Premium Essay

Information Rules

In:

Submitted By rvarun
Words 108016
Pages 433
Information Rules
A STRATEGIC GUIDE TO THE NETWORK ECONOMY

Carl Shapiro Hal R. Varian

HARVARD BUSINESS SCHOOL PRESS BOSTON, MASSACHUSETTS

Copyright © 1999 Carl Shapiro and Hai R. Varian All rights reserved Printed in the United States of America

03 02 01 00 99

5

Library of Congres§ Cataloging-in-Publication Data Shapiro, Carl. Information rules : a strategic guide to the network economy / Carl Shapiro and Hal R. Varian. p. cm. Includes bibliographical references and index. ISBN 0-87584-863-X (alk. paper) 1. Information technology—Economic aspects. 2. Information society. I. Varian, Hal R. II. Title. HC79.I55S53 1998 658.4'038—dc21

98-24923 GIF

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.49-1984.

To Dawn, Eva, and Ben To Carol and Chris

Contents

Preface ix

l

The Information Economy

2 Pricing Information

19

3 Versioning Information

53

4

Rights Management

83

5 Recognizing Lock-In

103

6 Managing Lock-In

135

7

Networks and Positive Feedback

173

8 Cooperation and Compatibility

227

9

Waging a Standards War

261 297

10 Information Policy

viii I Contents

Further Reading 319 Notes 327 Bibliography 329 Index 335 About the Authors 351

Preface

Luck led us to write this book. Each of us became economists because we wanted to apply our analytical training to better understand how society functions. By our good fortune, the economics of information, technological change, game theory, and competitive strategy were emerging fields of inquiry when we started our professional careers. We jumped in and offered our own contributions in these areas. Never did we imagine that, twenty years later, we would find ourselves in the middle of an information revolution. What

Similar Documents

Premium Essay

Information Rules

...informationInformation Rules A STRATEGIC GUIDE TO THE NETWORK ECONOMY Carl Shapiro Hal R. Varian HARVARD BUSINESS SCHOOL PRESS BOSTON, MASSACHUSETTS Copyright © 1999 Carl Shapiro and Hai R. Varian All rights reserved Printed in the United States of America 03 02 01 00 99 5 Library of Congres§ Cataloging-in-Publication Data Shapiro, Carl. Information rules : a strategic guide to the network economy / Carl Shapiro and Hal R. Varian. p. cm. Includes bibliographical references and index. ISBN 0-87584-863-X (alk. paper) 1. Information technology—Economic aspects. 2. Information society. I. Varian, Hal R. II. Title. HC79.I55S53 1998 658.4'038—dc21 98-24923 GIF The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.49-1984. To Dawn, Eva, and Ben To Carol and Chris Contents Preface ix l The Information Economy 2 Pricing Information 19 3 Versioning Information 53 4 Rights Management 83 5 Recognizing Lock-In 103 6 Managing Lock-In 135 7 173 Networks and Positive Feedback 8 Cooperation and Compatibility 9 Waging a Standards War 10 Information Policy 227 261 297 viii I Contents Further Reading 319 Notes 327 Bibliography 329 Index 335 About the Authors 351 Preface Luck led us to write this book. Each of us became economists because we wanted to apply our ...

