The summer class is over and it’s a great time to take few weeks of break before the next quarter begins. Looks like it’s time to have a little bit of rest.

It’s time to take a look back to my expectations for the class:

Thus, talking about the class, I expect myself to learn some “what’s” and “how-to’s” regarding the current trends and practices in the digital marketplace.

We all know there are a lot of questions and not this many answers in this field. Thus, the trick is to ask right questions, so one more thing I do expect from this class is a little bit more practicing in critical thinking and asking questions.

We’ve talked a lot about the impacts of Internet on the society in general and on the economy in particular during our meetings. No doubts, we’ve learned a lot of “what’s” due to specifics of the class. We were able to track the recent changes in the way economy works. I think I also had enough practice asking questions. I found preparing questions for the guest speakers quite entertaining and useful.

Talking about the class in general, I should make a note that it took a fair amount of efforts to complete all the home assignments. They weren’t way too difficult, just time consuming.

Summarizing the class experience, I can mention that Net-centric Economics required above the average time input and was insightful. It contributed a lot towards my theoretical and practical understanding of how new information technologies change the economy


The first thing I want to write about is Howard Rheingold’s (our guest speaker) talk about the digital identity of people going online. It sounds a little bit unrealistic but makes some sense. There are a lot of pros and cons here, so it’s really hard to decide whether it is necessary or not. I think it should be optional. If you want to gain some credibility in your online community – choose to use a digital identity. If not – don’t even bother yourself. For a number of years Internet have been the place where people could escape from their shame and embarrassment (I’m talking about positive projections of this phenomenon – like people talking anonymously about the health problems they wouldn’t talk otherwise). Anonymity is really important over here. It just cannot be taken away without harming these people.

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“Media economics: applying economics to new and traditional media” tries to set out the broad range of economic principles and concepts needed to understand media industries and issues. The media issues and applications addressed in the book are widely drawn from both new and traditional media. As for me, the most interesting chapter is the one about consumer behavior.

The overlook of a consumer behavior presented by the book is pretty brief but provides enough information on how consumer allocates a limited budget between an unlimited number of goods, and covers few laws describing customers’ behavior. However, the examples authors use to support their ideas are usually a little bit dated, which makes me doubt the relevancy of the ideas stated, for today’s fast changing economics. The good thing about this situation is that it usually takes some time for consumers’ behavior to get changed, thus I hope, the book provides relatively fresh look at the consumer behavior patterns. From the other side, I believe that the book’s approach to the media economics is a little bit obsolescent.

Nevertheless, the chapter presents an interesting analysis of individual customer behavior patterns. One of the best examples is a problem of foreign films. Authors make a good point on the habit-forming nature of the cultural goods, which is clearly illustrated by the increasing demand for foreign movies with the changes of the individual’s tastes after viewing the ones. Chris Anderson draws pretty much the same conclusion while making an attempt to describe the growing demand for less common goods in his book, “The Long Tail”. However, Anderson goes even further. He thinks that offering more variety does not shift demand by itself. Consumers must be given ways to find niches that suit their particular needs and interests. There is a need for filters that can drive demand down to more obscure goods.

Our guest speaker, Mike Culver, brought to discussion one of the most interesting topics we were talking about last Monday class. That was the cloud computing concept.

Mike also continued and expanded on the Amazon’s Mechanical Turk service, an online crowdsourcing marketplace for HITs – human intelligence tasks. Last week’s guest speaker talked about it as well. However, since Mturk is one of the suites of Amazon Web Services, Mike was able to provide more details on this topic, giving really interesting examples of how this service is being used.

One of the examples was the collective search for a Steve Fossett’s plane using the latest Google satellite pictures. What is really amazing, thousands of people spend a lot of their personal time without even getting paid. That’s a real power of the networks.

Steve Fossett’s case made me think also about the transformation of journalism caused by the social media appearance once more. The fact that the plain was missing on September 3rd and the press (CBC) covered the story only 8 days later, on September 11th illustrated the shift of a power from professionals working for traditional media outlets to amateurs once again. Media aren’t mainstream anymore. They used to be the main source of news, covering newest stories and delivering the latest news. Nowadays, media, as it often happens, cover the topics that create a significant buzz online.

