Revenue Generation in the Information Era: Opportunities and Challenges

Vol 23, No 1; Article by Sreelata Jonnalagedda; March 2011

While innovation in technology has given consumers greater access to and choice of information goods and presented businesses with tremendous market opportunities, it has also made success in the market seem elusive. The failures are frequently attributed to the lack of innovation on the technological front but research has shown that one of the major challenges for businesses in the information era is that of 'appropriability'  or the ability of a firm to profit from its investments in innovation.

IIMB Management Review invited a panel of industry experts and academics who face these challenges in the field of information goods to share their experiences. The panelists spoke on the criticality of business model innovation, the technology and production aspect of these goods where the ease of communication and reduced cost of distribution are a boon as well as a bane, the challenges of reaching out to customers, dealing with the competition and devising the right marketing strategies. The criticality of innovation and its many aspects were debated.

Manish Agarwal, CEO of UTV, New Media Ventures, shared the innovations encompassing product, content and device that his organisation was working on to rise to the challenges in the new media space, driven by the changing demographics, attitudes and notions of value of the Indian population. Understanding the reality of 'India vs Bharat' and catering separately to the two, offering a combination of 'the rational plus the emotional' and innovating constantly for the value-conscious customer were the imperatives of marketing in the digital future.

Constant innovation as the key to revenue generation and distinguishing oneself from the competition, and understanding the Internet market were emphasised by Om Prakash Subbarao, Technical Advisor, UID; formerly Head, Consulting, Yahoo! Software Development, India. While the Internet marketplace functions on the basis of 'fastest finger first', the first mover has to guard against complacency and adapt to market mutations, as stalwarts like Yahoo! and Google are learning. Internet companies basically compete for an audience, for advertising and for talent. Advertising still remains the major revenue model in the Internet space and Google is an example of a company that has been able to convert eyeballs into dollars successfully.

Speaking from the niche of education, Ratnesh Mathur, Co-founder, Geniekids Learning Resources, spoke of the advantage of using open source as a way to build community and then offer other services as a source of revenue. The Internet and social networks are a boon in peer sharing and community building. Positive word of mouth generated by end to end solutions is the way to success.

Focusing on the customer and capitalising on the first mover advantage by staying on course and being constantly open to customer needs is the way forward in the Internet space observed Sanjay Anandaram, MD, Jumpstartup Fund Advisers. The decision to invest in a company is taken on the basis of five broad parameters: the people, the market opportunity, the defensibility of the proposition; the business model and finally, the financials.  When all these elements are aligned, competitive edge is created.

Given the short shelf life of technology itself, the key to market strategy is business model innovation, emphasised Prof YLR Moorthi of IIMB. On the question of licensing and communication of information goods where ease of duplication and piracy are big concerns, the mantra would be, 'license and earn; chase and corner'. While there is an abundance of information and 'noise' on the Internet, clarity is also increasing and the same technologies can be used for effective targetting. Co-opetition is a reality in this space; rather than the competition, companies should focus on coming up with a great idea and executing it at lightning speed.