals.

Music Festival Rip-Off?

Mud
Creative Commons License photo: burge5000

I’m going to Reading Festival this weekend which 80,000 music fans are expected to attend. It’s my second music festival and I can’t wait! Reading Festival certainly isn’t cheap. For many teenagers of my age with only part-time jobs, the cost of Reading Festival (£155 + p&p, other spending) is at least a whole months wages. £155 could buy a lot else. So are music festivals a big rip off? Well, obviously it’s a personal and a subjective opinion. I’d argue that at £155, it’s great value. Here’s why.

Two facts: Tickets for Reading Festival sold out very quickly – less than two hours. Tickets on the black market (eBay) have gone as high as £300 each. A friend of mine was offered £500 for his ticket.

As an economist, this indicates to me that, in fact, music festival tickets are under priced. In economics, we have something which is called the equilibrium price. This is the price for which supply equals demand. For example, if 80,000 people want a ticket at a price and 80,000 tickets are available at that price, the market is said to be in equilibrium.

Carling Leeds Festival 2004
Creative Commons License photo: Ian Wilson

In the case of Reading Festival, it is obvious that at the price of £155, more people want tickets than the number of tickets which are available. So the organisers could increase the price of a ticket and still sell out to capacity.

Why is that a problem? Surely the fact that tickets are “too cheap” is good news for festival goers such as you and I. We’re saving money after all aren’t we? Kind of.

Firstly, it’s a waste of everybody’s time to queue up overnight for tickets, or to have to keep refreshing a website to buy them.

Secondly, there is the problem of the black market. People are buying tickets for £155 and selling them on the black market (i.e. eBay) for double that. That means £150 of profit has gone towards a ticket tout, who has served no useful purpose at all, as opposed to towards the organisers who could put the money into improving the festival for everyone.

Roskilde Festival 2004 - Det første indtryk
Creative Commons License photo: Stig Nygaard

The black market is also a dangerous and difficult place to deal. Many fans bought tickets on unofficial sites such as SOS Tickets and never received them. They’re now disappointed they can’t go and may have difficulty in getting their money back. And the sole reason why people had to turn to the black market in the first place is because they can’t get them from legitimate agents, so it’s as a direct result of below equilibrium prices.

There are several reasons why Reading festival may have been under priced. It’s possible that the organisers wanted publicity from queues outside stores, and being able to announce that it sold out within 2 hours on the news headlines. Or they simply didn’t expect demand to be so high.

Reading Festival tickets are cheaper than they should be. For the lucky ones amongst us who were at the front of the line to get tickets, that’s great news – we’re getting a bargain. But for everyone else, it’s bad news. It leads to a secondary market, and that’s a recipe for being ripped off, scammed and paying vastly over-the-odd sums: most of which doesn’t even go to the festival organisers.

AVG: Missing .bin file in Update Manager

I woke up this morning and recieved an error from AVG Anti-Virus which told me I wasn’t protected. In the “Update Manager” component, there is an error saying “missing .bin file”. I’m sure the same scenario will happen to many more people across the land as they turn their computers on!

After doing a bit of digging around, it turns out today’s anti-virus update is corrupt because AVG failed to provide the .bin file. Annoying it certainly is but don’t reinstall AVG or anything: simply wait until tommorow’s update is released and all should hopefully be well. Besides, it’s nowhere near as annoying as McAfee.

Facebook Connect can make any website social

Way to the future right now
Creative Commons License photo: ionushi

In June, I posted a proof of concept which allowed you to log in to an external website using your Facebook identity: in effect taking it around the web with you. The proof of concept worked by utilising Facebook’s Applications system to pull certain pieces of information (e.g. User ID, name, profile pic) passing it on to an external webpage.

There is a more elegant solution which has now opened up to developers called Facebook Connect. It promises to allow you to seamlessly integrate Facebook identity into your website, manage your privacy and to be able to take your friends list with you around the web.

The fantastic thing about this is you no longer need to create a Facebook application and to rewrite and “force” your webpage into a Facebook application in order to utilise Facebook’s range of viral promotional channels.

I’ve downloaded the sample application (view a live demo here) and it certainly doesn’t seem too tricky to integrate and build social features around.

Unfortunately you can’t launch your websites with Facebook Connect just yet. It’s just for developers at the moment, but Facebook claim that you can open your social websites up to the public some time late summer.

As I’ve blogged before, I’ve had some considerable results building Facebook-based communities. Facebook Connect is a very exciting product launch and I believe will be a significant milestone in building the social “web 2.0”. Well worth playing with!

We're Back!

