On The Serio

[1/13/09 there's a tech glitch with typepad right now that seems to be messing with some of the fields, including comments. we are trying to figure it out.]

A few days ago I sent an message to my distribution list (full text below the fold) telling everyone that I'm starting to sort my Inbox using a currency called the Serio. The Serio is a virtual currency that can be attached to emails. Since it is a scarce resource, I know that a message with more Serios attached means more to the person who sent it. For that reason alone, I should pay more attention to that message.

That was my reasoning. Since I sent the note out, there has been quite a lot of negative reaction. That is not all that surprising if you know much about the history of public reaction to prices - people hate them. Making things more heated in this case is the frequency with which people think that virtual is the same as digital which is then thought to be costless.  As a result, the idea of applying a price in terms of a virtual good, to ration attention, a good that has always been thought to be free, has stoked some angry discussion. The anger in turn calls for a calm reflection on what prices are, why we have them, how virtuality changes prices, and how all of these things relate to human well-being.

First, text of my mail:

*** BEGIN QUOTE

No big news; I'm just letting you know that from now on I'm going to be sorting my Inbox using the Attent program, developed by Seriosity. Attent allows senders to attach a virtual currency called the Serio to emails. By design, Serios are in limited supply. An email with more Serios attached means more to the sender. By attaching Serios to messages, senders help receivers prioritize the flood of incoming messages. It's the sort of thing that appeals to me: virtual currency, economics, scarcity, fun, etc. 

Therefore starting today, I'll be responding first to emails with the highest incoming Serio values. Look at it this way: If you want to help me give your message the attention it deserves, go to www.seriosity.com and get some Serios, then attach them to your message. 

Apologies for cross-posting. Hope you're all having a nice New Year.

Ted

*** END QUOTE

I then added to my webpage some statements to the effect that, in general, I will not be responding to emails that have no Serios attached.

What is the Serio? It is an invented money. Seriosity created an Outlook aplication called Attent that enables a user to attach Serios to email.  The Serios are drawn from the user's Seriosity account. Seriosity refills the account with a certain amount of Serios every week, keeping a limited number of Serios in circulation. (It also makes sure the accounts and transactions are secure and don't get hacked, duped, or exploited.) Being limited in supply, Serios become valuable through a simple, unavoidable fact about the nature of economic human life: Opportunity Cost. Opportunity Cost is the true economic cost of any decision, and can be summed up as the value of what you might have done instead. If I spend a minute talking to Joe, I missed out on the opportunity of spending it talking to Jane. The lost value of talking to Jane is the true cost of talking to Joe. Thus while minutes are "free" - I don't have to buy them - nonetheless there is a real cost in using them, the opportunity cost. Using time itself is costly. Similarly, using Serios is costly: if I spend mine to get Barack Obama's attention, I can't spend them to get yours.

Serios have value. Therefore a message that comes with Serios attached has cost the sender something. The sender is trying to get my attention when he could have tried to get someone else's attention. If I am just being respectful of people and their wishes, I ought to pay more attention to a message with more Serios attached - just as I ought to pay more attention when someone waves frantically at me rather than calmly at someone else. I trust they know what they are doing and are not going to the expense (physical and in terms of social embarassment) of waving like a lunatic for no good reason. So I perk up and ask what they need. Very natural.

What would be very unnatural would be a system that did not allow people to up the ante when they needed more attention. Imagine if all babies cried at the same decibel level, or all gestures were the same. A man puts his hands to his neck; the viewer cannot tell whether he is looking for respect a la Rodney Dangerfield or choking to death. Though odd, this is the situation we have with email. I can use the Subject and From field to make an inference about whether the email might matter to me. But I have no idea how much the email matters to the sender. Sure, claims are made; but no one in his right mind delves quickly into every email labeled "IMPORTANT!" That's because it is too cheap and easy to write those letters - just look at junk snail mail. ("DO NOT DISCARD!!" Ha. First one in the bin.) Not knowing how important an email is to the sender, we tend to look into just about everything.

Looking at email is a lot of work and it is inequitably distributed. As Clay Shirky has written, nothing about the digital age has changed the inequities inherent in human reputational networks. Though the cost of mail has fallen to zero, Oprah Winfrey still cannot read the mail of all of her fans. Indeed, the collapse of messaging's cost has only made the inequities worse, in that far more people now have the time and resources to satisfy their inclination to send messages to Oprah, but she has no more time to read them. If you really, really, REALLY need to get Oprah's attention, it's harder in the digital age, not easier. She is flooded with messages that all look the same. She has no way to tell who really has something to say and who doesn't.

This is not a big deal for Oprah's business, but it is a crushing burden for many others. Managers of sizable corporate units now face exposure to thousands and thousands of emails a week, all of which look the same. One of those thousand message is pretty damn important, and to make sure she catches it the manager has to look through them all. It takes a lot of time, most of it wasted on "IMPORTANT! READ! Someone left an earring in the 3rd floor women's room." Estimates of the business cost of free email run to the billions of dollars.