Words: 108051 - Pages: 433

Premium Essay

Quantitative Association Rule Mining Using Information-Theoretic Approach

...Quantitative Association Rule Mining Using Information-Theoretic Approach Mary Minge University of Computer Studies, Lashio dimennyaung@gmail.com Abstract Quantitative Association Rule (QAR) mining has been recognized an influential research problem due to the popularity of quantitative databases and the usefulness of association rules in real life. Unlike Boolean Association Rules (BARs), which only consider boolean attributes, QARs consist of quantitative attributes which contain much richer information than the boolean attributes. To develop a data mining system for huge database composed of numerical and categorical attributes, there exists necessary process to decide valid quantization of the numerical attributes. One of the main problems is to obtain interesting rules from continuous numeric attributes. In this paper, the Mutual Information between the attributes in a quantitative database is described and normalization on the Mutual Information to make it applicable in the context of QAR mining is devised. It deals with the problem of discretizing continuous data in order to discover a number of high confident association rules, which cover a high percentage of examples in the data set. Then a Mutual Information graph (MI graph), whose edges are attribute pairs that have normalized Mutual Information no less than a predefined information threshold is constructed. The cliques in the MI graph represent a majority of the frequent itemsets. Keywords: Quantitative...

Words: 3460 - Pages: 14

Free Essay

What Are the Causes of Crime and How Could Crime Be Reduced?

...In this world, it is almost impossible if people live without rule. Rules are made to stop anarchy and to provide order. People need to be accountable for their actions so rules are needed. However in reality, some people still do not follow the rules or even they don’t care about the rules at all. This action of breaking rules or laws is called crime. Nowadays, the reported cases of crime all over the world are alarmingly increasing. It is believed that the main reason behind this is the rise in population which will lead to unemployment. The crime can be reduced with the involvement of the government to the society. Firstly, I would like to state that the population of a country will be the first and foremost reason behind this increase in crime. Take Indonesia for instance, it is a developing country and in the prevailing scenario its population is sharply increasing, which creates a significant number of problems. With respects to that, unemployment is the major one, because of that, educated and sophisticated people survive without jobs and result in indulge in the crime to bear their expenses. To combat this grave problem, governments can arrange educational classes and programs to increase public awareness about the adverse effects of the increase in population. If the increase rate of population decrease, there will be less unemployment which will of course decrease the number of crimes. Eventually, after analyzing all the views, I would like to conclude that...

Words: 293 - Pages: 2

Free Essay

Rule 301 Confidential Client Information

...Rule 301 of the American Institute of Certified Public Accountants’ professional standards states that a member CPA “shall not disclose any confidential client information without the specific consent of the client.” Auditing documentation should not be made available to outside parties without the authorizing of the client. Although the protection of a client’s information is an important principle of being professional, the member need to release the information under certain circumstance. Here are four exceptions of Rule 301: 1. Compliance with rules 202 (compliance with standards) and 203 (accounting principles) as set forth by the AICPA Code of Professional Conduct. When a member discovers criminal activity or fraud, or an activity the member reasonably expects is criminal or fraudulent based upon his or her good faith belief that there may be a crime or fraud, on the part of his client or employer, the member shall report the illegal activity or fraud to the appropriate supervisor above the person or persons who the member suspects of the illegal activity. 2. Compliance with enforceable subpoena or summons, or must comply with applicable laws ad government regulations. In practice, the member may receive informal request, Civil Subpoenas or Grand Jury Subpoenas. Not all civil subpoenas are valid or enforceable but you may need to comply the grand jury subpoenas because that is a method for a federal grand jury to gather evidence in a criminal matter sufficient to consider...

Words: 528 - Pages: 3

Free Essay

St. Francis Reflection Paper

... found the history of St. Francis to be interesting and inspiring. His resolve to glorify one master, God, was remarkable. The new order rules of St. Francis were concise and strict. His rules seem to be dependent on one another. Obedience to God was carried out in his daily work, consisting of prayer and worship, which are two more new order rules. Prayer was so important that St. Francis and his followers would bind themselves with rope while they slept so not to disturb others in prayer. I can’t imagine doing this or taking a vow of poverty. The rule of poverty is extreme to me. He wore rags and owned nothing. He underwent a severe change from that of a party person to one that follows such strict and extreme rules. He had a love for only God, which is shown in his chastity rule. He would not let himself or his followers be tempted by the opposite sex. All the rules put forth by St. Francis seem unimaginable to me. However, the sacrifices made by him caused others to take notice and listen. A positive aspect of the new order rules is no responsibility of possessions. Owning items itself is a responsibility. The rule of poverty would remove this responsibility allowing focus on worship and prayer. Today, we put too much value on material things. The new order rules value only God. Simplicity of daily life would be another positive aspect. No other obligations or thoughts except obedience, prayer, and worship...

