Table Of ContentEuropean Communication Council Report
E-CONOMICS
Strategies for the Digital Marketplace
Springer
Axel Zerdick, Arnold Picot, Klaus Schrape,
Alexander Artope, Klaus Goldhammer, Ulrich T. Lange, Eckart Vierkant
Esteban L6pez-Escobar, Roger Silverstone
with an introduction by Carl Shapiro and Hal R. Varian
Springer-Verlag Berlin Heidelberg GmbH
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E-CONOMICS
Strategies for the Digital Marketplace
European Communication Council Report
E-CONOMICS
Strategies for the Digital Marketplace
The authors:
Axel Zerdick (1941), Prof. Dr., Institut fur Publizistik-und Kommunikationswissenschaft,
Freie Universitat Berlin, E-mail: [email protected]
Arnold Picot (1944), Prof. Dr. Dr. h.c., Institut fur Organisation, Seminar fur
Betriebswirtschaftliche Informations-und Kommunikationsforschung, Ludwig
Maximilians-Universitat Miinchen, E-mail: [email protected]
Klaus Schrape (1946), Prof. Dr., Vicedirector and Chair of the Department for Media and
Communication, Prognos AG, Basel, a.o. Professor, Universitat Basel, E-mail:
kIa [email protected]
Alexander Artope (1969), Dipl.-Kfm. M.A., Managing Editor, European Communication
Council, E-mail: [email protected]
Klaus Goldhammer (1967), Dr., Managing Editor, European Commmunication Council,
E-mail: [email protected]
Ulrich T. Lange (1953), Dr., Director of "institut fur medienarchitektur und -gestaltung",
Berlin, and CEO, dynavions AG, Berlin, E-mail: [email protected]
Eckart Vierkant (1972), Dipl.-Kfm., Institut fur Publizistik-und Kommunikationswissenschaft,
Freie Universitat Berlin, E-mail: [email protected]
Esteban LOpez-Escobar (1941), Prof. Dr.; Departamento de Comunicaci6n Publica,
Universidad de Navarra, Pamplona, E-mail: [email protected]
Roger Silverstone (1945), Prof., PhD; Chair of Media and Communications,
Department of Sociology, London School of Economics, E-mail: [email protected]
Supported by: MElJlAGRUl'PE MONCHEN
Webpage: www.mgmuc.de
ISBN 978-3-642-86484-1 ISBN 978-3-642-86482-7 (eBook)
DOI 10.1007/978-3-642-86482-7
CIP-Ilaln ap~ied for
E{anomies : strategies for the digilnl markelplacel ed : ECC
European Communication Council By Axd Zerdick _-Berlin; Heidelberg; New-York;
BarcelOfl{] ; Hong Kong; london; Milan; Paris; Singapore, Tokyo: Spring,r, 2000
(Report ... 1 Europem Communiconan Council; 2000)
ISBN 978-3-642-86484-1
This work is subiect to copyright. All rtghlS reserved, whether the whole or port of this moterill is COna!f~, spedfico~y the r\lhlS of tronsi<Jtion, reprinting, reuse of
niustrations, recilntian, broadCIIsfing and reproducnOfl an microfilm or in other ways, and stomge in daln bonks. OUjllkation of this ~atian or poII5 thereof is permi"ed
only under the prov~ion of the Germon Copyr\lht law of September 9, 1965, in its ament version, and permission for use must a1woys be obtoined from Springer
Verlag. Violations ore na~e for proserution loIlIier German Copyright lnw.
© Springer-Verlag Berlin Heidelberg 2000
Originally published by Springer-Verlag Berlin Heidelberg New York in 2000
Softcover reprint of the hardcover 1st edition 2000
The use of general desHiptive names, reghtered names, trademmks, etL in this pub~mtian does not i~, even in the absence of a specific slntement, that such names
are exempt from the relevant protective ~ and regu~tions and therefore free for general use.
Cover design and setting: 5coomonnCorporote/Beriin
SPIN 10691497 68/3020·54321 O-PrintedonocidfreeJlllper
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Workshop P<lrticip<lnts
<lnd Interview P<lrtners
The Eee is particularly grateful to those experts who gave their valuable time for interviews
with us and for discussions in our workshops:
arne Fun lion rgani -alion
Alfieri, Thomas Manager Intemctive Reseorch NBC
Bachem, Christian Strotegic Planning, Marketing Services Pixelpork
Beer, Joachim Associate Director ICSI
Bonnaure, Patrick Manager Business Development Web lV Networks
Bunger, Stan Producer New Media News KRON-lV, Channel 4
Carlton, Jim Technology Reporter The Wall Street Journal
Catchings, John Station Operotions Director KPIX Television -CBS
Cavagnaro, Ed Director News and Programming KCBS NewsRadio
Cringely, Robert X. Author
Dennis, Everette E. Distinguished Visiting Professor Fordham University
Diamond, Michael Associate Director, Time Warner
Corporote Strategy and Planning
Dixon, Christopher P. Managing Director, Entertainment Research Paine Webber
Eliashberg, Jehoshua Professor of Marketing University of Pennsylvonia
Fischer, Claude S. Professor of SOciology, University of California ot Berkeley
College of letters and Science
Henkin, Michael Director of Operotions Planning loml Spoce & Communications
Kellog, Nelson R. Professor of Interdisciplinory Studies Sonoma State University
Kim,Jasmin Marketing Manager Yahoo!
