Monday, February 19, 2007

How To Aim A Shotgun A Duck Hunting

key economic concepts digital value and limits of review of the book "Information Rules" by Carl Shapiro and Hal Varian.

The introduction of Shapiro and Varian's book "Information Rules" presupposes an economic perspective on digital culture and environment. Its main feature is the Capacity of application of economic principles to the network structure at the same time highlighting its unique character.

The digital revolution opens the world to infinite possibilities and huge commercial potential. But the bubble burst of e-commerce at the end of the last century shows how mirage of infinite growth leading to a widespread failure if not taken into account a number of factors peculiar to the digital economy.

From my point of view, among the basic economic concepts presented highlights a number of keywords that interest me briefly discuss, in its significant aspects and its limitations.

"To begin with fundamental consider the definition of the molecule based Internet information. According to the article " information" is considered anything that can scan and in particular the "information digital is that you can "encode a bit stream" or can be translated into the language of the machine computer. The value of this information depends on how the consumer has to evaluate it.

-information is considered as "good experiential " to indicate the fundamental problem before the experiment (ie evaluate) a product has to buy it. Shapiro and Varian proposes three strategic business to solve this dilemma:

- Browsing: test samples, to experience parts of the product without paying (such as demos of video games ");

- Branding: Creating a brand identity well defined and targeting a selected audience, which makes it the satisfaction of their expectations.

- Reputation: strategy created through cultural and infomediaries through the response (feedback) of the public.

"Another fundamental concept is that of" overload "or of information overload, a typical feature of the network as a virtually infinite capacity to store and provide material to utente.

The risk I insist on this feature is that the consumer is caught in the net loss and sacrifice his attention for a chaotic experience and sterile. For this reason the need to manage information is of primary importance. if not a more digital company is billed Goggle ( that filtered, locates and distributes information) and general business that the philosopher Jeremy Rifkin calls "gatekeepers" who decide which information must pass or less.

But the limits of duo's vision Shapiro-Variant, based on the concept of technology Useful ("+ simple, + fast + cheap"), in my personal opinion is evident in a series of points at which the analysis is incomplete, unable to consider the consequences of the dynamics following:

  1. The network application to control the aggressive policies of mass as the technological level of Web allows web servers to "observe the habits of millions of consumers," or hair have access to personal information utente;
  2. durability of DVDs for storage of information. As an example we can compare the actual average life of a CD (about a hundred years) than a paper book;
  3. Intergenerational Support and the acceleration of technological change, which require continuous updating of knowledge of the tool to access to information, and a change in "forma mentis" which often leaves the older generations apart;
  4. The danger that cultural content is considered simply good and as such has value only if it obtains a trade response.

On this last point I refer to a journalist's account Kapucinski as which currently "information that does not interest the mass has no value."

The site actually brings in its own structure the ability to overcome this limit critical mass culture, that is the absolute necessity of a "critical mass " audience as to derive benefits through cultural production based on quantity rather than quality (just to give you an example, the concept of "best-seller ranks is based on this issue.)

Network, taking advantage of its flexibility and its potentially unlimited supply, is able to attract and bring together a typology of public away from the products offered by multinational entertainment (music, film, etc.).. The creation of a new market for products previously destined to fall into oblivion for failing to attract a minimum number of customers in a short time (the phenomenon of "Long Tail"), therefore represents one of the most important challenges for the future of the Net economy

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