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Information Rules: A Strategic Guide to the Network Economy [Kindle Edition]

Carl Shapiro , Hal R. Varian
4.4 out of 5 stars  See all reviews (36 customer reviews)

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Book Description

In Information Rules, authors Shapiro and Varian reveal that many classic economic concepts can provide the insight and understanding necessary to succeed in the information age. They argue that if managers seriously want to develop effective strategies for competing in the new economy, they must understand the fundamental economics of information technology. Whether information takes the form of software code or recorded music, is published in a book or magazine, or even posted on a website, managers must know how to evaluate the consequences of pricing, protecting, and planning new versions of information products, services, and systems. The first book to distill the economics of information and networks into practical business strategies, Information Rules is a guide to the winning moves that can help business leaders navigate successfully through the tough decisions of the information economy.

Product Description

Amazon Review

Chapter 1 of Information Rules begins with a description of the change brought on by technology at the close of the century--but the century described is not this one, it's the late 1800s. One hundred years ago, it was an emerging telephone and electrical network that was transforming business. Today it's the Internet. The point? While the circumstances of a particular era may be unique, the underlying principles that describe the exchange of goods in a free- market economy are the same. And the authors, Carl Shapiro and Hal Varian, should know. Shapiro is Professor of Business Strategy at the Haas School of Business at the University of California, Berkeley, and has also served as chief economist at the Antitrust Division of the US Justice Department. Varian is the Dean of the School of Information Management and Systems at University of California, Berkeley. Together they offer a deep knowledge of how economic systems work coupled with first-hand experience of today's network economy. They write:
Sure, today's business world is different in a myriad of ways from that of a century ago. But many of today's managers are so focused on the trees of technological change that they fail to see the forest: the underlying economic forces that determine success and failure.
Shapiro and Varian go to great lengths to purge this book of the technobabble and forecasting of an electronic "woo-woo land" that's typical in books of this genre. Instead, with their feet on the ground, they consider how to market and distribute goods in the network economy, citing examples from industries as diverse as airlines, software, entertainment and communications. The authors cover issues such as pricing, intellectual property, versioning, lock-in, compatibility, and standards. Clearly written and presented, Information Rules belongs on the bookshelf of anyone who has an interest in today's network economy--entrepreneurs, managers, investors, students. If there was ever a textbook written on how to do business in the information age, this book is it. Highly recommended. --Harry C. Edwards,

From the Publisher

The book is clearly written, and easy to read
If you think you can apply traditional economics to the new information economy, then you are ... right. That is the message from the economist authors of this informative and readable book from Shapiro and Varian.

The book uses a range of products from the network economy to outline strategies for pricing information goods. These range from the obvious (introductory pricing, competitive upgrades, basic versus deluxe) through to more complex strategies such as versioning (producing different versions of a product for different groups of customers - and charging different prices accordingly).

The book is full of examples, ranging from HDTV and railroads through to the computing industry. For me, some of the most interesting examples come from the content side, and this includes Encyclopaedia Britannica's move to supplement its hard copy business with digital delivery.

In fact, there is a lot of overlap in the book between the very different markets of software, hardware and content, and this can make it difficult sometimes to apply the rules to the area in which you are interested (probably "content" if you bought the book after the hype). Also, I'm not convinced that there really is a direct comparison between these very different industries. For instance, there is much talk about network economies and lock-in (with companies using closed standards) which I believe isn't directly applicable to the information content industry as I would define it.

However, all of the examples are suitably analysed and each chapter ends with a summary of the rules learned. This is a good way to make you think about the interesting issues raised.

The book is clearly written, and easy to read with little jargon. Much of this material you will probably have read something about elsewhere (first mover advantage, network effects and externalities, economies of scale, etc.) but it is nice to have it clearly summarised in one place.

This is not, however, a "How to make money by selling information on the Internet" book for Net entrepreneurs. Also, it may not contain much new material for those who already work in the industries covered. However, even though it may tell you some things you already know, it is well worth a read for bringing it all together and getting you thinking about the important issues raised.

FreePint - June 1999

Product details

  • Format: Kindle Edition
  • File Size: 616 KB
  • Print Length: 380 pages
  • Publisher: Harvard Business Review Press (6 Oct. 1998)
  • Sold by: Amazon Media EU S.à r.l.
  • Language: English
  • ASIN: B004OC07FI
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Enabled
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (36 customer reviews)
  • Amazon Bestsellers Rank: #337,261 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

