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analyticalQ book review by Anne Ku

Information Rules
A Strategic Guide to the Network Economy

Carl Shapiro, Hal R. Varian

ISBN 0-87584-863-X, copyright 1999, 352 pages hardback

6 June 2000

What an impressive and timely book!  I wouldn't be surprised if it was the required reading for a semester course on information economics, or rather the economics of an information society.  It is full of insightful concepts, and more importantly, examples to substantiate the strategies recommended.

"Information is costly to produce but cheap to reproduce." 

Here are just some of the useful bullet points:

managing intellectual property: choose the terms and conditions to maximise value rather than the protection of content
information as an experience good:how to let people know what you have without giving it away?
economics of attention:the problem of information overload (this reminds me of getting shelf space in a supermarket which is packed with different brands of the same sort of product, like frozen peas)
lock-in and switching costs:how to avoid it as a consumer, how to exploit it as a seller
network externalities:   when value of a product to one user depends on how many others use it.  Some adopt wait and see attitude for common standards to appear.
versioning information:value-based pricing - selling different versions at different prices to different consumers; on-line vs off-line versions;  how many versions? tactics: delay, quality of image or user interface, comprehensiveness, annoyance, features, capability, format, support, etc.

What I like most about this book is that there is a bullet point summary of lessons learned at the end of each chapter.  The reader can easily remember these rules from the wise, such as "know thy customer."   Finally, like Striking It Rich.Com, it has a companion web site, which I've yet to review:  The InfoRules Website.