The Internet and its likely Impact upon Society, Business and the Economy

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See also:	What is the Information Age?
	Easy Web Site Design - a non-technical introduction

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Abstract

This paper considers the major implications of the growth of the Internet for society, business and the economy. It begins by tracing the development of the various technologies which form the Internet from their origins to the current state. Some 10% of the world's population now has access to this vast resource of billions of interlinked documents covering every imaginable topic. The Internet presents both opportunity and challenge for business. Profit can no longer be guaranteed from price differential alone, but for those able to adapt and innovate huge potential rewards exist.

The Internet provides numerous opportunities for small business start-ups. Those whose work is essentially information processing or production are now able to work from the comfort of their own homes, freeing them from the drudgery of commuting and office politics. The Internet is seen as an integral part of the trend towards globalization and the diminishing significance of the concept of nation state.

For all its promise of bringing equality and liberation a number of hurdles remain before the information revolution may be considered as complete. The availability of information in such vast quantities leads to the problem of sifting that which is of relevance and value from that which is not. Issues such as security and privacy (both real and perceived) prevent many from adopting the 'net as their prime channel for conducting business. There are also huge differences in levels of access between different countries.

1. Introduction
2. Definitions
3. Origins
4. Current position
5. Non-commercialism
6. The changing business environment
7. Agents
8. Opportunity
9. Advertising
10. New strategies
11. Digital Content
12. Challenges
13. Representation
14. Information overload
15. Internet business models
16. Socialization
17. Globalization
18. The digital divide
19. Conclusions
20. References

1. Introduction

This paper presents a personal view of some of the main implications of the growth of the Internet for society, business and the economy. It also suggests some ways in which the information age might develop. It is not intended as a definitive reader on ant of these issues, rather as a stimulus for further debate.

Just as the proliferation of machinery irreversibly changed the primary focus of human activity from agriculture to manufacturing so the development and growth of computer technology is predicted to have a similarly dramatic impact upon society.

2. Definitions

The Internet is the global network of computers and computer networks interconnected by the common TCP/IP protocol. The World Wide Web (Web) is an Internet application consisting of billions of documents (web pages) connected and navigable by means of hyperlinks.

Electronic commerce (e-commerce) is the process of trading across the Internet, i.e. a buyer visits a seller's website and makes a transaction there. Less rigidly it includes deals where the Internet plays some role, e.g. assisting the buyer in locating or comparing products and/or sellers.

3. Origins

One of the first applications of computer technology was the attempt to decode German military intelligence during World War II. The earliest commercially available computers were prohibitively expensive to all but the wealthiest corporations and public bodies. They were enormous in size and miniscule in processing power. Continued exponential improvement in technology has seen processing power increase many-fold while price and size of hardware have plummeted.

With the exponential improvement in technology came change in the nature of the technology. In the corporate world the dumb terminals on every desk which were connected to a centralised "brain" were replaced with autonomous personal computers (individual "brains") - on every desk. In our homes intelligent but isolated boxes gained the ability to communicate with the wider world, first through dial-up modems, and now increasingly by permanent broadband connection.

In the late 1960s the U.S. Defense Department developed a secure and robust communications network (ARPANET) linking organisations engaged in defence research, which was designed to be able to continue functioning even if part of it was damaged, e.g. by nuclear attack. During the 1970s ARPANET became increasingly used by academics for sharing research material and eventually evolved into the Internet.

In 1989 Tim Berners Lee proposed the World Wide Web (WWW or web) while working at CERN, the Swiss based scientific organisation for research into subnuclear physics. Berners Lee initially envisaged a text based global hypertext system enabling fast and efficient communication between scientists located around the world and released the first text based browser in January 1992.

In addition to the dramatic developments and improvements in the technology the nature of our interaction with it also changed.

The 1990s saw the advent of affordable desktop computers together with the emergence of Microsoft's Windows as the dominant personal computer (PC) operating system. Its point-and-click graphical interface replaced the previous blank screen with flashing cursor. Windows utilised a set of (supposedly) universally understandable icons to represent tasks such as file management and printing. Essentially, computing's potential and power became accessible to the masses.

