Two charts
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Two charts

Here are two fun charts.

The first shows that active management of mutual funds adds no value.

luck-f1-updated

The blue line shows the actual performance of actively managed mutual funds after fees have been taken into account. The red line shows randomly distributed results. Even at the right (high performing) end of the graph, the active managers still don’t outdo chance. Put your 401k into index funds.

The second chart shows that while record labels are suffering, actual recording artists are seeing their income increase.

music_income

This maps pretty closely with what I’m seeing in the music industry. Lots of great music being made, lots of good shows out there to go to, and increasing availability of music at lower prices. The changes in the music industry are good for consumers, and it looks like they may be good for artists as well. The fact that they’re bad for record labels is a bonus.

Revisiting “What would an economist do?”
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Revisiting “What would an economist do?”

Back in March, I asked:

I really want to buy the new Neko Case album, released last week, but I have a suspicion that Amazon.com is going to make it the deal of the day sometime soon. What would an economist tell me?

Today it’s Amazon.com’s MP3 deal of the day and you can get it for $1.99. I purchased it a few months ago when it was on their 50 albums for $5 list, but I wanted to point out that my prediction was correct for some definition of soon.

How Shazam works
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How Shazam works

Slate’s Farhad Manjoo explains how Shazam works. If you’ve never seen Shazam, check it out, you’ll be amazed. Its incarnation as an iPhone app is its most famous — I had no idea it started out as a dial-in service. Shazam fingerprints songs and then compares the fingerprints of submitted samples to their database. The service fingerprints “important” notes in a song, not sequences of notes. I wonder how long note sequences would need to be to constitute a unique fingerprint? It’s probably less than you think.

Links for September 13
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Links for September 13

  • Jay Robinson: Some Notes On iTunes LP. Unsurprisingly, the album info is basically a packaged Web site made of HTML, CSS, and media files. I like that Apple is trying a new way to get people to return to the experience of listening to an album.
  • MySQL Performance Blog: 3 ways MySQL uses indexes. Short and useful.
  • The American Prospect: The Life and Death of Online Communities. There are plenty of articles on this subject, but they never get old for me. This one’s about GeoCities.
  • Ask MetaFilter: New York Times malware ads. Looks like the New York Times is running ads that attempt to install malware. I noticed the same thing on Haaretz a couple of weeks ago. Sounds like something’s wrong with the ad brokers. The New York Times owns up here.
Links for September 5
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Links for September 5

Links from June 8th
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Links from June 8th

Links from May 20
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Links from May 20

Long delayed roundup of links:

The changing model of music sales
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The changing model of music sales

Today’s Amazon MP3 store special is Ben Harper’s Diamonds on the Inside. For $1.99, you can download the album in MP3 format with no DRM. Here’s part of a customer review of the album that was written in March 2003:

First of all, this review will not address the actual MUSIC on this disc, which is up to Harper’s usual platinum standard of songwriting and musicianship.

No, this is intended to be a warning that this CD has been laced with copy-protect technology that prevents those who paid for it from making MP3s and whatnot. It also prevents you from even listening to the disc on a computer except by using an extremely low-quality proprietary player that limits the quality to just 48 kbps — about what you’d get from AM radio.

Times change.

MP3 2000
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MP3 2000

Scott Rosenberg reposts a piece on MP3 from 2000. Here’s my favorite sentence:

Today, though, “having” a new music release is beginning to mean something as vague as having a particular file on your computer’s hard drive.

Here in 2009, the idea that having something means that it exists as a file doesn’t seem vague to most people at all. I don’t think it seemed vague to me back then, either. This also led me to wonder when I first encountered MP3 — I know for sure I started using WinAmp in 1997.

Rosenberg’s comments on the wrongheadedness of the music industry are amazing to read in retrospect. The obvious path was out there, and the recording industry is still hesitant to take it.