Thursday, June 21, 2007

Busisness Models for the Information Age

Business owners don't have to understand economic theory or business models. When I lived on the west coast, a co-worker told me, referring to the location and manager of a particular restaurant, "any idiot could make a good profit there: and that guy's proof."

For the rest of us, it's not a bad idea to have at least a tenuous hold on some of the basics of business theory. I'd launched my small business before started to hit the books (virtual and otherwise) on the theoretical side of running a digital applecart. It may not be as crazy a choice as it looks: I have a little informal background in economics, a sort of gargle at that particular font of knowledge.

Besides, doing business in the Information Age is such a new phenomenon that I doubt that there are established, reliable, authoritative business models and economic theory dealing with the exchange of information in the Internet.

There are some very interesting ideas emerging, though. How valid they are is something we'll lean in time.

A series of blogs by Mike Masnick at Techdirt discuss what he thinks scarcity and non-scarcity mean now. (Thanks to The Mandelbear for telling me about these).

One of the ideas Mr. Masnick presented in "Scarcity Isn't As Scarce As You Might Think", the most recent of these blogs that I've read, is that attaching scarce items to non-scarce items makes good business sense.

As examples, he cites

* Marcus Loew, the theater owner, who said: "We sell tickets to theaters, not movies." The point here is that Loew attached movies (a non-scarce item, according to Masnick) with theater seats (a scarce item)

* Google, which attaches its index of information (non-scarce) with the attention of the online community they've formed (scarce)

* The String Cheese Incident, a band that assumes that "The more people are exposed to the music, the better it is for the band." Their (non-scarce) music draws people to the band's (scarce) concerts. TSCI even has a travel agency which makes money by "saving people time (scarce good!) and helping them secure flights (scarce good) and lodging (scarce good), all in the pursuit of access to the band (scarce good)who they value so much because of the music (non-scarce good)."

I'm going to study this series of blogs, and would appreciate opinions on how much sense Mr. Masnick's ideas make.

Here's a list of the related blogs that I know of:

2 comments:

Martin said...

Hey Brian,
Speaking of Business Models, I'd be interested to know your opinion on Business Process Outsourcing as part of a Business Model for entrepreneurs. (I'm personally an advocate for all forms of LOCAL outsourcing.)

Thanks

Brian, aka Nanoc, aka Norski said...

Martin,

Thanks for the comment - and request.

I checked out your link: "The Professional Employer." You obviously know quite a bit about outsourcing, so I'll skip technical details. Besides, discussing my views on business, outsourcing, business models, economics, and society.

This is a bit much for a comment, so I'm responding to your request/question in another post: "Outsourcing: Great Idea; Lousy Idea; Sensible Idea." (June 23, 2008).

I got a bit off-topic, but hope that this is of interest.

("Following" list moved here, after Blogger changed formats)

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