“Think of eBay, but where the underlying products being traded are pieces of information,” suggests Michael J. Stern, who is president of Adeste.com, one of several information markets preparing imminent debuts. Stern’s idea is to supplement the Web’s vast array of freely available information with an offering of expertise that people are willing to pay for. The information markets will connect experts ranging from tax accountants to dog trainers with people who are willing to pay for their help, and the info market providers will take a cut of the transaction fee.
“We probably won’t ever bother with questions like ‘Where’s the best place to get a steak in Seattle?’” Stern says. “But on the other hand, we do very well with questions like ‘Can I deduct losses from the sale of a publicly traded partnership from capital gains income on my 1040?’ — where the answer depends on the facts and circumstances of the querier’s individual tax return. Plugging these same questions into search engines yields nothing useful.”
“What we’re doing is creating a marketplace for expert advice and services,” says Mark Benning, president of Advoco.com, another information market that’s planning a fourth-quarter launch. The info markets work by encouraging experts to post information about themselves and their areas of specialty, while potential customers post questions they hope to answer. Either party can contact the other and arrange for the expertise to be conveyed for a set price. Some information markets, like Advoco, make the transaction very simple — by charging a customer’s credit card and cutting a check to the expert, minus the info market provider’s commission.
“This is one of the first true examples of a market that wasn’t possible before the Internet,” says Guy Kawasaki, former chief evangelist at Apple and now CEO of Garage.com, a company that brings entrepreneurs and investors together. “It’s not ‘bricks to bits.’ It’s ‘impossible to possible.’”
In 1984, an economist and futurist named Phil Salin created the American Information Exchange (AMIX), a network for the exchange of research, information, contracts and computer code. It was intended to be the world’s first online market for information and expertise, and to enable companies to rely on external sources of information and expertise instead of hiring more employees. AMIX charged participants a monthly fee and an hourly connection rate for its online service, and it took a cut of around 30 percent from each transaction conducted over the system.
The problem was that AMIX pre-dated a widespread network on which it could run. “Much of its energies were soaked up by trying to create an online service from scratch,” says Doc Searls, who did marketing work for AMIX and who is now senior editor of Linux Journal and one of the drafters of the Cluetrain Manifesto. AMIX disappeared shortly after Phil Salin died in 1991.
“The stumbling blocks in AMIX’s days were mountains and now those mountains are gone,” says Searls, who is now on the board of Adeste.com. “Think about it: Phil had to create his own Internet. In hindsight, it couldn’t be done … The time really is now. It wasn’t then, much as we wanted it to be.”
Now that the Internet provides the network infrastructure that AMIX struggled to create, a small new group of companies, including Adeste.com, Advoco.com and Guru.com, is preparing to bring information markets to life. Each company varies in its approach — Adeste.com is concentrating first on areas like academia (students who need tutoring or research help) and technical support for computer products; Advoco is building its site around professional services, parenting and pets; and Guru.com is devoted mainly to the needs of the professional self-employed who work as contractors and freelancers. “We’re going to empower them to run their businesses better,” says Jon Slavet, CEO of Guru.com.
Advoco.com informally launched its site last week but plans to beef it up with more categories by year’s end, while Adeste’s technology will be ready sometime in August and the service will debut soon thereafter. Guru.com is planning to launch in a similar time frame.
Jon Slavet and his brother James, who serves as Guru.com’s president and chief business strategist, got the idea for Guru.com when looking for independent contractors to hire at previous jobs. Finding the right people, said Jon Slavet, “was an incredibly frustrating ad hoc process.”
“There was really no place to go to find the kinds of people we were looking for,” said James Slavet. To find a freelance designer, programmer or other professional, most people rely on word of mouth, mailing lists or occasionally, high-priced headhunters who specialize in freelance projects. Guru.com aims to change that, although James Slavet emphasized that the site is not intended to work like a classifieds site or a temp service. Instead, he says it is meant to foster a kind of online professional culture. The site already offers tips on billing clients, insurance, home office supplies and more and the Slavets says the company will encourage a “guru-to-guru” approach, in which independent professionals — everyone from “programmers to massage therapists” — will be able to find and rely on one another. “We affectionately call it the guru nation,” Slavet said. “Gurus have amazing expertise in specific domains, and allowing gurus to tap into the expertise of other gurus will be very powerful.”
Adeste.com’s approach is to partner with a number of other sites and integrate its information market across the Web. Stern imagines a scenario in which an amateur gardener goes to a Web site specializing in home improvements and posts a question, say about building a flower bed in Northern California’s hard clay soil; the Adeste.com service then posts the question on a site geared specifically toward contractors and a knowledgeable contractor contacts the gardener. Neither party needs to know that Adeste brought them together.
