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This is really interesting, thank you. Could you recommend any good books about the economics of information as you've described it here?

ChuckMcM 14y ago
I don't know of any good books on the subject. I have been studying the ideas since 1995 when I joined a startup called GolfWeb which was publishing a magazine about Golf on the Web. And the question came up "What is this worth?" and "Would people subscribe?" That lead to some interesting investigations into the how people value things. Then in the late 90's I was talking with a friend who was getting an MBA at Berkeley. We invented the 'time valued coke machine' over lunch one day, its a coke machine where you can buy a soda for 25 cents if you are willing to wait an hour to have it come out. For $2 it will come out right away. Now this is a really really precise soda machine (has an atomic clock in it) so if you paid your 25 cents your ticket tells you exactly when a soda will fall out of it. Now you can sell that to someone for 50 cents, and if you're getting near the hour mark you might be able to sell it for $1 or maybe $1.50. So you have just created, and sold information for a profit of 100 - 500%. All when you thought you were buying a soda :-). I started writing my experiences with this up but stopped when I went to work for Google on the advice of my lawyer. Its a discouraging thing to write/talk about because without context people think its crazy, so slowly over time, as context develops, and "real world" examples get played out, the notion that information can have its own set of economic principles becomes less foreign because it sure as heck isn't behaving like it "should" if it was bound by the old rules. Anyway, three ways I've seen so far to add value to information is that its timely, its rare, or its distilled. An example of timely information would be stock trades, very valuable right at the time they happen to high frequency traders, less and less as it gets older until its basically worthless 15 minutes old. Continuing with the stock market 'rare' or 'precious' information might be insider information about a company, it has value because it creates context that others can't see, which gives it a value proportional to the advantage it conveys, and lastly distilled value. Remember our stock market trades? Well they were very valuable 20 milliseconds after they happened, worthless after 15 minutes, but when kept over the course of time new data can be distilled from that old information (like maybe a stock always rises in the third quarter). I discovered at a conference that the intelligence agencies call this last one the 'Mosaic effect' where any single piece of information is useless but together they allow new data to emerge. Artistic creation however is always the "best" information in terms of value. It can create value greatly out of proportion to the cost to produce it. Anyway, like I said, I've been thinking about this stuff for 15 years. :-)
- napoleond 14y ago
  It's a book that needs to be written; I hope you write it. (And then... how would you price it? ;) ) In the meantime, thanks for taking the time to dump this out--it's enormously appreciated and has given me lots to think about.

ChuckMcM 14y ago

I don't know of any good books on the subject. I have been studying the ideas since 1995 when I joined a startup called GolfWeb which was publishing a magazine about Golf on the Web. And the question came up "What is this worth?" and "Would people subscribe?" That lead to some interesting investigations into the how people value things. Then in the late 90's I was talking with a friend who was getting an MBA at Berkeley. We invented the 'time valued coke machine' over lunch one day, its a coke machine where you can buy a soda for 25 cents if you are willing to wait an hour to have it come out. For $2 it will come out right away. Now this is a really really precise soda machine (has an atomic clock in it) so if you paid your 25 cents your ticket tells you exactly when a soda will fall out of it. Now you can sell that to someone for 50 cents, and if you're getting near the hour mark you might be able to sell it for $1 or maybe $1.50. So you have just created, and sold information for a profit of 100 - 500%. All when you thought you were buying a soda :-). I started writing my experiences with this up but stopped when I went to work for Google on the advice of my lawyer. Its a discouraging thing to write/talk about because without context people think its crazy, so slowly over time, as context develops, and "real world" examples get played out, the notion that information can have its own set of economic principles becomes less foreign because it sure as heck isn't behaving like it "should" if it was bound by the old rules. Anyway, three ways I've seen so far to add value to information is that its timely, its rare, or its distilled. An example of timely information would be stock trades, very valuable right at the time they happen to high frequency traders, less and less as it gets older until its basically worthless 15 minutes old. Continuing with the stock market 'rare' or 'precious' information might be insider information about a company, it has value because it creates context that others can't see, which gives it a value proportional to the advantage it conveys, and lastly distilled value. Remember our stock market trades? Well they were very valuable 20 milliseconds after they happened, worthless after 15 minutes, but when kept over the course of time new data can be distilled from that old information (like maybe a stock always rises in the third quarter). I discovered at a conference that the intelligence agencies call this last one the 'Mosaic effect' where any single piece of information is useless but together they allow new data to emerge. Artistic creation however is always the "best" information in terms of value. It can create value greatly out of proportion to the cost to produce it. Anyway, like I said, I've been thinking about this stuff for 15 years. :-)

napoleond 14y ago
It's a book that needs to be written; I hope you write it. (And then... how would you price it? ;) ) In the meantime, thanks for taking the time to dump this out--it's enormously appreciated and has given me lots to think about.