Game of Cults: The Artificial Culture Markets and the Big Con

The Artificial Cultural Market Experiment

I touched on the Artificial Cultural Market Experiment by Salganik, Dodd, and Watts in Advantage. I am including this research because it was the definitive study that showed in a winner-take-all market, there is a concentration of results such that only a small group gets most of the sales. Inequalities of outcome naturally occur, meaning equally talented and hardworking authors won’t necessarily have the same results. The results can vary drastically.

This brings up a second issue: the unpredictability of success. In the publishing market, taste, quality, and talent don’t automatically equate to success. Two authors of equal skill publishing books of equal quality will not have the same success. What’s the difference? The stuff we are discussing here is how the market PERCEIVES each book.

A quick synopsis of the research. Researchers took forty-eight songs and had thousands of people rank these songs.

The researchers created an experiment that consisted of eight “worlds,” or artificial markets. Each world featured forty-eight songs that thousands of people were allowed to listen to and rate. In the first “world,” raters were given no context for how others rated the songs. They were shown the songs in random order with no rank or rating.

Seven other worlds were created with the same forty-eight songs; in these worlds, the listeners were shown the rank and ratings of others.

Worlds with social influence were 50% more unpredictable, meaning while there was a clear distinction between good and bad, within the good and bad segment, there was wide variability of ranking and ratings. This is the inequity of outcome, and this variability increased by more than 50% with social influence.

These same researchers conducted an experiment called leading the herd astray, where they inverted the results. They gamed the system by switching the worse songs for the best. The idea was to test if you could game the system and influence the crowd to think the songs that typically rated lower were the better songs.

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This is where it gets interesting…

The probability of listening to the #1 ranked song (correct or inverted) was three times higher.

When it came to downloads, the results were different.

When a good song was ranked correctly at #1, it had 500 downloads vs. 270 when inverted. A bad song, when properly rated, had 20 downloads vs. 150 when inverted. Note that even when inverted, the good song outperformed the inverted bad song.

So you can’t scam the market.

In the end, if your product doesn’t have observable quality by the masses, they will figure it out eventually, limiting your upside.

The wisdom of the crowd will prevail and sort out those that try manipulative marketing tactics on a crappy book.

This is a good thing.

It means that those who might use these tactics without looking to provide a quality product won’t have results that will skew the market—quite the opposite.

But you have a quality product, or if your craft is sub-par, you will improve it now that you know the importance of quality in this game.

Before I move on, I want to digress for one moment about something I observe in the industry concerning quality.

I often read posts where people ask for help because their books aren’t selling.

They look to the myriad of marketing and appeal-related issues—covers, blurbs, and ads—but won’t look at the quality of the product.

Not just editing but story and structure.

I find this ironic because story quality has a massive impact and is one area you can improve in with solid instruction and help.

Spend $1,000 on an ads course; in ninety days, what you learned could be worthless because of one change on the platform. But if you make strides in your writing, your improvements are cumulative.

The big con

Now, back to us running a confidence game on the market…

I want you to run a big con like Gondorff and Hooker in The Sting. Something the Yellow Kid would be proud of.

The big play uses the methods from this season to influence the market to focus on your brand.

But this is a play on words…

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We’re not looking to trick the market by abusing their confidence. We will get an advantage in the market by building their CONFIDENCE in your brand.

When you get some fleeting attention, you earn some more and build trust.

Once you have some trust, you influence a reader on what they think the quality is, giving it to them.

You prime prospects to a specific sentiment about your brand experience and how you provide satisfaction.

You trigger that sentiment around your product and your community.

You develop game paths to get a reader to place your characters, story world, and story experience on their self-map so they begin to attach their identity to your brand.

You collect a group that you compound in size over time through the retention game path to grow an asset—your audience.

By activating this audience, they become a significant enough force to begin to shift market opinion and sentiment, and this is further amplified through machine learning and sales optimization algorithms.

This feeds back into your business by indirectly influencing future buying decisions of potential new readers as you increase your funds and fans.

The recipe I showed you becomes a way for you to construct a pseudo-environment that you have control over and can continue to influence.

When constructed through these methods, your game becomes a system to influence readers individually and as a group. That group influences the broader market, and since the market is a slave to logic and machine learning, it concentrates on what triggers what it seeks (conversion of sales).

That’s the big play. By quietly working on your system and accumulating fans slowly and deliberately, you get to the point where you influence the market.

I have several clients at this point who are having their best years with growth and higher profits using this methodology.

You see, the market is a massive, complex self-organizing system, and these types of systems have feedback loops that drive the organization. Our sleight of hand isn’t one of misdirection but putting our thumb on the scale to tip its balance our way.

One more thing…

I’ve talked about clients who are practitioners of cumulative advantage. I talk about their business’s profitability and how the return on the whole operations really matters. Do a little experiment, and evaluate your business as it stands now. Take the gross sales and deduct your expenses to find your net profit. If one of your expenses is your salary, then add your salary back into the net profit. Divide that number by your gross sales.

If it’s below eight percent, then the stock market delivers a better return. Most authors I’ve seen are typically below twenty percent. It would help if you strived to be thirty to fifty percent.

Now deduct eighty percent of your advertising spending and reduce your sales by ten percent. Is this model more or less profitable?

Restructuring your business to fit this model may be your best goal.

Read: Controlling a Pseudo-Environment with Positive Feedback Loops and Ease of Choice