Words: 520 - Pages: 3

Free Essay

Hair

...The rules proposed by Robert B . Reich are all important in making one an invaluable employee able to sustain the organizational success over a prolonged time period in the age when change is sudden and quick . The company has to be able to manage change and at the same time provide continuity to its actions , keep its identity in all the time of its existence . To achieve this , the management and employees have to meet the needs of today 's rapidly changing society For the company as a whole perhaps the ninth rule is the most important : Just do it ' Indeed , many companies are losing their share of the market because they prefer to stay where they are and enjoy what they have done in the past , rather than grasp the moment and make changes that will update their products and services . Thus , Sony Corporation is in many ways losing ground to its previously more modest competitors such as Samsung because they are more proactive and are able to seize the day and put innovative stuff in the market People are perhaps the most important factor of business because in the long run it is people that generate all the benefits . That is why the first and second rules are so useful in creating an efficient workforce I they give supervisors a chance to look at the familiar things from a new perspective . Sometimes it helps to have someone fresh to assess what has been going for years without change simply because no one gave it a thought . At the same time the legacy of the...

Words: 499 - Pages: 2

Premium Essay

Art of Love

...The Art of Love, written by Ovid, was a set of three books, the first being a guide or rule book on how to “pick-up” women and the second book a rule book on how to keep the woman you have or “caught” satisfied and interested in you. The third and final book that he wrote was written for women on what to do to catch and keep a man, since he felt it was only fair for women to also be “armed” when it comes to picking- up men. The rules that Ovid describes in The Art of Love are similar to the rules that most people follow in the “cruising and catching” game because they are effective and produce results, although not all the rules described in Ovid’s book are still used, a great majority of them are and have not changed after so many years. My overall perception for Ovid’s poem would be that of surprise. I would describe it as surprising because the “moves” that were implemented thousands of years ago are still very accurate and being used today. What Ovid’s poem tells me is that the “game” between men and women has not changed even though men and women have. Although most of the rules that Ovid writes about are now common sense in the dating world, such as choosing the best place to meet women just as fishermen know the best places to cast their nets to catch fish, and are followed by everyone. Ovid’s poem must have been written by experiences that he had and by the experiences that yielded the best results. In order for him to write a poem that describes what goes on today...

Words: 760 - Pages: 4

Free Essay

Assignment 3: Blogger Code

...on your blog. 2. Label your tolerance level for abusive comments. 3. Consider eliminating anonymous comments. 4. Don't feed the trolls. 5. Take the conversation offline, and talk directly, or find an intermediary who can do so. 6. If you know someone who is behaving badly, tell them so. 7. Don't say anything online that you wouldn't say in person. After reading the seven rules I have to agree with them and they should be followed because they are very down to earth things that all people can follow and they clean up messes if people follow them. If you follow step 1 you will stop all the baiting that happens in most online forums. Step two informs your viewers of potentially subjects that may arise to keep issues that might start from even occurring and this helps keep younger views away from said sites. I believe that rule three is the best one of them all because people typically say things they would not if they believe no one knows who they are that is a very normal human instinct. Step four keeps your users from leading on conversations that normally would not be happening. Rules five and seven are very similar in the mindset that you are talk straight to the person and not a group which gives you a much different aspect with the other user that really changes how a conversation is talked about. These steps are very compatible with Freedom of speech because it doesn’t stop you from posting it just giving you an outline of thing to not doing while posting...

