The Economics of Personalisation Flashcards
What are some notable phenomena in Online Revenue Models?
Long Tail Market (Anderson):
Market demand shift from a few popular to numerous niche market
Amazon books vs. Bookstore
Spotify (80M rec) vs. Record Store (1M rec).
Personalisation, search, reviews, tags,
Subscriptions and Freemiums
Crowdsourcing: Wikinomics
Openness, peer, sharing, global,
Prosumers
Googlenomics:
Give for free, sell ads, buy eyeballs
From sponsored posts to auctions
From negotiated to programmed, cut sales personnel, tap into small clients
Reduce negative CS NE
P2P:
File sharing, low barriers, seeding, peers,
Freerider problem: consuming without sharing
Attention economy:
TikTok, Meaningful Social Interaction (MSI, pt system)
Effectiveness of Advertising
ROI - Effectiveness of Advertising
Retargeting -
Click farms
Paid to click Websites
Ad Blockers
Why is price discrimination a thing online, and what are the different types,
People invest in personalisation and profiling because, More than increasing ad effectiveness, knowing the Willingness to Pay WTP.
It is becoming a thing because it is easier based on personal data,
Moving from cost-oriented pricing to value-based pricing
Web 1.0 was all about auctions (EBay), Web 2.0 is about price discrimination.
It’s a sign of market power, antidote to competition
Types:
Different rates based on location, on institutional vs individual clients, based on time (fares)
Effective ways to achieve price discrimination
Versioning// different versions
Damaged goods
Erode privacy and increase security -
Degrees:
3rd- Same product different price for different people
2nd- Discounts for bulk purchases
1st- Charging based on WTP
What are the main contesting views on Privacy and Data Protection
Individuals:
customise offerings vs. data misuse
Firms:
Data-driven business and business model innovation
Regulation:
Protecting citizen vs. firms innovation (lol)
What do Conservative NeoClassicists think of the economics of privacy?
Complete infromation leads to economic efficiency,
Privacy creates inefficiencies in the marketplace
Privacy inhibits decision-making, increases transaction costs, courages fraud
Firms own the information they collect on consumers
Better personalised offers, better for everyone
What do Liberal NeoClassicists think of economies of privacy?
Market failures because of externalities
Privacy can be economically beneficial
Difficult to value, difficult to regulate
Price discrimination might lead to higher consumer welfare in competitive markets
Symmetry needs to be ensured - openness about firms’ actions with personal data
No spam law, but spam tax
What do Neo-kensiyans think of Privacy?
Private data are the property of the individual - opt-in basis
Price discriminations are unfair
Costs of privacy is less harmful for costumers than firms,
What do innovation Economists think of Privacy?
Data mining potential for innov
Online lead to turnaraound in privacy-publicity relationship - Privacy became more valuable, ads became less valuable
Trust neeeded for consumers
Innovation can empower consumers with Privacy Enhancing Tech
PETs can enable data exchange
Innovation rather than regulate, may solve or let the issue evolve.
