Economics of Selling Online

It is time for another post with some economics of selling online statistics. Today’s question is “who is buying online?”

A recent PEW Internet and American Life survey shows that 75% of all U.S. adults in 2007 are using the Internet. Among users are 74% of adult women and 75% of adult men. The numbers are predictably up from the 2000 survey which showed that 46% of adult women and 51% of adult men were online. Usage has increased from 2000 to 2007 from 50% to 76% of white adults, 34% to 56% of black adults, and 43% to 79% of English-speaking Hispanics. As expected, internet access increases with age, income, and education.

The statistics on U.S. internet access suggest that there is a “digital divide”. While access has increased in all groups :

-
So what are Americans doing online? According to the study by PEW Internet and American Life, the more popular activities (reported by greater than 70% of users) include reading and sending email, searching for information on products or interests, getting directions or maps, and getting weather reports, news or travel information.

Of particular interest to this course is that an estimated 78% of users research a product or service before buying it. 68% say that they buy products online. The demographics of those who buy products online are different than internet users in general. For example, of folks who make purchases online :

-
The study reports that the number of online users either buying or researching products online has roughly doubled since 2000.

To catch up on some world internet statistics, see http://www.internetworldstats.com/stats.htm. World stats show that the largest number of Internet users come from Asia, followed by Europe. However, internet penetration (users/population) is highest (73.6%) in North America (including Canada and Mexico) and lowest (5.3%) in Africa.

World statistics also show a digital divide. In nearly all the countries surveyed in an OECD study (pgs. 21-23), internet use decreases with the age of the user, increases with the education of the user, and increases with the income of the user. Globally, households with children are more likely to use the internet.

Sources and More Information:
http://www.pewinternet.org/trends/User_Demo_2.15.08.htm, Demographics of Internet Users, October-December 2007 Survey.
MRI CyberStats, Fall 2007, http://www.infoplease.com/ipa/A0908398.html, Internet Access and Usage in the U.S., Fall 2007.
http://www.pewinternet.org/pdfs/PIP_Online%20Shopping.pdf, pg. 8, Online Shopping, Pew Internet & American Life Project, February 13, 2008.
http://www.infoplease.com/ipa/A0921862.html, Most Popular Internet Activities, Pew Internet & American Life Project tracking survey.
http://www.oecd.org/dataoecd/44/56/40827598.pdf, OECD Study, The Future of the Internet Economy: A Statistical Profile, OECD Minitsterial Metting, Seoul, Korea, June 2008.

Does this sound like you? You have heard of cookies on computers. You may have heard something about deleting them and preventing websites from putting them on your computer, but when you did that, you found it very difficult, if not impossible, to effectively navigate the web. Then you resigned yourself to being cookied because you didn’t know what else to do. So what are cookies? And why do we have to have them? And how are they relevant for selling online?

What are cookies?

Cookies are simply small text files placed on your computer by a website that you are visiting (or may not be, as we will learn) that store information about you on your own computer so that it can be accessed later. This is how the computer “recognizes” you when you return (or when you visit other sites affiliated in some way with the website you visited). If you delete these cookies, then the website(s) will not know you when you visit again. Since nearly all ecommerce websites these days will place cookies on your computer, how your browser handles cookies will affect your use of these websites.

The Good, the Bad, and the Really Ugly

Cookies were “cooked up over a weekend [by Marc Adreessen and Vint Cerf] … because there was no way to do a shopping cart”.* They learned that if a website could put a small file on the customer’s computer with an ID that would help identify the customer for the entire visit to the site, then shopping would be easier. The cart would remember all the goods placed in it by that customer ID while the customer shopped. While this idea created convenience for customers and eliminated a huge barrier to selling online, it also created a doorway to potential privacy abuse that is still being debated today.

Cookies can be classified in several ways. One such way is to identify cookies as permanent or temporary (session) . Permanent cookies remain on your computer after you leave the website that you were visiting. Whether they remain there a week, a year, or forever, depends on whether or not the website puts an expiration date in the cookie. However, cookies are not required to have an expiration date. When you return to that website at a later date, the website will search for its cookie and learn information from your last visit, such as the date and time of your visit, your IP address, and various browser and computer information (such as the version of your browser, the resolution of the monitor you use, etc.). The cookie may also be used to store user ID and password information, as well as, surfing habits and interests. This information may be matched with the site’s own transaction log of information that it has for you on its server, such as your preferences, clickstreams, search terms, purchase history, etc. In this manner, the website develops a “user profile” for you. How the store uses this information is at the center of the privacy debate today.

Temporary, or session, cookies are deleted when you close your browser. These cookies may or may not require you to log in to a site, but they are necessary to help you navigate page to page. For example, you may desire to add goods to a cart and then continue shopping. Because of the session cookie, the site remembers items that you place in the cart. Or perhaps the site remembers you as you move through pages on forums and other social network sites.

Cookies are also classified as “first party” or “third party”. First party cookies are placed by the websites you visit and convey information only back to them. They cannot be read by other websites. One particularly nice pro is that you do not have to remember login information at many of these sites. For example, I don’t have to “log on” to the Wall Street Journal web site when I use my office computer to access it. It remembers who I am automatically. Cookies, themselves, are simply text files. As such, they cannot collect and relay private information from your computer back to the site. While this is convenient, cookies placed on my computer can store data that can be matched up with my e-mail address, phone number, and possibly my home address (if I enter personal information into a form on that site). As a note of reference, many websites will offer contests, giveaways, contact us pages, registration forms, etc., which allow them to connect your personal information with your online behavior. Then you can be targeted for email, telemarketing, and junk snail mail. While many consider that clever marketing, I would call it a hidden mouse trap. Please note that not all contact us forms and contests have this aggressive marketing intent in mind.

Third party cookies are placed on your computer by an outside website. These are common with advertising sites and affiliate programs. When you visit a site with advertising, the advertising company may also place a cookie on your computer. Then, when you visit another site that displays the advertising company’s ads, it will know more about your interests and display an ad targeted directly at you. E.g. if you visit a photography site one day and then later visit a furniture store, don’t be surprised if you see a banner advertising cameras. It’s not fate or coincidence. It’s marketing! Suppose you visit the website of your favorite movie and then click through an ad to buy the DVD which takes you to Amazon.com. This likely means the website was part of an affiliate program. The website will get a cut of your purchase, and Amazon has found a way to track your interests and purchases based on sites you visit other than its own. Because third party cookies provide the greatest potential to exploit your online behavior, they provide a greater risk to your online privacy and security.

