The Impact of the Information Economy

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How have the technological innovations of the last several years changed your business? Have they?

Aside from clearly manufactured goods, the U.S. economy, along with other advanced economies, has seen a dramatic — some might even say radical — shift toward a networked information economy that is turning the usual ideas of market production topsy-turvy. And recent turmoil in the global markets makes this even more clear. But what is the next step, and how can you play a role as an executive?

In his tome on networked information economies, The Wealth of Networks, Yochai Benkler says that the debut of open-source technologies over the last 15 or 20 years makes the 20th-century industrial model unworkable and unrealistic in the 21st century.

This new networked information economy, he says, is based on voluntary collaborative production and the habits of hackers (Eric Raymond expounded on these habits in his book on the open-source revolution, The Cathedral and the Bazaar).

Open-source usually means free, but how can the adept business embrace these free and open technologies and still make money?

Benkler says that giving something away for free in the open-source model can create a demand for another product or service that could be sold. Thus, singers, artists, writers, and other information-producers, and the companies who produced, marketed and sold their goods, are now forced to look for alternate ways of earning a living.

However, Benkler notes that the idea of new business models forcing old business models out of business is in fact nothing new.

The real shift, he says, is the change in how companies will relate to their users. Customers will have more power to define the terms of the relationship — what they want and how they want it. The companies that will survive in this era are those who can adapt to this changing relationship and adopt the social production model.