"Technology changes, economic laws do not"
Among other things, Hal Varian went on to work at Google as an economist.
An information good is one for which it's very cheap to produce additional units. Unfortunately, I'm probably abusing the term, since books are listed as an example of information goods. The idea is that most of the cost of producing the book goes into the content (writing, editing, etc.) and actually printing one additional book is cheap. (When I said books are "imperfect" information goods I meant that they still require paper and shipping and retailing and such, but it's probably just a bad use of the term.)
There's a fantastic book about the economics of information goods called "Information Rules" ( https://www.amazon.com/dp/087584863X ). Software is an information good so this covers some topics relevant to the digital economy. My favorite part is the chapter on lock-in. In particular the discussion around the equation:
profits from a customer = quality advantage + switching costs
which puts "(marginal) goodness of your product" on equal footing with "pain you can inflict on your customer for leaving".
Information Rules: A Strategic Guide to the Network Economy - http://amzn.to/2hKFpwW
One of the authors, Varian, is now Google's Chief Economist, so they must think highly of him too.
The book is a bit older, but like the book says, “Technology changes, economic laws do not.”
Here's my favorite book on the subject: http://amzn.to/1JMtX0X
And yes, that's an affiliate link: https://news.ycombinator.com/item?id=10982630
Hal Varian has gone on to be the chief economist at Google.
Other pieces of the economic puzzle are things like network effects and lock in. I highly recommend this book: http://amzn.to/1FTa7ib
One of the authors is now the chief economist at Google. I highly recommend it.
Then again, the user experience with the leading alternative solution (MS Exchange) is so miserable that at one organization I'm aware of, the public announcement of a migration to Google Apps for Domains was greeted with a standing ovation.
Another interesting factoid: Hal Varian, co-author of Information Rules, which largely discusses strategic use of lock-in by both vendors and users, is Google's chief economist. I suspect this is a subject the organization understands well:
Yep. If you're interested in the economics of our field, I can't help but recommending 'Information Rules' ( http://www.amazon.com/dp/087584863X?tag=dedasys-20 ). One of the co-authors is now the chief economist at Google.
Perhaps long time readers find my recommendations for this book tedious, but 'Information Rules' is a great read and explains why lots of things like this work the way they do:
In other words, things do work differently on line, in some cases. Understanding that, and understanding what happens why is crucial to being able to do a 'DHH style' company that doesn't get crushed by a big player, or undercut by a bit of open source software.
I highly recommend the book 'Information Rules': http://www.amazon.com/dp/087584863X?tag=dedasys-20
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