While cookies themselves are harmless text files, it is the websites that read them that provide the problem. The debate centers around what websites do with your private information and how securely they keep it. Congress recently sent letters to 33 companies asking what they do with the information they collect from customers. Most will claim that the information is used to provide a better shopping, search and advertising experience. Yahoo sends the customer targeted ads based what on they believe are the customer’s interests as derived from their online behavior. You can actually “opt out” of receiving targeted ads from Yahoo through their privacy page. (Note it doesn’t mean that they aren’t still collecting information or that they won’t show ads – just that the ads won’t be something that you would more likely be interested in seeing.) Google replied that it prefers to place ads to the consumer based page context information. Thus, the Google ads that you see on this site “should” be based on the context of this article or previous articles. For example, Google believes that you are reading this because you have some interest in Internet privacy. If not, then the ads might have been about golf tours or Elvis Presley albums – which may show up because I mentioned them in this article. Microsoft already allows you to turn off targeted ads.

So what is the economic relevance of cookies? (These lists are not meant to be all inclusive.)

For the consumer, cookies:

-Allow consumers to personalize their online shopping experience by stating their preferences.
-Allow consumers to navigate through a website without multiple logins.
-Allow consumers to mainly see relevant advertising.
-Allow consumers to participate in Web 2.0 activities.

For the online seller, cookies:

-Allow the seller to get to know their consumers and therefore provide a more relevant shopping experience.
-Allow the seller to target consumers who are most likely to want to see their advertising.
-Allow sellers to see what pages of their sites are relevant to consumers and which ones they can eliminate.
-Allow the seller to know the locations of the consumers, the ratio of new and returning visitors, what technology the consumers use, etc. (E.g., I recently increased the width of a web site after learning that better than 80% of the viewers had browsers capable of handling it without a horizontal scroll bar.)
-Allow the seller to fully implement Web 2.0 strategies.

How will these relate to later topics we’ll discuss?

Cookies allow for clickstream tracking which identifies individual tastes, preferences, and online behavior. This allows for targeted margeting and “personalized” pricing – both of which are viewed favorably and unfavorably. Cookies also carry the potential for security and privacy abuse. Despite the potential for unfavorable results, from an economic standpoint cookies increase the efficiency of online sales, search, advertising, and communication whose previous inefficiencies had provided a tremendous barrier to online retail sales, or e-tailing.

*http://cnettv.cnet.com/9742-1_53-50002002.html, Marc Adreessen: Past and Present, Video interview of Marc Adreessen by John Battelle, May 2008

Bibliography and Other Reading:

Energy and Commerce Committee Questions Data Practices of Network Operators, August 1, 2008, http://energycommerce.house.gov/Press_110/110nr337.shtml

Google’s Response to the Energy and Commerce Committee, http://64.233.179.110/blog_resources/google_policy_davidson_letter.pdf

Spyware, adware, and internet cookies. What’s Good and What’s Bad. Privacy and Removal Tips and Help, http://cookiescache.tripod.com.

“Yahoo’s Response to Congress on Targeting May Not be Enough”, Heather Green, Business Week, August 8,2008, http://www.businessweek.com/the_thread/blogspotting/archives/2008/08/congress_turns.html

While researching topics for the course that accompanies this blog I noticed a disturbing trend. I use Google Alerts fairly often to get practical applications of topics that I want to present. However, I noticed that I was coming across an abundance of low quality short article posts on various topics. Many of the them began with titles like the “Top 10 Reasons…” or “The Top 7 Ways…”, etc. Others were short how-to articles. Often the same article could be found on different web sites. Many were laden with spelling and grammatical errors. Most were replete with advertising. Eventually I began to see through the fog known as article marketing. I ran across ads for freelancers to write blog posts – by the hundreds. I found volume discounts offered to companies who purchase large numbers of articles written by bloggers. What is this strange market and from where did it come? For every good idea created on the Internet there is a market to exploit it, and that is fine. As an academic, the origins of this market seem to have come from a source surprisingly close to home.

Origins of article farming

I believe the origins of what I call “article farming” on the Internet, otherwise known as article marketing, has risen with the advent of Google’s PageRank and other determinants of SERPs (Search Engine Results Pages). An anonymous author on Wikipedia suggests these origins go farther back. This author suggests that it has been common practice over the years for newspapers, magazines, etc., to accept “How To” articles from companies in exchange for acknowledgement of the company’s authorship. This provides free content for the newspaper and free advertising for the company - an arrangement that works out well for both parties. However, this would not entirely explain the watering down of content that is occurring on the Internet. In our non-Internet newspaper example, poor content would lead to lower sales of newspapers and thus would not be tolerated. There must be more, and I believe the explanation lies in search engine optimization. On the Internet, positioning in SERPs, or Search Engine Results Pages, can make or break a small business selling online. Participating in the market for articles is a way to achieve better positioning. To see, let’s look at the idea behind PageRank.

PageRank is an algorithm used by the search engine Google to rank websites in its search results. Craven explains the mathematics behind the algorithm*, but more interesting to me is the philosophy behind it. This is explained in amazing intuitive detail using laymen’s terms in Battelle (2005). Battelle tells the story how Larry Page and Sergey Brin developed the PageRank concept (named after Page) and the early Google search engine as part of a graduate school project at Stanford. Being in academia, they had a pretty good understanding of the concept behind publishing in academia. Professors gain recognition by publishing in leading peer-reviewed academic journals. The higher the journal ranks and the more citations from ranking journals that an article receives, the more important the publication. Page and Brin developed PageRank based on this concept. A site’s “peer review” was assumed through the quality of sites that find it worth linking to.

Page and Brin sought through PageRank to reduce the ability of spammers to rise to the top of search engines and to provide more relevant results. They built in the importance of backlinks into their search engine. E.g., let’s say that your site is Site A. A backlink is a link from another site (Say, Site B) that links to your website (Site A). A backlink would be the equivalent of a vote for your website. (Likewise, your vote for Site B through linking to it is its backlink.) In other words, the more websites that linked to a website, the more important that website must be. But they didn’t stop there. That concept would be easily manipulated – just get lots of folks to link to your website. Instead they built into PageRank a way to rank the backlinks such that higher ranked websites that link to a website have more weight than lower ranked websites that link to it. So a website’s position in Google’s search engine results depend, in part, on the quantity and the quality of sites that link to it. PageRank is also affected by sites a website links to, as well (so be wary who you link to, as well as, who links to you). So on the Internet, site relevance is, in part, determined by the number of votes a site receives through links to it, as well as, by the company it keeps through sites to which it links.

