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:

• Economics Of Abundance Getting Some Well Deserved Attention
• The Importance Of Zero In Destroying The Scarcity Myth Of Economics
• The Economics Of Abundance Is Not A Moral Issue
• A Lack Of Scarcity Has (Almost) Nothing To Do With Piracy
• A Lack Of Scarcity Feeds The Long Tail By Increasing The Pie
• Why The Lack Of Scarcity In Economics Is Getting More Important Now
• History Repeats Itself: How The RIAA Is Like 17th Century French Button-Makers
• Infinity Is Your Friend In Economics
• Step One To Embracing A Lack Of Scarcity: Recognize What Market You're Really In
• Why I Hope The RIAA Succeeds
• Saying You Can't Compete With Free Is Saying You Can't Compete Period
• Perhaps It's Not The Entertainment Industry's Business Model That's Outdated
• An Economic Explanation For Why DRM Cannot Open Up New Business Model Opportunities
• Recognizing That Just About Any Product Is A Bundle Of Scarce And Non-Scarce Goods
• Scarcity Isn't As Scarce As You Might Think