I had occasion to look up something in [amazon_link id=”087584863X” target=”_blank” ]Information Rules: A Strategic Guide to the Network Economy[/amazon_link], the 1999 book by Carl Shapiro and Hal Varian. It was the first, and is still the best, book about how the internet changes the economic basis of business models. It ranges from price-setting to rights management to standards to positive feedback effects. Anyone involved in business strategy, in any business, should read it.

Of course, there are areas that loom larger now than they did then. Online copying is one of them. People in the music or movie industries will consider the authors complacent about the capacity of legal authorities to clamp down on ‘bitlegging’ (great word). However, the book has wise advice:

“It’s easy to see the threats inherent in the new media; it’s hard to see the promise. The key issue is how to exploit the economies of scale. …. We think the natural tendency is for producers to worry too much about protecting their intellectual property. The important thing is to maximise the value of your intellectual property, not to protect it for the sake of protection.” (p97)

Some loss should be regarded as a cost of business, like depreciation, they argue. I’m sure the producers would reply that the scale of copying is way beyond reasonable. But they should still read this and ponder.

[amazon_image id=”087584863X” link=”true” target=”_blank” size=”medium” ]Information Rules: A Strategic Guide to the Network Economy[/amazon_image]