Economist’s E-commerce Survey
In its May 15th Survey, the Economist contains some interesting observations.

eBay and A Product’s Life Cycle
eBay’s strategy is to build a global trading platform that operates at the beginning and the end of the typical bell-curve of a product’s life. The bump in the middle, where market pricing works efficiently, is left to conventional retail channels.

For instance, when a successful new product is launched, demand for it may be so high that it becomes scarce, so it can be auctioned for more that the recommended price. Then price stabilizes and high-street (or online) retailing takes over. But as the product ages, it starts having to be discounted to clear out the stock, presenting another auction opportunity. And once its first owner is finished with it, a used market of uncertain value emerges.

Google’s Auction of Search Keywords
Google employs an automated bidding process using a version of what economists call a Vickery second price auction. Winning bidders pay only one cent more than the bidder below them. Hence, if there are bids of $1, 50 cents, 25 cents and so on, the winner of the top place pays 51 cents a click-through, the winner of the second place pays 26 cents, and so on. This, Google believes, encourages companies to bid whatever they think a search term is worth, safe in the knowledge that the final price they pay will be less.

I think this ensures transparency in the bidding process and the buyer gets the comfort that it is not being exploited by Google.

Factiva, WebFountain and Data Mining
Factiva is a web-based news and business information service. A joint-venture between Dow Jones and Reuters, it has around 1.6m paying subscribers and draws on almost 9,000 sources in 22 languages, many of which are subscription-only. The tools of the system are designed to allow more precise searches and to provide results in a single format.

Some companies use such services to provide virtual ‘clippings’ – all the stories from newspapers and magazines that mention their firm or their product. But just think how much more valuable it would be to know in advance what might be written about you in future. A new type of search engine could get close with an automated process called data mining. WebFountain has been developed by IBM’s research center in at Almaden, California, to use text analysis as a way of identifying trends, patterns and relationships from massive amounts of both unstructured and semi-structured text, ranging from bulleting boards, chat rooms, web logs, newspapers and trade journals.

Factiva has licensed this technology to provide a new ‘reputation management service’, launched this month. The idea, is that, say, a brand manager will be able to see how his company is being perceived on the internet without having to keep checking hundreds of different sites. This could provide an early indication of trends and troubles. Companies could also use such services to find out what their rivals are up to.

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Turing: Laid the Foundation for Invention of Software

In its ‘The Great Innovators’ series, BusinessWeek (May 10, 04) writes about Alan Turing:

It was a 1936 paper by Cambridge University mathematician Alan M. Turing that laid the foundation for the electronic wonders now crowding into every corner of our lives.

Turing invoked the notion of a ‘universal machine’ that could be given instructions to perform a variety of tasks. Turing spoke of a ‘machine’ only abstractly, as a sequence of steps to be executed. But his realization that the data fed into a system also could function as its directions opened the door to the invention of software.

A Google for Global Politics

In its ‘Innovators’ series, Time (May 3, 04) writes:

At www.e-parl.net, cyberspace is used as a town hall for legislators from around the globe. Membership in the e-Parliament is open to the world’s 25,000 democratically elected national legislators, including those in the US Congress. Though the group is still at what [one of the co-founders] calls the ‘level of experiments’ as organizers figure out how best to harness email, web chats and intranets to serve members, several hundred lawmakers have already signed, representing countries from Brazil to India.

Non-legislators can join a related forum, paying a fee that depends on the size of their organization. The goal: to devise common solutions to common challenges. E-Parliament is setting up a database that will allow legislators to search for like-minded colleagues – those working on, say, early-childhood education or counter-terrorism issues.

The e-parliament is already having an impact. For legislators who want to create a movement beyond their borders, it is launching action networks for lobbying and strategizing. In March 2003, Norwegian MP Ingvlid Vaggen became the first to turn an e-Parliament discussion into potential law when she took [an] energy efficiency issue to her legislature.

The initiative is founded by Nicholas Dunlop, a New Zealander and longtime leader of international political networks and William Ury, an American and a co-founder of Harvard Law School’s negotiation program.

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