A Course in the Digital Economy

 

It would be an understatement to talk that the world is very different than it was let us say twenty years ago. When the new century dawned, there were number of things that one could not have imagined would exist barely twenty years later. In 2000, the Google was not yet born. While the www was in its infancy about to slowly evolve into an adult, it was very different. The connections were very slow and the internet penetration was minimal. The emails were making an appearance. It would not be unusual to find in those days many creating their first email ids during their post graduation days. Those were the days when the teachers of information technology would offer assignments on basic MS-Word, which perhaps is now taught to kids in the primary school. People were barely exposed to MS-office or its numerous facets. There was hardly anything called a smart phone. The internet enabled phones could perhaps be counted in a hand. Yet twenty years down the line the world has changed. It is therefore natural to think what might be a course on advanced digital economy as it dismantles the brick and mortar surely and steadily. The discussion is not about the basic course on technology but little more advanced in terms of management and business issues in the economy. Implied is a need for a course on digital economy for the business school students of the first year.

 

The course might begin with a primer on the changing business environment. There could be a discussion on the hype curve and the emerging technologies and the timespan by which they are likely to mature and gain mainstream acceptance. There could be a discussion on the historical background of the industrial information economy. The constraints of the industrial information economy enabled the rise of production on scale but subject to diminishing returns. It was the era of the top down hierarchy. The scale mandated the large investments thus a shrinking role for smaller industries which would survive through complementing the larger industries. There would be a talk on the value chain that was centered round production. There would then be talk on changing environment like the modularization, granularity of production and consumption means besides the lumpiness of production means. This also implies the deconstruction of value chains and possibility of some new value chains emerging. This obviously would lead to a rise of host of business models around the web.

 

The discussion could then shift to these new business models. There would arise new value propositions that would change the underlying identities. The hierarchies were being dismantled replaced perhaps by hyperarchies. In the deconstructed value chains, new forms of production chains would arise. The value addition would no longer be linear but perhaps non linear in differing shapes across industries. There would new decentralized production models which would unencumbered by scale. The non-market models of production would gain new credence. The means of monetizationh itself would undergo a change. There would be new value creation in the byproducts generated. New business models focusing on the niche and the small have emerged and merit certain discussion on their likelihood of survival. The pricing models themselves are undergoing rapid changes. Interestingly the time tested economic principles of scale, scarcity, marginal costs, marginal revenues and many others are being put to a sort of stress test. The market structures are changing and evolving from a firm to platforms. The platform based business models would bring with themselves new challenges as they seek to create new monopolies and lock-ins. The platforms would themselves lead to redefining conventional business models and redefining the relationship between the consumers and producers.

 

At this stage, it would be imperative to have a discussion on the sectoral impact of these changes. Each sector faces a different challenge to itself. For instance, the retail sector as we know it might be headed for a creative destruction. While the grocery shop might continue to exist the business of wholesale and related matters is likely to face its moment of truth. The television and broadcasting industry is facing different challenges as new forms of entertainment consumption emerge. The music industry has seen the unlocking of the genie and it adjusting albeit with resistance to the new changing currents. The movie industry too is facing severe headwinds in terms of distribution and exhibition models which have stood the test of time for decades. The biotechnology industry too would be undergoing a transformation given the increasing use of computation. DNA too is a digital good and the enormous possibilities it offers would add lot of attraction and potential. The digital product failures too would be decoded at length.

 

Yet while one discusses the sectoral impact, there would be numerous new challenges that are striking on the horizon. It is not unusual to find hacking, cybercrime, identity theft, spam and many others that encroaching into our domain. The privacy challenges are one too many to be confounded especially given the sheer data that is being collected by the platforms. Data generated is quite high in quantum and the insights they generate might pose unsettling questions in terms of the information the platforms have about individuals and non-individual economic agents. There seems to be surrender of one’s rights to these platforms. These things have to be confronted. Therefore the digital externalities need to be discussed at certain depth. Perhaps a whole course might be in order to understand these externalities. Besides, the role of knowledge being increasingly critical in the digital industries, the role of intellectual property rights too would undergo critical changes perhaps very different than what was envisaged in Marakesh agreement on TRIPS some quarter a century ago.

 

What has emerged above is the broad contours of an introductory but slightly advanced course on the contours of the digital economy as we see it gain strength in the coming years. In the absence of the knowledge about the basic paradigms of the digital economy, it would be difficult to visualize the trajectories. It must be conceded that the basic course is not sufficient but only a foundation for more advanced courses in the areas suggested and elucidated above.