Dave Winer asks why people are investing money in Podcasting. What's the business model?

That's a return to one of the really interesting questions raised time and again by the rise of the internet and the subsequent investment bubble : what's the relation between importance and market value?

This question is usually obscured by a sequence of reactions the market takes to an idea, whether it's podcasting, RSS, blogging, the internet, the personal computer etc. etc. :

1) What?

2) So what? (There's no business model, nothing for us here)

3) Hmmm. This is gonna be big!

4) Gimme some of that. How much do you want?

5) Hey! I never made any money. You fraudsters!

The problem is between steps 3 and 4. By definition markets are information processing engines. They claim for themselves a kind of cognitive ability to learn, to take in information, to process it, and to make rational decisions based on this information.

Markets rightly see they can't make money (step 2) and assume that there's nothing to the idea. But the people involved can see that something's going on.

At this point, there's a kind of cognitive dissonance. We can see this is going to be big. So we assume that the market must be able to learn and reason about it. Unfortunately, the market's way of representing information, which is very clever, flexible and powerful is nevertheless limited. Markets can process any information which can be represented in the form of tradable property. But conversely, they can't reason about, and can barely see, things which can't be represented that way.

As people see the importance of the new idea, they naturally try to find ways of packaging for consumption in the market. That, they hope, will make them wealthy. In doing so, we hope the market gets to learn about and understand the idea sufficiently to know what to do with it, particularly tell us how important it is, relative to everything else.

But this is The Age of Amateurs, and more and more things are becoming recognisably important without being captured by the market.

That's one of the things that makes them good. The markets tends to try to rationalise and commoditise things. What's recognise by traders is not the full multifaceted idea, but a simulcrum, a few perceptual cues which can trigger the right response in the buyers. In doing so, ideas which have been understood and engaged by the market end up drained of their richer complexity. The products of the age of amateurs are spiky and gnarly. Over complex, unfit for the consumer. But alive with possibility and novelty.

The absurdity of the internet bubble was a symptom of frustration due to the dissonance between the obvious real importance of the internet phenomena and the inability of the market to get any recognisable hold on it. This frustration is echoed repeatedly with blogging, free software, wiki, podcasting. How do you commoditise free?

Podcasting, like blogging, the internet and the personal computer transcends the market. Sure the market makes it happen, but it's essence is not bound by it.