Kounalakis, Markos Executive Communications Strategist Silicon Grophics
Kiirble, Peter lecturer Fontys Hogescholen, Venlo
McGowan, David Attorney at law Howord, Rice, Nemerovski,
Canady, Falk & Robkin
Meluso, Peter Chief Service Officer I-Troffic
Neuert, Ulrich Executive Vice President Bertelsmann New Media
Noam,EliM. Professor of Finance and Economics, Calumbia University
Director of the Columbia Institute for Tele-Information
Poliza, Andreas Chairman ond CEO GoUve Systems
Reiss, Spencer Senior Editor Wired Magazine
Riquier, David Associate Director MIT Media lab
Schambach, Stefan President and CEO Intershop Communications
Schoneberger, Markus Manager Movies, lV, Media Economics RTl Television
Shirk, George News Director The Gate· Online Service
Stipp, Horst Director, Social and Development Reseorch Reseorch Deportment, NBC
Swank, Gabriel Corporate Strategist Intershop Communications
Tannenbaum, Percy Professor University of California at Berkeley
Varian, Hal R. Dean of the School of University of California at Berkeley
Informotion Managament and Systems
Weiber, Rolf Professor of Morketing Universitot Trier
Weinberg, Ulrich Generol Manager, Terrotools,
Professor for Computer Animation HFF Potsdam/Babelsberg
Woroch, Glenn A. Professor of Economics, Consortium for University of California at Berkeley
Research on Telecommunications Policy
Worthman, Susan Managing Director MDG.ORG,
Multimedia Development Group
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The European
Communication Council
The European Communication Council (ECC) is an independent group of scholars and
scientists from different European countries and the USA. For each new report, communica
tion experts from diverse academic backgrounds are invited to participate in research and
production as either Fellows of the Council or authors. The ECC's objective is to discuss trends
and issues in European communications for leaders and visionaries in communication
companies and for leading policymakers.
ECC Reports concentrate on key trends and issues in media, telecommunications and
information technologies, which are expected to be predominant for future development of
communication industries, and which deserve higher profile in future debates.
The European Communication Council is organised as an independent research
project at Freie UniversitiH Berlin. It is fully funded by non-government resources from
MEDIAGRUPPE MUNCHEN.
Fellows, editors and authors who contributed to this and previous reports:
arne ECC Function Home rgani alion
Artope, Alexander Managing Editor 1999, 2000 datango.de, Berlin
Carlton, Jim Author 1999, 2000 The Wall Street Journal, San Francisco
Claisse, Gerard Author 1997 Laboratoire d'Economie des Transports, Lyon
Cringely, Robert X. Author 1999, 2000 Journalist and Author, San Mateo
Gaster, Jens Author 1997 European Commission, Brussels
Goldhammer, Klaus CO'Ordinaling Author 1997, Goldhammer Medienberatung, Berlin
Managing Editor 1999, 2000
Kelly, Kevin Author 1999, 2000 Wired Magazine, San Francisco
Kleinsteuber, Hans J. Author 1997 Universitiit Hamburg
Lange, Ulrich T. (O'Ordinaling Author 1997, dynavisions AG, Berlin
Author 1999, 2000
Lopez-Escobar, Esteban Fellow 1999, 2000 Universidad de Navarro, Pamplona
Martinoli, Mario Author 1999, 2000 Databank Consulting, Milano
Negroponte, Nicholas Author 1999, 2000 MIT Media Lab, Boston
Noam,Eli M. Author 1997 Columbia University, New York
Paterson, Richard Author 1997 British Film Institute, London
Picot, Arnold Fellow 1999, 2000 Ludwig-Maximilians·Universitiit, MUnchen
Pilati, Antonio Author 1997 Instituto di Economia dei Media, Milano
Richeri, Giuseppe Author 1997 University Bologna / University Lugano
Rosenbach, Marcel Author 1997 Universitiit Hamburg
Schlesinger, Philip Fellow 1997 University of Slirling, Sco~and
Schrape,Klaus Author 1997, Fellow 1999, 2000 Universitiit Basel / Prognos AG
Seufert, Wolfgang Author 1997 Deutsches Inslitut fUr Wirtschaftsforschung
Shapiro, Carl Author 1999, 2000 University of California at Berkeley
Silj, Alessandro Fellow 1997 ROMA . Research on Media Associates /
Consiglio Italiano per Ie Scienze Sociali, Roma
Silverstone, Roger Author 1997, Fellow 1999, 2000 London School of Economics
Tannenbaum, Percy Fellow 1997 University of California at Berkeley
Varian, Hal Author 1999, 2000 University of California at Berkeley
Vierkant, Eckart Author 1999, 2000 Freie Universitiit Berlin
Wattenberg, Ulrich Author 1997 GMD Forschungszenfrum
Informalionstechnik, Berlin
Zerdick, Axel Speaker 1997, 1999, 2000 Freie Universitiit Berlin
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The Authors
back row (left to right): Axel Zerdick, Ulrich T. Lange, Esteban L6pez-Escobar, Alexander Artope
front row (left to right): Klaus Goldhammer, Roger Silverstone, Klaus Schrape, Arnold Picot
not in the picture (here, that is - but very much so otherwise): Eckart Vierkant
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Table of Content
