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If you don't care about the algorithm economy, here's why you should

The algorithm economy is a growing idea that every developer should pay attention to. Buying and selling algorithms has never been easier, but what else can it bring?

If you haven't heard of algorithm marketplaces yet, you will soon. Algorithms -- reusable chunks of data-based code -- are set to be the next big thing in software development and should be on every developer's radar. Companies today are organizing marketplaces to make buying and selling algorithms easier.

What's driving the use of an algorithm economy is the need for a fast and simple way to deal with data analytics, experts said. Forrester analyst Brian Hopkins enabled the idea of an insight service and thinks the timing of algorithm markets is perfect, because they will enable the development of insight services. "So what that's really meaning is you push data in and insight comes out," Hopkins said. "It's enabling complex data science and simplifying it down to a procedure call, 'Here's some data. Give me the insight, and I'm moving on.'"

Developers are used to alternative open source marketplaces like GitHub, but the algorithm economy will function differently. The concept, according to Kenny Daniel, CTO and founder of Algorithmia, is "pretty unique and pretty new." By putting your code in a marketplace, such as Algorithmia, developers get paid anytime somebody calls upon their algorithm. "Anybody could start using it immediately because it is always live," Daniel said. "People could start sending their data to it immediately to see if it works for them."

The algorithm economy may be very early with pockets of maturity, but ultimately algorithm marketplaces will be faster and cheaper. "It's only going to continue to increase, in time, the value of algorithms," Daniel said. "Why would you want to take the risk of building that in-house when you have these tools already available at your disposal?"

The algorithm economy, such as Algorithmia, operates in two ways: Developers can "share" their algorithms with others -- and get paid -- or companies can place a bounty -- the amount they would be willing to pay -- on an algorithm they would like to use. For those who simply want to share their work on the platform, it's as easy as signing up for an account.

That means developers now need to consider a new way of thinking about creating code. They can now build applications that should be able to easily reach out, connect and incorporate what they're learning from the data insights.

Customer experience

The potential for algorithms can go far. Hopkins said they can improve the scale of the customer experience. Algorithms, especially paired with the internet of things, can help you study your customers without hiring an army of representatives to do it. "But the main thing that's most important about IoT is, I think, the new customer engagement scenarios it creates," Hopkins said.

To him, it's not about automating the process through IoT. The exciting component is engaging customers in new ways. Companies will need to think about how the world will change as technology advances and how customer expectations and needs will change alongside. And by using algorithms, developers will be able to make small changes and see, nearly instantly, what they mean in the code. "So it's this continuous cycle of, 'This is what I think is going on, here's the algorithm. Did that work? Oh no, let me tweak and tune it.'"

Daniel believes that elements such as artificial intelligence and algorithms are going to be "just as important to the future of business as the internet is today."

What's in store for algorithms?

Algorithmia is pioneering this idea of an algorithm marketplace, Daniel said, and the company is building the technology further and pushing aggressively on deep learning and machine learning technologies. Daniel said, "It makes much more sense to let a company like Algorithmia do a what we're best at, which is collect the world's best algorithms, make sure that they run smoothly and produce the best results, and manage all the infrastructure and scaling."

Next Steps

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This was last published in June 2016

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Why you call it "algorithm" instead of "program" (or Procedure or Class or Component)?
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