Why Info-based Internet Business Models?

I am going to try to routinely review an internet business model that's based purely on delivering information, or digital services. I am deeply interested in learning about these types of businesses, and what makes them so valuable to their customers – and in return – profitable for their owners. I will learn so much from my research that I may someday build my own successful endeavor.

What is an info-based internet business model? What is the source of profit?

• By my definition, an info-based internet business model is a web site that sells information, or community, or digital services.
• The source of profit is dicated by the type of service that's provided. If it's software, it might be a recurring monthly fee (Sales Force, Basecamp ). If it's services, it might be a transaction fee (E-trade, Legal Zoom). If it's pure data it might be subscription based (porn, Wall Street Journal) or affiliate based. Other cool models have no apparent money aspirations (Delicious, Wikipedia), other than to be bought out by a huge company. I'm intrigued by these more for the buzziness and traffic generating aspect – perhaps I'll figure out how to mash their coolness up with some path to profitability.

Why do I have such a passion for Internet business models that operate only on information, or digital services?

• Because they're new and shiny and creative. And I have shiny object syndrome, and I'm jealous of creative people. By their very newness, the undiscovered potential is immeasureable. The ability to be creative and start something that nobody else has done is very exciting!
• They're often automatable – you can set up a digital process that runs itself.
• They're global – data goes places boxes don't (very quickly). It doesn't cost nearly as much to set up a web site in French as it does to put a building there!
• They're cheap to operate, and easy to get started. You can set up a new info-based business in your spare time with a web-host, a little creativity and some brain-grease. —> not money, investors, contracts, lawyers, or commitments —> This is not to say that you shouldn't utilize traditional resources when setting up your online business – but you don't have to!
• When you put up a web site – you get the same amount of space as Wal-mart. You get the same real estate as IBM. Your ability to start something that people want, and that nobody else has done before will drive visitors, and customers. Google might step in and build it bigger and better than you – or buy you out – but either one would be an honor for me!
• They're measurable. Every 1 and 0 that passes across your servers can be stored for later analyzing. You can do this with an online retail store as well – but definitely not with a brick and mortar operation. I can track and A/B test my advertising ROI, my conversion rates, my visitor location/language, click paths, blah blah blah. There's too much measuring available to mention. The most important thing to know is that I can test advertising on a small scale and then roll it out big once I prove the ROI. A newspaper ad or television commercial doesn't do that.
• The marketing buzz available on the Internet is very powerful, and growing each day. Bloggers are a powerful army. A mention on the del.icio.us popular page or digg front page can bring down a server, it can drive news, it can replace PR —> or it could kill you if negative. The blogger attention directly results in search engine exposure, to reach a much bigger audience, and can also drive traditional news to explode the cycle bigger and bigger.
• It's got a long-tail. Links, search engines, press releases, articles, etc… all last a long time. I have sites from 1997 that no longer exist that still have links pointing to them!

Why don't I want to sell hard goods via the internet?

• Warehouses have been around for a long time – and I have no desire to do fulfillment.
• Drop shipping is now an option – but you should always control your product. If you're drop shipping, not only do you not have control of the product, but there are probably 97 other places on the Internet selling the same thing.
• Selling hard goods just doesn't seem as creative, or as fun as delivering value with information that people are willing to pay for. A wise man once told me that money won was twice as sweet as money earned – and I feel like shipping boxes is earning it, and being smart enough to have people paying me for data is like winning it.

Why am I writing about the coolest Internet biz models I can find? Being a programmer by trade, and an entrepreneur by passion, I always look to blatantly rip someone else off before I try to be creative enough to come up with something new myself. Now, this might be viewed by some as a cowardly way out of thinking very hard – but I have always programmed faster when using someone else's code snippet, and made more money by emulating something that I already know works. By learning how companies are currently successful by selling information, and digital services, I can also learn how to be successful at it myself. Who knows – maybe I'll be able to come up with something that no-one else yet has… an automatic uber information delivering, buzz-worthy, value-delivering, self-sustaining money tree!

is that too much to ask?

Where are Internet business models going? I'd love to hear feedback about where everyone thinks internet business models are headed. 5 years ago people knew the internet would be big – but how many people predicted that community sites like Wikipedia and My Space would rule the roost? Who really thought that search (Google) would be redefined as the most amazing money maker on the planet? What comes in the next 5 years – or – what kind of site are you going to start?