How to monetize Intelligent Information?

With the success of ad-supported revenue models, it’s easy to think the future of online information is free to consumers. We’re accustomed to Google searches, Hulu videos, and online newspapers for free. However, intelligent information that’s digitally-delivered still commands a high price.

There’s a lot of information on the Internet but that doesn’t mean it’s credible or useful. According to Nielson Ratings, the Office of the CIA, and Serverwatch, the collective reasoning is that just over one billion people use the Internet. Said differently, the Internet has a population of one billion people. Considering frequent usage (at least once per week), the Internet population is roughly 500 million.

Additionally, Eric Schmidt (CEO of Google) claims that there is over five million terabytes of data on the Internet, of which Google indexes roughly 200 terabytes. That’s about .004%!

The estimate for the number of websites on the Internet is 155 million. It’s tough to decide on this number as each person’s social profile page is part of a larger domain but might be considered singular and other caveats like that.

There’s far too much information to digest. For the professional customer, it’s difficult to find information that improves performance. If a company can offer intelligent information to professionals, the revenue potential is quite large. If we look at two companies that provide intelligent information to businesses, we can analyze different revenue models. For this exercise, let’s consider Bloomberg and Thomson Reuters.

According to Alexa.com, Bloomberg has a traffic rank of 264 in the United States with over 36,000 sites linking to its service while Thomson Reuters has a traffic rank of 7,960 in the United States with roughly 1,7500 sites linking to its service.

It looks like Bloomberg is well ahead. However, as I considered the homepage strategy, the two companies varied drastically. Bloomberg offers a prominent search box for professionals to easily look up equities and bonds on the market. It’s provided for free and supported by advertising. This is the “freemium” revenue model with additional subscription services for higher-value information. Thomson Reuters doesn’t offer free information above the fold of the homepage and relies almost exclusively on its subscription revenue model.

Shifting to revenue, Bloomberg generated $5.4 billion annual revenue and Thomson Reuters generated $11 billion.

Since both companies specialize in offering intelligent information in a digital form, it looks like the future isn’t shifting to “freemium.” Bloomberg’s significant advantage in traffic doesn’t translate to a revenue advantage. Most likely, many professionals and consumers visit Bloomberg for its free financial tools, but may not click on ads or subscribe to additional for-pay services. Conversely, Thomson Reuters hosts its online financial tools behind a “pay wall” and continues to perform well.

While this is a drastic simplification of the products and services offered by each company, I believe a strong conclusion is that companies that can provide credible and useful online content do not need to shift to the lowest common denominator of free ad-supported content.