Words: 322 - Pages: 2

Premium Essay

Fairness Is Good Management

...of the quirkiness of the English language that fair means according to the relative merits of each or consistent with rules and logic. However, it also means moderately good or satisfactory. So a fair manager can mean either one who treats others fairly or one who is only moderately good as a manager. Our goal is the first meaning. Why Is Fairness Good Management? When asked, a group of almost 2200 people reported fairness as the most important trait of a boss for who whom they would want to work. When you treat your employees fairly they spend less time worrying about who else is getting an unfair share. They don't spend a lot of time looking for ways to increase their own share. They spend less time looking for another job. And they spend more time working for you and getting more done. When you treat others fairly two things happen. Your own employees notice and respect you for it. It reinforces their belief that you are treating them fairly and will continue to do so. Second, the other people who you treat fairly will respond in kind. You will get better cooperation from them. That makes your job and the job of your employees easier too. How To Be A Fair Manager A good manager is one who treats everyone fairly. That means his/her employees, but also his superiors, her peers, employees in other departments or companies, everyone. * The golden rule When you are fair, you treat others as you wish they would treat you. * No favorites A manager who is fair does...

Words: 724 - Pages: 3

Premium Essay

Education

...PROBLEM PREVENTION PLAN Introduction Rules and procedures for the classroom, regardless of the level, are imperative and will be used accordingly in order for a classroom to be effectively managed. The most effect approach to classroom management is effective instruction (Evertson & Pool, 2008). Starting the school year with rules and procedures will set a standard that will set a tone for the remaining school year. This customized plan will focus on a first grade classroom. Rules and Procedures Since students do not share the same knowledge or behavioral characteristics, the classroom will support the diverse learner in many ways. Van Brummel suggests, “To create an optimal learning situation, indicate your expectations clearly.” One of these supports will be classroom rules. These rules will be for the entire classroom, which will be set at the beginning of the school year. The rules will be simple and easy to understand for young students. The rules are as follows: 1. Respect everyone in the class. 2. Follow directions. 3. Be polite. 4. Raise your hand. Respecting everyone in the class is rule that is to include many aspects of classroom activity. This rule can include offensives such as interrupting and disruptive behavior. A classroom has to behave in a way which depicts Christian character. Students are also expected to follow directions, but it is an important class rule, because they need to be able to be ready and have the...

Words: 602 - Pages: 3

Premium Essay

Corporate Social Responsibility and Diversity in the Modern Workplace.

...• Explain which of the eight steps from “Sherman’s Eight Steps towards Integrity” apply to Dalman and the Location Manager in this particular situation and why. • The Eight Steps toward Integrity include: doing what we say we will do, doing the right thing, taking responsibility, supporting our own weight, holistic thinking, checking the mirror, defining the rules and values. The first step is doing what we say we will do which “includes keeping promises and meeting deadlines… —and often, tough negotiation—prior to making commitments.” (Stratford Sherman). Doing the right thing includes being aware of what’s right and performing the right actions. This also includes accepting the consequences. Taking responsibility is simply taking responsibility for your actions. Supporting your own weight “means functioning as a whole.” (Stratford Sherman). Holistic thinking is “an appreciation of wholeness in the world supports its practice.” (Stratford Sherman). Checking the mirror is taking the time to do an honest review of you or as Sherman said pause for reflection. Defining the rules and values is simply rules about the basics that can be applied to almost anything from couples to organizations. The new laws that Sandwich Blitz is in violation with needs to be corrected. The enclosure that houses the trash dumpster is five feet from the property line. The government inspector has told the unit manager that he would be willing to approve this if Sandwich Blitz provides...

