The deep phenomenon and hidden value behind the prosperity of e-commerce

The American magazine recently published the article, elaborated that the electronic commerce is contrary to the mainstream economics theory some deep phenomenon and brings the hidden value.

The following is the full text of the article:

As business activity has just begun to line up, economists predict that consumers will reap two benefits: not only will commodity prices be lower and more unified, but consumers will also have more choices.

But it is not always easy to discern these benefits. Online commodity pricing is diverse, although the choice is indeed very large, but many are self-help publishing books such niche products, the demand is close to zero. Although E-commerce ultimately brings real benefits in terms of perspective, many papers published at this year's annual session of the American Economic Society show the value of e-commerce in terms that many economists have not foreseen. Of course, these values cannot be measured by common indicators such as GDP.

Take old books for example. MIT's Green Erison (Glenn Ellison) and Sarah Erison (Saraellison) summed up the price of 335 books and found that the average price on the internet was 17.80 dollars, 50% more expensive than the bookstore. Paying high prices for the same goods is often frustrating, and few people will be happy. But the paper's two authors have come to the opposite conclusion: buyers are willing to pay high prices, suggesting that the internet is better at connecting them to the books they want.

For example, the reign of George iii,1760-1815, published by Oxford University Press in 1960, is already out of print, and few bookstores sell it. Even with such bookstores, there are few people who really want the book-because they are scattered all over the country and even around the world. But if the inventory is posted online, all potential readers will become potential buyers of the bookstore. The growth of demand and price can obviously bring benefits to bookstores. But readers are also benefiting because without the internet, they may never find the book.

One of the authors of the paper bought a 30-year-old pharmaceutical book online a few years ago because the MIT library did not have the book. She spent 20 dollars, after receiving the book, he found that the book's cover was originally written in pencil with 0.75 dollars, and then wiped out. "It is clear that the book has been lying quietly on the shelves of a second-hand bookstore for many years, and no customer has ever been willing to pay even 0.75 dollars to buy it." "she said.

For products that are easy to find and not highly differentiated, this benefit is difficult to demonstrate. The prices of popular printed books on the internet are lower and closer to the line.

The rare second-hand calligraphy belongs to the typical "long tail", which can greatly expand the product category. But the product that has been rejuvenated through the internet is often a niche product, so even if it is brought together, the benefits to consumers remain small. For example, with a handful of singers contributing most of the sales to the music industry, the number of downloadable songs from 2000 to 2010 has grown by twice-fold, but it doesn't seem to make much sense: Most new songs may be sung by fringe singers, but they don't attract too many fans.

Chor Woldforg of the University of Minnesota Joelwaldfogel that this underestimates the contribution of the Internet. The demand forecast of cultural products is much more difficult than shoes and beverages. Even seasoned publishers have created a vague idea of which books, movies and songs can be sold. Big labels can only sign up to a handful of singers who know they may miss the future superstar.

Yet, thanks to Low-cost Digital recordings, file-sharing, YouTube, streaming music and social networking technology, the entry threshold for the music industry has dropped dramatically. Singers no longer have to sign up with a major record company to record and distribute songs on their own. Independent record companies are also fast growing, trying to dig out outstanding singers who have been missed by big record companies. But whether to become a hit song is still like buying a lottery ticket, except that the public has gained twice times the number of lottery tickets.

This seems to be inconsistent with record companies ' declining earnings since 2000, and their experience suggests that the music industry's output is decreasing, rather than increasing. This, Woldforg says, is misleading: the total amount of music consumed by the public is undervalued because of rampant piracy. The results of his calculations show that the recordings recorded since then were either stable (based on the number of songs on the list) or significantly increased (based on the number of sales or playback).

This was confirmed by the success of independent bands such as Mumford & Sons and Mumford & Sons. The proportion of indie albums in the "Billboard200 blockbuster" rose from 13% in 2001 to 35% in 2010. Woldforg and his co-authors argue that if more predictable products increase twice times the benefit to consumers is 1, then the twice-fold increase in song choice to consumers is the benefit of 15.

A paper on ebay users ' search habits further reinforces the theory that prices do not necessarily reflect the full value of E-commerce. People tend to think that consumers have a clear demand on ebay, so they will spare no effort to find the lowest-priced goods. But Tomblake Tom Breck of ebay, Chris Nosk of the University of Chicago (CHris Nosko) and Steve Tah of the University of California, Berkeley, have painted a more nuanced picture.

They paid attention to 500,000 randomly selected ebay users in one day and found that only 16% of the searches eventually led to buying behavior. Users seem to think that browsing is almost without cost because they are willing to save money through more searches--but on average they save 0.25 of dollars per item. In addition, many searchers are not looking for the same commodity at a lower price, but are looking for a different product. a user who searched for the "opera DVD", after viewing the works of Puceni, Verdi, Wagner and Bizet, eventually decided to buy a Puceni record.

The authors of the paper believe that this suggests that prices are indeed a major search motivation for users, but they are small in proportion. Some values are reflected in the knowledge they have learned during their search. A lot of users, he suspects, are even interested in web search, as many people like to shop in physical stores. This is clearly contrary to mainstream economic theory, which generally assumes that search costs reduce the user experience and do not bring pleasure. In addition, this underlines the conventional indicators of GDP, the shortcomings that are highlighted in measuring the benefits of the Internet.