So how does PageRank lead to article farming? An author writes an article rich in keyword content and posts it in an article directory, a website that specifically hosts articles for dissemination. The article contains a resource box which contains such things as the article’s author, the author’s company, and a link to the author’s website. This creates a backlink to the author raising the author’s site’s PageRank. The article directory places relevant ads on the article giving it some advertising revenue while also increasing its content (which raises its position in SERPs). A company that uses the article places the article on their own site creating new content (which raises its position in SERPs), as well as, creating a backlink to the article directory further raising its PageRank. So it’s a win-win situation for all, right? Not so fast.

The market for articles – or keyword rich content

This is a classic example of supply and demand in a very competitive market with very low barriers to entry and exit. As I see it, two closely tied markets have developed which could be seen as part of the infamous “circular flow” diagram. First, there is the market for articles and second, there is the market for resources to produce the articles.

The supply for the market for articles is produced by freelance bloggers building a name for themselves, companies trying to get their websites noticed by search engines by providing “advice”, stay-at-home workers earning a little money on the side, etc. The main barrier to entry is knowing how to market yourself online and the reputations of established bloggers. Often these articles are supplied to the market via article intermediaries, otherwise known as article directories. The main requirement for the articles is that they be rich in popular keywords or search terms.

The demand for the market for articles are time or expertise strapped companies looking for new keyword rich content to produce a steady flow of traffic to the site. SERPs change often, so fresh content helps a company maintain, as well as, raise their positions in online search results. Companies will seek articles from article directories or hire writers to create content.

In researching this article, I came across advertisements requesting authors’ services and selling authors’ services. The market price for keyword rich content is relatively low. In many cases, articles are provided for “free” as authors build reputations for themselves or their sites. The going rate for services seems to be anywhere from $10 to $50 per article, and of course, this depends on the length of the article and experience of the author. If an author is really good he/she may break out of the article farming mold. Some sites offer volume discounts to companies purchasing articles. 1-5 articles may be $45 per article, but 8-10 may be $35. Small companies hoping to build page rank need lots of articles at low cost. They can get these articles for “free” from article directories if they are willing to accept the advertising terms. The article directory is getting advertising revenue which increases with the number of articles they support and their ranking in SERPs.

The way I see it, this market produces more articles, less pay per article, and lower quality work per article. The market is being flooded with blog/article posts. One website boasts “We are looking for expert Freelance Bloggers who can write on any given topics with little research.” A major health magazine advertises “magazine for work-at-home writers / bloggers – anybody interested in writing about health, even casually, with no experience required.”

As I write this article, I am aware that my opportunity costs rise with each article per week that I put together. To write more for industry, I would demand higher pay per article – which is why I would never make it in the business. Serious writers will likely move on to other writing venues rather than continuing to participate in this market. The market does provide a good opportunity for less experienced writers with lower opportunity costs. As such, the market appears to be quite oversupplied leading to low priced, low quality articles providing content largely to fool search engines into thinking the site has more relevance than it actually does – article farming.

So in the end, this is likely a win-win situation for many of the parties involved. The potential loser is the consumer searching for information who will increasingly find low quality information available for free on the Internet. In this case I remind the consumer, you often get what you pay for, and this free lunch may leave you a little hungry.

*If you would like to play with the PageRank algorithm, try Google’s PageRank Calculator from WebWorkshop. To calculate your website’s PageRank, try this PageRank Calculator.

Articles Cited and Further Reading

Article Marketing, http://en.wikipedia.org/wiki/Article_marketing

“Google’s PageRank Explained and how to make the most of it”, Phil Craven, Webworkshop.net, http://www.webworkshop.net/pagerank.html

“The Anatomy of a Large-Scale Hypertextual Web Search Engine”, Sergey Brin and Lawrence Page, 1998, http://infolab.stanford.edu/~backrub/google.html

Batelle, John. The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture, Penguin Books Ltd. 2005.

Common Article Directories:

http://www.articledashboard.com/

http://www.articledirectory.com/

http://www.articlegold.com/

http://www.goarticles.com/

Examples of Authors for Hire Sites:

http://www.freelancers-wanted.com/

http://www.ifreelance.com/

Tips for Authors for Hire

11 Skills That A Freelance Blogger Should Have,Raj Dash, March 9, 2008 http://performancing.com/freelance-blogging/11-skills-freelance-blogger-should-really-have

“Problogging Tips: Get Smart, Leverage Your Research”, Raj Dash, March 6, 2008 http://performancing.com/problogging-tips-get-smart-leverage-your-research

“Freelance Blogging for Side Income: My Top 10 Tips”, Skellie, Feb. 26, 2008, AnyWired.com, http://www.anywired.com/freelance-blogging-for-side-income-my-top-10-tips/59/

I was inspired to write this post due to an article in this week’s Wall Street Journal titled, “Creating An Online Presence Is Essential For Job Hunters,” by Marty Orgel. In this article, the author stresses the importance of creating an online presence to aid in job search and placement. Googling potential job applicants is becoming common practice in today’s Web 2.0 job search environment. According to a recent article in Harvard Business Review, “Your CV is no longer what you send to your employer – it’s the first ten things that show up on Google” (Coutu, 2007). Results of a Google search are part of your online presence. This presence is often called your “digital footprint”. So what is your digital footprint? And how big is it?

How big is our digital footprint?

According to Wikipedia.com, your digital footprint is the trace you leave through your activity in a digital environment. This is commonly believed to be your visits to websites, searches, online profiles, email, blog or forum posts, etc. But your digital footprint can go even farther than that. For example, try out this online simulator that illustrates how you leave a digital footprint each day. Another resource that you can use to find out how quickly your digital footprint grows is the Digital Footprint Calculator. This calculator illustrates how much information you create and add to the digital universe each day. Another interesting article to help you track your digital footprint with iGoogle Widgets is described here if you want to voluntarily hand it [your digital footprint] over.

How do I create a digital footprint?