Words: 498 - Pages: 2

Premium Essay

Nature of Argument

...course text, The Rulebook for Arguments, consider the nature and purpose of argument. Consider the different forms that arguments can take. As you prepare for this Discussion, be sure to focus on rules one through seven presented in Chapter 1. With these thoughts in mind: * Select two of the rules that either you or one of your associates have broken in the past. * Illustrate an example of an incorrect and a correct use of each of these two rules. * Discuss why the rules are important in formulating strong arguments. One of the rules that I have recently broken myself was in my last course. For an assignment I used language and words to further emphasis the point of my paper. Now, after reading thru the 7 rules to consider when posing an argument I now understand that use of loaded language is not an effective way to back any of my premises. After thinking about this further, breaking this rule only allowed me to present my paper in a opinioned manner which clearly is going to take away from the validity of the points/issue being addressed. A second rule that is overly annoying to me in real-life, is when a member of senior management does not use definite, specific, or concrete language. Reading that this is one of the general rules in posing an argument this rule really hit home for me. From my experience, I often find that when I asks questions of senior management or other members of management I can never get a start forward answer. It seems as if they...

Words: 402 - Pages: 2

Premium Essay

Wyyyyyyyy

...line and b is the y-intercept. • The point-slope formula for a line is y – y1 = m (x – x1). This formula uses a point on the line, denoted by (x1, y1), and the slope of the line, denoted by m, to calculate the slope-intercept formula for the line. Also, there is some information from Calculus you must use: Recall: • The first derivative is an equation for the slope of a tangent line to a curve at an indicated point. • The first derivative may be found using: A) The definition of a derivative : lim h →0 f (x + h ) − f ( x ) h B) Methods already known to you for derivation, such as: • Power Rule • Product Rule • Quotient Rule • Chain Rule (For a complete list and description of these rules see your text) With these formulas and definitions in mind you can find the equation of a tangent line. Consider the following problem: Find the equation of the line tangent to f ( x ) = x 2 at x = 2. Having a graph is helpful when trying to visualize the tangent line. Therefore, consider the following graph of the problem: 8 6 4 2 -3 -2 -1 1 2 3 The equation for the slope of the tangent line to f(x) = x2 is f '(x), the derivative of f(x). Using the power rule yields the following: f(x) = x2 f '(x) = 2x (1) Therefore, at x = 2, the slope...

Words: 753 - Pages: 4

Premium Essay

The Evolution of Information Technology and Its Impact

...The Evolution of Information Technology and its Impact Felles Grant Grantham University October 29, 2013 The Evolution of Information Technology and its Impact Businesses have been searching forever for newer technology and ways to speed up production to draw in more business. With the introduction of the first personal computer in 1981 the promise of a new age of information technology was just beginning. Before businesses could capitalize on these benefits some rearranging had to take place. Automated tellers came to be and Microsoft releases the windows operating system in 1985, then in the 90's electronic commerce gabbed hold to technology. Now look at us mostly all business is conducted over a personal computer or some type of device. Computers offer businesses many options to organize data, personal information and other essential information. Information technology though it may seem new it's not, it has been around for a while now. It has been around so long that information technology can be broken down into 4 main ages. There is the premechanical age, the mechanical age, the electromechanical age, and the electronic age. The premechanical age is around the time of 3000 B.C and 1450 A.D. Yes we're talking caveman. Some of man's first communications were performed by drawings and carvings on rocks. This technology was called petroglyths. The along came the alphabet and we as people began writing...

Words: 515 - Pages: 3

Free Essay

1029384756

...photo shoot and try to capture that specific colour in all your shots. For example, if your chosen colour is yellow, shoot as much yellow in as many locations as you can — and notice the different tonal changes, how light can change the hues and how the colour “handles” translucence, or opacity. This exercise can help you to train your eye to really search out colour as the focal point of composition. 3. The 100 paces exercise The point of this exercise is to force you to look closely at your surroundings, consider various angles and find something unusual about your specific location. 4. Play with the rule of thirds. . So to do this exercise, when you go out for a photoshoot, instead of placing your subject directly in the middle of the frame, offset it slightly, so that the subject roughly lines up along an axes drawn at a third of the frame. Note that this “rule” doesn’t mean that every shot should be taken on thirds (some shots just work...

Words: 681 - Pages: 3