The Economics of
Thomas P. Koltai
Fri, 18 Oct 96 09:03:08 PDT
Folks, the Americans would like our assistance with the following.
I apologise to those who have alrerady responded to the first call
Anybody want to jump in for a co-operative group effort response ?
John F. Kennedy School of Government
Science, Technology and Public Policy Program
Center for Business and Government
Harvard Law School
Center for Law and Information Technology
Council on Library Resources
Coalition for Networked Information
"Economics of Digital Information and Intellectual Property"
Cambridge, Massachusetts, USA
January 23-25, 1997
Announcement and Final Call for Papers
Harvard University is hosting this symposium to broaden and
deepen understanding of emerging economic and business
models for global publishing and information access and the
attendant transformation of international information
markets, institutions, and businesses. By refining and
publishing the work presented at the symposium, our goal is
to provide planners and managers in the public, private, and
nonprofit sectors with a practical framework for developing
program strategies and assessing the efficiency and
competitiveness of new information markets and institutions.
The symposium and book will address:
-- How will pricing be affected by different technological
factors and market environments? What are likely long-term
scenarios for different pricing models?
-- What will be the relationships between classic production
costs, transaction costs, and the economic value of
-- How will different pricing practices for
telecommunications and Internet services affect the pricing
-- What will be the effect of bundling or unbundling of
information services? How will opportunities for bundling
and unbundling change?
-- How will changing cost structures and other factors
affect the allocation of rights between authors and
publishers and other intermediaries?
-- How will markets for complementary products and
services, including advertising, affect the pricing and use
-- What are the policy implications of different pricing
models? How do these reflect policy values associated with
different kinds of information?
The rapid growth of the Internet and the World Wide Web is
transforming the way information is accessed and used in
business, education, and the home. New models for
distributing, sharing, linking, and enhancing information
are appearing, often embodied in software or information
The Internet and the World Wide Web are characterized by
explosion of information along with an explosion of new
tools for navigating information. No change is more dramatic
than the shift to user-initiated retrieval for text-based
information formerly distributed in the form of physical
objects by publisher-initiated manufacturing and delivery.
Although a similar shift may be underway for sound and
video, the considerable differences in delivery and storage
requirements between text, images, sound, and video may
dictate different cost and pricing models.
As production and distribution costs decline, transaction
costs and the value of intellectual property may assume
greater prominence. On the other hand, standardization and
software may reduce transaction costs over the long run.
With barriers to entry reduced by the Web and related
technology, information markets may become extremely
competitive, reducing margins and possibly lowering the
market value of some forms of intellectual property.
Competition for attention intensifies as companies extend
their marketing, sales, and support functions into the
Internet. Especially useful or entertaining information may
have greater value in attracting customer attention in an
increasingly competitive marketplace for information. It has
been argued that information may be valued less as
intellectual property and more in terms of the access it
provides to other markets and the value it adds to
relationships. As a practical matter, copyright may be
overshadowed by the growing use of contracts as a means of
both securing value and defining expectations in continuing
Some proprietary positions in simple distribution chains are
likely to erode as a result of disintermediation and intense
competition. Reduced production costs and pressure to avoid
residual transaction costs may force vendors away from
complex pricing models. For example, usage-based pricing may
give way to subscription pricing. Such dynamics will lead to
new business models and, in small markets where users are
also producers, may lead to new institutional arrangements
for managing life-cycle costs of information.
Similarly, as production costs decrease, the costs of
information may be assimilated by the underlying
infrastructure or assumed by advertisers and other
interests. This trend may be seen in the pricing of online
services and in the massive volunteering of content on the
World Wide Web. This applies to context and other forms of
value, inasmuch as the Web, including client software and
servers, enables editorial and navigation functions
traditionally performed by publishers and libraries to be
performed increasingly by individual authors and users.
Cost analysis in this environment may hinge on
identification and evaluation of critical bottlenecks --
with the understanding that many technological limitations
may be short-lived. Congestion may lead to new methods of
supplementing point-to-point transmissions, such as caching,
mirroring, and satellite broadcast. These new mechanisms
raise intellectual property and interconnection questions
that may addressed as both business and policy issues.
Network congestion and the demand for Internet telephony and
other real-time services may hasten the implementation of
type of service priority at the network level. This in turn
would facilitate marketing of quality at the server and
other levels, especially if vertical bundling proves
successful. If so, vendors may be tempted to package and
price to many dimensions of value. Conversely, simple
pricing models may have surprisingly strong appeal, as they
have had in the analog environment.
Sequential distribution windows for motion pictures
illustrate the potential for simple price differentiation in
a environment with many distribution alternatives, and price
differentiation is now playing an increasingly important
role in the marketing of software and databases. There may
be public policy arguments for price differentiation, not
only for reasons of efficiency but to enable some of level
of access for those who cannot afford it under standard
terms, just as public libraries have offered access for
those who could not afford to buy.
The project emphasizes the sharing of insight among scholars
and practitioners with different skills and backgrounds.
Papers should be written in a clear, non-technical manner
(technical appendices are permitted) for a mixed,
interdisciplinary audience that will include publishers,
librarians, economists, lawyers, and policy- makers.
Prospective authors should submit short abstracts for review
and comment as soon as possible. Extended abstracts or
outlines should be submitted by November 11, 1996, to ensure
consideration for the program. Acceptances of abstracts and
outlines are conditional pending receipt of a satisfactory
draft by January 15, 1996. Papers and supplementary material
will be published as a volume in the Project's series with
the MIT Press. Copyright assignment is not required, and
parallel or subsequent publication of individual papers in
journals is encouraged.
Please send paper proposals and requests for subsequent
Coordinator, Information Infrastructure Project
John F. Kennedy School of Government
79 John F. Kennedy St.
Cambridge, MA 02138
617-496-1389; Fax: 617-495-5776
Erik Brynjolfsson, Stanford/MIT
Esther Dyson, EDventure Holdings
Brian Kahin, Harvard
Jeffrey Mackie-Mason, Michigan
Paul Evan Peters, CNI
Hal Varian, UC Berkeley
Thomas P. Koltai
185 Liverpool Street,
Sydney NSW 2000