In this book, the author has tried to review the economic literature with the aim of firstly extrapolating the conceptual models with which the Internet is represented, and secondly to highlight how and to what extent the Internet impacts economic systems.
The ubiquitous nature of the Internet makes its modeling and impact assessment a matter of great academic interest, but also very complex and difficult to analyze. The basic concept of the economic contribution of the Internet is actually very simple: the Internet facilitates the sharing of information in a cheap and fast way. This translates into an increase in information efficiency, which supports the production of products and services dependent on information sharing. The speed of Internet propagation combined with its impact on international economies (McKinsey quantifies the weight of the Internet economy in 2009 as 3.4% of the GDP produced by the 13 major world economies), justifies the interest of scholars in the attempt to model the phenomenon from an economic point of view.
Several models have been developed and both generalist models and specific models of the online industry have been analyzed in the book. Analyzing the Internet with models tracing the CAS (Complex Adaptive System), the GPT (General Purpose Technology) or the LTS (Large Technological System), allows the reader to have an overview of the Internet system, and allows you to study how this is relationships and impacts on other systems. The disadvantage of these models is the lack of specificity in the analysis of what the Internet is and how it is composed, not providing the scholar with the necessary tools to break it down and to understand how the various parts interact with each other.
The more specific models of analysis analyzed in the book, such as the layered models, with economic flows and focused on the value chain, instead have the advantage of looking into the Internet, trying to identify the different pieces of which the industry is composed, but they are lacking, in the author’s opinion, in not adequately representing the specificities of the economic models that exist in the Internet industry and in not extending the analysis to other dimensions of investigation beyond the simple definition of the parts. For this reason, the author has proposed a new framework for the analysis of the Internet industry, the LIIF. The framework is based on the interpretation of the Internet as a multi-layer meta-platform, i.e. a universal and neutral platform that constitutes the ecosystem where numerous platforms are born and evolve, which, due to their functions, create the different layers that make up the Internet industry. The identified layers are:
- Infrastructure layer, the layer that includes the producers of equipment and materials necessary for the Internet infrastructure, the operators involved in the creation and management of the infrastructure, that is, all the technological infrastructure platforms that support the Internet;
- Access layer, the layer that includes the operators that provide access (ISP), producers of internet enabled devices, producers of operating systems and connection software, that is, all internet access platforms;
- IT layer, the layer that includes software producers for web development, applications for internet commerce, online content management systems (CMS), that is, all basic Internet software platforms;
- Intermediary layer, the layer that includes operators that intermediate technology and online services, such as search engines, payment intermediaries, platforms enabling transactions between sellers and buyers, online advertising platforms, i.e. all Internet intermediation platforms;
- Content layer, the layer that includes operators who offer content and sell products and services, i.e. all the content platforms of the Internet.
The Internet model as a meta-platform makes it possible to highlight the main evolutionary stages of the network based on the affirmation of different aspects of the meta-platform. We start from the Internet of origins, intended as a Scientific Platform, aimed at exchanging information between researchers. We then move on to the Information Platform, where the information aspect of the network goes beyond the scientific sphere to reach consumers and the web is dominated by portals that organize the content. In the next phase, the explosion of contents leads to a paradigm shift: the web is no longer the closed world of portals but becomes an expanding galaxy in which search engines are the entry point for the network, we are in the period of Searchable Platform. The network later established itself as a new media, where information is no longer one to many but many to many, marking the advent of the Social Platform.
Being online becomes a necessity even on the move, the base of connected devices is getting wider, the Internet evolves into the Mobile Platform. The network is confirmed as a reference infrastructure for the exchange of information where not only people, but also sensors, objects and things connect, marking the advent of the next Internet, the Internet of Things Platform.
The framework consists of an analysis dimension that allows you to study the Internet in its fundamental guidelines, in particular in the book the LIIF is used to analyze:
- Distinctive characteristics – what are the distinctive characteristics that have made the Internet a platform different from the others and how these have determined its evolution and the social impacts it has had, from its origins to the present day, also identifying the ongoing developments and future trends.
- The question – what are the key dimensions for measuring Internet demand in each layer of the LIIF framework, trying to grasp the salient aspects that explain the fast growth and affirmation of the Network, and finally analyze the general dimensions of the Online industry, which the main global consulting firms have done this, calculating the economic weight of Internet on the GDP of the world’s largest economies.
- The offer – what are the main phenomena that insist on the supply side, in particular we focused on the analysis of some of the fundamental Internet platforms, such as the Search Platform, and we also studied the phenomenon of Startups, i.e. the creation of new companies based on the Net, which sees numbers and distinctive elements of the Internet industry.
- Economic models – what are the models and specificities of the Internet economy, with particular reference to multi-sided markets (markets with different groups of customers connected together by an enabling platform), to the economic impacts of the network within markets traditional, and new online markets created from scratch, characterized by better measurement, high customization, rapid innovation and a more conscious market design.
- Business models – what are the business models found on the network, analyzing the classifications present in the literature and proposing a new classification that highlights the specificities of the Internet and takes into account the latest developments of the Internet, based on three macro-categories identified by the author: Transaction based models, Advertising based models and Free based models.
- Markets – which are the main markets in the layers of the Internet industry with a focus on the most characteristic markets of the sector: Online Advertising and E-Commerce, both analyzed in terms of weight, economic size and key operating dynamics.
The book ends with a taxonomy of products and services in the Internet industry. This is because in every modern industry there is a need to represent products by creating a taxonomy of production, also for statistical and economic purposes. To this end, not finding anything exhaustive in the current academic literature, the author proceeded in an attempt to create one, which by specifying clear elements of distinction, identifies three major macro-categories in the industry: websites, technological platforms and services for sites and platforms, each of which is suitably opened and characterized with levels and sublevels.
The method followed throughout the book is profoundly analytical and starts with an accurate analysis of the literature to compare it with the everyday facts. The goal is at the same time both to produce debate in the academic world and to provide a working tool for managers and entrepreneurs who decide to approach the world of the Internet to develop their business or to create new forms of business.