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Writings on technology and society from Wellington, New Zealand

Tuesday, March 23, 2010

How valuable is information?

Oliver Bell has posted a thought-provoking article called Information is Currency. He and I discussed some of these ideas over a beverage or two one night in Wellington recently. Reading through Oliver’s article, I find some things to agree and others to disagree with, so I’m taking the time here to write a reflective response.

The value of information depends on several things, including its scarcity and its usefulness to the potential end-user. I’m left wondering if there is information that is inherently valueless. I can think of examples of obscure trivia, but someone, somewhere, always seems to care. It can be argued (and Oliver presumably is arguing this) that search engines monetize obscure information by using it to sell eyeballs to advertisers.

Of course, search engines don’t sell the information itself. They sell a way of discovering it. The information itself has generally already been published for free. The information has value based on the network effect, i.e. that its a published in a standard form using the World Wide Web. The search engines are very much part of this system that imputes value to freely-published information.

So, then, the monetary value of freely-published information derives as much from the great mass of other web sites, from the search engines and from the Internet itself as it does from the information.

However, I’m interested as much in what we can do with information in bulk as I am in in assigning a numerical value to individual chunks. If I write a piece of software, say, is its optimal value realized if I sell licenses to use it or if I simply publish it for others to use as they see fit without monetary recompense? The answer to that question depends partly on who recognizes the monetary value. If we look at value to the community of computer users as a whole, allowing anyone to use the software will have the greatest value. If I look at it in terms of personal revenue-maximization for that piece of software, I would presumably retain the source code as a secret and sell licences to use it on the basis of my perception of each user’s ability to pay. This applies to any information goods, i.e. things that can be copied without using up physical resources.

There are two components to value of information in the Internet age – value derived from maintaining its scarcity and value derived from making it available. Both are highly dependent on usefulness. The former is usually captured by the publisher, the latter accrues to the community.

There may, as Oliver suggests, one day be a market for all kinds of personal information. The individual worth of each piece is likely to be very low. The worth to the community as a whole of pooling its information is likely to represent the major part of its technology and its culture.

posted by colin at 3:48 pm  

4 Comments

  1. This is a great conversation, and one I have found myself having frequently of late.

    Personally I’m not sure I see any information as inherently valueless, only that it has traditionally been hard to find a market at the more obscure end of the spectrum.

    I think there are two givens;

    1. The business model around information will evolve beyond advertising.

    2. Moore’s Law says that more compute power is just around the corner, which in turn means we will be able to do more with information, processing, publishing and protecting, than we can today.

    The possibilities that lay beyond those two points fascinate me.

    Comment by Oliver — 23 March 2010 @ 4:33 pm

  2. I know I’ve probably missed the conversation to get you both to your respective blog posts (darn it).

    I agree with Colin and feel information per se is, well, pointless for the vast majority of the world. BUT, being able to transform that into something of value (a behaviour change in the case of advertising) can have a $ valued attached.

    Comment by Mike Riversdale — 23 March 2010 @ 7:52 pm

  3. The quote at the right as I read this post is:

    It is a very sad thing that nowadays there is so little useless information.
    Oscar Wilde

    Is this a coincidence, or are the quotes chosen to try to match words in the posts?

    Comment by Tim McKenzie — 25 March 2010 @ 11:48 am

  4. That really would be clever. Sadly, it’s too clever for me. The quotes were originally selected by me as witty or interesting (not because I necessarily agree with them all), but they are selected for display randomly.

    Comment by colin — 25 March 2010 @ 2:20 pm

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