Introduction by Carl Shapiro and Hal R. Varian .............. 12
Foreword - The European Communication Council .......... 14
1. The Internet Economy as a Stlategk Challenge .... 17
1.1 Ten Theses Relating to the Internet Economy ............ 17
1.2 Perspectives ............................................. 21
2. Fundamental Principles of the Network Economy .. 2S
2.1 A Classification of Revenue Types and Revenue Models . 25
2.2 The Concept of Value Chains ............................ 31
2.3 New Markets - Old Data:
The Proble!ll of Assessing Revenue Potential ....... .. __ _3 3
3.1 Kings of Content - An Analysis of the Media Sector ..... 38
3.1.1 Structure and Development af European Media Markets .................. 39
3.1.2 Revenue Types and Revenue Models in the Media Sector ..... ............ 47
3.1.3 Value Chains in the Media Sector ........................ ........ 52
3.1.4 Using the Revenue Potential of Prafit Windows ........................ 60
3.2 Rulers of the Waves-
An Analysis of the Telecommunications Sector .......... 63
3.2.1 Size and Structure of European Telecommunications Markets ............... 64
3.2.2 liberolisation of Telephone Markets in Europe ......................... 67
3.2.3 Netheads versus Bellheods: The Fusion af Dato and Voice Communication ....... 77
3.2.4 Revenue Types and Revenue Models in the Telecommunications Sector ......... 94
3.2.5 Value Chains in Telecommunications .........................•.... 96
3.3 Digital Data Crunchers -
An Analysis of the Information Technology Sector ..... 101
3.3.1 Size and Structure of European IT Markets ............. _. .......... 102
3.3.2 From Mainframe Computer to Intemet.p( ...... _. _. ............... . 105
3.3.3 Revenue Types and Revenue Models in the IT Sector ................... 125
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3.3.4 Value Chains in the IT Sector .................................. 126
3.3.5 Infonnotion Technology and Productivity -AP OlOdaxon? ................ 128
3.4 Trailblazer for the Internet Economy - The Convergence
of the Media and Communications Sectors ............. 130
4.1 Decisive Factors in the Emergence of
the Internet Economy ................... ............... 137
4.1.1 Centro I Role of Informotion in Morkets. . . . . . . . . . . . . . . . . . . . . . . . . . .. 138
4.1.2 Explosive Rise in Information ond Communications Technology Capacities ...... 139
4.1.3 Couses of the Internet Revolution ............................... 141
4.1. 4 Virtual Markets os a Result of DigitollnfrostructUle . . . . . . . . . . . . . . . . . . . . 146
4.2 Consequences of Technological Evolution -
An Economic Revolution? .............................. 153
4.2.1 New Rules of the Game: AN ew Economic Market Model. ................ 154
4.2.2 Media and Information Goods: The Near ZelO Morgiool Cost Issue ........... 162
4.2.3 New Revenue Strotegies ..................................... 164
4.2.4 The Erosion ofTlOditiona\ Value Chains by Multimedia Value Networks ........ 171
5.1 Strategic Consequences for Media and
Communications Companies ........................... 177
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5.1.1 New Competition Strotegies -Creating Business Webs .................. 1
5.1.2 New Product Strotegies - From Windowing to Versioning ................. 184
5.1.3 New Price Strotegies - Follow the Free ............................ 188
5.1.4 New Communication Strategies -One-to-One Marketing ................. 191
5.1.5 Strotegic Development of Content in the Internet Economy ............... 196
5.1.6 Perspectives for the Internet Economy ............................ 202
5.1.7 Hong on a minute ... -Critical Comments .......................... 210
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5.2 An Integrated View of User Behaviour ................. 214
5.2.1 Bosic Ideas ond Fundomentnl Prindples ...... ..................... 214
5.2.2 Towords Medio Integrotion in the Private Household .................... 229
5.2.3 Finondng ond Implementing the Integrated Offer ..................... 243
5.3 The Internet Economy and Regulation .................. 252
5.3.1 Politicollmplicotions of the Internet Economy: Why regulote, after oil? .. ...... 252
5.3.2 Reolms of Govemonce: Whot remoins to be regulated? ................. 255
5.3.3 Structures ond Institutions: Who should be responsible? ......... ........ 263
6. Facts & Figures 269
6.1 Basic Population and Economic Data ................... 272
6.2 Distribution Infrastructure and Household Equipment .. 280
6.3 Research and Development. Production and Supply .. .. 289
6.4 Spending on Information and Telecommunication
Technologies ........................................... ]01
6.5 Advertising Markets .................................... 307
6.6 Selected Media Markets ................................ 314
References ................................................ 321
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