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Information is the product (part 2).

My head has cleared slightly, so I thought I’d try to advance the ball on yesterday’s half-a-thought. I can’t promise a full thought by the end of the post but I think I can at least get closer. However, if you’re expecting anything remotely practical or useful, you may want to just move on.

I want to start with a revision to the chart that I posted yesterday:

information business002 Information is the product (part 2).

One of the main things that bothered me about the idea that information is where the value lies is that it’s pretty clearly not true in a wide variety of cases. What the Internet has proven is that almost all kinds of information are freely available and that’s probably not going to change. Therefore while some kinds of information still cost money, most kinds of information including instructions on how to build stuff, instructions on how to program stuff, software and instructions on how to do stuff can now be found for free. (This covers all four of my information types above.)

Transformation on information (or turning information into a product/service) still costs money by and large, but there too, it’s clear the trend is towards free. Except for things like iTunes and Netflix, most web services are completely free, and this exerts pricing pressure upon products both digital and analogue. Why pay for packaged software if I can use a web-service for free? Why buy a car when I can use one whenever I want for less? This trend is already well underway and by and large we’re benefiting.

What 3D-printing, or on-demand-manufacturing adds to the equation is yet more downward pressure on the price of things. Because if I, as the consumer, own or have access to the means of production for a variety of different products, and information about how to create those products is also free then what exactly am I paying for? Of course there are a huge number of products which will never be able to be manufactured in the home but I think that what’s happened to the content or media industry is in someways analogous to what could happen in manufacturing industries. At the very least, I can see the world splitting into two classes of products. Those which can be “manufactured” in the home which I will still use as products and those that can’t be manufactured at home which I may simply choose to consume as services instead.

(On a side note, I also think 3D printing will lead to the creation of temporary products. Things like spare keys, cutlery, or various tools which I use once in a while but which I don’t really need to store.)

Since nothing can ever be truly free, this means businesses will eventually need to find new ways to draw value from the system to make money. The first, and simplest, way that this can happen is that businesses will be able to charge for offering better information/instructions or for better manufacturing/transformation than you can get for free. Secondly, there will always be a market for businesses that do things that people don’t want to do for themselves.

However (and perhaps this is my one thought), I begin to think that there may be an entirely new class of business that will emerge. A class of business that doesn’t make money by selling or doing things but that makes money in an entirely new and unexpected way. Do you think I’ve gone to far afield on this one?

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This entry was posted on Friday, February 27th, 2009 at 3:57 pm and is filed under business, information, innovation, models, monetization, services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  • The difference between the information goods and physical goods is the friction involved. Thanks to the internet, information flows freely more then ever - with very low friction. The world of real goods is full of friction, trade barriers, engineering barriers, manufacturing barriers,health and safety barriers - so many barriers that cause friction. Business efficiency has been about reducing this friction. Many businesses have done this by using the internet to reduce some level of friction. As long as there is friction there is opportunity need for real world business to exist and they will disappear where it does not exist.

    So in your paradigm, where is the friction between information and benefit - there you will find businesses
  • Adrian,

    Brave of you to put fuzzy thoughts on the screen. This is an interesting thoughtstream worthy of more exploration. Initially your writing makes me think that the ultimate value of a product or service results in an internal emotional and mental experience that could be seen as information. This led to more thoughts.

    There are information-dependent business models out there (e.g., Google, Blogs, AAA, Wikis, etc.) and there will surely be more. Information can lead to the efficient consumption of products and services; and since human time and materials resources are limited, information should have great economic value. Amazon customer reviews present a good example of your ideas in practice. The reviews help me shop better.

    Industrialized nations will have less labor time in the future due to an aging population, and emerging nations want more material goods. Perhaps information (or knowledge) is the key to solving these problems.

    One big problem is that information is perceived as being an abundant and free resource, and information used to form decisions about the future is never perfect. Perhaps this tendency will fade as people become more sophisticate buyers.

    You may enjoy reading "Collective Intelligence" by Pierre Levy. He philosophizes beautifully on some of these issues you raise. This is a fuzzy book, but my gut says Levy points to the future. Fuzzy thinking is where good things begin.

    Dan Wallace
    Twitter @ideafood
  • @Adam, thanks for the reminder, I had read that, thought it was brilliant.

    @Jake, yes I think you're right, there are a whole set of abstracted services like filtering and organising that would still be valuable. The Web is a model for that.
  • Adrian,

    First, your foggy ideas are something I aspire to. Second, I started down one path and then decided to check the link @Adam provided in his response above. Damn.

    That blew my mind and my idea.

    One thing "Better Than Free" did not explore fully enough IMO is the value of the filter in this copy economy. I believe one possibility for the new class of business you suggest could be a company that provides the service of filtering the infinite possibilities available into a finite list for my particular situation. Further, for those items that need it, this virtual concierge will also be able to develop a customized, personalized copy.

    Just a half-foggy idea from someone who should have most of his faculties intact.
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