Tuesday, December 29, 2009

Is Google stifling innovation?

See http://bit.ly/6NzbNc

Adam Raff makes a good argument. At the same time, the Google platform opens up new opportunities for innovation. Assessing the net trade-off would be an interesting research topic.

Tuesday, December 8, 2009

Mathematical Proof of the Inevitability of Cloud Computing

(Posted by Mona Masghati)

In the emerging business model and technology known as cloud computing, there has been discussion regarding whether a private solution, a cloud-based utility service, or a mix of the two is optimal. My analysis examines the conditions under which dedicated capacity, on-demand capacity, or a hybrid of the two are lowest cost. The analysis applies not just to cloud computing, but also to similar decisions, e.g.: buy a house or rent it; rent a house or stay in a hotel; buy a car or rent it; rent a car or take a taxi; and so forth.

Follow this link to continue: http://cloudonomics.wordpress.com/

Monday, December 7, 2009

Search By Sight With Google Goggles

(Posted by Dhirendra Sharma)

Today Google released information on two new key technologies as described below:

1). Google Goggles: Use pictures to search the web. Refer to below links:

a). Google goggles labs

b). An article in the Washington post

2). Real-time web search: Mixing the real-time information with ranking technology":

a). For example, get the latest news even if it is "not the popular news of the day". See details

b). An interesting article on the wired.com website:

Publisher Lays Out Plan to Save Newspapers

A German publisher is proposing a marketplace for news, some free, some a la carte and some bundled.

Instead of separate pay walls around individual newspaper Web sites, Mr. Keese wants publishers and Internet companies to work together to create a “one-click marketplace solution” for their online content. In that system, Google or other Internet gateways would display links to newspaper articles, videos and other content from a variety of providers, as search engines do now. But some of the items would include something new: a price tag....

A single mouse click would allow the user to pay for and view the pictures. Readers could also buy flat-rate packages providing access to content from a variety of media companies, Mr. Keese said, just as they can subscribe to unlimited data access plans via mobile phone networks.

Tuesday, December 1, 2009

Open Source as a Model for Business Is Elusive

(Posted by Yuri Ramos)

This article is closely related to the debate we had recently, about Open Source Software vs Paid Software.

Monday, November 30, 2009

Europe Approves New Cookie Law

(Posted by Sheila Seles)

I saw this and thought of last week's presentation on online advertising. The EU recently passed a bill that will require all Internet users to opt-in to cookies. Here's a brief summary of the law from the WSJ.

This is an editorial about the law that's linked to from the WSJ article:

The author of this editorial points to a lot of valid criticisms of the law including skepticism about how the law could be effectively implemented across the EU's 27-member states. This argument is at the heart of his criticism: "behavioural advertising could be managed without wielding a sledgehammer that cracks almost all cookies. Lawmakers should identify any harms they see in today’s practices and legislate against the harms. To legislate against the technology is unnecessary, short-sighted and destined to fail." While I agree that legislating against technology is short-sighted, I wonder how can lawmakers "legislate against the harms" of behavioral advertising. Does behavioral advertising necessarily have to be harmful? People like Gary Loveman would argue that behavioral advertising can provide huge benefits to customers if done properly.

Tuesday, November 24, 2009

Volunteers Log Off as Wikipedia Ages

(Posted by Mona Masghati)

Top Story of WSJ on 11/23/2009:
"Wikipedia.org is the fifth-most-popular Web site in the world, with roughly 325 million monthly visitors. But unprecedented numbers of the millions of online volunteers who write, edit and police it are quitting."


Monday, November 23, 2009

The move to evidence-based decision-making in business

I finally started using twitter and found that people are tweeting about me behind my back!

One was sending around a quotation of me discussing how "business can move toward evidence-based decision-making" from this NY Times article. I hadn't seen that yet.

Sunday, November 22, 2009

How Popularity Affects Popularity in Music

(Posted by Andrew Merkin)
The article below tested a couple of factors in the creation of "hit" songs in the music industry. It goes along with the power law discussion from Thursday's class.

The authors create an artificial ‘‘music market’’ in which 14,341 participants downloaded previously unknown songs either with or without knowledge of previous participants’ choices. Increasing the strength of social influence increased both inequality and unpredictability of success. Success was also only partly determined by quality: The best songs rarely did poorly, and the worst rarely did well, but any other result was possible.