Individuals have both passive and active footprints. Passive footprints occur without any intervention from the individual. Common examples of passive digital footprints occur via cookies and caching. Most websites that you visit will leave a cookie on your computer. Cookies store information about you on your own computer that can be accessed during later visits to the web site. This is how the computer “recognizes” returning visitors. One particularly nice pro is that you do not have to remember login information at certain sites. For example, I don’t have to “log on” to the Wall Street Journal web site when I use my office computer to access it. It remembers who I am automatically. While this is convenient, cookies placed on my computer can store data that can be matched up with my ISP, my e-mail address, and possibly my home address (if I was to enter personal information into a form). We will discuss cookies more in a later post. Caching is a method of storing information that browsers and search engines use to record web sites or search terms for later use. If you want to reduce your passive footprints, you might delete these cookies and caches, follow steps listed in articles such as the following “Step Carefully: Covering Digital Footprint Is Key to Web Privacy”, by Brian O’Connell, or “Footprints in Cyberspace“, by Michele Alperin. But to completely prevent adding any additions to your footprint, you might crawl into a cave in the wilderness, hunt and grow your own food, and play marbles for entertainment.

Active footprints are information that we voluntarily contribute – such as personal or professional websites, vitas, photos, email, blogs, publications, etc. Creating a profile on a social networking site or commenting or posting to a blog is an active footprint – even if you don’t want your boss to see it. Terry (2008) discusses how employers and potential employers use the web to evaluate individuals. The article quotes Ryan Vartoogian, president of Spartan Internet Consulting Corp., as saying “It gives us a general idea of the professionalism of a candidate.” The article also cites a December 2007 study by CareerBuilder.com that suggests 45% of employers reported using online search engines or social networking sites to research job candidates. Thus, with the advent of Web 2.0 (the term describing the trend on the WWW to toward collaboration, information sharing, and social networking), active footprints are becoming more prevalent and thus it may be in your interest to manage yours.

Why do we care about our digital footprint?

According to a Pew Internet Report, 47% of individuals have searched for information about themselves online. This has often been called a “vanity” search or an “ego” search. Whatever the negative connotation, they are wise searches to do – especially for upcoming college graduates. According to the study, more than half of all adult internet users have used a search engine to follow someone else’s footprints. 11% of these users were looking for information about someone they were thinking about hiring. 19% were looking for information on co-workers, professional colleagues or business competitors. According to the survey, they were looking for contact information (72%), professional accomplishments or interests (37%), profile on social or professional networking sites (33%), photos (31%), public records, (31%), and personal background information (28%).

Other interesting results from the Pew Internet survey suggest that “10% of internet users have a job that requires them to self-promote or market their name online”; “20% of American adults say their employers have special policies about how employees can present themselves online”; and “90% of information an individual locates about themselves say most of what they find is accurate”.

Be proactive. Manage your online footprint. Reduce the elasticity of your services by making your footprint stand out. Do this through such things as intelligent blog entries, joining websites of professional organizations, publishing papers online, and creating a professional website. Don’t make careless online blog or forum entries or post inappropriate personal pictures on social networking sites. Build your online reputation. Your name is your personal brand. Build your brand recognition. You might even consider buying your name as a domain name. The TLDs .name and .me have been set aside for just that purpose.

As an aside, sometimes your digital footprint gets tangled in a mass of footprints by others - many of which share the same name. The individuals sharing your name on the Internet are now being dubbed “googlegangers”. If you are lucky enough to have the same name as famous individuals, then making your name stand out will be more difficult. In some cases there is little that you can do about it. If a search of your name yields undesirable results about individuals that may be mistaken as you, you might share this with a potential employer if you think this may make a difference.

Articles Cited and Further Reading

“Footprints in Cyberspace,” by Michele Alperin, 01/30/08, http://161.58.97.168/200801/80130s02.html.

“We Googled You”. By: Coutu, Diane, Palfrey, Jr., John G., Joerres, Jeffrey A., Boyd, Danah M., Fertik, Michael, Harvard Business Review, 00178012, Jun2007, Vol. 85, Issue 6

“How to Track Your Digital Footprint with iGoogle Widgets,” Virginia DeBolt, http://www.ehow.com/how_2161698_track-digital-footprint-igoogle-widgets.html, accessed 7, 23, 2008.

“Digital Footprints: Online identity management and search in the age of transparency,” by Mary Madden, Susannah Fox, Aaron Smith, and Jessica Vitak, 12/16/2007, http://www.pewinternet.org/pdfs/PIP_Digital_Footprints.pdf

“Step Carefully: Covering Digital Footprint Is Key to Web Privacy”, Brian O’Connell, NODA Federal Credit Union, http://hffo.cuna.org/18592/article/2382/html

“What Is Web 2.0: Design Patterns and Business Models for the Next Generation of Software”, Tim O’Reilly, 09/30/2005, www.oreillynet.com, http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html

“Creating An Online Presence Is Essential For Job Hunters”, Marty Orgel, Wall Street Journal, July 23, 2008, http://online.wsj.com/article/BT-CO-20080723-705677.html?mod=moj_industries

“Leaving a digital footprint: Online activities follow students to job interviews, professional world,” Joseph Terry, The State News, February 7, 2008, http://www.statenews.com/index.php/article/2008/02/leaving_a_digital_footprint

This will be the first of several posts I plan to do on the topic of domain names. I thought it best to first understand what a domain name is before going into the economics of domain names in later posts. To find a starting point for discussion, I simply googled the word “name”. On the second page of the search results I found a site called “What’s My Pirate Name?” (http://www.piratequiz.com/) which purports to scientifically determine your pirate name based on your responses to twenty questions. As peculiar as it sounds, determining your company’s domain name often follows a similar process. You need to ask important questions to determine the best domain name that is right for your company. What follows are some questions and answers about domain names in general.

What Is a Domain Name?

A domain name is a unique name that identifies an Internet Protocol (IP) address on the Internet. IP addresses are numerical addresses that computers use to identify each other. IP addresses, however, are not easy for people to remember, so we use a system of domain names. These domain names help identify us in cyberspace to friends and businesses when we send email or help us find businesses on the Net when we do searches for information or buy products. In the early days of the WWW, the choice of domain name could often make or break an online business. Today, sound business and economic principles are largely responsible for the success or failure of an online business. But a good domain name can help or hinder that process.

Domain names have two essential parts: the top-level domain (TLD) and the second-level domain (SLD). The TLD is the part of the domain name that is to the right of the “.”. The most common TLD is .com. As of July 21, 2008, there were 76,392,628 .com names active. This number changes every day as new .coms are added, deleted and transferred. To see the current count to the day, check http://www.domaintools.com/internet-statistics/. This site also shows the domain count of other common generic TLDs such as .net, .org, and .info.

The SLD portion of a domain name is the part of the domain name to the left of the “.”. This is the part that you wisely choose to represent your organization or business. Anything to the left of the SLD (separated by one or more .’s) is a subdomain. The “www” used in domain names is really just a third level subdomain that is usually not a necessary part of the domain name. A domain name can have up to 127 subdomains. (Bain, 2000)

Why Is the Choice of Domain Name Important?

