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Abstract:
The Internet provides consumers with unprecedented amounts of product information. Although the competitive implications of better-informed consumers have been extensively studied, little attention has been paid to the impact of information on overall consumer demand. In this paper, we estimate the differences in demand for music CDs and cassettes between consumers who access online product information and those who do not. Our empirical model accounts for the self-selection effect that consumers who have greater demand for a product are more likely to search for information on that product. After controlling for self-selection and observable consumer characteristics, we show that consumers who access online product information have a 17% greater demand for CDs and cassettes. Using our model estimates, we calculate the benefits of a new marketing strategy in which product information is provided only to those consumers who exhibit the highest marginal demand response to product information. We show that this strategy significantly outperforms the traditional strategy of targeting consumers who had high demand in the past.

Product information, electronic commerce, consumer demand, target marketing

Abstract:
Digital technologies are profoundly transforming the production and consumption of culture and entertainment products. The emerging digital re-mix culture is an open source approach where content products in the arts and entertainment industries are increasingly rearranged, manipulated, and extended in the process of creating new works. This article offers a unified description of the tools and techniques that led to the development of the open source culture and that enable the processes which promote re-use of previously recorded materials. It then lays out the incentives and forces that either promote or inhibit the development, distribution, and consumption of modified cultural content by individual consumers and by derivative artists. Using multiple perspectives from economics, design sciences, and arts and culture, new theory is built to suggest how "rip, mix and burn" strategies based on re-use and recombination of content components can create significant economic value, stimulate artistic innovation, and spur creativity and growth in the culture and entertainment industry. The potential for wealth transfer and who loses and who gains in the open source digital re-mix culture are explored. The creative and economic forces enabled by digital re-use technologies are shown to play a significant role in the observed move towards more open source and social production modes in the culture industries. Five-mini case studies provide supporting perspectives for the proposed interdisciplinary theory of open source digital re-mix culture.

digital culture, digital entertainment, digital music, information goods, innovation and creativity, theory development, interdisciplinary theory, open source culture, re-mix, social production

Abstract:
Information and telecommunications technologies have profoundly altered the distribution channels available for a wide range of goods and services. In this paper we analyze a particular class of products, information goods and develop a first framework for predicting which information goods are most likely to see their production, distribution, and consumption patterns altered by the net, which are likely to see shifts in power and profitability, and which are likely to remain unchanged for the foreseeable future. We focus on music and news as a selected couple of very different information goods industries that follow two very different trajectories. Our results suggest that the power structure in news distribution is unlikely to be transformed rapidly. In contrast, the power structure in music is transforming rapidly. Star acts no longer need their record labels to certify their music to their fans, and digital production and distribution have reduced or eliminated the value of other assets owned by the record companies. The framework we use to analyze these two industries can readily be applied to a range of others . . . from the production of television soap opera series to the publication of academic journals in polymer chemistry.

business transformation, digital media, strategic analysis, competitive advantage, theory of newly vulnerable markets

Abstract:
The London Stock Exchange (LSE) faces rising pressure in its efforts to maintain its positionas a favored market of institutional fund managers and professional investors. Customers aresatisfied with the current state of the LSE market, but member firms are pricing institutionalbrokerage and market making services below economic cost. The LSE's position will besignificantly damaged when the effective subsidy ends, and commissions and dealing spreadsreflect the costs incurred by members firms. Competition in the supply of trading services hasincreased, and a range of alternative, off-exchange trading systems could draw order flow awayfrom the Exchange market. These trading mechanisms provide order matching, crossing ofbasket and portfolio trades, and reduce investors' commissions and trading spread costs. Fundmanagers in the U.S. are using the systems more actively, and the result has been an erosionof the position of the New York Stock Exchange. The LSE's customers are also using anexpanding range of portfolio management techniques, many of which require low-cost trading,and do not demand immediate order execution, as traditionally provided by London's marketmakers. The Exchange needs to respond to the changes in fund managers' demand for tradingservices, and to the growing competition in the supply of off-exchange trading services.Enhancements to the existing LSE market structure are the best response to these threats.

Abstract:
Evaluating strategic investments in information technology can be difficult. Uncertainties exist in customer responses, competitor reactions, and thus in the actual economic benefits to be realized. Valuing interorganizational information systems (IOS) is far more complex, since the valuation is complicated by issues of bargaining power, and distribution of IOS benefits. Although an IOS may create a net benefit or economic surplus, valuation by the innovator contemplating the investment must also consider who retains these benefits. The distribution isin part determined by the technology's capabilities, but principally by the power and resource endowments of the different IOS participants. Screen-based securities markets represent IOSs that serve many stakeholders including investors, securities firms, and listed companies, as well as the securities exchange or vendor providing the system. The London Stock Exchange's (LSE) £25 million investment in trading technology at the time of its 1986 Big Bang deregulation did not benefit all IOS participants equally. Although the screen-based market produced significant benefits for the Exchange, and for investors,whose transactions costs were reduced, any gains retained by the LSE's member firms, who ultimately paid for the investment, are difficult to demonstrate. The damage done to those parties that paid for technological improvements at the LSE has led to dysfunctional behavior by the member firms, and to some deterioration in the quality of the market. The evidence indicates that an uneven distribution of benefits can potentially subvert the efficient functioning of an important IOS.

Abstract:
Some implications of e-Commerce financial services firms are becoming clear. The web drives transparency, and increases the information endowment of all market participants. It is harder to manipulate customers' behavior, or to overcharge them. Transparency drives differential pricing. Not all customers can or should be charged the same prices. Transparency reduces the viability of cross-subsidies between customers can or between products. The differential pricing enabled by the web transforms distribution channels, and enables direct distribution and alternative forms of distribution. Some intermediateraries may be bypassed altogether, while others may rapidly lose their best, most profitable, and previously most loyal customers.

Net-based financial services, transparency, pricing, bypass and disintermediation

Abstract:
It has long been accepted within the information technology (IT) research community that IT should have a profound impact on industrial organization. However, there has been as yet no consensus on the changes to be expected in the design of firms or industries; rather, there is an apparently inconsistent collection of conjectures and analyses. We are now able to offer an integrative framework for describing the impacts of IT on an industrial organization. Our analyses generally support the "move to the middle" hypothesis that states that the impact of IT on the organization of economic activity is to lead to a greater degree of outsourcing where this increased outsourcing is done from fewer suppliers with whom the buyer has long-term relationships.