Hi there! It's a good article, and there are plenty of good points being made. That said, I have a number of comments.
Finally, the k5 community should find it entertaining and stimulating to discuss applications of these principles to k5. Using k5 as a concrete example will concentrate our thinking and focus our discussion. Think of it as an open source business plan.
I don't believe that Kuro5hin stands as a good example of the use of information for commercial ends. Textads, the paid-for Digital Identity spot, these aren't really cases of selling information - that's more about selling eyeballs, metaphorically speaking. Where economics comes in is where K5 acts as a broker for Advertisers and DigId. And I'm fairly sure Rusty doesn't think of us as consumers.
(As an aside, ''an open source business plan'' is an odd term. Open Source is generally used to describe a method of software development and/or distribution. The term here implies a business plan for selling open source software. It may serve to encapsulate the collaborative side of things, but it implies a whole lot more...)
The authors unabashedly focus on how a business can maximize profitability often at a cost to consumers.
It's an interesting perspective to take. But are you saying you want us to talk the most efficient methods for businesses to fleece us? I don't really like the word ''consumer''. The word implies a passive, couch-potato role, which is not what the Internet is all about.
The characterization of current commercial information exchanges as a simple deal between producers and customers has served business well offline. However it has crashed and burned horribly on the Internet.
The best sites on the web place the emphasis on interaction and communication. Arguably, this is what the Internet was built for - think Usenet, email, and then later the IRC and then the instant messaging explosion.
The ''consumer'', who's role has traditionally been a passive one, has now become a threat to large commercial information distributors, such as the music industry, simply by getting off their butts and distributing information themselves, regardless of legality.
Strategies like differential pricing, value subtraction, and lock-in may seem objectionable to consumers let alone open source enthusiasts.
Yes. And here I was expecting a ''but'' clause. People recognise these things when it happens to them. These strategies are objectionable to customers because they are seen, rightly so, as weaseling, underhanded, and, in extreme cases, morally bankrupt. It is these strategies that have cause the incredible resentment of companies such as Microsoft, Disney, etc., causing this sort of thing, and makes copyright infringement and piracy so palatable to Internet users. People are happy to screw over companies they dislike.
Pure open source products do not involve an exchange of resources and thus are not a matter of consideration for economics.
This ignores the fact that ''pure open source products'' are used as the basis for commercial operations, and therefore should most definitely be considered when studying the economics of information exchange, for example, when examining the finances of companies such as Red Hat.
Business models that give away a product to create new markets for complementary products and services are the basis of the New Economy.
Have I misunderstood this? I don't see Amazon giving away books and charging for wrapping paper. When Salon.com makes some of it's articles freely available, granted they induce people to subscribe. But by making those articles available, no market is created. I think there's some confusion here.
I don't believe that the ''New Economy'' differs in principle all that much from the so-called ''Old Economy''. The same principles of supply and demand, marketing, product life-cycles, etc. still apply. If ''New Economy'' signifies anything today, it signifies the crazed hysteria and gold-rush mentality of the late nineties.
Attempting to create markets by giving away products (such as the CueCat) has proven to be difficult. The whole idea was borne of the fallacy that all you needed to make money on the Internet was eyeballs, and the attention of surfers. The state of the banner-ad market, and the rapid proliferation of alternate business models, is an effective rebuttal to that.
The central myth of the New Economy is that new levels of value production and efficiency can be realized by employing the zero marginal cost of producing and distributing information.
I think it's more the case that ''the zero marginal cost of producing and distributing information'' is itself a myth. Even this guy acknowledges that production and distribution of information rarely has a non-zero marginal cost. The Internet has brought the marginal costs dramatically closer to zero, but still not zero.
Even disregarding the production costs, distribution alone uses bandwidth, which becomes increasingly important as your business gains customers, or eyeballs, or attention. Bandwidth isn't a zero marginal cost, yet. And the more dynamic your content (text < Web (HTML < Images) < Flash/SVG < audio < video), the more non-zero your distribution costs become.
With respect to differential pricing, it's been tried by companies such as Amazon, and it caused storms of protest. They stopped.
... we as corporate officers ...
Heh. I'm sure a lot of k5ers work for a corporation of some type. I can't speak for k5, but I come here to get away from that.
For parts two and three, I would encourage you to break up your paragraphs a bit. I'd say this article has it about right. If you look at CNN.com or BBC.co.uk, they have about 1 sentence per paragraph, which is a bit extreme. In addition to that, using links and/or references to back up your points tends to help sway your audience.
I'm reluctantly abstaining for this article. The second half in which you describe the chapters, is pretty good, but some parts grate, particularly the over-use of that word...
''The products you buy. The programs you watch. The car you drive. Your job. These are the things that define YOU as an individual.''
- Cop Shoot Cop, ''YOU the consumer!''