the internet economy

The internet has changed how we live our lives. We use it to communicate; it doesn’t matter how far away someone lives; we shop online; saves us a trip to the store, or more importantly that trip in the car through heavy traffic. We find dates online, get our news and can view sites all over the world. We can search for anything using tools like Google, and now Google video.
It seems that the internet is so versatile. It is. That’s because it is primarily a platform. What people build on this platform demonstrates the creative versatility of it’s users.

Not surprisingly, it has developed a new economy. In the world of retail, shopkeepers stock whatever they think is going to sell well. They help create what is popular by limiting choices. But, as it turns out, people don’t necessarily want to be told what is popular. There are many niches, and off-markets that carry items that a brick-and-mortar store would never try to sell. They depend on carrying the few “hot” items, and selling alot of them (Anderson, p 2).

It has been proposed that the internet is responding to a different need. Even though there will still be the hot markets and products, the greater proportion of goods lie in the lower end of the curve of popularity (Anderson, p 1). These are the hard to find, no longer made, low customer demand items. This market, as it turns out is huge. In the long run, riches can be made by servicing this type of market. Instead of carrying a popular item, say, the “latest” and “most popular” CD’s, places like iTunes try to carry as many CD’s as possible. A CD sold is a profit, no matter the quantity or frequency (Anderson, p 2). This new economy is turning the world of retail upside down. One of the purely “internet” techniques being used is linking. This came primarily out of “blogging” where someone would mention a story, say, then provide a live link to it so someone can go to that site and view it for themselves. Links would get deeper and deeper as people in-between had something to say and provided yet another link (Thompson, p4). Retailers learned to utilize this by introducing a new product or service by sending it to a “chosen few” who would then pass it on to their friends, and before you know it “word of mouth” has created a popular product (Scoble, p 34). In some ways this seems like a return to the simpler communication that took place before the electronics boom. If you wanted to know about a good restaurant you asked your friends, and they would ask you. With the interconnectivity of the internet, that can now involve millions of people.

The internet economy is still new. The retailers out there, even the big ones like Amazon are really just pioneers in the new economy.

References:

Scoble, R. & Israel, S. (2006). Hoboken: John Wiley & Sons, pp. 1-62.

Thompson, C. (2006). Blogs to Riches. New York Magazine, February 20. 26-35.

Anderson, C. (2004). The long tail. Wired, 12(10).