Wednesday, September 07, 2005

Risk vs. Reward

So after a couple of trackbacks, several emails back and forth, and some furniture problems that delayed it a couple of times, I had lunch with Charlie O'Donnell today. It was my first face-to-face meeting with someone as a result of my blogging, which brought with it the slightly awkward moment of finding each other through vague descriptions. Fortunately, my description (6-foot-3 Indian guy) narrowed the field down pretty well.

We had a great conversation, most of which should find it's way into a post in the next few weeks, but one part that really intrigued me was as we discussed how tagging with RSS would change the future of content delivery. Right now, my feed reader has mostly individual feeds of people that I find interesting (see my blogroll). However, with services like providing feeds to collections of tagged content, how long will it be before you eschew individual publishers, and only subscribe to tagged content?

While I agree that such feeds will soon be much more popular, I'm wary about making that jump completely. While aggregations like this will definitely make for more focused content, it will also strip out a lot of the benefits of finding a good publisher. The trouble with completely customized content is that often, you have a hard time getting exposed to new things. Just like in finance, when you lower your risk (wasted time on items that don't interest you), you also lower your reward (unexpected or new things that appeal to you).

A great example of this dynamic is in music. I have a decent size collection of music, accumulated over the past 15 years or so. If I really wanted to, I could listen to nothing but the music I already own, and since it was stuff I bought, I'd have pretty close to a 100% "hit rate". However, in doing so, I also cut myself off from exposure to any new artists or groups that I might like.

Enter Pandora - I know I've mentioned this in the past, but I'm just in love with the service. I might only get an 80-90% hit rate on it, but so many of those are new acts, that it's worth the risk to me. Unlike radio stations, that hit rate gets better with time, as they learn my preferences, so my "risk" goes down, without a corresponding drop in my "reward".

I really enjoy Jeff Nolan's Venture Chronicles for much the same reason. While he's good for a daily dose of tech and vc posts, every so often he'll throw in a link talking about the heredity of thoroughbred. They're not all my cup of tea, but enough are that it's worth it to subscribe to his feed.

In the financial world, people get paid a LOT of money to increase, or even just maintain, the return while lowering the risk. I think the analogy holds up for content - those who find the best way to increase my reward for consuming their content while lowering the risk of wasting my time will be the ones that will have me as a loyal customer.