Most Helpful Customer Reviews
3 of 3 people found the following review helpful
By A Customer
This book is a very strong and accessible primer on the underlying economics of the information and network economy. It is NOT a bunch of speculative conjectures on the next new hyped up techno-babble concept and/or technology that will soon revolutionize the world. If you're looking for spin, whether to guide you in business choices or co-op for you own marketing, you won't find it here. The point of the book is to clearly communicate economic theories that can help one make sense of the economic of the computer/internet/information economy. As such, it may seem a bit academic (though I found the real world examples provided very grounding).
I would heartily recommend it -- if you are interested in learning some concepts to help you make sense of the *NEW* economy. The authors do a great job of avoiding the typical economic jargon that makes these sorts of ideas opaque. However, like any academic book, it requires that you take the concepts you learn from it and apply them YOURSELF to the business world around us. Unlike a lot of HYPE TECHNO books, these concepts will not go OUT OF STYLE. They are basic, fundamental and informative, if you're willing to think a little bit about them.
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1 of 1 people found the following review helpful
2.0 out of 5 stars Not Particularly Insightful 16 Nov. 1998
By A Customer
This book says nothing new that has not been said before - such as increasing returns by Brian Arthur. The book looks at the problem of selling digital goods from the perspective of economic theory such as theory of complements and network externalities. The book is useful as a primer on economic theory with examples from the Internet space. However, there is little insight for a budding entrepreneur about how to create new value or how to create differentiation in the web marketspace. From the marketing hype that has enveloped this book, I definitely expected more. The book was quite dry and could have used more contemporary examples.
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By A Customer
The authors provide a very interesting retrospect of some of the key milestones in the evolution of Information Technology and, more interestingly, they do it from several complementary perspectives: historical, political, social, legal, as well as technical.
If only for the number, the variety, and the significance of its examples, the Book is well worth reading. The Book is a reminder that the "breadth" of Information Technology is more than just conventional computer systems, as many of us have come to think of, and that the "depth" of Information Technology is more than just the last 50 years or less. The authors remind us that Information Technology existed well before the advent of computer systems and the age of digital recording of information in general.
The authors refer to companies and products that most of us have already heard of but they go one step beyond the mere presentation of these examples, they do analyze them and they propose explanations of the underlying principles behind the successes and the failures of the former as well as of the battles that took place.
The Book is well-written, has a good flow, shows objectivity, and provides useful backward references as well as summaries of lessons learned throughout. The authors successfully translate the lingo of Economics into layman's terms. Reading the Book is like taking a refresher class in Economics applied to Information Technology.
The one lesson learned, after reading the Book, could well be: "look back in history and look around in the various areas of Information Technology if you want to better understand what the future might hold in one specific area of Information Technology".
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5.0 out of 5 stars valuable insights 29 Aug. 1998
By A Customer
Here are some excerpts of a review I wrote based on aprepublication copy.
Varian and Shapiro (henceforth VS) argue that economics is applicable to the Information Age, even though information has characteristics that differ from those of ordinary goods. As they put it,
"Even though technology advances breathlessly, the economic principles we rely on are durable. The examples may change, but the ideas will not go out of date." (preface, p. viii)
"markets for information will not, and cannot, look like textbook-perfect competitive markets..." (p. 22-23)
In other words, the asylum of economic analysis is still sturdy, even though it may resemble the movie "King of Hearts," in which the inmates are in charge. In this case, the inmates are phenomena that formerly were regarded as theoretical curiosities: zero marginal cost, significant complementarity, etc.
Mass-market business books instead tend to focus on providing affirmation, not information. ("You can be great, too! Here is the recipe for success!"). Many authors use jargon and metaphors to try to make their ideas sound more radical and important than they really are. VS offer neither chicken soup nor cyberbabble. They provide business executives with advice that is unconventional from a traditional vantage point and yet is well-grounded in economic reasoning.
As someone who finds pure intellectual curiosity sufficient motivation to read about this subject, I found "Information Rules" to be very worthwhile. The book is rich with substance, which can be conveyed only superficially in a brief review. It gave me fresh insights that helped to clarify my thinking.
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Most Recent Customer Reviews
3.0 out of 5 stars Good reading
good reading
Published 8 months ago by Alvaro Magalhaes
5.0 out of 5 stars A roadmap to the Internet paradigm
One of the most influential books on the rise of the networked economy and the new Internet culture with a set of analysis and consequent business rules for how to navigate it... Read more
Published 16 months ago by Angus Jenkinson
5.0 out of 5 stars Road map for the information economy
I first read Information Rules in 1999-2000, enjoyed it, and kept it on shelf. 8 years later, I am reading it again, it is as fresh as it was then, because it is grounded in solid... Read more
Published on 19 Nov. 2007 by Mubbasher Khanzada
5.0 out of 5 stars Outstanding!
An outstanding book which has influenced both academics and practitioners. There is extensive coverage of both firm-level and industry-level issues. Read more
Published on 15 Jan. 2007 by K. Maroukian
New technologies always suffer in their development because people overestimate them in the near term and underestimate them in the long term. Read more
Published on 29 May 2004 by Donald Mitchell
5.0 out of 5 stars Keep this Network Economy strategic guide close to your hand
You will have to come back to it many times to improve continually your understanding and practices in the network economy... Read more
Published on 23 July 2002 by Amazon Customer
4.0 out of 5 stars A must read for any information goods executive
The Gist:
"Technology changes. Economic laws do not." Ignore basic economic principles at your own risk. Read more
Published on 21 Dec. 2001 by Charles Heaton- The Fusebox (
5.0 out of 5 stars Excellent primer of IT economics
An interesting and informative read on network economics. Plenty of examples and the authors have concealed their economic arguments in very simple terms.
Published on 9 Aug. 2001 by Ant
5.0 out of 5 stars Excellent work!
A very practical and concise blueprint to the network economy. Read it and understand the differences between the old and the new economy.
Published on 25 Jan. 2001 by Marque Pierre Sondergaard
4.0 out of 5 stars Easy read, good microeconomic fundamentals and examples
It may to too remedial for industry veterans or any recent graduate from an MBA program. It is, however, an excellent primer for those entering the IT industry. Read more
Published on 3 Sept. 1999
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