There are many reasons why a domain name is important. Think of your domain name as an investment. It is an essential piece of cyber real estate where the same mantra of location, location, location applies in reference to search results. You want to choose a domain name that separates you from the competition – one that sets you above the competition. For that reason, you should try your best to obtain the appropriate .com address. (I recommend the .com TLD because it is the most familiar and customers will likely check it before looking at any others.) You want to choose a name that is short, easy to remember, has few, if any, hyphens or numbers, and that best represents your organization. Typically your domain name will include your brand name.

Building brand recognition for your domain name is important. Most generic SLDs of one or two words have been taken, so you will have to be creative. Shorter domain names are easy to remember, but they may not always make sense. If numbers or hyphens are included in the domain name, then customers will have difficulty reciting the address to others. This confusion may lead customers to other sites with similar names or lose them altogether when they are unable to find your site. However, longer names do have benefits – for example, when someone knows only your company name they may type it in the address line in the form of a URL. You can have a domain name that has up to 64 characters; however, you should consider the idea that most URLs have accompanying email addresses. Long domain names mean even longer email addresses. It’s like having a long street name and has many similar cyber complications (e.g., the address may not fit in the box on a form as an email address).

How Is a Domain Name Chosen?

For the reasons listed above, choosing a domain name is somewhat of a scientific process. You have to ask the important questions. What is my company’s name? Have I sufficiently built the brand name? Can I describe it in a few short words? Can I incorporate keywords into my domain name? Has the domain name that I have chosen already been trademarked by someone in a similar business? If someone mistypes in my URL, where will it take them? I have listed several sites and tools below that may help with these types of questions.

When Should a Domain Name Be Purchased?

A domain name should be purchased sooner rather than later. Domain names are so cheap (usually $6.99 - $35.00 per year) and have so much value to your business that they should be purchased as soon as they are conceived as an idea. Buy the domain name across TLDs to protect your investment. You might even consider buying common misspellings to keep typosquatters* from taking advantage of your good name.

Where Can Domain Names Be Purchased?

Once you have decided on a domain name, you will register it with a registrar (For a complete list of accredited registrars see http://www.icann.org/registrars/accredited-list.html). A registrar has the ability to register your domain name in the global registry maintained and overseen by the Internet Corporation for Assigned Names and Numbers (ICANN). Your name will be unique and no one else in the world can register it. However, many SLDs are registered across different TLDs – i.e., economicsofsellingonline.com can only be registered to me as long as I continue to renew it; however, the only way I can prevent others from purchasing economicsofsellingonline.net or economicsofsellingonline.org, etc. is to buy them myself.

Who Can Purchase Domain Names?

TLDs are generally classified as generic or specific. Generic TLDs are unreserved meaning that anyone can register them. Current generic TLDs include: .com, .net, .info, .org, and .biz. Businesses may also buy domain names that identify them by country using ccTLDs (for example, .us, .uk, .de, .au, and so forth). Specific TLDs are reserved for specific groups or industries. Specific TLDs are just that – specific to a purpose and limited as to who can register them. Examples include: .tv (entertainment), .gov (government), .mobi (mobile phone access), .edu (education), .museum (museums), .name (personal names), .int (international organizations established by intergovernmental agreements), .coop (cooperatives), .aero (aviation), .mil (military), .travel (travel), and .jobs (job search).

At the time of this writing, however, ICANN policy for assigning domain names is undergoing a major change. I will post on this at a later time.

*typosquatters – individuals who buy common misspellings of popular domain names in order to profit from consumers who are directed there by accidently typing errors in address lines of browsers.

Other readings:

M. Brain. “How Domain Name Servers Work.” 01 April 2000. HowStuffWorks.com. <http://computer.howstuffworks.com/dns.htm> 01 June 2008

Erik J. Heels, Domain Name Law, http://www.erikjheels.com/?p=993

Mark Jackson, Search Engine Watch, Dec. 4, 2007, How to Choose the Best Domains for Search Engine Visibility, http://searchenginewatch.com/showPage.html?page=3627757

Mark Jackson, Search Engine Watch, Dec. 11, 2007, What’s in a Domain Name? Take 2 http://searchenginewatch.com/showPage.html?page=3627834

David Kesmodel. The Domain Game: How People Get Rich From Internet Domain Names, Xlibris Corporation, 2008

Nach Maravilla. What’s in a Domain Name: How Your Domain Name Can Ensure Your Online Success, http://www.powerhomebiz.com/vol34/domain.htm , PowerHomeBiz.com

Christopher Heng, Tips on Choosing a Good Domain Name, http://www.thesitewizard.com/archive/domainname.shtml

JumpLine.com, 8 Quick Tips to Choosing a Domain Name, http://www.sitepoint.com/article/tips-choosing-domain-name

12 Rules for Choosing the Right Domain Name, http://www.seomoz.org/blog/how-to-choose-the-right-domain-name

http://www.webmaster-toolkit.com/

http://www.domain-generator.net/

http://www.deleteddomains.com/

http://www.dynamoo.com/webmaster/choosing_a_domain_name.htm

In today’s post I want to pull together a few statistics regarding online selling in the U.S. Unless otherwise stated this data comes from two reports: U.S. Department of Commerce Quarterly Retail E-Commerce Sales Report (http://www.census.gov/mrts/www/data/pdf/08Q1.pdf) (1st Quarter 2008) and U.S. Census Bureau E-Stats (http://www.census.gov/estats), May 17, 2008.

What makes selling online different than selling through traditional channels? The U.S. Census Bureau defines e-commerce sales as “sales of goods and services where an order is placed by the buyer or price and terms of sale are negotiated over the Internet, an extranet, Electronic Data Interchange (EDI) network, or other online system. Payment may or may not be made online.” Thus, e-commerce is the sales of goods and services that take place in a virtual (or electronic) marketplace. By this definition, e-commerce sales in the U.S. represented 31.2% of manufacturing shipments and 2.7% of retail trade sales in 2006.

There are several types of transactions that occur online:
• Business-to-Business (Examples might include GM buying auto parts from a supplier.)
• Business-to-Consumer (Examples include Amazon.com or BestBuy.com.)
• Consumer-to-Consumer (Examples include EBay.com and other auction sites.)

