Found in 12 comments
davidw · 2018-05-11 · Original thread
I would also highly recommend the same book.

"Technology changes, economic laws do not"

Among other things, Hal Varian went on to work at Google as an economist.

danblick · 2017-05-13 · Original thread
The term "information good" is from economics:

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" ( ). 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".

davidw · 2016-12-13 · Original thread
If you're interested in the economics of tech, this is one of my favorite books:

Information Rules: A Strategic Guide to the Network Economy -

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.”

davidw · 2016-01-29 · Original thread
Because 'economics'. Switching costs, network effects, etc...

Here's my favorite book on the subject:

And yes, that's an affiliate link:

davidw · 2015-12-31 · Original thread
If people are interested in the economics behind these things, I can't recommend this book highly enough:

Hal Varian has gone on to be the chief economist at Google.

davidw · 2015-10-05 · Original thread
The article is attempting to explain the economics of why that is so. It's a pretty important thing to understand.

Other pieces of the economic puzzle are things like network effects and lock in. I highly recommend this book:

davidw · 2014-10-02 · Original thread
This book has a great treatment of the underlying economics of 'information goods' if you're interested in this kind of thing and want something a bit (well, a lot) more thorough.

One of the authors is now the chief economist at Google. I highly recommend it.

dredmorbius · 2014-02-26 · Original thread
The relevant book to read on this topic is Varian and Shapiro's Information Rules. Aimed at companies, and written in the late 1990s, its concepts are now increasingly applicable to the consumer information/IT space. In particular it discusses lock-in, or what we're now calling "fucking ecosystems".

dredmorbius · 2012-01-30 · Original thread
Yeah, it's reasonably light, as I said. Training and end-user usage patterns (never something to be taken lightly) are probably your biggest issues.

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:

davidw · 2010-03-15 · Original thread
> the marginal cost being nearly zero means that the chance of hitting a few out of the park justifies a whole bunch of expensive flops.

Yep. If you're interested in the economics of our field, I can't help but recommending 'Information Rules' ( ). One of the co-authors is now the chief economist at Google.

davidw · 2009-08-10 · Original thread
> What keeps them going

Switching costs.

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:

davidw · 2008-04-21 · Original thread
The problem with that line of reasoning, in my opinion, is that "normal" businesses sell "normal" products. As a simple example, how much would you pay for a clone of reddit? Not much. The value of the site is entirely in its large community. Same thing for eBay, for the most part. Also, normal products always cost something. There are a ton of information goods that are free: Linux, Apache, all kinds of languages, compilers, editors, browsers - everything you need to run a business, almost, can be had for free these days.

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':

View this Book on Amazon