Thursday, February 21, 2008

I've been working like a dog!

Twice every year since 1998 (once each semester) I have started teaching a new class of students about the Economics of the Internet and the Digital Economy. It is really interesting but involves an awful lot of work. My other courses (on Mathematics for Economists and an Introduction to Econometrics) do, of course, require updates and revisions to them each time that I run them, perhaps to take on board some new tests or procedures that have been introduced, or because there is a new version of the recommended textbook or the software that is used. But these changes can be incorporated steadily and carefully planned. Publishers and software houses will let you know in advance about new products and you shouldn't really get taken by surprise.

But on my Internet course every new day brings the possibility of change. I never know when I switch on my radio in the morning, or go online to check for the latest news, what important new development might have occurred overnight: the latest twist in the ongoing battle between Microsoft and Google for online dominance for example, a new contribution to the debate over network neutrality, or a new suggestion for dealing with problems of spam, online fraud and various forms of malware. The basic structure of my syllabus has to stay the same, beginning with a discussion of the history, growth and development of the Internet where we also discuss the importance of common standards and protocols and the relevance of network effects. Next we look at debates over the pricing of Internet access and use (which links up with the net neutrality argument and the problem of spam). Then we look at the growth of e-commerce, including problems of its accurate measurement. We examine the effects of the Internet on the prices of goods and services (online and offline) considering reasons why, perhaps counter-intuitively, online prices can show greater variation than the prices of goods bought and sold via traditional channels. We look at the impact of the Internet on various sectors of the economy such as the banking sector and specific industries such as the music industry and tourism. We look at implications for the labour market and international trade. Then there is an important section on business models and business strategy, covering pricing and investment policy as well as models based on securing revenue from advertising rather than directly from users. We look at mergers and acquisitions and the formation of alliances in the attempt to gain market dominance. Lastly we turn to issues of government and supra-government involvement discussing appropriate forms of regulation and taxation, and stances on innovation and dealing with different forms of the digital divide. So looking at my weekly lecture headings over the years, the titles of lectures haven't changed too much, but what goes into the lectures has often had to be revised even during the week of the lecture. As a famous American economist who studies the Internet once said “Competing on the Internet is like leading a dog’s life - it compresses seven years into every one” (Brad DeLong, 1998). That makes it a bit of a challenge for those of us who teach courses about it. But it also stops us ever getting bored by having to go over the same old stuff!