The article is available through the Dewey library site.

Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market

Salganik et al. Science 10 February 2006: 854-856 DOI: 10.1126/science.1121066

Tuesday, November 17, 2009

What if we only interacted with people like ourselves?

(Posted by Jessica Russell)

The Economist ran an article last year looking at the way people were picking neighborhoods that were a "better match" for their personalities. It discusses wider implications of these changes, particularly as it relates to politics. I thought it fit in well with the final slide of today's lecture.

How Zappos Grew So Big So Fast

(Posted by Jennifer Fremont-Smith)

This article relates to our discussion of Amazon in class. The marketingsherpa site where I found the article also is an interesting example of some of the bundling ideas we discussed earlier -- it's a new pricing system that they recently adopted.

How to Define 'Hits' and 'Niches'

Sheila Seles sent me the following link, which describes a new working paper by a Wharton professor and grad student.

They modify the methodology that we discussed in class today by having the set of "hit" and "niche" products change as the number of SKUs increases. Specifically, they define "niche" in percentage terms (e.g. the bottom x% of all SKUs) and find that when Netflix added a lot SKUs, the share of sales for "niche" products decreased.

The authors argue that this contradicts the "Long Tail" story. Chris Anderson says that it doesn't make sense to define "niche" in percentage terms and that the paper is flawed.

What do you think?

Saturday, November 14, 2009

Study: File sharers spend more money on music

(Posted by Yael Caspi-Schwartzberg)

I think this article presents a very interesting - maybe even surprising - finding, and can be a great link between a few different past class discussions - the music industry, digital rights and even the last class about online pricing

Wednesday, November 11, 2009

Can "Freemium" Work? Babbel and WSJ Say No

(Posted by Mikhail Turilin)

Chris Dannen says:
Babbel and The Wall Street Journal both turned away from the Freemium model this week. The outcome will be drastically different for each.

"Can 'Freemium' Work? Babbel and WSJ Say No and One
of Them Is Wrong

Saturday, November 7, 2009

Amazon's new 3D store

(Posted by Dhirendra Sharma)

Here's a development relevant to our class on Tuesday.

Amazon is pioneering 3D online store.

WindowShop is a new content-viewing layer for Amazon.com. If you've ever used Cooliris' PicLens before, you'll feel right at home, as WindowShop turns Amazon's selection of online goods into a giant wall, which you can scroll back and forth across, and zoom in and out of to find things to buy.

Cnet has more details

Thursday, November 5, 2009

Saying No To Big Software

(Via Ike Nassi)

From the Forbes article mentioned in class today:

Up until he considered open source, Save Mart's IT systems serving 250 stores, three warehouses, 20,000 employees and a trucking fleet was locked into Big Software licenses..

Sims replaced proprietary software with open-source technologies across the company's IT infrastructure with the deployments of the SuSe Linux operating system, the Ingres open-source database, and the Hobbit open-source monitoring tool to monitor the health of Save Mart's servers, applications and networks.


Friday, October 30, 2009

Clash of the Clouds

(Posted by Mads Srinivasan)


It may be a good exercise to discuss this statement in the class: "the economics of the cloud may be different from those of the PC. Network effects are unlikely to be as strong. Much of the cloud is based on open standards, which should make it easier to switch providers"

If the economics of clouds is based on open standards, how can company extract value from their cloud offerings? Looks like there is no "winner take all" in the cloud. Is the pie big enough for multiple players? Do some companies have inherent competitive advantage over others?

Thursday, October 29, 2009

Web Pioneer Recalls 'Birth of the Internet'

(Posted by Dhirendra Sharma)

It is believed that this day i.e Oct/29 in 1969, the first message was sent from one computer to another. Hence, began an age of connectivity with computers talking to one another and sharing information. Refer to below CNN article for interesting conversation with UCLA Prof.Leonard Kleinrock who sent first message over computer network on October 29, 1969


Monday, October 26, 2009

The App Store Effect: Are iPhone Apps Headed for Oblivion?

(Posted by Courtney Skay)

I thought this was an interesting article to add.

Thursday, October 15, 2009

Spigit Raises Capital for Workplace Social Network

(Posted by Mona Masghati)

Related to the case today:
Spigit Raises Capital for Workplace Social Network

Articles on Online Media/Publishing

(Posted by Anand Mohanrangan)

I came across a couple of articles on online media/publishing that seem relevant given our discussion of SMR.

