Information Rules: A Strategic Guide to the Network Economy

Carl Shapiro and Hal R. Varian

Harvard Business School Press, October 1998

Preliminary Table of Contents

 

• Acknowledgments
• The Information Economy
  • Information
    • The cost of producing information
    • Managing intellectual property
    • Information as an experience good
    • The economics of attention
  • Technology
    • Systems competition
    • Lock-in and switching costs
    • Positive feedback, network externalities, and standards
  • Policy
  • How we differ
• Pricing Information
  • Cost of producing information
  • Costs and competition
    • When information is commoditized
    • Market structures for information goods
    • Differentiate your product
    • Cost leadership
    • First-mover advantages
  • Personalize your product
  • Know your customer
    • Registration and billing
    • Queries and clickstream
  • Pricing your product
  • Personalized pricing
    • Personalized pricing in traditional industries
    • Personalized pricing on the Internet
    • Lessons about personalized pricing
  • Group pricing
    • Price sensitivity
    • Network effects
    • Lock-in
    • Sharing
    • The Electric Library
  • Lessons
• Versioning Information
  • Designing your product line
    • Delay
    • User interface
    • Convenience
    • Image resolution
    • Speed of operation
    • Flexibility of use
    • Capability
    • Features and functions
    • Comprehensiveness
    • Annoyance
    • Support
  • A numerical example
  • Value-subtracted versions
  • Avoiding pitfalls in versioning
  • On-line and off-line versions
  • How many versions?
    • Analyze your market
    • Analyze your product
  • Goldilocks pricing
  • Customizing the browser
  • Bundling
    • Dispersion in customer value
    • Other reasons for bundling
    • Information bundles
    • Customized bundles
  • Promotional pricing
  • Lessons
• Rights Management
  • Production and distribution costs
  • Making lower distribution costs work for you
    • Giving away your content
    • Demand for repeat views
    • Similar but not identical products
    • Selling complementary products
    • Illicit copying
  • Making lower reproduction costs work for you
    • Digital Audio Tape
  • Trusted systems
    • Cryptolopes and superdistribution
    • Problems with cryptographic envelopes
  • Historical examples
    • The rise of the library
    • The rise of the video
    • Growing the market
  • Choosing terms and conditions
    • The analytics of rights management
    • Transactions costs
  • Lessons
• Recognizing Lock-In
  • Examples of lock-in
    • Bell Atlantic
    • Çomputer Associates
    • Aircraft repair and cargo conversion
    • Small switching costs matter
    • Switching costs are ubiquitous
  • Valuing an installed base of customers
  • Classification of lock-in
    • Contractual commitments
    • Durable purchases
    • Brand-specific training
    • Information and databases
    • Specialized suppliers
    • Search costs
    • Loyalty programs
  • Suppliers and partners face lock-in, too
  • The lock-in cycle
  • Lessons
• Managing Lock-In
  • Lock-in strategy for buyers
    • Bargaining before you become locked-in
    • Keeping your options open
  • Summary of lock-in strategy for buyers
  • Lock-in strategy for sellers
  • Investing in an installed base
    • Look ahead at the whole lock-in cycle
    • Fighting for new customers
    • Structuring the life-cycle deal
    • High market shares don't imply high switching costs
    • Attracting buyers with high switching costs
    • Selling to influential customers
    • Multi-player strategies
  • Encouraging customer entrenchment
    • Entrenchment by design
    • Loyalty programs and cumulative discounts
  • Leveraging your installed base
    • Selling complementary products
    • Selling access to your installed base
    • Differential prices and lock-in
    • Attempts to raise search costs
    • Exploiting a first-mover advantage
    • Cycle length
  • Lessons
• Networks and Positive Feedback
  • Positive feedback
  • Demand-side economies of scale
  • Network externalities
  • Collective Switching Costs
  • Is your industry subject to positive feedback?
    • Information products get pushy
  • Igniting positive feedback: performance vs. compatibility
  • Evolution: offer a migration path
    • Technical obstacles
    • Legal obstacles
  • Revolution: offer compelling performance
  • Igniting positive feedback: openness vs. control
    • Openness
    • Control
  • Generic strategies in network markets
    • Performance Play
    • Controlled Migration
    • Open Migration
    • Discontinuity
  • Historical examples of positive feedback
    • Railroad gauges
    • Battle of the systems: AC vs. DC power
    • Telephone networks and interconnection
    • Color television
    • High-definition television
  • Lessons
• Cooperation and Compatibility
  • How standards change the game
    • Expanded network externalities
    • Reduced uncertainty
    • Reduced consumer lock-in
    • Competition for the market vs. competition in the market
    • Competition on price vs. features
    • Competition to offer proprietary extensions
    • Component vs. systems competition
  • Who wins and who loses from standards?
    • Consumers
    • Complementors
    • Incumbents
    • Innovators
  • Formal standard setting
    • The ITU, ISO, and ANSI
    • The IETF and the W3 coalition
  • Tactics in formal standard-setting
  • Building alliances
    • Assembling allies
    • Interconnection among allies
    • Negotiating a truce
    • Alliances in action
      • Xerox and Ethernet
      • Adobe PostScript
      • Microsoft's Active-X
  • Managing open standards
  • Lessons
• Waging a Standards War
  • Classification of standards wars
  • Information-age standards wars
    • AM stereo radio
    • Digital wireless telephones
    • 56k modems
  • Key assets in network markets
  • Two basic tactics in standards wars
    • Preemption
    • Expectations management
  • Once you've won
    • Staying on your guard
    • Commoditize complementary products
    • Competing against your own installed base
    • Protecting your position
    • Leveraging your installed base
    • Staying a leader
  • Rear-guard actions
    • Adapters and interconnection
    • Survival pricing
    • Legal approaches
  • Capstone case: Microsoft vs. Netscape
    • Preemption
    • Penetration pricing
    • Expectations management
    • Alliances
  • Lessons
• Information Policy
  • Policy overview
  • Price differentiation
    • How differential pricing can benefit consumers
  • Competition policy
    • Principles of competition policy
    • Implications for strategy
    • Mergers and joint ventures
    • Cooperative standard setting
    • Single-firm conduct
  • Direct government intervention
    • Government regulation
    • The government's role in achieving critical mass
    • Universal service
  • Lessons
• Further Reading
  • The Information Economy
  • Pricing Information
  • Versioning Information
  • Rights Management
  • Recognizing Lock-In
  • Managing Lock-In
  • Networks and Positive Feedback
  • Cooperation and Compatibility
  • Waging a Standards War
  • Information Policy
• List of Hyperlinks
• List of Figures
• List of Tables
• References
• Index

Hal Varian
Mon Mar 30 13:31:07 PST 1998