The Value of Information Model

In the last few posts I have been wondering about the right questions to ask ourselves and looking at some of the issues surrounding the legacy print media businesses.  The elephant in the room is what do we do about the online opportunity?  I have argued that delivering the old model in the new world is likely to build us a sustainable business model.

Until recently I was a member of one of Outsells excellent Executive Leadership Groups.  One of the joys of this collection of leading business media figures is that every now and again someone says something really interesting and thought provoking.  At one of our meetings (I can’t attrribute this as the meetings are strictly off the record) someone said that they had been researching what the users of their data did in the ten minutes after they had consumed it.  This gave a real insight into how the user extracted value from the information and helped the supplier improve its offering.

I like this notion a lot.  About ten years ago when the first shoots of an Internet economy began to show, I used to speak quite often at media conferences about what it all might mean.  The key question that delegates at these events were trying to answer was ,

“Well, this Internet thing is all very interesting but can we make money at it?”  Which is not very far away from the question that many are asking today.

Before we start rushing ahead and building a web site let’s  think for a moment about the value of infomation.  If data or information does not help the user make a bette decision, or if that information is simple and shallow, its value will be minimal.  The best you can hope for is to be able to give it away for free and achieve a low advertising yield.  On the other hand, if the data is vital to a decision, especially if that decision is time sensitive, and that data is difficult and complex to asssemble and present then you are in a good positon to be able to either charge users for the information or to charge advertisers a premium price  or both.  This can illustrated in a 2 by 2 matrix thus:

Value of Information to the Business Model

(Apologies for the small size  I am wrestling with the wordpress image upload tool – if you click the image it gets bigger)Looking at the issue like this, is it any surprise that many business media web sites are struggling to make the the grade as going concerns?  The kind of news content we publish in magazines is highly unlikley to be critical to a time sensitive decision.  We need to know more about what our target users are doing, know more about where their infomation pain points are and then address those.  We need to add value to the information we publish by organising it, categorising it, assembling it, interpereting it and illustrating it.

So the starting point for building your digital future has to be a thorough understanding of  what decisions get made on the basis of which information.  As a start point with your existing online business, why not take each content type and overlay it on the matrix.  It just might give you an insight into where and how you can make some money, and why you don’t.

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