Sunday, October 07, 2007

The value of Internet services

Every post on this blog is a testimony to the leveraging of Internet services. I am able to create the posts in a few minutes using the Blogger editor, and creating and configuring the blog took only a few hours. Furthermore, the footer of each post has a link to a text-to-speech service at Talkr.com which can read the post aloud. Again, creating this composite application or "mashup" took only a short time.

Writing a program to create a blog with text and optional speech would have been impossible when I first started out as an assembly language programmer. A few years ago, it might have taken years to create a site with the features of this blog -- designing and creating Web pages, writing server-side code, acquiring and integrating a text-to-speech package, etc. Today it takes a few hours. As levels of abstraction rise, infrastructure improves, and the Internet "ecosystem" proliferates, programmer productivity will increase still faster.

Public and private infrastructure has clear value. The US Interstate Highway System is a valuable asset that increases economic productivity. Equipment, buildings, and other assets owned by organizations also make them more productive. We have also spoken of the value of open source contributions, the gross contributed product, to the world economy.

What is the value of an Internet service? What is the value and economic contribution of, say, Google Maps? Is there a line on the Google balance sheet that states a value for Google Maps? What is the value to the world economy of all the Web sites that leverage Google Maps?

Individual firms could begin to answer such questions today -- how do they show Internet services on their books? How much revenue do those services generate? We will have to leave the task of estimating their value at the national or global level to future economists.