Information Rules: A Strategic Guide to the Network Economy.

• Author: Carlisle, Diane

TITLE: Information Rules: A Strategic Guide to the Network Economy

AUTHOR: Carl Shapiro and Hal R. Varian

ISBN: 087584863X

PUBLISHER: Harvard Business School Press

PUBLICATION DATE: 1999

LENGTH: 352 pages

PRICE: $29.95

SOURCE: ARMA International Bookstore's Additional Readings section

Have the fundamental principles of competition and business success changed drastically given the breathless advancement of the Internet and other technology advances?

In Information Rules: A Strategic Guide to the Network Economy, authors Carl Shapiro and Hal R. Varian say "no." They assert that what technology has changed is how organizations use the information they gather in the course of business.

For example, Lands' End's mail-order house doesn't keep that much more customer and order information than Sears Roebuck did for its catalog business a century ago. However, Lands' End has a much greater capability to manipulate that customer information for a variety of uses--to analyze customers' needs and buying patterns, to improve product design to differentiate their products in the marketplace, to conduct one-to-one marketing campaigns, and to provide alternatives for conducting transactions with banks as well as customers. It is the use of the information that provides the greatest opportunities.

With this premise as a starting point, the authors discuss a variety of practical strategies that companies can use to ensure their competitiveness. For example, the fact that costs of reproducing and distributing information are nominal means it is increasingly difficult to be the low-cost provider of information products. However, organizations can compete on the basis of being first to market, by providing customers an array of personalized products, and by personalizing pricing to attract different customer groupings.

Another interesting discussion examines various methods of capitalizing on low distribution costs. These include giving away samples of information in order to sell it (i.e., give away the index in order to sell the full text of an information product), selling complementary products, and finding ways to sell a variety of similar products to various segments of the customer base.

Other discussions include rights management, how to "lock in" customer loyalty, and the impact of various government regulations regarding anti-trust, price-fixing, and monopolies on the ability to compete effectively (and to collaborate effectively) within the...