I’ve recently become fascinated by the views of pointy-headed pundits, the legion of so-called experts who pontificate about what’s good in the content world. In every market and vertical industry, power-users and pundits consume different content sets than the layperson, creating opportunities for information arbitrage. Understanding information arbitrage affords intriguing opportunities worth exploring if you’re on the sell side of the econtent business or exploiting if you’re an information consumer.

I read a lot of novels. I used to go with the popular ones, picking up Grisham or Clancy in paperback to while away frequent long plane flights. I loved getting lost in the pages and the time flew by. After dozens of thrillers I got bored with the same old formula so I turned to book reviewers for new ideas. It struck me as odd that the million-selling authors like Grisham and Clancy weren’t being reviewed. But I found lots of new and interesting fiction on the review pages. Why I wondered, were the well-reviewed books not carried at the airport bookshop? It seemed there was some sort of disconnect between what people bought and what was deemed “good.” After I began to take some creative writing classes, I found myself leaning towards the “professional” attitude of the reviewers and looking down my nose at my old pals Grisham and Clancy. One day as I sang the praises of Jonathan Franzen’s The Corrections to a friend I realized—with horror worthy of a Stephen King novel—that I had become pointy-headed myself.

This same phenomenon of the professional liking one content source and the general public appreciating another pops up all the time. The Beach Boys’ Pet Sounds is on practically every critic’s top ten list, but it never sold well. The Hollywood Foreign Press Association hands its Golden Globe Award for the best television series comedy to a brilliant but obscure show called The Office. Huh? What about Friends, the most watched comedy? My wheels really started turning when I was gushing to a colleague about the Design Within Reach modern furniture Web site. My colleague shot back a note saying that her husband, a design professional, said that Herman Miller’s site is way better, but that his criteria differs from mine—because he’s a pro.

Information arbitrage occurs when people stray into each other’s territory on purpose to exploit simultaneous differences in information markets. For example, some forward-looking brokers and traders read beyond the financial newswires on their workstations, looking for emerging trends within publications read by the general public. For these smart financial professionals, by the time news appears on the wires it’s already too late. They might read Seventeen Magazine to learn about a hip fashion craze or Shape for the diet trend of the month. Even more innovative are those who lurk in chat rooms and read blogs for the nuggets of information that haven’t yet hit mainstream publications. If you were the first to buy beef futures because you spotted an emerging low-carb diet trend before the financial wires wrote about it, you cashed in big time. Any time one information market (say the financial newswires) says one thing about a topic and the blogs and chat rooms reveal something completely different someone can profit. Cool—people actually get paid to do this.

Econtent vendors can also profit by creating services for several markets at once or even creating information arbitrage tools. Dow Jones provides an excellent example. Over two million people read the print and online versions of The Wall Street Journal, making it the general business newspaper of record. At the same time, professional brokers and traders make their financial decisions based on the Journal’s sister publication, the real-time Dow Jones news service. Dow Jones has the formula right—publish a high-end version of their financial and business econtent for the professional financial markets and another edition aimed at the general businessperson.

Or consider Factiva and IBM who have joined forces to combine Factiva business information and the content from billions of Web pages with the IBM Web Fountain text mining application to extract trends, patterns, and relationships from massive amounts of unstructured and semi-structured text. With this new application, information arbitrage can be visualized on screen.

But there’s a catch. With all forms of arbitrage, the potential to profit only exists as long as there’s an exploitable difference between simultaneous markets. As tools like the Factiva/IBM offering catch on, the window for profit begins to slowly close because more people are able to perceive differences in information markets.