(Annette Moser-Wellman)

Some say history can be thought of as a spiral. As the spiral climbs ever higher, we deal with the same problems, but in a slightly different context. Can that experience be true with the news industry? If so, what can we learn from that history?

Andrew Odlyzko is a Professor of Mathematics at the University of Minnesota and the founding director of the Digital Technology Center. He researches electronic publishing, electronic commerce and the economics of data networks. In our interview, he started out by talking about his latest research comparing the Internet bubble to the British Railway Mania of the 1840's. My first thought was, "What could the 19th century possibly have in common with post-modern technology?" But when Odlyzko started explaining how information flowed both then and now, I caught a glimpse of the lesson he was trying to share:

150 years ago newspapers were selling opinions. But their information tended to be opinionated presentation of factual material and recommendations on that content. Journalism was widely regarded as corrupt. Until a few decades before, practically all papers had been either subsidized by some faction of government or by some wealthy aristocrat. Investigative journalism wasn't so much reporters digging up facts. It was about getting some gossip or purposefully crafted misinformation spreading information on a case which the newspapers would pick up. It was simply expected that newspapers were openly partisan. There were many views and newspapers were small affairs.

Sounds like the blogosphere today doesn't it? Odlyzko's point is that information sharing is and always has been a fairly complicated flow and that the battle for public opinion and mindshare will likely continue to be more complex, richer and provide even more opportunity for monetization schemes.

We've gotten used to the concept of the public as consumers of news and commentary and of the professionals - the reporters, the editors - as those who prepare the materials for wide consumption. Increasingly we see a model, similar to the 19th century, in which the newspaper doesn't have many reporters. In the past, reporters were often called penny liners, because freelancers were paid a penny a line to write. We now are moving to a continuum of information flow in which you have information prepared for you for consumption by groups of various sizes, from very small to very large, for groups from very small to very large.

This new flow of information driven by the Internet is causing more players to play in the news and information market. Odlyzko uses the term "intermediaries" for those who prepare or package information. News organizations have traditionally been one of the primary intermediaries. But now the weight is shifting to many smaller players who will have a more opinioned and tailored role. And we are not merely talking about the obvious blogger community. Odlyzko describes it like this:

Because we are increasingly an information society, more people are involved. More scholars, more researchers, more voices from the developing world. And more data is involved. More field science, more engineering, more medicine. There is a greater need than ever for intermediaries. These intermediaries will expand beyond news organizations and technological functions like Google and Yahoo. More and smaller new intermediaries will enter the picture and will come from unexpected places, like corporate PR organizations, financial analysts, community groups and the legal community. These intermediaries will specialize in the power to package and present data in a particular light to serve a particular audience. I believe there will be opportunities for journalistic skills in these kinds of areas. There will be new markets for customized and insightful information.

So how will lots of these smaller intermediaries make money? Will they charge for their packaging and opinion? Will micro-fee based news emerge in which you pay per story? Odlyzko reminds us that readers haven't been paying for news since the 19th century, when most revenues came from newsstand sales and subscription fees. When the majority of revenues transitioned to advertising in the early 1900's, consumers didn't realize they were paying for news indirectly through the goods they purchased. So paying for news products will happen but it may be a slow transition. Expect advertising to continue to be a viable way to monetize.

But Odylzko believes there will be new and unexpected revenue models ahead. He cites the Bloomberg model as a way to monetize access to deep financial data by bundling service and news feeds:

One of the things the Internet does is that it lowers costs. So part of what is happening is just a general squeezing out of redundant costs. I suspect there will be many specialized news services that will be set up. They may be sponsored. They may be ancillary. But with more specialized services and an increasing volume of data and information, you'll need more and more insight, and that's where the skills of the journalist come full circle.

With new intermediaries packaging insightful data, competition will increase the quality of information and perhaps deliver on the highest values of the press. Odlyzko uses an example from history to illustrate his point:

The Internet bubble should have collapsed much sooner, and one of the reasons it didn't was that the news media didn't have the expertise to dig into it and expose the problems. Constituents like lawyers, accountants, financial analysts and technologists had better data and could see parts of the problem that would lead to the collapse of the bubble, but their individual contributions were not assembled into a coherent whole, and their voices were buried. These intermediaries could have eased the crisis. With more, smaller and even openly biased sources of information, we will find more and better information available to society.

Annette Moser-Wellman is President of Firemark, Inc., an innovation consultancy, and author of Six Competencies of the Next Generation News Organization and Running While The Earth Shakes: Creating An Innovation Strategy To Win In The Digital Age, both published by the Media Management Center.

This TechScout article is part of a series of Moser-Wellman interviews commissioned by the Media Management Center to explore opportunities and insights at the intersection of technology and the news media. Click here to view other articles in the TechScout series.

What do you think? Please share your thoughts, experiences and reactions by clicking on the comment button below.