Crowd Wisdom and the Future of Newsgathering in ABC7's "Futures Market"

For the past couple weeks I have been joining fellow speculators on ABC7's "Futures Market." Launched in February of this year, it's a virtual forum where ABC7 patrons are invited to vote on the likely outcomes of a selection of "news" issues of the day. The significant twist is that users identify and post news topics as "markets," and determine an IPO for their self-identified news as if it were a NASDAQ property. Questions of the yes/no variety (Will the '9ers make the Super Bowl this year?) or multiple choice (Which Democratic candidate will win the primaries?) are posed, and "playas" express confidence in the likelihood of an outcome by purchasing shares with a kitty of $5,000 in play money. Prices rise and fall according to the collective wisdom of the market; the higher the stock price, the higher the probability a particular prediction will come to pass. Of course you don't want to go bankrupt; kudos are awarded the most successful traders.

The forum is a product of Inkling Markets, Inc., a Chicago-based company helmed by a couple of marketing consultants with seed money from yCombinator, a venture firm started by notable hacker Paul Graham. Their tool is being applied by a range of subscribers that includes think tanks and retirement communities. ABC7 justifies this new facet of their reportage by explaining that "a ... 'crowd' is likely to generate a more accurate answer than a smaller number of 'so-called' experts." The premise is lifted straight out of James Surowiecki's book, The Wisdom of Crowds. Surowiecki identifies four key characteristics that make crowds smarter than experts: They're diverse, decentralized, networked, and composed of independently minded individuals who execute decisions based on their own information gathering, rather than what others are doing.

It's a point of debate whether the big games at AMEX and NYSE can fit this bill, let alone the game being played by the journalists at ABC7. It's a ready-made attempt at editorial populism; the news can thumb its nose at elitist "experts," who are crippled by narrow knowledge and biases. Surowiecki attributes some of the more famous failings of the stock market (the sucking sound of a tech bubble popping) to their dirtying influences. Trouble is, the same experts sometimes just might possess critical knowledge to back up their credentials.

This isn't the only reaching attempt by ABC to mesmerize the Net 2.0 gang. ABC News is trying to capitalize on the "viral appeal" of YouTube by stepping up its solicitation of video "caught" on cell phones by amateurs in the right place at the right time. The rationale of the ABC brass is that "Everyone is becoming a hunter and gatherer for the news business."

It's almost a moot point whether prognostication should pass for proper journalism, as we've all seen mainstream news outlets succumb, salivating, to the tantalizing advertising potential of rampant speculation. The most recent episode of ABC's flagship news magazine "20/20" was oozing with urgency, as intrepid reporters delved into hell, interviewing so-called "near death experiencers" on the existence of an afterlife. But could this unfortunate trend, outsourced to the masses, maybe hit the journalistic bulls-eye?

While there's something to be said for putting two (or more) heads together in a knowledge pool, there's also something to having too many cooks in the proverbial kitchen. The "game" of the free market model may at times accurately reflect the fiscal health of individual corporations, but the parallels bend after being shoehorned into the newsroom. Corporations are run by executive officers, though to some extent, theoretically, in deference to their investors. For the "Futures Market" to function in the same way, it must be adopted as a legitimate child of journalistic endeavor.

--Matt Novak