The power of sharing in business
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Transcript of The power of sharing in business
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The power of sharing in business
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"Ignore basic economic principles at your own risk. Technology changes. Economic laws do not."
Carl Shapiro and Hal R. Varian in Information Rules
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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?
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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?
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Wikipedia: The free encyclopedia
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WikipediaApproximately 55 million visitors per month
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Google: Free search engine
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GoogleApproximately 130 million visitors per month
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Facebook: Free social networking
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FacebookApproximately 33 million visitors per month
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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?
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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?
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Microeconomics of traditional goods(the past)
Price
Quantity
SupplyDemand
P1
Q1
• You pay and receive a good
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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
• Typical for physical goods
Price
Quantity
SupplyDemand
P1
Q1
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www.dell.com
Microeconomics of traditional goods(examples)
www.travelocity.com
www.jcpenney.com
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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?
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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
P2Q2
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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
P2Q2
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Microeconomics of shared goods(examples)
www.wikipedia.org
www.google.com
www.skype.com
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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?
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Microeconomics of incentives (the future)
Price
Quantity
Demand
P3Q3
0
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
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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
P3Q3
0
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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
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Microeconomics 101conclusions
Microeconomic of traditional goods(web 1.0)
• Price = P1 (P1 > 0)
• Quantity = Q1
• Shared benefits between consumers and producers
• Typical in the physical world
Microeconomic of shared 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
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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?
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Public and private goods theory
• Definition:“In economics, a public good is a good that is non-rivalry and non-excludable”
• Non-rivalryThe 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.
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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
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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
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Public and private goods theory
Type of goods
Excludable Non-excludable
Rivalrous Private goods Common goods / (Common-pool resources)
Non-rivalrous Collective goods
Public goods
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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
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Private goods (examples)
www.dell.com
www.travelocity.com
www.jcpenney.com
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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
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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
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Collective goods(examples)
iTunes Store
www.diamondlounge.com
www.aol.com
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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.
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Public goodsExamples
www.wikipedia.org
www.google.com
www.facebook.com
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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?
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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)
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In the hyper connected world free riders are welcomed!!!
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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?
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How many potential clients can I get if I share?
• Wikipedia 55 million visitors average• Britannica2.5 million visitors average
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• Yahoo 130 million visitors average• AOL 60 million visitors average
How many potential clients can I get if I share?
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• 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?
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Coming soon:What to sell in the hyper
connected world
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Still need more help?
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Marcelo HonoresEconomist, Master in E-Business, 15 years experience in IT
“The billion business model” consultant
[email protected] (511) 9924-22131
The Billion Business Model saga