“From a user’s point of view, we have invented the Bat Computer,” says Adeste’s Stern. “You type in a question in a wide range of subject areas, and it walks you through the solution in real time. It responds to your requests for clarification, and it can answer questions which have never been asked before.”
Of course, the success of info markets is predicated on people paying for information — and so far, the Web has not been successful at charging for anything other than physical goods, like books and CDs, that can be delivered to your door.
Proponents of info markets, however, say that the kind of information they offer will make all the difference. People already pay for information and expertise from doctors, lawyers, consultants and others, and the Net simply makes it possible to do this in new ways. In fact, the founders of some incipient information markets say they were motivated by their inability to get certain kinds of information and expertise in any other way.
“The natural mode of behavior is to try to get the free answer first,” Stern says, “but the truth is that the people who are best able to provide good answers are worth money.” How much money depends on what’s being asked, and of whom, of course. Prices will be set by market forces, and may span a range from a few dollars for relatively simple homework help, to hundreds for more high-level commercial expertise.
“Anybody in the world can provide answers,” says Stern, “but we rely on market forces to attract talent in difficult subject areas and to drive out unqualified participants. If lots of people have questions about the Belousov-Zhabotinskii [chemical] reaction and there’s only one person capable of answering them, the cost of those answers will rise, attracting other respondents to the market.”
Once an info market transaction occurs, the customer will be asked to rank the expert. Just as shoppers on eBay can quickly determine a trader’s reputation based on the feedback from others who have bought goods from them, info market customers will be able to see how valuable other customers have found an expert to be.
“If you go to the yellow pages today, you can see who has the biggest ad, but you really don’t get the power of the community rating those advisors,” says Advoco.com’s Benning. Say you want to change jobs and are looking for a resume writer. You would see a list of advisors, view their profiles and make a decision. If one particular resume writer has been used by a hundred people and has a high rating, says Benning, you can expect they’ll be pretty good. “Each Advoco user will have the opportunity to rate a particular provider on a five-star scale after a transaction is complete, as a way of helping to establish, confirm or dispute that provider’s reputation.”
As Searls puts it, the markets will run by individual supply and individual demand. “I want to know X and I would be glad to buy it from this guy for $50, or that guy for $100, or the other guy for $500, and I can know the value of each of them because their other customers tell me … We don’t need Consumer Reports to tell us who is good and who’s full of crap,” he adds. “We’ve got each other. Those of us with the best goods will be rewarded accordingly. Markets will make reputations and reputations will make markets. Scaling could hardly be more granular, or more tightly coupled to actual worth.”
Ratings systems will also encourage people to complete their transactions at the info markets sites, says Adeste’s Stern. While an expert and a customer could find each other through an info market and carry out their transaction privately to avoid paying the info market’s commission, the expert would miss a chance to be rated. It’s in the expert’s interest to build up business on the site, so that new customers can see that the expert has successfully carried out a number of transactions and has been rated positively.
Whose fault is it if you pay for information and it turns out to be bad advice? Adeste.com, Advoco.com and Guru.com each said they are in the process of putting together procedures for legal questions and the possibility of refunds, but they argue it’s not much of an issue. “Our role is essentially that of the phone company,” says Stern. “If you get bad advise over the phone line, the telephone company isn’t responsible.”
And info markets could broaden the horizons of a lot of experts. “If I’m a nutritionist in Topeka, Kan., today my marketplace is a very limited area,” says Benning. “Information markets make it possible for experts to sell their services anywhere.”
How big is the market? At first, the idea of selling information might conjure up images of “Make money now!” spam or the “Peanuts” character Lucy Van Pelt hawking advice for 5 cents from a sidewalk stand, but proponents argue that the demand is potentially huge, and that the Net is precisely the medium to draw it out.
“I think the most massive market is ultimately the most personal one,” says Searls. “The market for information. The curiosity market. The market for finding stuff out. I think it’s ultimately the biggest market of all, because all of us are in it.”
What may be required to make information markets take off are a few yet-to-be determined kinds of information exchange that lend themselves particularly well to the medium. As an example, Stern points to the role that the buying and selling of Beanie Babies has played in the growth of online auctions. “We don’t know what the equivalent phenomenon will be for us, but there are areas which we expect will drive a lot of interest. You’ll have cornerstone markets like academics and tech support which we expect will be important, and other things will emerge and grow from there.”
Kawasaki anticipates that the cumulative impact of information markets will be immense, and he draws comparisons to the scene in “Star Wars: Episode One — The Phantom Menace” in which a giant sea monster that is about to chomp the heroes’ ship is itself eaten by an even bigger monster. “The online market for physical goods is the monster biting the ship,” he says. “The online market for information is the monster biting the first monster.”