Heaven knows what poorly priced email costs people outside business. As I write this post, the AP reports that the the US Department of State nearly lost one of its communication systems due to email. It seems someone wrote a message to a huge list, and everyone responded to it - using 'Reply All.' The ensuing packet flood swamped the servers and led the department's leaders to threaten disciplinary actions against anyone using 'Reply All.' It's funny that people see a problem when the attention of a server gets swamped, but they ignore the same problem when it is not a server but a person drowning in the tide of information. 

Something is wrong with email and a lot of responses have been tried without success, all of them focusing on new things the receiver could do to assess all this information. of course, the problem is that the receiver is the person who is overwhelmed in the first place. It's like forcing the people whose river water is being polluted to do the cleaning at their own faucets, rather than putting the burden on the factory upstream to clean it at the source. The senders are the source of the problem; they are the ones who face a zero price for a thing that actually does have a cost. In this kind of problem, where prices are out of whack with actual costs, the best remedy is to make a price that reflects the real economic cost. In this way, the massive costs of email, once placed on the senders who create them, come into alignment with the benefits of email. You send an email when the benefit of sending it exceeds it price. If the price is zero, you send them all. That's too many. Therefore something is needed to make the price positive, so that not every single sendable thought actually gets sent.

Businesses seem to face the greatest pain, and their costs were the main focus of Seriosity when I first consulted for them, back in 2004 or so. (Disclaimer: as a result of this prior consulting, I do have some stock options in the company. And I am writing this entire blog post because I hope to become fabulously rich by drumming up massive hype. Yep.) Anyways, I had no intention of using the Serio or anything else to sort my own Inbox. Bravely, and in retrospect naively, I felt I could manage it on my own, using receiver-side filters, priority colors, and a system of insider-outsider email addresses. But none of this works. It takes too much time to set up filters; I don't know whom to filter; and what about all the email I get from people I don't know. I have to examine every incoming message, and the examination time is the source of pain in the first place. Filters on my end don't eliminate examination time, they add more work to it. What I needed was a filter that senders could apply, as a legitimate signal on their part of how much they want me to see what they have to say.

The Serio does this, so as my work with it continued, I came to wish I could implement it myself, not as a business unit manager but as just a guy with too much email. The Attent program, which is the way you attach Serios to emails, works in Outlook, so I hesitated to switch from Thunderbird. But it finally got to be too much, so I decided to go for it, and this resulted in the January 8 email. I have since learned that Seriosity now allows you to send Serios simply via the web - not attached to a particular email. Rather, you just go to http://www.seriosity.com/ss/sendserio.php  and compose a message, attaching Serios from your account. They seem to have divorced the Serio from email per se - you could send someone 10,000 Serios with the message "Please have a close look at the comment I just put on your Facebook page."

With this development, it seems like it ought to be quite easy now to orient attention with respect not only to what obviously seems important to me - an email from my brother - but also what seems important to someone else, someone I don't know. If I get an email with Serios attached, whether from the Outlook client or the web-sending tool, I'll know somebody went to some effort to get my attention. When it is a good message, I will be sure to send some back as a way of thanking them for getting their idea the attention it deserved, while saving me time (not to mention the risk of not seeing it at all). To me, this is entirely benign. A good development.

Yet many people are angry and dismissive. I understand this in the same way that I understand the general opposition to things like gas taxes and parking fees. It is an old problem in economics: People hate to see prices on things even though they know that the things do have social costs. "Let someone else pay." Yet when the people creating the cost are not the people bearing the price, bad allocation results. Think what would happen if everyone could order a pizza for delivery and have the bill sent to the next person in the phone book. We would all order, and pay for, way too much pizza. Prices are not our enemy, they are our friends; they align the costs to individuals (the price) with the cost to society (the underlying opportunity cost of using the resource).

When you have worked through the basic economics of a situation, you sometimes come to the conclusion that a good that seems to be "free" really isn't "free"; that this "free" good is being allocated unequally, some getting more than others; moreover that the allocation that's happening is bad in the sense that some people are getting the thing even though they don't want it that much, while others are not getting it despite being desperately interested in having it; and finally that a simple pricing system, one that aligns the costs of the good with the prices faced by the people who cause the good to be made, would correct the problem. Yet people understandably wish prices were not there at all, because they think the absence of prices means the absence of costs. Or perhaps they just like getting something for free while someone else pays. Therefore it is common that when an economist proposes a price system for something, people howl - even though a price system would allocate things more fairly. People prefer to believe that the thing is just plain free.

