1.1. -Reducing your average cost of production usually means focusing on unit costs of production.
1.2. -One great thing about information is that you can sell the same thing over and over again.
2. First-Mover Advantages
2.1. -The best way to secure a leadership position is through an early presence in the market.
2.2. -Incumbents should be willing to sacrifice short-term margins by limit pricing. This meaning to set prices as high as you can without encouraging others to invest the sunk costs necessary to enter your market.
3. Personalizing Products
3.1. -Yahoo!, like other search engine companies, sells ads linked to search terms (“hot words”) for a premium price.
3.2. -The technological development is the open profiling standard being developed by the W3 group.
3.3. -The other primary way to learn about your customers is by observing their on-line behavior.
4. Group Pricing
4.1. -Sometimes you can base prices directly on group identity, a strategy economists refer to as “third-degree price discrimination.
4.2. -Reasons to sell to groups rather than to end users: Price sensitivity, network effects, lock-in, sharing.
5. Cost of information
5.1. -Once first copy of information has been produced, adding copies cost essentially nothing.
5.2. -For information goods, copies are free for the producer as well as for the consumer.
5.3. -There are no natural capacity limits for additional copies
6. Cost and Competition
6.1. -The most important point is that markets for information will not, and cannot, look like textbook-perfect competitive markets in which there are many suppliers offering similar products, each lacking the ability to influence prices.
6.2. -Information commodity markets do not work
7. Market Structure
7.1. -The dominant firm model may or may not produce the “best” product, but by virtue of its size and scale economies it enjoys a cost advantage over its smaller rivals.
7.2. -In a differentiated product market we have a number of firms producing the same “kind” of information, but with many different varieties.
