Digital Phoenix; Why the Information Economy Collapsed and How It Will Rise Again

375 Pages·2005·11.43 MB·English

by  Abramson

Digital Phoenix

Digital Phoenix
Why the Information Economy Collapsed and
How It Will Rise Again
Bruce Abramson
The MIT Press
Cambridge, Massachusetts
London, England
© 2005 Bruce Abramson
All rights reserved. No part of this book may be reproduced in any form by any
electronic or mechanical means (including photocopying, recording, or informa-
tion storage and retrieval) without permission in writing from the publisher.
Trademarks, brands, and names mentioned in this book are the property of their
respective owners.
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This book was set in Sabon by SNP Best-set Typesetter Ltd., Hong Kong and
was printed and bound in the United States of America.
Library of Congress Cataloging-in-Publication Data
Abramson, Bruce.
Digital phoenix : why the information economy collapsed and how it will rise
again / Bruce Abramson.
p. cm.
Includes bibliographical references and index.
ISBN 0-262-01217-0 (alk. paper)
1. Information technology—Economic aspects. 2. Internet—Economic aspects.
I. Title.
HC79.I55A27 2005
303.48¢33—dc22
2005042804
10 9 8 7 6 5 4 3 2 1
In loving memory of my grandparents.
Though they might not have grokked, they certainly would have
kvelled.

Contents
Acknowledgments ix
Prologue xi
1 Net Assets 1
2 Progress of Science and Useful Arts 27
3 Competition and Its Discontents 51
4 The Artificial Science 81
5 Mortal Combat 111
6 Fresh from the Source 171
7 The Computer Ate My Industry 203
8 Down the Rabbit Hole 241
9 Sand in the Vaseline 273
Epilogue 309
Notes 323
Index 349

Acknowledgments
If anyone you know has ever written a book, you know that authors
require a certain amount of indulgence. They also require at least a few
proofreaders to remind them that discretion is often the better part of
valor. Though the list of those who have endured my brainstorming is
too long to enumerate, I would like to thank the smaller list of friends
and colleagues who read portions of earlier drafts and helped me get the
final manuscript into place: Joe Bernstein, Jeff Itell, Cathy Johnston,
and Miranda Xafa. Several anonymous reviewers also provided useful
feedback.
I would also like to thank Charles River Associates Incorporated,
where I was a consultant from 1998 to 2000, a Principal from 2000
to 2003, and which I recently rejoined as a consultant. CRA is a world-
class economic consulting firm that respects academic-style analytic
thinking while providing its clients with valuable expertise and advice.
More to the point, my affiliation with CRA gave me the privilege of
getting to know some of the world’s best industrial organization econo-
mists and antitrust specialists.
That said though, every idea and opinion expressed in this book is
mine and is not to be construed or deemed the opinion or position of
CRA or any of its employees, officers, directors, or consultants. Nor, for
that matter, should anyone attribute any of my ideas to any organiza-
tion, any individual collaborator, or any client with whom I may have
worked in the past or may work in the future.
The expressions of my ideas are also original. In some cases, I found
previous authors who already said what I wanted to say in ways better
than I could say it. In those cases, I quoted the previous authors—always