September 1992 saw the release of Mosaic. Developed by Marc Andreesen and others at the National Center for Supercomputing Applications at the University of Illinois. Mosaic was the first web browser with a graphical interface. The web started to become the familiar face of the Internet, providing easy access to a wealth of text and images, and later, animation, sound and video too.

4. Current position

The Internet is not the first medium of mass communication. That came with the invention of the printing press, aided by widespread education. Radio and television followed. What differentiates the Internet from its predecessors is not only the sheer convenience of having such a vast range of resources (leading search engine Google claimed to index over 3 billion web pages at the end of November 2002) available on demand from one's desktop, but also the ease with which content consumers may become content providers.

Global Reach estimated 619 million people, some 10% of the world's population, had Internet access as of September 2002. There can now be few in the developed world who do not have access to Internet-connected computers at home, work, or through facilities such as public libraries and cybercafes. It cannot, however, be said that this applies to humanity in its entirety, as shall be discussed further under the heading of the digital divide.

5. Non-commercialism

The governmental and academic (i.e. non-commercial) origins of the Internet continue to have an important impact on its nature and development. Most users have become familiar with the availability of a vast quantity of free, quality content. Such expectations represent a significant barrier for those seeking to charge for access to their Internet-based content. To profit from such a model requires content of sufficient quality, quantity and uniqueness, and that is in demand by sufficient numbers.

6. The changing business environment

For the consumer the Internet provides an environment of near perfect competition in which prices from many suppliers can be compared within seconds. Leading IT business consultant Robin Bloor [the electronic b@zaar; Nicholas Brealey Publishing 2000] predicts that "Arbitrage will become a fact of life in the electronic economy. Nowhere will artificially high prices be sustainable". Numerous sites such as Shopper.com, DealTime and mySimon already enable consumers to find the best online deal for whatever they want - free of charge. The implication is that whilst transit and delivery charges for physical goods will still apply (for digitisable products physical distance becomes irrelevant) consumers will generally get a better deal as a result of increased, global, competition. Since suppliers will be forced to lower their charges to remain competitive they will be forced to innovate in other ways, e.g. service standards or other forms of added value, in order to win and retain market share.

For the elderly, disabled or those simply short of time, e-commerce offers the convenience of goods being ordered online and delivered to their doorstep.

e-commerce increases the variety of ways in which business may be transacted. The use of auction has become increasingly common with sites such as eBay permitting anyone to auction anything in a variety of auction styles. An interesting variation is provided by Priceline.com, where customers enter the price they are willing to pay for air tickets, the company then surveys the major airlines to find if one is willing to sell at that price. These alternative business methods would not be possible without the real-time information sharing capabilities of the Internet.

7. Agents

Agents are intelligent computer programs which are able to represent the interests of, and act on behalf of, their human owners. DealTime and mySimon are examples of a form of agent called the shopbot. Given a user's requirements they are able to enquire of many suppliers and so recommend the best deal. A further type of agent, the pricebot, is described by Kephart et al. as one which adjusts "prices automatically on the seller's behalf in response to changing market conditions". Books.com is quoted as an example, it uses an agent to slightly undercut the prices of its leading competitors. Bloor reports that "some websites have chosen to bar access to the robots that obtain comparison prices". He describes this as foolish and likens it to "turning customers away".

The Information Economies group at IBM research carries out simulations using agents programmed with various strategies. The work is described by Kephart et al. who predict that over the next decade "the global economy and the Internet will merge into an information economy bustling with billions of autonomous software agents that exchange information goods and services with humans and other agents". This report also predicts a role for agents in personalised filtering and bundling of information as a response to the problem of information overload described below.

See also:	What is the Information Age?
	Easy Web Site Design - a non-technical introduction

All information correct and links valid at time of writing, Dec 2002.