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The power of sharing in business
- 1. The power of sharing in business
- 2. "Ignore basic economic principles at your own risk. Technology changes. Economic laws do not." Carl Shapiro and Hal R. Varian in Information Rules
- 3. Agenda Why should I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get if I share?
- 4. Agenda Why would I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get if I share?
- 5. Wikipedia: The free encyclopedia
- 6. Wikipedia Approximately 55 million visitors per month
- 7. Google: Free search engine
- 8. Google Approximately 130 million visitors per month
- 9. Facebook: Free social networking
- 10. Facebook Approximately 33 million visitors per month
- 11. Agenda Why would I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get if I share?
- 12. Agenda Why would I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get when I share?
- 13. Microeconomics of traditional goods (the past) You pay and receive a good Price Quantity Supply Demand P1 Q1
- 14. Microeconomics of traditional goods (the past) Observations: Price = P1 (Price > 0) Quantity = Q1 Benefits of the Consumer = Green area Benefits of the Producer = Yellow area T ypical for physical goods Price Quantity Supply Demand P1 Q1
- 15. Microeconomics of traditional goods (examples) www.dell.com www.travelocity.com www. jcpenney .com
- 16. Agenda Why would I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get if I share with this strategy?
- 17. Microeconomics of shared goods (the present) You receive a free good in internet, such as free search engine service, free calls from PC to PC, free social networking, etc. Price Quantity Demand P2 Q2
- 18. Microeconomics of shared goods (the present) Observations : Price = P2 (P2 = 0) Quantity = Q2 Benefits of the Consumer = Green area Benefits of the Producer = 0 Typical for digital goods Price Quantity Demand P2 Q2
- 19. Microeconomics of shared goods (examples) www.wikipedia.org www.google.com www.skype.com
- 20. Agenda Why would I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get if I share with this strategy?
- 21. Microeconomics of incentives (the future) You receive an incentive in a social currency such as ringtones, music, videos, minutes of calling, text messaging, SMS, etc. for using or buying a good, mainly advertising Price Quantity Demand P3 Q3 0
- 22. Microeconomics of incentives (the future) Observations : Price = P3 (P3 < 0) Quantity = Q3 Benefits of the Consumer = Green area Benefits of the Producer = 0 Will be typical in the mobile world Price Quantity Demand P3 Q3 0
- 23. Microeconomics of incentives (examples) search.live.com/cashback www.virginmobileusa.com/stuff/sugarmama.do Incentives is a new business model. This model will be used widely in the mobile world. Free ringtones, music, videos, minutes of calling, text messaging, SMS, etc. for watching advertising www.yourexample.com
- 24. Microeconomics 101 conclusions Microeconomic of traditional goods (web 1.0) Price = P1 (P1 > 0) Quantity = Q1 Shared b enefits between consumers and producers Typical in the physical world Microeconomic of s hared goods (web 2.0) Price = P2 (P2 = 0) Quantity = Q2 (Q2 > Q1) Consumer gets all the benefits Typical in the internet world Microeconomic of incentives (web 3.0?) Price = P3 (P3 < 0) Quantity = Q3 (Q3 > Q2 > Q1) Consumer gets all the benefits Will be typical in the mobile world
- 25. Agenda Why would I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get if I share?
- 26. Public and private goods theory Definition: “ In economics, a public good is a good that is non-rivalry and non-excludable ” Non-rivalry The consumption of one good by one individual does not reduce its availability for others consumption. Non-excludability. No one can be effectively excluded from consumption of one good.
- 27. Rivalry Non-rivalry goods Goods never run out (not scarce) Examples: The fact that one use a search engine does not reduce its availability The fact that one watch an online video does not reduce its availability Rivalry goods Goods can run out (scarce) Examples: The fact of installing a software in a computer with a license key prevents to installing in an other computer (artificial rivalry) The sales of theatre tickets online is a signal of rivalry
- 28. Excludability Non-excludability Difficult control of distribution or consumption Examples: The fact that one can use a search engine does not prevent other to use it The fact that one watch a video does not prevent other to watch it Excludability Easy control of distribution or consumption Examples The fact of installing a software in a computer with a license key prevents to installing in an other computer The fact of accessing a website with password is a signal of excludability
- 29. Public and private goods theory Public goods Collective goods Non-rivalrous Common goods / (Common-pool resources) Private goods Rivalrous Non-excludable Excludable Type of goods
- 30. Public and private goods theory Private goods They are scarce and the producer can control their distribution and consumption Almost any physical good In internet: password protected services
- 31. Private goods (examples) www.dell.com www.travelocity.com www. jcpenney .com
- 32. Public and private goods theory Common goods / (Common-pool resources) They are scarce and control of distribution and consumption are difficult Examples: Hosting data transfer Disk space
- 33. Public and private goods theory Collective goods Also know as artificially scarce goods , they are goods that can be scarce or not and distribution is controlled Examples: Copyrighted goods DRM goods Patents Commercial software “ Walled garden” communities or social networks
- 34. Collective goods (examples) iTunes Store www.aol.com www.diamondlounge.com
- 35. Public and private goods theory Public goods They are not scarce and the producer can not control the distribution or consumption Examples: Information in general Digital goods Wikipedia Google Yooutube MySpace Facebook Etc.
- 36. Public goods Examples www.facebook.com www.wikipedia.org www.google.com
- 37. Agenda Why would I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get if I share?
- 38. So what the bleep can I share? Share something valuable for a large group Share when you can not control distribution Share when there is not scarcity problems Turn private goods into public goods (if apply) Make collective goods public goods (if apply) Share when your business model is not clear Share information Always share digital goods (no physical ones) Make flexible your copyright (use creative commons)
- 39. In the hyper connected world free riders are welcomed!!!
- 40. Agenda Why would I care about sharing in business? Microeconomics 101 Microeconomics of traditional goods (the past) Microeconomics of shared goods (the present) Microeconomics of incentives (the future) Public and private goods theory So what the bleep can I share? How many potential clients can I get if I share?
- 41. How many potential clients can I get if I share? Wikipedia 55 million visitors average Britannica 2.5 million visitors average
- 42. Yahoo 130 million visitors average AOL 60 million visitors average How many potential clients can I get if I share?
- 43. MySpace 33 million visitors average aSmallWorld 50 thousand visitors average (a social networking site for rich people) How many potential clients can I get if I share?
- 44. Coming soon: What to sell in the hyper connected world
- 45. Still need more help?
- 46. Marcelo Honores Economist, Master in E-Business, 15 years experience in IT “ The billion business model” consultant [email_address] (511) 9924-22131 The Billion Business Model saga