The Internet changed lots of things in lots of really neat ways.

Now that my overly-general attention-grabbing intro-sentence is out of the way, let’s get down to business, specifically, how the Internet has dramatically changed the way businesses start, operate, and fail.

Several variations on how to achieve the end goal of any business (making stacks, piles, and swimming pools of money) have arisen in the recent times, all varying in their experimental nature. Chris Anderson coined the concept of “The Long Tail” in an article for Wired Magazine in 2004. He has gone on to write two books on the topic and endless blog posts. The name comes from a power law distribution curve which (think back to graphing in Algebra, it’s very close to the graph of an exponential function). Traditionally businesses focus on selling only the most popular products, especially when it comes to media like books or music. Businesses like Amazon and Netflix have shifted that norm by overcoming costs of stocking and distribution by leveraging the Internet to reach a huge audience and offer them an unimaginable array of options at a very low cost. Thus making more money off of the nearly infinite ‘tail’ of the graph rather than the ‘head’. Essentially selling more of less popular items than possible ever before.

Another strategy employed by many Web 2.0 companies has become known as Freemium. Again, companies like Flickr, Second Life and Rapidshare use the Internet to reach a very large number of people for almost no money and then proceed to give away their service but offer paid premium memberships with added features. This model works because of the scale, if only 1% of users pay $25 for a year of your service and you have 10 million users, well do the math. The percentage of paid customers varies greatly depending on the service. Club Penguin, for instance, has 25% of monthly unique visitors sign up to pay $5 a month, where as most shareware software programs often see less than .5% of users paying.

This brings us to the “pay as you wish” method, which allows the consumer to pay only as much as they see fit. Obviously very counterintuitive, this idea was employed by Radiohead, Saul Williams and many other artists as a new way to distribute their music. Certain others are refusing to take money for their work, San Diego singer-songwriter, Joel P. West, is offering his album only in exchange for a creative work (photo, poem, song, painting etc.) to be posted on the album’s blog.

With all these evolving business models, the value of a service or product really comes to the forefront especially when leaving the monetary payment for said object to be determined by its consumer. This is a truly fascinating concept, which would revolutionize commerce. As many social scientists theorize, our personal sets of values are determined mainly by the culture surrounding us in our pre-adult years and the order in which we prioritize these values shifts around through the course of our lives based on the scarcity or need for them. For example, during a drought, the need for clean drinking water comes to the forefront of many people’s minds. My question is this: what if everything we consumed was paid in accordance with the ordering of your values set at any given time?

JZ, Graphic Designer
Lunch: Supafood Smoothie and Everythang Bagel wif Hummus