Where are Adam Smith's/Karl Marx's grandchildren?

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2 total messages Started by Gregory Aharonian Sun, 23 Jun 1991 04:13

#173

Author: Gregory Aharonian
Date: Sun, 23 Jun 1991 04:13

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    Ed's recent attempts to have comp.archive grow as a process really
illustrates how lacking we are in developing economic models to handle
information as a commodity. Current hardware and communications technology
is almost to the point where everyone has a Cray at home talking to each
other. This occurance was possible because computer hardware and communication
equipment are classic commodities. I claim that information is not, and my
proof is empirical - I do not consider that is information is being handled
very efficiently.
     My belief is that an information economy will be different from the
present economy, and this will come to happen either by companies who figure
this out and make the transition first, or by some collective effort that
starts out in the universities and government laboratories.
     I know that if the government is going to spend hundreds of millions of
dollars adding more hardware and communication capacity to the networks (i.e.
NREN), it should be willing to put about many tens of millions of dollars
exploring the economics of an information economy. Then maybe the problems
that Ed is raising can be addressed more formally.
     By the way, given sufficient backing and market access, I figure what
Ed is doing is worth over one hundred million dollars a year (or actually
what Ed is doing, and what I do).

Greg Aharonian
Source Translation & Optimization

Re: Where are Adam Smith's/Karl Marx's grandchildren?

#125

Author: Edward Vielmetti
Date: Sun, 23 Jun 1991 13:16

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> what Ed is doing is worth over one hundred million dollars a year

Send your checks to
	MSEN Inc.
	628 Brooks
	Ann Arbor MI 48104
When I get to a hundred million I'll let you know :-)

A few things I'd like to bring up about the economics of the situation,
so far as I can see them.  First, what I'm doing (combing netnews for
source announcements) is not new, and the technology I'm currently using
is pitiful.  In the securities industry, traders have relatively sophisticated
screens on their desks combing the news wires for information about
the value of firms, things which might change that, hot-breaking news, 
and deals in progress.  Granted, they're culling that information from a
news wire which is relatively structured (unlike netnews), so the job is
easier.  There's already millions of dollars a year, very likely more than
that, going at the same problem -- unfortunately not much of that technology
has (yet) leaked back to usenet.

The market for "freely available software" is marked by great uncertainty
of information, high search costs, and wide dispersal of location.  In
terms of classical economics, this is not a perfectly competetive market,
because that market assumes that consumers have perfect information about
the goods and services they choose to consume.  A production like the
MSEN Archive Service / comp.archives should be able to add value (and
possibly extract revenues) from several sources, namely

- consumers of freely available software, who are willing to pay for
  higher quality information if it reduces their search costs enough;
- producers of freely available software, who are willing to pay for
  the opportunity to have their products effectively marketed and to
  gain in their knowlege of other complementary (or competing) 
  technologies;
- wholesalers of network bandwidth, who are willing to pay to get services
  which would make more effective use of their networks, and who would
  seek a competetive advantage over other competing ``regional networks''
  by providing more effective network information services;
- retailers of network access, a la UUNET, or Compuserve, or GENIE, who
  would seek to gain customers for their pay-for-service by providing
  them with reliable information on the quality and location of new 
  software resources. 

Your guess is as good as mine where the eventual payoff is going to be,
i.e. who is going to fund the efforts.  

--Ed

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