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Measuring and Sustaining the New Economy Report of a Workshop (2002) / Chapter Skim
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Economic Issues of E-Business
Pages 105-110

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From page 105...
... The debate over instant messaging at AOL suggests a larger debate to come. He returned to the example of Napster as a possible example of a profitable business model: a company that uses centralized directory services to facilitate point-to-point communication.
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From page 106...
... An Investigation of Internet Buying Behavior Dr. Brynjolfsson started with a discussion of predictions about e-business, including the prediction that the Internet, by lowering search costs and facilitating comparisons among products, would lead to fierce price competition, dwindling product differentiation, and vanishing brand loyalty.3i He cited the rise of price search engines and comparison intermediaries.
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From page 107...
... Brynjolfsson conjectured that these results would be more likely to hold as they start testing more heterogeneous products and products with more levels of unobserved service quality. For instance, they looked at the subset of consumers who wanted their screen sorted on the basis of delivery times instead of price.
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From page 108...
... He described a joint project with Merrill-Lynch, a sponsor of the Center for E-Business at MIT, to study online versus traditional brokerages. A traditional brokerage has a physical retail front office where customers interact directly with brokers.
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From page 109...
... Simply adding email services to a traditional bookstore would not bring even a small fraction of the personalization, customization, book recommendation, and the other parts of the business model that Amazon invented. Measurement of Intangible Assets Is Difficult He said that he does not yet have good data on how to measure the value of such e-business context, but his group has studied traditional information technology and has found a striking difference between the intangible investments associated with information technology versus traditional capital investments (Figure 13~.
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From page 110...
... He summarized by saying that the Internet is transforming the way markets function and that the successful Web businesses of today are just the first wave of this transformation. Secondly, the Internet is transforming firms themselves.
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Key Terms

  • shipping time
  • customer service
  • computer capital
  • business models
  • price offers

  • customers interact
  • consumers apparently
  • traditional capital
  • versus traditional
  • business model

  • search engines
  • organizational structures
  • product selection
  • apparently perceive
  • studied traditional

  • increased access
  • heterogeneous products
  • unobserved quality
  • front office
  • retail front

  • price improvement
  • traditional assumptions
  • interact directly
  • hedonic price
  • comparison intermediaries

  • real price
  • price competition
  • particular economic
  • clickstream data
  • successful web


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