It would be nice if things with no prices were free, but they are not: costs are always there, whether or not they are expressed as prices. Take parking spaces, for example. My campus has a limited number (so does yours). They are also unequal in terms of quality, with some closer to the offices than others. And there are differences in need, too: some people need to get in and out of their workplaces fast, some have heavy things to carry, some often have visitors. In many cases, however, parking is "free": you don't have to pay anything, just go in and park. But we see immediately that parking space is not, in fact, free. For when no one pays for it, it still gets allocated to someone, and others must do without. The question is not whether parking spaces have a cost, it is rather how does the cost relate to the price, and who ends up getting the parking? Is it fair that those who come in first get the best spots, regardless of need? My chairman, nearing retirement and with no little kids to take to doctor appointments mid-day, gets in at 7:30am and walks 10 feet to the door. I take my kids to day care and don't get in until 9:30am, so I have to park on the moon and if Abigail has her doctor appointment at 1:30, I have walk back out there at starting at 12:45. Oh sure, we have a permit system; my chair and I, along with 5,000 other workers, students, professors, and lab rats, all pay an outrageous sum every year to have access to the exact same 200-car lot. The permits do not actually price the parking; they just extract money from us all so as to grant us "free" access to that parking, which every day goes to the early-risers first, regardless of their needs for that day.

Yet what would people say about a policy that the closest spot costs $1,000 per day, the next closest $995, and so on, down to my usual spot on the moon priced at $1. Imagine the hue and cry. Unfair! Injust! Rich full professors will get all the spaces! (rich?!?!) Putting a price on something free!  It's Just Wrong!

OK, richer people have more dollars. Fair enough. Therefore imagine this instead. Suppose there were a virtual currency, the Parko, allocated to every University employee and student (and lab rat) at the rate of 100 Parkos per week. The closest spot costs 1,000 Parkos, the next 995P, and so on, down to my 1P moon-spot. There would probably be the same hue and cry, perhaps less loud because nobody in this scheme is more rich than anyone else. But one thing would definitely be true: people who really want the close parking on a given day would get it. They would save up their Parkos and spend a chunk of them on the day when an important meeting runs until 11:15 but Justin has his orthodontist at 11:30. People who don't care so much about where they park on that day would not spend Parkos on those close spots.  Wouldn't that be better?

The Serio makes things better. It does not put a price on a thing that was formerly free. That thing, attention, was never free. Rather, we did not have to actively manage access to our attention, because the technology of communication did not allow people to send more messages than anyone could handle. However, we now find ourselves overwhelmed with incoming messages. Even our servers can't handle it.  We went from free parking with 200 spaces and 100 cars, to free parking with 200 spaces and 10,000 cars. The resulting allocation stinks in terms of fairness and efficiency. The old allocation system does a very poor job of getting the attention where it needs to be. Thus the Serio comes in as an attempt to improve the allocation mechanism for attention, by putting a returnable price on the sending of messages. No more thoughtless Reply-Alls, and you don't need to impose 'disciplinary measures.' The Serio uses what we know about prices, information, and markets to direct the scarce resource of eyeball time to its most useful ends.

Why a virtual currency? Foremost, it's fair. Nobody is rich in Serios; if you sign up, you get the same amount as anyone else.  But virtual currencies are also easier to manage, costless in transportation, and very pliable.

This is where the fun comes in. At Seriosity, I talked often about what a smart company could do with Serios outside of the email problem. Look at what MMOG players do with gold: They buy gear, they buy resources, and they buy services. Imagine turning aspects of a business into a game driven by virtual currency accumulation. Need to get a bunch of people to meet at a weird time? Give them some Serios. Need the lab tomorrow, not in three weeks when the next opening is? Pay the current holder some Serios. Want to give major kudos to the employee who took over the newsletter? Give Serios. For my own work, I imagine sending Serios to a former student on the occasion of tenure, or paying a current student some Serios to make game art, or paying my colleagues some Serios to help me with a guest lecture. The Serio is a lighter kind of money, suitable for a lighter kind of transaction, one not burdened with all the ramifications of real cash. Imagine coming up with cool games based on MMOG incentive systems, where Serios are the rewards. (Actually, you don't have to imagine. The guys who invented the Serio have written up some ideas already.)

Based on my research in this area so far, I think virtual currency is the kind of innovation that unlocks entirely new incentive systems and social institutions. I love the idea of the Serio, even though up to now it has been a business-only app for Outlook. It's unfortunate that people get upset when they see a price. They need to recognize that most things have a cost, that some have costs that are hard to see, and in those cases the absence of a visible price does not make the good, in fact, "free." Invisible costs only make the good poorly allocated. The answer is to make the cost visible, with a price.

The fact is, attention is not cheap. I need to order my Inbox or I will go crazy. In the digital age, with its low cost of sending messages, the information search costs that people can place on others are becoming immense. There will have to be a response, and some responses are better than others. Think of it this way: Which is more unfair, to order my Inbox by Serios or to ignore all email from people I don't know? If technology makes us all rude people who only talk to folks in our old-boy networks, that would not be a good development. Better to invite innovative forms of signals and transactions - new currencies, new markets, new agreements, new institutions - to help preserve both our sanity and our respect for one another.