Welcome back to the blog! Unfortunately we had a few issues related to Gentoo Linux over the last few days which has caused the server to be inaccessible. I hope this didn’t cause too much inconvinience for anybody! If you have sent me an email in the last few days and did not recieve a response, please send it again!

Neondragon did an absolutely fantastic job setting up a brand new server from scratch, encoutering issues like not being able to gain access to the server facility at weekends and various software incompatibilities with hardware. The server issues obviously came at a very bad time for all of us soa special thank you must go out to him for managing to find the time and expertise to sort everything out! The Evolution MMORPG and other sites running on the server should be operational; if you encounter any issues, please let us know!

Obviously time flies on the internet! I’m very pleased to be able to report that I received 4 A grades in my Advanced Level results on Thursday. This means I’ll be studying Physics next year in London! I’m currently working full time and I’ve recently been doing a lot of work with XML schemas and validation routines. I’m also doing a fair bit of work on the Mozilla Platform which I hope to write about soon!

Anyway, it’s great to be back, and we’ve got a lot of blog posts to be made up for!

Making Money Online (and a living?)

What no one ever tells you about blogging
Creative Commons License photo: andyp uk

Much has been written about people who’ve quit the day job and taken up blogging or maintaining web sites full time. The claim is that you can spend a bit of time setting it all up and updating it with new content every so often and earn a lot of money very easily. In this post, I want to analyse whether this is true in practice. Further on in this post are also a couple of bits of advice to anyone who wants to monetise their website.

How much do you want to earn?

The most important question regarding making money online is how much you want to make and whether you can make it.

If you wanted to make a living from websites or blogging, the absolute minimum income you’ll want would be to have income equal to the level of “relative poverty”. This is how much money you’ll need just for the basic neccessities. In the US, its $10,787 a year. In the UK, it’s £11,326 a year ($21,900).

For my fellow Brits: you can already see how the exchange rate is stacked against us and the high costs of living don’t help. It’s always recommended that your primary sources of income and expenditure are in the same currency so you aren’t at risk from exchange rates volatility. It’s a source of worry if you want to become a full-time blogger and you live outside the USA.

Anyway, that means earning £215 a week just for the basic essentials. As the current exchange rate, that means a minimum income of $420 per week.

Let’s say your primary source of income is advertising. And let’s assume an eCPM (Earnings from 1,000 page impressions) of $1. So you’ll need 420,000 page impressions per week, or 60,000 per day. And if you want to earn a decent living, you’ll need at least 100,000 impressions per day.

It’s just a rough back of the envelope calculation. Of course, eCPM depends on all kinds of factors such as the subject of your site, the source of visitors (e.g. Digg traffic gives poor eCPM) and the number of advertisers.

Blogging tools, at Nerja Parador...
Creative Commons License photo: Ben30

Hopefully, I’ve quickly demonstrated that making a living online isn’t easy. Perhaps the exchange rate will become more favourable to website publishers in the future. Perhaps by redesigning your site you can increase your eCPM. But you’ll need close to a six-digit number of page impressions every day if you’re going to stand a chance.

What skills do I need?

If you want to be a professional blogger or webmaster, there are a whole range of skills you’ll need.

First and foremost, you’ll need to be able to write and to enjoy writing. After all, people come to your site for content and you’ll need to be able to write good, coherent content regularly.

You’ll need all the technical skills: web design, HTML, some CSS. You’ll need to know how to use a CMS or blog software. You’ll need to be able to optimise your pages for search engines.

Running a webpage professionally means you’re running a business. You’ll have to know how to communicate with advertisers and readers, manage cashflow…

It’s certainly possible to have all these skills, but making money online certainly is not easy or a “lazy” way of making money as it is often claimed on sites across the internet.

But if you do want to give it a go, a few bits of advice:

  • Make sure you find the topic of your blog/website interesting – otherwise it won’t be fun!
  • Think supply and demand. If you can supply something that is scarce (not many other people supply it) and high in demand (lots of people want it), you’re onto a winner. The fact that you need technical skills to run a blog means that blogging attracts the technical types. That means there are billions of blogs on computers and technology. If you do want to make a living, you probably won’t make it as a technology blogger. Sorry!
  • Keep experimenting with different ad programmes, placements and formats to maximise your earnings. Sometimes, rather surprisingly, fewer ads will give higher earnings.
  • You’ll probably find AdSense earning reports very addictive and check them many times every day… don’t.

Anyway… I hope this isn’t too demoralising for anybody! I write this blog entry as a technology analyst and an economist rather than somebody who has expertise or experience trying to make a living online. But I think people do need to know that it’s not the easy and lazy way of making money that people make it out to be.