Strategy for Information Markets

This is a textbook intended for upper-level business economics courses. The focus of the text is primarily on the economics of information goods and markets facilitated by information technology, particularly with respect to the Internet.

Background

This should likely be material at the end, rather than the beginning, but we can see. I'm putting the self-assessment quiz here. It should include other similar material which isn't strictly part of the course, but is important background.

The Demand Side

Demand is created by establishing a want and linking it to a sense of need. Information, in general, is necessary as people need to be informed in order to make correct choices. Otherwise, all digital content is based on an artificial sense of want. Beyond sharing of information and ease of communication, there is not much that the rise of digital information networks has brought to the human society. In fact, the need for information sharing and easy communication were the two reasons the Internet was originally created. People are independent on these networks in order to satisfy those two needs. Digital information networks were only a leap forward in the optimization of old distribution and communication technologies. Most of these advances resulted from the rise of the digital age, in applying computing power to old analog models. Example: As globalization raises the need for faster distribution of information and communication, improvements in those areas will be needed.

• Features of Goods
• Discrete choice
• Network Externalities
• Durable goods

The Supply Side

• Cost Structure
• Intellectual Property
• Non-IP approaches to innovation
• Piracy (Copyright infringement)
• Remixing (cumulative innovation)
• Diffusion of Innovation

Competition and strategy

Providing information services or digital goods has costs, not only in the final offer, but in the maintenance of all the infrastructure that is required to keep the market open. All participants have to pay to be present, there are the costs for local infrastructure, energy and in access to the medium.

Surprisingly, many of the participants will offer free services to each other. This, allied with the easy access to public domain works, freely licensed digital goods and works under copyright infringement corrodes the old physical market shares that depended on the digitization of creations and procedures. The concept of a distinct separation between consumers and producers starts to disappear. This presents a difficult challenge to information goods providers to individuals who want to enter the market, not only of commercial viability but of visibility and relevance. How to make money? In this chapter we will examine revenue.

• Expectations management
• Competition for the market
• Compatibility and Standards
  • Format war
• Network Neutrality
• Bitcoin
• User generated content
• Monopoly

Information Aggregation and Dissemination

• Collaboration
• Collaborative Filtering
• Information Cascades

The market

The Internet was never intended to be a commercial zone. However, even with the impact of the Internet on world commerce and markets, people still argue that it should not be a commercial zone. Today the concept of network has gone global; as the computer becomes smaller and energy requirements decrease all things will ultimately become interconnected.

• Globalization
• e-Commerce
• Search engine business models
• Particulars of network advertising
  • Google's Advertising System
  • Cellular phone advertising
• Multiplayer computer games
  • Sony PlayStation 3
  • Social Games
• Video Game Development
• Online stock trading sites
• Software as a service

All information is a valuable product

• Gathering Market Information
• Gathering education information.
• You as a digital product