The bulk of e-commerce is conducted as business-to-business (B2B) e-commerce. According to the U.S. Census Bureau E-Stats report, B2B e-commerce totaled $2,716 billion representing 93% of online sales in 2006. Most of the remaining 7% was in the form of business-to-consumer (B2C) e-commerce. In 2006, B2C e-tail (electronic retail) sales totaled $107 billion dollars. In 2007, B2C e-tail sales totaled just over $127.7 billion or 3.2% of total retail sales.

Between 2005 and 2006 (the most recent data available for total e-commerce in the U.S.), e-tail sales grew at a 22% rate. According to the same report, over 90% of e-tail sales were from the two industry groups: Nonstore Retail and Motor Vehicles & Part Dealers. Most of those Nonstore Retail sales came through Electronic Shopping and Mail-Order Houses . This latter group includes the sales of goods from traditional retailers if they have separate Internet business units. The leading merchandise category for e-tail sales was Clothing and Clothing Accessories. Two other leading categories were Music and Videos (71%) and Electronics and Appliances (69%).

Other selected Statistics:

Selected industry categories (percentage of total U.S. manufacturing value of shipments devoted to e-commerce):
• Transportation equipment (2006: 54.9%; 2001: 43.9%)
• Computer and electronic products (2006: 31%; 2001: 17.1%)
• Food products (2006: 28.7%; 2001: 11.9%)
• Chemicals (2006: 31.2%; 2001: 12.4%)
• Wood products (2006: 13.1%; 2001: 5.6%)

Durable Goods in 2006 (50.1% percent of distribution of e-commerce revenue)
• Largest percentage going to motor vehicles, parts, and supplies (29%)
• Lowest percentage going to lumber and construction materials (0.7%) and Metals and minerals, excluding petroleum (0.7%)

Nondurable Goods in 2006 (49.9% percent of distribution of e-commerce revenue)
• Largest percentage going to drugs and druggist sundries (25.8%)
• Lowest percentage going to groceries paper and paper products (1.5%) and farm products, raw (3.1%)

Selected industry statistics regarding service industries (percent of distribution of e-commerce revenue):
• publishing industries (11.8%)
• securities and commodities contracts intermediation and brokerage (6.4%)
• travel arrangement and reservation services (7.4%)
• accommodations and food services (8.4%)

Selected International Statistics and Sources

Ecommerce sales in Latin America:
Country | 2007 | 2006 | % growth
Brazil | 4,899 | 3,541 | 38%
Mexico | 1,377 | 868 | 59%
Venezuela | 821 | 490 | 68%
Caribbean (except Puerto Rico) | 818 | 585 | 45%
Argentina | 739 | 619 | 19%
Chile | 687 | 472 | 46%
Central America | 499 | 360 | 39%
Puerto Rico | 445 | 384 | 16%
Peru | 218 | 145 | 50%
Columbia | 201 | 175 | 15%
Others | 203 | 165 | 23%

Books, music, movies 21.4%
Tourism and travel 16.9%
Electronics 13.9%
Software 12.3%
Appliances 9.1%
Services 7.7%
Flowers, gifts 6.7%
Food 4.3%
Games 3.1%
Spare parts 2.8%
Furniture 1.8%

Source: Visa Inc. “B2C Electronic Commerce in Latin America and the Caribbean: Beating All Odds.”, from Visa Predicts E-commerce in Latin America to surpass $16 billion this year, Sante J. Achille Jul 11, 2008, http://www.multilingual-search.com/visa-predicts-e-commerce-in-latin-america-to-surpass-16-billion-this-year/11/07/2008

Canada:

Canadian e-commerce grew 26% in 2007. E-tail sales grew 38% in 2007. E-tail sales accounted for 10% of total e-commerce activity. Source: Statistics Canada. Found on http://www.internetretailer.com/dailyNews.asp?id=26179.

Some European stats on e-commerce by country (2006) can be found here:

Annual Information Society Report, http://ec.europa.eu/information_society/eeurope/i2010/docs/annual_report/2007/sec_2007_395_en_documentdetravail3_p.pdf

I begin working on this post with the image of a waiter dressed up as a pirate playing a snappy little tune on his guitar touting “freecreditreport.com… I should have seen it coming at me like…” Fantastic commercial, but what does “free” really mean?* During the first week or so of my economics classes I usually get around to writing the acronym TANSTAAFL on the board. TANSTAAFL means “There ain’t no such thing as a free lunch.” That is when occasionally someone points to all the “freebies” on the Internet. So what does it mean to be “free” on the Internet? Is that any different from “free” in the non-Internet world? When is something really “free”? And why do I keep putting the word “free” in quotation marks? Economic principles hold even on the Internet and this post will explain a few reasons why.

What Does It Mean to Be Free?

Type in the word “free” into the “free” Google search engine and you’ll get an estimate of 4.5 million sites. Who gets the top honors? FREE –Federal Resources for Education Excellence (http://free.ed.gov/) FREE is a site that “makes it easier to find teaching and learning resources from the federal government” with “More than 1,500 federally supported teaching and learning resources are included from dozens of federal agencies”. Who pays for this “free” service? The taxpayer.

Next is TheFreeSite.com (http://thefreesite.com), a site dedicated to listing “all the top free products, services and offers available on the Web.” This is actually a great resource, and I’ll recommend it to my students. Who pays? The site itself seems to be supported by revenue from Google’s AdSense. There are also some hand-coded links to other “free” sites like the Freebiedirectory.com, which may be paid advertising.

A little further down the page is the Free Software Foundation http://www.fsf.org/licensing/essays/free-sw.html. According to the Free Software Foundation, free software has the characteristics found on http://www.fsf.org/licensing/essays/free-sw.html. Essentially, they suggest that free software gives you, the user, the right to use, adapt, redistribute, and improve the software. They assert that the purpose of free software is to enhance learning and knowledge in the area, and that using it constitutes a “political and ethical choice asserting the right to learn and share what we learn” (http://www.fsf.org/about/what-is-free-software). If there is any case where the developer has the right to revoke the software, then it isn’t truly free software (as is the case with nearly all of the free resources that I may recommend). Since real resources go into its production, it must be funded in some way. Often funding is initially by the developer who later accepts donations for his/her time, and then may even begin charging for the final, stable version of the product. Funding could be indirect through the universities or corporations employing the services of those experimenting at your risk (note the warnings when you download betas) and profiting from the knowledge learned or shared. Unfortunately, most software distributed on the web isn’t truly free.

