Information economy

From Media Technology and Culture Change

In the most generic sense, an information economy is any economy where information, which notionally has no capital value, becomes a commodity. Under this kind of economy, entire industries are based on the retrieval, exchange, or production of information. Modern-day corporate powers such as Google, Yahoo, Facebook, YouTube, and in general all internet-based companies rely on the ease of information exchange and retrieval made possible by the physical infrastructure of the worldwide computer network. For example, Google's basic "service" is as an information compiler. Consumers go to Google to find the nearest Chinese restaurant or the name of the third track on Pink Floyd's Dark Side of the Moon, and in exchange for user attention advertisers pay Google to advertise on the site or set aside "preferred" search results. In some sense this model is similar to the television model of advertising, except that it can be tailored toward the information needs of individual users.

Yochai Benkler sketches out a comprehensive model of the information economy in The Wealth of Networks. He argues that in addition to the above-described industrial models of production, there exists a network information economy defined by the rise of nonmarket information production and distribution as well as the rise of peer production models of information production. In many ways, these new models for the information economy have arrived concurrently with the rise of Web 2.0.

Some information economy quotes

"Advances in computers and data networks inspire visions of a future ``information economy in which everyone will have access to gigabytes of all kinds of information anywhere and anytime. But information has always been a notoriously difficult commodity to deal with, and, in some ways, computers and high-speed networks make the problems of buying, selling, and distributing information goods worse rather than better."

"The shared nature of information technology makes it critical to address issues of standardization and interoperability sooner rather than later. Each consumer's willingness to use a particular piece of technology---such as the Internet---depends strongly on the number of other users. New communication tools, such as fax machines, VCRs and the Internet itself, have typically started out with long periods of relatively low use followed by exponential growth; this means that changes are much cheaper and easier to make in the early stages. Furthermore, once a particular technology has penetrated a significant portion of the market, it may be very difficult to dislodge. Fortunes in the computer industry have been made and lost from the recognition that people do not want to switch to a new piece of hardware or software---even if it is demonstrably superior---because they will lose both the time they have invested in old ways and the ability to share data easily with others. If buyers, sellers and distributors of information goods make the wrong choices now, repairing the damage later could be very costly" (http://people.ischool.berkeley.edu/~hal/pages/sciam.html).