Sunday, April 06, 2008

Does being open pay off?

In spite of setbacks and roadblocks, there is an overall trend toward increased Internet and telecommunication openness and standards. (The ball started rolling with the 1956 Hush-A-Phone Case which forced AT&T to allow us to attach devices to their network).

We talk about openness and transparency in various contexts. We talk about the end-to-end, dumb Internet where anyone can run any application and connect any device. We talk about the cellular providers trying to keep control over their networks, but gradually begining to loosen up. We have seen record companies first try to control music copying, then starting to sell unprotected .mp3 songs. YouTube is open to all comers as are FaceBook, MySpace and thousands of other sites. I came across a different sort of openness while ordering a book at Amazon.com.



As you see here, Amazon sold new copies of the book I wanted for $18.25 plus shipping. They also listed offers to sell the same book from 36 of their competitors. One competitor, FeelGoodReaders, was selling the book new for $14.55 and another had a used copy that was "like new" for only $12.75. In fact Amazon listed 12 competitors who were selling new copies of the book for less than their price of $18.25 and many others selling cheaper used copies. Amazon also told me that FeelGoodReaders had an excellent reputation -- 99% of their customers gave them positive reviews.

Based on this, I bought the book from FeelGoodReaders. Was Amazon hurt or helped by their openness? What did the decision to show the competitor's prices and customer ratings cost Amazon? Did it benefit them at all? Did it benefit the economy?