Technology Meet Economy

Information Rules

Winny Setyonugroho, M.T. Head of Health Informatics Dept. Faculty of Medicine and health sciences UM

What is Information ?

Is anything that can !e digiti"ed

The information economy

Technology changes, Economic la#s do not

Producing Information

The cost of producing information

Costly to produce but cheap to reproduce It has high fixed cost but low marginal cost

Price information according to its value, not its cost

Managing Intellectual Properties

Information goods, reproduce cheaply, others copy cheaply Information goods, reproduce cheaply, others copy cheaply

Experience Good

Information is an experience good

Other goods free samples, promotional pricing, ! testimonial to learn new product

Information is an experience good everytime it"s consumed

Experience Good

#ased on #randing and $eputation

eg reason read %ournal published by &lsevier today is that we"ve found it useful in the past

$eputation accuracy, timelines, ! relevance

#rand &lsevier conveys a message for potential reader about the 'uality

The Economic of Attention

( wealth of information creates a poverty of attention

)owadays the problem is not information access, but information overloaded (dvertising wor*s by exploits statistical patterns Create one to one mar*eting

Technology

Infrastructure is to information as a bottle is to co*e Technology is pac*aging, to deliver information to end user Technology ma*es information more accessible and more valuable

System Competition

Traditional rules competitive strategy focus on competitors, suppliers, and customers Information economy companies selling complementors

+ou cant compete if you"re not compatible

,ocus on competitors also collaborators and complementors

oc!"In # S$itching Cost

once you have chosen a technology, or a format for *eeping information, switching can be very expensive -oc*.in arises / invest in multiple complementary and durable assets specific to a particular information technology system0

%ecogni&ing oc!"In

1imple rules, such as 23on"t get loc*ed in2 or 2&valuate costs on a life.cycle basis,2 / wont help strategically loo* ahead and reason bac*0 Total cost of switching 4 cost the customer bears 5 costs the new supplier bears

%ecogni&ing oc!"In '(

&'uipment wears out, reducing switching costs information.based loc*.in is durable0 peciali6ed databases live on and grow, enhancing loc*.in over time 7eep control of information and databases by using standardi6ed formats and interfaces

%ecogni&ing oc!"In ')

1uplliers and partners face loc*.in

1oftware vendor write a speciali6ed soft for individual client

Brand selection

Lock-in enrtrechment

sampling

ou are not !orn $loc%ed&in' ou get loc%&n !ecause of choice you ma%e

Managing oc!"in

8inimi6ed loc*.in 8a%or consideration be how difficult it may be to convert your data to other formats in a few years 7eep control of information and databases by using standardi6ed formats and interfaces (nticipating 90 bargain hard : ;0 Ta*e steps to minimi6e switching cost

*et$or!s # Positi+e ,eed-ac!

the value of a product to one user depends on how many other users there are / networ* externalities, or networ* effects0 Positive feedbac* ma*es large networ*s get larger &xternatilities create virtual networ*s / create externalities

Waging a Standars War

<18 vs (8P1

Information Policy

8onopoly is illegal