The first is a debate between Clay Shirky and Steve Brill about the impact of the internet on media and can one charge for content

The second is an opinion piece by the CEO of Associated Press about the future of the newspaper business

Monday, October 12, 2009

Elinor Ostrom, Wikipedia and the Commons

Congratulations to Elinor Ostrom and Oliver Williamson for winning the Nobel Memorial Prize in Economics.

When we discussed Wikipedia in class, one of the mysteries was how and why it worked in the first place. The contributors are not paid and don't have the kinds of property rights that economists and lawyers often argue are essential to provide incentives for the creation of content. And yet, it is one of the top sites on the Internet.

Elinor Ostrom's work can help provide an explanation. Far before Wikipedia or even the World Web Web were developed, she showed how natural resource commons like fisheries, forests and water rights have been successfully managed for decades and even centuries without either central control or private ownership. She identified a set of principles that were important to successful commons, including clearly defined boundaries around the commons, group monitoring of how the commons were used, and a system of increasingly severe penalties for free riders or vandals.

In the coming days and weeks, I suspect many pundits will point out how relevant Ostrom's work is for environmental issues like global climate change. However, her insights also can help unlock the paradox of Wikipedia, open source and some of the other burgeoning successes of the information economy. In many ways, knowledge and information are the ultimate commons.

Sunday, October 11, 2009

Thursday, October 8, 2009

Searching for Trouble

(Posted by R.J. Lehman)

Almost perfectly timed after our Google discussion is Ken Auletta's article about the past/future of Google in this week's New Yorker. It appears that it requires registration to read the entire piece, but I'd be happy to bring my copy in next week if anyone is interested.

Tuesday, October 6, 2009

AcaWiki & SMR

Sloan Management Review seeks to bridge the gap between academic research and management practice.

Should something like AcaWiki be part of Sloan Management Review 2.0?

AcaWiki is like "Wikipedia for academic research" designed to increase the impact of scholars, students, and bloggers by enabling them to share summaries and discuss academic papers online.
AcaWiki Officially Beta Launches Wednesday October 7th!

Jacek Utko Designs to Save Newspapers

(Posted by Emily Short)

Our readings on the evolution of the print industry reminded me of this Ted talk - a Polish designer suggests that we might save periodicals with good design, thinking about form + function. His results are dramatic, sometimes doubling circulation.

To me, it seems like a band-aid.

Monday, October 5, 2009

The Evolution of Print

(Posted by Carlos Eduardo Selonke de Souza)

Below is a link for a video about how a magazine might look in the not-so-distant future.


A Spear-Carrier for the Future of Media?

(Posted by Jennifer Fremont-Smith)

This is my day job now. ...The 300 or so subscribers who support this operation (renewal rates are always a little bit uncertain) should feel that they are part of a very interesting evolution in the news business.

... little start-ups – Dyson’s, Tufte’s, Lipsky’s, Stoll’s, Sennott’s, mine – may be more indicative of the possibilities for a new kind of journalism on the Web, perhaps even more durable in the end.

That's David Warsh's latest column. More here.

Sunday, October 4, 2009

Thursday, October 1, 2009

Reinventing Print Media

Very appropriate article given our upcoming assignment and class discussion on digital publishing.

Microsoft’s Netbook Conundrum

(Posted by Mona Masghati)

Lost revenue for Windows 7 on netbooks market segment:

Jimmy Wales Quietly Edits Wikipedia's New Edit Policy

(Posted by Katia Acosta Fernández)

This article should provide some more information about the current policies of Wikipedia.

Wednesday, September 30, 2009

Gmail Still More Reliable Than Many Corporate Email Systems

(Posted by Mona Masghati)

Related to pricing at Zero:
Gmail is free and relies on quality of service and experience to attract and retain users.


How Much Are You Worth to Facebook?

(Posted by R.J. Lehman)

I came across this FastCompany article and thought I’d share it. It raises some interesting points and questions that I thought might have relevance later on in the semester.

Friday, September 25, 2009

Is Twitter Worth a Billion Bucks?

(Posted by Mona Masghati)

Business Week article on Twitter’s new round of funding: “Is Twitter Worth a Billion Bucks?”

Tuesday, September 22, 2009

Google Developing a Micropayment Platform

(Posted by Dhirendra Sharma)

The below links appear to be directly related to our class discussion on "micropayments".

