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Topic 5 Digital Markets

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Question

What impact has the Internet on the fundamental dynamics of markets?

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What constitutes a market?

Typical market?

or this Queen Vic

Is this a market?

What about a virtual market? (Chris Anderson)

Or more realistically other Online Markets

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Buyers• Ability to search

• Compare sellers

Sellers• Reach large numbers of sellers

• Eliminate intermediaries

• Maximise prices

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What does all this mean?

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Data is not conclusive at the moment.

Examination of some of the basic elements of market places may be useful to predict future trends...

Example marketplace

How advanced is Australia?

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Marketplace elements

Communications infrastructure

Structured environment

Transaction mechanism

Delivery

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So how does information get communicated?

And so one thing we know is if the Internet is anything it’s a communications network, and that’s obviously going to have an impact in the ability both of manufacturers and producers to make the marketplace aware of their products and for buyers to learn about them.

Ease of communication is both a strength and a weakness because of the huge volume of information and excess noise such as SPAM

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Market dynamics

Price

– are they clustered?

- are they elastic?

- are they transparent?

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Market dynamics

Search costs (related to transparency)

Switching costs

Entry or exit barriers.

Google

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How can the digital economy impact on competitive dynamics in

different marketplaces?

ITUNES

What new opportunities are there?

What is the Long Tail?

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What are the implications of the long tail for businesses and

customers?

How could it change the nature of products and services available?

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Other videos for optional viewing –

Amazonbeyond books – Amazon future business

HP – Dealing with change in a digital world

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Next week

Listen to the Automata Podcast…..

Look at the iTunes case study and answer the following questions :-

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How does the iTunes business model work? How is it different from traditional models for the music industry?

How does iTunes model compare with other Internet music services? Are there any Australian services?

Are there currently any threats to Blockbusters dominance in the video hire in Australia? If there are, identify them and describe the business models being used.

Can the iTunes model survive in an environment where illegal music downloading is rampant?