1. 1 Topic 5 Digital Markets

2. 2 Question What impact has the Internet on the fundamental dynamics of markets?

3. 3 What constitutes a market? Typical marketTypical market? or this Queen VicQueen Vic Is this a market? What about a virtual market? (Chris Anderson)virtual market Or more realistically other Online Markets 1 – 2 – 3 123

4. 4 Buyers Ability to search Compare sellers Sellers Reach large numbers of sellers Eliminate intermediaries Maximise prices

5. 5 What does all this mean?

6. 6 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? How advanced is Australia?

7. 7 Marketplace elements Communications infrastructure Structured environment Transaction mechanism Delivery

8. 8 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 SPAM

9. 9 Market dynamics Price – are they clustered? -are they elastic? -are they transparent?

10. 10 Market dynamics Search costs (related to transparency) Switching costs Entry or exit barriers. Google

11. 11 How can the digital economy impact on competitive dynamics in different marketplaces? ITUNES What new opportunities are there? What is the Long Tail? ITUNESLong Tail?

12. 12 What are the implications of the long tail for businesses and customers? How could it change the nature of products and services available?

13. 13 Other videos for optional viewing – Amazon Amazon beyond books – Amazon future business HPHP – Dealing with change in a digital world

14. 14 Next week Listen to the Automata Podcast….. Look at the iTunes case study and answer the following questions :-

15. 15 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?