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Adding Value on the Internet

By 8 June 2010 14 Comments

Economist/columnist/blogger/ex-TreasuryGuy Bruce Bartlett has started Bartlett’s Notations, a new horse in the Fiscal Times stable.

His plan:  “Every business day I plan to post an annotated list of recommended readings, some generated that day and others that may have appeared in the recent or even distant past.” But he does not want to do a simple tab dump:

I am going to make an effort to get off the beaten path and find studies, reports and articles outside the usual places that many bloggers tend to cite and comment on . . . . [because] the heavy concentration on breaking news has, unfortunately, led to a sharp decline in long-form analysis. Mainstream publications don’t have the resources to cover issues in depth, except under special conditions, such as the BP oil spill, while bloggers clearly don’t have the time. This has created a vacuum, I believe, that needs to be filled. The sort of longer form analyses that one used to read in major newspapers and news magazines still exists; it’s just off the beaten track. It appears in publications from academics, trade associations, government agencies and international organizations. The problem is finding and disseminating them.

He makes the point that it was once difficult to find solid information, but that those who did get it were able to capitalize on it in some fashion, precisely because of its scarcity. “In that era, access to data conferred power and many economists made good livings simply because they had it.” However:

Today the easy availability of raw data and government reports allows anyone to do his or her own analysis. But because no one can “own” such things the way they used to, fewer people are willing to invest the time and resources to really understand them. I think this is one reason why we had an economic crisis; the coverage of things like the housing market, mortgage finance and other underlying causes by experienced reporters and analysts wasn’t as broad or as deep as it once was. . . .

My plan is to look beneath the surface and find in-depth analyses of topical issues that mostly escape attention. Reputable academics, government agencies, trade associations, think tanks and other institutions that still have the incentive and resources to analyze issues more thoroughly than bloggers or even major media reporters are able to do. Luckily for me, the Internet provides tools that make it possible for one person to do the work of many.

Digital Society does not normally speak fiscal, so the interest here is not so much on the specific topics that Bruce will cover (though he will certainly be a daily stop in my personal efforts to understand the world) but on his underlying rationale.

He is right: the fact that one cannot get a return on the investment required to obtain data and information and/or to chew it over and penetrate its mysteries is dumbing things down. Nicholas Carr published a new book yesterday called The Shallows: What the Internet Is Doing to Our Brains which expands on a point from an earlier article, Is Google Making Us Stupid?:   “Once I was a scuba diver in the sea of words. Now I zip along the surface like a guy on a Jet Ski.”

The problem is stark. If collecting and analyzing information cannot be monetized in some fashion, then the incentives to engage in these activities will be minimal. Effort will be devoted to competitive aggregation, in which everyone tries to free ride on everyone else, devoting minimal resources to in-depth activity. Advertising is not the answer, because the business plan of anyone who expects to make money from aggregation is that they will be able to divert some of the clicks from people interested in a topic from the producer of the original material to the aggregator.  Nick Carr again (he really is very good):

Wow. “A billion clicks.” “Millions of dollars.” Such big numbers. What Google doesn’t mention is that the billions of clicks and the millions of ad dollars are so fragmented among so many thousands of sites that no one site earns enough to have a decent online business. Where the real money ends up is at the one point in the system where traffic is concentrated: the Google search engine.

The FTC staff is catching flack from all ends of the political spectrum for publishing a staff report that raises the possibility of government subsidies for news gathering. The report has problems (stay tuned to this space), but much of the criticism is juvenile. If content users will not pay, and advertising won’t support news services because the revenues get siphoned off, then there must be subsidies from somewhere or there will be no news. Duh! Attacking the FTC staff for noticing this is truly shooting the messenger. Furthermore, whoever provides these subsidies will have an agenda.  Double Duh!

So if you don’t like the consequences of the new free world, think of some alternatives. It ain’t easy. The system whereby information was scarce and could be monetized had many problems; there are huge gains in making data generally available where it can be analyzed by anyone who wants to, not just by some special priesthood, and no one wants to create artificial scarcity. And, as Bruce notes, the government already funds lots of data collection efforts, and universities and think tanks are in the information-as-a-public-good business. As Bruce also says, there is an important function here in terms of having someone knowledgeable cull through this product and bring it to public attention, with a professional gloss.

It’s almost enough to make one believe in a property-rights-based system: Information is not free to produce, at least good information isn’t, so reasonable charges designed to fund its collection are fair. So is a considerable level of exclusivity, as long as the information is available to all who are willing to pay. (There is something to ye olde doctrines of common carriage.)  One of the ironies of the current tech world is that people are willing to pay billions for hardware, connectivity, and software, but squawk loudly at paying for the content that is the raison d’etre for these functionalities.  Of course, the Jet Ski level of analysis of people like the Free Press does not help here.

It is also amusing that Bruce says: “I am primarily interested in things that are publicly available on the Internet and aren’t hidden behind a pay wall or demand onerous registration requirements.”

I urge him to rethink this one; one of the bits of information that I would find very interesting is whether there is a lot of material behind pay walls or registration requirements that outshines the free. For example, on the tech side, I much like GigaOm, which costs, I think, about $70/year. For technical tech with an investment twist, there is a reasonably priced Next Inning. The WSJ and the FT are worth their costs. There must be lots of others. From my point of view, I would much like Bruce’s opinion on which sites contain material that meets his high standards of quality and interest.

Hey, maybe Bruce can turn it into a business and charge for access – sort of like a fund of funds. I would pay for such access to his expertise. And let me tell you about the time in 2001 when I suggested to Eric Schmidt that he should charge for Google:

After a seminar last year, I met [Google President Eric Schmidt] and fell into a conversation reminiscent of Who’s On First.  I said Google is a great search engine and it should make me and others pay for using it.  He assured me that the company has no intention of charging.  I responded that its value to me far exceeds the amount of a modest fee, and if the company charged then it could spend the proceeds doing even more good things, and I would get even more surplus value.  He answered that I need not worry because they are making money from ads and other services and will not make users pay.  I said I worried that they might not be making enough money.