Google is developing a micropayment platform essentially leaning towards - "Open need not mean free"

1.) Google plan is available at:

2.) Analysis and discussion on Google's plan is available at:


Reinventing Print Media

(Posted by Ipshita Nag Deepak)

An interesting article on reinventing print media that shares useful insights on strategies to reinvent their business models.

[Administrator note: Apparently free registration on strategy+business.com is required for access.]

Monday, September 21, 2009

New Media Demands a New Kind of Media Company

(Posted by Yael Caspi-Scwartzberg)

This article seems relevant to our class discussions since it discusses the economics of the online media vs. the traditional media businesses, including barriers to entry, economies of scope and possible business models.

Sunday, September 20, 2009

How Big is the Internet?

Apparently, there are about 1.5 billion Internet users worldwide. About 210 billion emails were sent per day in 2008, which helps explain all the unanswered messages still in my inbox.

Music publishers: iTunes not paying fair share

(Posted by Emily Short)

This article may be of particular interest after our class discussion of the Rhapsody case. It looks like music industry execs are trying to get a bigger share of the iTunes pie with "performance fees."

Saturday, September 19, 2009

TV Everywhere

(Posted by Sheila Seles)

TV Everywhere is a response to the success of free, legal online video content on sites like hulu. MSOs and networks seem to be scared that these free services will cut into their revenue models, so they've begun to take measures to make that content available online only to existing cable or satellite TV subscribers.

The "TV Everywhere" initiative, led by Time Warner, is an attempt to extend the cable TV subscription model to online television content through an authentication process. Here's a broad overview of the service:

Now that TV Everywhere is going into trials, MSOs, networks, and studios are starting to talk about the revenue models they're testing:

Finally, because of comments made by Jeff Zucker and Rupert Murdoch, there are rumors that hulu will begin charging for subscriptions:

Friday, September 18, 2009

Bits vs Atoms: Back to the Future with "Google Paper"

The economics of bits look pretty favorable for most applications, but some customers still prefer paper.

Yes, Google introduced this on April 1.

Thursday, September 17, 2009

Confirming the Value of News?

Paying for Print: Over $100 a Year for WSJ Mobile App: Pricing Plan Aims to Get More Subscribers, Who Can Receive It for Free

DRM by the backdoor?

(Posted by Dhirendra Sharma)

BBC looks to copy protect content

Wednesday, September 16, 2009


How important is the social media revolution? Mark Zuckerberg says its a "once in a century" technology. This video tries to make the case with some remarkable statistics.

Pass it on to your friends, if you agree -- or if you don't!

Tuesday, September 15, 2009


The Dallas Stars are implementing a dynamic pricing system for their hockey games. Economic theory predicts this will increase profits, and total welfare, but that consumers may be worse off overall. But then there are also the psychological factors to consider. Will consumers react negatively, or will this approach become more common?

Did You Know 4.0

Here's the latest "Did you know" video with some fascinating statistics about the media and Internet.

Monday, September 14, 2009

Do Media Moguls Understand the Economics of their Business?

If we take Netscape’s public offering in 1995 as the birth of the Internet era, on average over the next 10 years the biggest media conglomerates achieved less than a third of the returns available from the S&P as a whole.
...Understanding the fundamental flaws of these four tenets of conventional media wisdom—growth, globalization, content, and convergence—is essential to saving media shareholders of the future from the anemic returns of their predecessors. Each myth reflects its own confusion about the sources of competitive advantage.

That's Bruce Greenwald, Jonathan Knee and Ava Seave writing in the Atlantic

The Media industry is not immune to basic economics, like the fact that when the Internet lowers barriers to entry it also hurts profits. The latest downturn in media valuations is not simply a reflection of the recession, but reflects a much larger, long-term trend.

Wednesday, September 9, 2009

Welcome to Economics of Information

My name is Erik Brynjolfsson and I am starting this blog in connection with my Economics of Information course at MIT. The Economics of Information blog brings together news stories, academic articles , cases about interesting companies and other items that are related to the changing economics of information in our emerging digital economy.

In addition to discussion by students in my MIT course, it is also open to other interested participants. The norms of the community are similar to those of Wikipedia. We encourage thoughtful, provocative and respectful interactions. Over time, the collective contributions of this community can become an increasingly valuable resource.