So what does “free” mean? First, the economics explanation. Something that is free is available in unlimited quantities. In other words, supply exceeds demand which produces a price equal to zero. Is this saying that information and goods offered for “free” on the Internet are essentially worthless? No. Read on… Resources have value, so anytime these resources are used in the production of a good, whether offered for “free” or not, an opportunity cost is incurred. For example, I am offering this explanation at some cost to myself (i.e., my time that could be spent doing something else – perhaps earning income selling web design); however, as an academic, part of my job is to impart knowledge on the waiting world, so my compensation is my salary. I could attempt to put this information under a password allowing only paying members to read it, but there is plenty of competition willing to provide the information for “free” or, perhaps, this information really is worthless.

What is “Free” on the Internet?

So in what other ways is the concept “free” used on the Internet? I will discuss these briefly so as to leave something to talk about later! (This is by no means an exhaustive list.)

(1) “Free” but with strings attached – e.g., product “bundling” or “tying”. You agree to sign up for something (maybe a trial period) or it accompanies the purchase of another good (free paper with purchase of printer ink) or it requires the subsequent purchase of a tied product (a “free” printer that uses only a specific kind of ink cartridge). Or perhaps you are giving up personal information, such as your e-mail address or phone number.

(2) “Free” as in information sharing - Perhaps you simply agree to a link back to the copyright holder for use of information. This raises page rank – perhaps necessary for higher advertising revenue - or increases the goodwill (reputation) of the writer. Or perhaps this information is shared alongside non-free services or products. I find this to be the case on FreeLunch.com – a self-proclaimed “free” resource for economic data. The actual “free” service here is being a central place to find both “free” data (that can also be accessed directly freely from its original source) and plenty of non-free services and products. It is essentially a form of advertising.

(3) “Free” as a carrot on a stick – e.g., product “crimping”. Some “free” software is distributed freely, but is actually “proprietary” software meaning that it is subject to limitations and you usually have none of the rights listed above by the Free Software Foundation. Certain features are turned off or not included unless you upgrade. This is called “crimping” the product. The idea is to provide just enough of a carrot on a stick to lead you to buy the whole product. An example is the NetObjects Fusion Essentials software. While you can build a decent simple site, you are enticed to want more, and the NetObjects Fusion 11 has it. For more examples of this, see http://www.venchar.com/2003/12/product_crimpin.html.

(4) “Free” to build a network – Goods or services that require network effects for success. For example, ebay.com, MySpace.com, CraigsList.com. For the network to reach what is known as a “critical mass”, the level where membership takes off, “free” membership may be critical (excuse the pun). A new fun rising network is called “Twitter” (at Twitter.com. See news story at http://www.youtube.com/watch?v=6kj6OGsfSG0&eurl=http://sfist.com/2008/06/30/would_you_pay_to_use_twitter.php). In many cases, building the network is essential to increase advertising revenues or increase the financial value of the network.

(5) “Free” as in the case of a “public good”– it is prohibitively expensive to collect fees from all individuals who receive and use the information or to exclude all individuals who do not pay. Examples include research findings, news reports, or weather reports. These sites are often paid through advertising or tax revenue.

(6) “Free” for the public interest – as in the case of net neutrality (see http://www.savetheinternet.com/). “Freedom of connection, with any application, to any party, is the fundamental social basis of the Internet, and, now, the society based on it.” (Read http://dig.csail.mit.edu/breadcrumbs/node/144 and http://dig.csail.mit.edu/2006/06/neutralnet.html by Daniel Weitzner. The term “free” here means equal access. “Free” is through legislation, but the cost is still born by users who pay to access it (ultimately, the consumer). In this case, legislation is limiting market power that might otherwise develop.

(7) “Free” for malicious purposes – as in the case of downloaded viruses or annoying adware (whether in the fine print or not) attached to items downloaded for “free” from the Internet. Your pursuit of the ability to avoid paying could lead to a much higher cost later.

With all this said, I am encouraging my students to build websites, and as a rule of thumb, I am using as many “free” resources as I can. I used a “free” site building software called NetObjects Fusion Essentials to build my own course website – even though I actually own NOF 10. I used a “free” blog on Blogger.com to build this blog. I used the “free” Google Analytics to record your visit to either site. And I am using my “free” server space at my university to host my campus website.

Is There Such Thing as a Free Lunch?

As an economist, I am still bound to my conviction that “there ain’t no such thing as a free lunch”. I am very skeptical whenever I even see or hear the word “free”. Read the fine print. Ask yourself, how is it that they can offer it for free? Post any truly free lunches in the comment section here – that is, something produced and consumed without using any valuable resources and with no strings attached. It must have value and yet it must not be scarce – i.e., it can’t be the case that some individuals will scoop it up and try to resell it for a price or provide it for some economic advantage of their own.

Perhaps the most useful “free” lunch I found on the Internet while researching this article can be found at www.freerice.com. Help this organization donate rice to hungry people for each word you get correct. Build your English vocabulary while helping to end world hunger. The site and donations are advertising supported.

Other Readings:
“Free! Why $0.00 Is the Future of Business”, Chris Anderson, Wired.com, http://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all, posted 2/25/08.

“TANSTAAFL: In Search of the Free Lunch and No-Cost/Low-Cost Full-Text Archives”, Mary Ellen Bates, Searcher; Jun2000, Vol. 8 Issue 6, p 55-59.

*freecreditreport.com obtains a “free” credit report while offering a trial period for credit monitoring service. By law, everyone can receive a free credit report without signing up for any other products once per year. For more information on this topic, including the federal law suit against Consumerinfo.com regarding deceptive marketing practices, see http://www.ftc.gov/bcp/conline/edcams/freereports/index.html.

I have spent the better part of the last week preparing for my fall Internet Economics class - a class that applies economic principles to online selling. It is my intention to use this blog to present the laymen’s terms of what we’ll discuss in class.

What better topic on which to begin than the rising “crisis” of the impending shortage of IP addresses? What does it mean and how will it affect selling online? The analysis is a bit like a combination of the oil crisis and Y2K.

