I had the opportunity to speak yesterday at Money Tech 2008…
The conference, hosted by O’Reily Media right here in New York, was focused on the convergence of Web 2.0 and Wall Street.
I took the opportunity to talk abstractly about the process of information discovery, and how it has changed since the arrival of the internet. It was probably a good audience for this type of talk, though I admit I had trouble fitting everything I wanted to cover into my 15 minute time window.
One of the topics I did touch on there was the changing meaning of scarcity as it relates to information.
Essentially, the value of a piece of information is greatly impacted by how scarce it is - the more people that have it, the less valuable it typically becomes. Pre-Internet, scarcity was all about controlling access. There were only a few sources of information available, and all of them locked up their content and charged people money to access it. Professionals that could afford the high monthly subscriptions got access - and everybody else was out of luck.
But the Internet changed that…
Now, there’s an endlessly growing number of information sources available on every imaginable topic. Most of what is produced today is both free and broadly available. Content has become ubiquitous to the point of being overwhelming - you have access to just about everything. The challenge - the new scarcity - is in discovering the specific content in this sea of information that’s valuable to you.
So how does this impact the marketplace?…
Pre-Internet, when people paid for access to a content source, they got it. There wasn’t a lot of content out there (by today’s standards), and with even the most basic of filtering, everyone that cared about a piece of information was able to discover it right away. That tended to limit how valuable a given piece of information could be, and the only way to gain an edge was to build a very efficient transactional mechanism behind it. Those that could convert the information they had into something actionable and execute on it quickly stood to gain the most.
But the story is different now…
Free or not, you can’t simply look at everything that’s being published anymore - there’s just too much of it. You need to invest more effort into filtering through it to discover information that can bring value to you.
And the value you can get from that information today is best described by this chart:
The green bar in this graph represents the time it takes for you to discover a relevant piece of information. The blue curve traces the value of that information as it becomes less scarce - as more and more other people discover it over time.
Whats obvious here is that the more efficient you are in the discovery process - the quicker you find things that matter to you - the more value you will be able to extract from them. And the maximum value a piece of information can deliver to the most efficient ‘discoverers’ can be significantly greater than it was back when everyone that paid for access got access to it at the same time. Unlike before, during that early discovery window the number of “people in the know” could actually be quite small. And in financial markets, that’s a good thing.
If you think about it, while access to content may have become completely democratic, the process of content discovery is now purely Darwinian.
I guess that’s what makes it such an exciting field to be working in…
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