What I didn’t expect to learn from an Amazon insider was the information about, one of the Amazon partners. is using the annoying business model that was being used for selling obscure goods online few years ago (it might be in use even now – I’m not 100% sure). It looks like this: one web site is selling something pretty obscure for the high price (quite rare MP3s, exotic alcoholic beverages – whatever). They buy a lot of different domain names and create slightly different web sites with the similar content. Thus, they get all/most the positions on the first page of major search engines results in their category. If you decide to buy the product from any of these sites, you end up on the master’s web site they are pointing to. It’s not clear for me, what’s the Amazon’s point in doing that?

I really enjoyed T.A. McCann who was this week’s guest speaker. He brought up a couple topics I was particularly interested in. First of all, he covered the topic on what motivates people to participate by talking about both emotional and financial rewards. One of the examples he used to illustrate the architecture of participation was a HelpShare/Google maps mashup. It was really amazing to see how these IT questions and answers distribute all over the World. As for me, the fact of a lot of answers coming from Easter Europe endorses not just the fact that outsourced work is the long tail of information (according to McCann), but also talks about the long tail in human resources (that’s one more reason why Microsoft strongly advocates working visas for foreign workers).

One more thing, which was really amazing to me, was the McCann’s estimate on the average Internet niche saturation. Answering the question of a student, he mentioned that there are 5 main players and 50 small players in pretty much every niche (Wishpot is an example of one of the players in the field of Internet wish lists). One of the speakers at the last week’s Seattle Tech Startup event mentioned that ideas are cheap. Implementation is what really matters. It’s really easy and relatively cheap to copy any idea; that explains the significant number of players in each niche. However, only few make it to the top…

Discussing the suggested questions during the second part of the class was also an interesting exercise. Unfortunately, we didn’t have too much time for it, so some of the questions were left not completely answered.


This week’s class conversation touched a lot of interesting points like elastic an inelastic pricing, Chris Anderson and Anita Elberse controversy regarding The Long Tail theory and so on.

One of the points that got my extra attention is the utility pricing model for the Internet. There are a lot of debates among ISPs regarding the different pricing models for a broadband.

From the other side, customers are concerned about ISPs putting limits on the “unlimited” broadband services (like relatively recent Verizon case).

In this situation the topic gets more and more intriguing. Nowadays we rely more and more on Internet an even get addicted. Thus, for most of us Internet access becomes an inelastic good. In this situation, the utility pricing model (pay for what you have used) makes more and more sense. It sound pretty fair when people pay more if they use more traffic. From the other side, ISPs most likely won’t drop the prices for the “light” users to pay less (yes, looks like TLT is working here as well, since a relatively small percentage of users generate the significant part of overall bandwidth traffic).

It is really interesting to observe where is it going, especially in a case when it’s hard to predict what happens next. Honestly, I’m a flat-rate pricing fan, since I recognize that we use more and more traffic every month…

It is a little bit sad to realize, but looks like the class is failing some of my expectations.

Dru’s lecture was really interesting, but I think it was a little bit off the topic. I understand that skills of writing the critical reviews are especially important in the field of digital media. However, I think we should focus a little bit more on the topic of a digital economics itself, not on the writing skills, since it’s not a content-production class.

I think focusing on the topic like “how to critically read text” is not a good fit for the Master’s program lectures. I don’t want to say something like: we are cool without it. I just think we’ve paid too much attention to it. Thus, some additional reading (a couple of articles) would be enough to cover it and not to spend our precious class time.

The overall introduction to the economics of information was quite interesting and helped to bridge my basic knowledge of economics with the new concepts of digital media. The comparison of the ideas of exiting costs and scarcity-driven essence of economics for both traditional and new approaches was somewhat helpful in understanding the basic key moments of how does economy evolve under the influence of new media. I hope we go further this way.