In this book the author has tried to make a review of the economic literature in order to extrapolate first conceptual models with which the Internet is represented, and secondly to show how and how much Internet impacts in the economic systems.
The ubiquitous nature of the Internet makes its modeling and evaluation of the impact a matter of great interest in the academic world, but also very complex and difficult to analyze. The basic concept of the economic contribution of the Internet is actually very simple: Internet facilitates the sharing of information in a cheap and fast way. This results in a higher information efficiency , which supports the production of products and services dependent upon the sharing of information. The speed of propagation of the Internet combined with its impact on international economies (McKinsey in 2009 quantifies the weight of the Internet economy equal to 3.4% of the GDP of the 13 largest economies in the world), justifies the interest of researchers in an attempt to model the phenomenon from an economic point of view.
Several models have been developed and the book analyz both generalists models and specific models of the online industry. Generalist models like the CAS (Complex Adaptive System), the GPT (General Purpose Technology) or LTS (Large Technological System), allows the reader to have an overview of the Internet system, and allows us to study how it 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 giving the student the tools needed to analyze it and to understand how the various parts interact with each other.
The more specific analysis models analyzed in the book, like the layers models, the economic flows models and the value chain models, they instead look into the merit of the Internet, trying to identify the different pieces that make up the industry, but are lacking, in the opinion of the author, not to adequately represent the specific economic models that exist in the Internet and did not extend the analysis to other dimensions of investigation beyond the simple definition of the parties. For this reason the author has proposed a new framework of analysis of the Internet industry, the LIIF. The framework is based on the interpretation of the Internet as a meta-platform, multi-layer, that is the ecosystem where born and evolve a variety of platforms, which, for the functions performed, create the different layers that make up the ‘Internet industry.
The identified layers are :
- Infrastructure layer, layer that includes manufacturers of equipment and materials needed for the infrastructure of the Internet, the operators involved in the creation and management, ie all the technological infrastructure platforms that support Internet ;
- Access layer, layer that includes operators that provide access (ISP), Internet enabled device manufacturers, operating system vendors and software connection;
- IT layer, the layer that includes the software vendors to develop web applications for the Internet commerce, content management systems (CMS);
- Intermediary layer, layer that includes operators intermediating technology and online services, like search engines, payment intermediaries, platforms enabling transactions between buyers and sellers, online advertising platforms, all brokerage platforms of the Internet;
- Content layer, layer that includes operators that offer content and sell products and services.
The Internet as a meta-model platform allows to highlight the main evolutionary stages of the net related to the statement of various aspects of the meta-platform. We start from the origin of Internet, when it was basically a Scientific Platform for the exchange of information among researchers. We then move towards the Informative Platform, where the informative appearance of the net emerges from the scientific to arrive to consumers and the web is dominated by portals that organize the content. In the next step the explosion of content leads to a paradigm shift: the web is no longer the closed world of the portals but is an expanding galaxy in which search engines are the entry point to the net, we are in the period of Searchable Platform. The net become the new media, where the information is no longer one to many but many to many, marking the advent of the Social Platform. Becomes essential to be online while on the move, the base of connected devices is growing, Internet evolves into Mobile Platform. The network infrastructure is confirmed as reference for the exchange of information where not only people, but also sensors, objects and things are connected, marking the advent of the next Internet, the Things Platform.
The framework consists of a dimension of analysis that allows to study the Internet in its basic guidelines, in particular in the book is used the LIIF to analyze:
- The Distinctive Features – what are the distinctive features that have made the Internet a platform different from the others and how they led to its evolution and the social impact that has had, from its origins to the present day, going also to identify the current developments and future trends.
- The Demand – What are the key dimensions for measuring the demand for Internet in each layer of the framework LIIF, trying to capture the salient aspects that explain the rapid growth and success of the web, and then analyze the general dimensioning of the Online industry, that the major global consulting made by calculating the economic weight of Interent GDP of major economies..
- The Supply – what are the main factors that insist on the supply side, in particular, we focused on the analysis of some of the key platforms of the Internet, such as Search Platform, and is also studied the phenomenon of Startup, the creation of new net companies, which sees its numbers and distinctive elements of the Internet.
- The Economic Models – What are the models and the particular features of the Internet, with particular reference to multi-sided markets (markets with different customer groups linked together by an enabling platform), the economic impacts of the network in traditional markets, and new online markets created from scratch, characterized by improved measurement, high customization, rapid innovation and design market more aware.
- The Business Models – what are the business models that are on the net, analyzing the classifications in the literature and propose a new classification. This will show the specificity of the Net and taking into account the latest developments of the Internet, based on three main categories identified by the author: The Transaction-based model, the Advertising based model and Free based model.
- The Markets – what are the main markets in the Internet industry with a focus on most characteristic of the sector: the Online Advertising and E-Commerce, analyzed both in terms of weight, size and key economic operating dynamics.
The book concludes with a taxonomy of products and services available in the Internet. This is because in every modern industry there is a need to represent the products creating a taxonomy of production, even for statistical and economic purposes . To this end, finding nothing of exhaustive in academic literature, the author has done so in an attempt to make one, indicating that elements of clear distinction , identifying three major macro-industry categories: Websites, Technology Platforms and Services for sites and platforms, each of which is suitably open and characterized with levels and sub-levels.
The method followed in this book is deeply analytical, and starts from a careful analysis of the literature to compare with the everyday facts. The goal is to produce at the same time debate in the academic world, and provide a tool for managers and entrepreneurs who decide to approach the world of the Internet to develop their business or to create new forms of enterprise.