First, what is an IP address and why is it important to you? IP stands for Internet Protocol. The oft used analogy is that of a phone number. Every computer connected to the internet has one, and this allows computers to talk specifically to each other. If you want to find out yours, try clicking on http://whatismyipaddress.com/. Sort of surprising, isn’t it? You have an IP address and the map on the site very possibly points near to where you live if you have not taken steps to hide it. The wireless router in my home also assigns dynamic IP addresses (DHCP) to each computer connected to it within a small range of addresses. Nothing drives my kids more crazy than when the router goofs and assigns two computers in the home the same IP address. The latter computer responds with “IP conflict” and will not access the internet. This can and does happen when Internet Service Providers (ISPs) make the same mistakes with customers. Perhaps with the growing shortage of IP addresses, this may occur more often? (In economics, we call that an “empirical question”.) Even more interesting is that the IP address you just looked up is really just a “dotted decimal number” and not your computer’s address in binary form - which is a series of 0s and 1s. These 0s and 1s are represented in groups of four with eight binary numbers in each (called octets). (These are called IPv4 addresses.) These octets can be arranged in just shy of 4.3 billion combinations. (That is NOT an empirical question. It’s a fact. And we have used nearly 85% as of May 2008.*)

So what does this mean? Well, it’s a simple case of supply and demand. It has been known since the beginning that we could potentially run out of IP addresses. Remember, we started with the knowledge that we could create only 4.3 billion. Starting to sound a bit like Y2K? In that case, programmers knew for years that using two digit dates (e.g., 95, 96, 97) would cause a problem when the year 2000 (i.e., 00) rolled around. So we started with a finite supply of IP addresses, but the supply seemed so vast that there seems to have been little concern. Now, as the assignment of IP addresses is growing exponentially as developing countries like China and India come online and expanding technology in developed countries requires more IP addresses, there is a looming shortage. The OECD issued a report about this in May http://www.oecd.org/dataoecd/7/1/40605942.pdf stirring up concern that finally hit the major news media.

The supply/cost factors in this scenario seem to be upgrading to IPv6 compatibility, obtaining and distributing remaining IPv4 addresses, and/or better managing existing IPv4 addresses. The demand factors in this scenario are the growing demand for Internet access by developing countries as they come online and technological innovation in developed countries. (For example, just imagine that people are now clamoring to have internet access via their cell phones. When I first started teaching, none of my students had cell phones. Now I can’t find any that don’t. Soon, I won’t be able to find any that don’t have internet access via their cell phones. It may be as common as microwaves.)

Developers have known that there are ways to get more IP addresses. Conversion to an IPv6 system of allocating internet addresses (having six octets instead of four) is the solution that would provide trillions more addresses. But it is costly and until devices were compatible, demand was low. Now, many of the newest systems and devices are already IPv6 compatible; however, IPv6 devices are not backwards compatible to IPv4-only devices. And imagine the cost of reassigning billions of IP addresses… Without getting over my head in how these things work, the simple economic notion is that eventually everyone may have to upgrade to the new system. Sort of like how your analog tv will quit working next year (http://www.fcc.gov/cgb/consumerfacts/digitaltv.html). And then there are networks effects. Few want to make the investment until they see others getting on board as well. (Read the Cellular-News article below to see how Japan and China are innovating in this area.)

How is this like drilling for oil? Well, it is less profitable to drill for oil in some places until the price is high enough. We have been quite spoiled to have relatively low cost access to the internet and perhaps our demand elasticity (our quantity response to the change in price) will be similar to our demand for gas as we grow more dependent. When the market price of internet access rises, as could be the case when supply decreases due to higher costs and demand increases due to more desire for internet access, some folks will reduce their access, but how many? (Another empirical question.) If the answer is not many, we can expect the price to rise quite a bit.

And then there is supply elasticity. Some reporters (as reported on Fox News on July 7, 2008 titled “The End is Near: Less Than Three Years Until the End of the Net?”) would have us believe that the supply of IP addresses will become perfectly inelastic - i.e., there will be no more and the Internet will just fail. If there were no solution, then there would be no new users at some point and the cost of purchasing access will grow as those who have it are lured into giving it up by the higher price they can get to sell it. Some fear that companies will monopolize the industry by buying up all the IP addresses and selling them at a high price. This does not make sense to me when there is an alternative that could ultimately flood the market with trillions of IP addresses. There are also methods of sharing IP addresses, much like the wireless router in my house, that can, and are, being applied in larger measures to IPv4 addresses. (This is called Network Address Translation.) But again, if this were the case that the OECD fears, should the government regulate the distribution of the remaining IP addresses? Or should the market handle it? Should we “drill” where we currently know to find IPv4 addresses or explore to find a better, more efficient source? Or would drilling be a good short term solution while working on the longer term solution? Whew, the analogies could go on, and I don’t profess to have the answers.

I am going to recommend that my students read the OECD report for discussion in class. And while this blog is still incredibly new, any comments or suggestions posted here would be great. I don’t claim to be a computer expert, so any corrections to technical errors in this post would be appreciated.

Ok, so how many economic terms have we covered here that we will eventually discuss in class? Supply, demand, elasticity, market price, compatibility, monopolize, network effects, government regulation.

Other Sources:

“What Is An IP Address?”, How Stuff Works, http://computer.howstuffworks.com/question549.htm
*”Mobile Phones Could Be Affected by IP Address Shortage”, Cellular-News, http://www.cellular-news.com/story/31184.php, Posted to the site on 15th May 2008
“Internet Address Space: Economic Considerations in the Management of IPv4 and in the Deployment of IPv6, OECD, http://www.oecd.org/dataoecd/7/1/40605942.pdf, May 15, 2008
“IP address shortage to limit Internet access” USA Today, Posted 8/3/2007 12:37 PM, http://www.usatoday.com/tech/webguide/internetlife/2007-08-03-ip-shortage_N.htm

Welcome to the Economics of Selling Online blog. What will make this blog different than other e-commerce information sites? The major difference is that I am first and foremost an economics professor. I develop a few sites online because I am inquisitive and I want to understand what I teach. Thus, the profit motive is much lower for me than for a company that sells web design. Well… At least it is until I am good enough to make more money at web design than I do as a professor. (That is called “opportunity cost” - one of the first concepts economics students learn to use.) However, my few clients can rest assured that their sites will receive my full attention to help make them successful or I wouldn’t be very credible in my teaching of the subject…

At the current time, my strengths lie in teaching and writing, so I will use these strengths to develop an online presence for myself as well - whatever it may be. This site will be a process of discovery. Since it is designed to supplement a course in the economics of e-commerce, it will develop over time. I will be moving through different topics as the course continues, so the focus of the blog will change over the course of the semester. However, when I teach a course, I want my students to come away with news they can use beyond the end of the semester. My focus will be on providing applicable tips along with economics analysis.

So join the journey with us and learn a few economic principles along the way. In the process, perhaps you will take away some tips that your web developer or designer may not tell you.

Note: My students will be developing simple sites as well. So I will be tracking the use of this blog as an example to them. On Day 1 this site is not found or linked yet anywhere on the net - as expected… Google Analytics has been added on this day.