He edged away, keeping a wary eye on this madman.

14 Comments »

  • Eddie Wright said:

    Thanks for the really interesting article.
    “I am going to make an effort to get off the beaten path and find studies, reports and articles outside the usual places that many bloggers tend to cite and comment on…”
    The very definition of social media!

  • Ed Hazel said:

    It is truly amazing how far we have come in the last decade or so in regards to news and information. I am old enough to remember seeing the first live broadcast from across the ocean. Now it seems everything is live and instantly streamed around the world not sure if this is a good thing or bad thing, it is definitely a lot harder to tell the difference between noise and actual news.

  • paul said:

    i agree with you ED Hazel ,things have come along way in the last decade ,makes you wonder what the next decade will bring.

  • Gordon Kruskowski said:

    Ed: “I am old enough to remember seeing the first live broadcast from across the ocean.”

    Yes I remember getting our first color TV in the 60′s. Media has certainly changed a lot since then. I guess that these days, there is the trade off between instant availability of information and accuracy. I’m not sure that paid access to information is the answer. But it certainly would be a reasonable alternative to all of the ‘surface Jet Ski’ info that is so prevalent on the internet today.

    Thanks for the insightful article, Ed.

    Gordon

  • Magda said:

    Yes James, analysis at the jet ski level is becoming more accepted each year.
    As newspapers shut down, real investigative journalism takes a hit. More folks are becoming news aggregators instead of originators. Think Huffington Post. Whatever direction the whole mess goes, there are huge forces at work that most of us can’t do a damn thing about.

    Will the internet stay as open as it is? Not likely – its adolescence is over, and the big players are getting on board. They will demand “special” treatment, effectively squelching the little guys and entrepreneurs who made google rich in the first place.

    The only thing you can count on is… change.

  • Gavin Connor said:

    “He makes the point that it was once difficult to find solid information, but that those who did get it were able to capitalize on it in some fashion, precisely because of its scarcity. “In that era, access to data conferred power and many economists made good livings simply because they had it.”

    I have always been fascinated by this concept. Shouldn’t this imply that the access to information is basically a very valuable resource, a resource which is accessible in exponentially greater form to anyone with an internet connection? Shouldn’t a resource which provided the means for giving power, which is now readily available, make a perceivable impact for the better in modern times? What do you think about this concept?

    visit us: Super Affiliate Free Training and learn how to turn information into power!

  • Jeannie said:

    “Information is not free to produce, at least good information isn’t, so reasonable charges designed to fund its collection are fair. So is a considerable level of exclusivity, as long as the information is available to all who are willing to pay. (There is something to ye olde doctrines of common carriage.) One of the ironies of the current tech world is that people are willing to pay billions for hardware, connectivity, and software, but squawk loudly at paying for the content that is the raison d’etre for these functionalities.”

    Although much of the internet information has been free, things are changing. I know more an more people who are charging for good information, memberships, tutorials.

    Much of the valuable information provided cannot be given out at no cost. The persons valuable time and his/her money went into producing it. And then if they plan on continuing in business, a profit must be made.

    As Magda said you can count on change. I think the internet will change from a free information model to a mixture.

  • James said:

    @Magda – depressing look at the future, but unfortunately not too far off point.

  • Steve Gillman said:

    Quote from above:

    “Wow. “A billion clicks.” “Millions of dollars.” Such big numbers. What Google doesn’t mention is that the billions of clicks and the millions of ad dollars are so fragmented among so many thousands of sites that no one site earns enough to have a decent online business. Where the real money ends up is at the one point in the system where traffic is concentrated: the Google search engine.”

    There is a problem of aggregation versus real new content, and shallow information in general, but I have had several websites that earn “enough to have a decent online business,” and have done so by trying to add real value, so there is some hope.

  • Clement Wong said:

    hey james, great article. I think the internal FTC circulation is frightening for me. The FTC is reactive at best and they should be less myopic.

    Clement

  • Bob said:

    @Magda – if the internet does not stay open, we have no one to blame except our own lazy selves that won’t get off our rear ends and vote those no good legislators out of office. I agree with you 100%.

    Nice write up James.

  • Jason Smith said:

    Hey Ed Hazel… that is a good point about how far technology has advanced. Recently we’ve seen some pretty devastating natural disasters here in Australia and the fact that we had twitter and facebook and even the new were using these mediums really helped everyone stay updated even if they didn’t have power or internet at home.

    It’s through the advancement of mobile phones that this was possible. And I think in regards to this, it is definitely a good move forward and very valuable to have technology like.

    However I do see your point in terms of it being a negative as there is too much noise and no one can really govern whether the information is actually accurate any more.

    Cheers for the post James.

    Jason Smith
    Webmaster, Tech 1 Repairs
    visit us at: TV Repairs Sydney

  • John Stove said:

    Interesting article. It’s unfortunate but I agree with Magda too. The internet is no longer in “frontier mode” and huge companies are going to start distorting the system as they move in. It’s really unfortunate but hopefully we continually create new forms of entertainment and media, and the little guys will always have a good chance in the beginning.

    I also think that ironically enough the internet is the reason that we depend on flash news instead of in depth analysis. We expect to be able to know what’s going on in 140 characters or less, and all forms of news have to compete with that.

  • John Reilly said:

    @Steve Gillman – I couldn’t agree more, Steve. But the biggest question for me is, who’ll beat Google and is there a company lurking to do it? There’s got to be a company which will swift through the internet, like Google did it, Facebook and Twitter.