Ekonomi Informasi - Pengantar 1

8/6/2019 Ekonomi Informasi - Pengantar 1

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INFORMATION ECONOMYINFORMATION ECONOMY//

THE ECONOMICS OFTHE ECONOMICS OFINFORMATIONINFORMATION


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Reading ListReading List

Collin turner, Information Economy, .., 2000. Hal R. Varian, Joseph Farrell, Carl Saphiro, The

Economics of Information Technology : AnIntroduction, Cambridge University Press, 2004.

Urs Birchler, Monika Butler, InformationEconomics, Rotledge, 2007.

Unctad Secretariat , Information Economy Report2007-2008, Geneva, 2007.

OECD. Measuring the Information Economy,2002.

Other related Books, Journal, Paper, etc.


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OverviewOverview Definition, economic roles and propert

What is Economics ?

Definition of Information

Economic Roles of Information

Economic Properties of Information

The Macro-economics of information

The Micro-economics of information


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What is Economics?What is Economics?

ECONOMICS ...

is the study of how society decides:

WhatFor whom

How

to produce...


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An increase in the price of oilAn increase in the price of oilaffectsaffects

What to produce less oil-intensive products

How to produce

less oil-intensive techniques For whom to produce

oil producers have more buying power,importers have less


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The distribution of worldThe distribution of worldpopulation and GNP, 1998population and GNP, 1998

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Population GNP

LIC MIC HIC


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Scarcity forces choices to beScarcity forces choices to bemademade

Opportunity cost a crucial concept in

economic analysis the quantity of other goods

that must be sacrificed to

obtain another unit of agood


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The production possibilityThe production possibilityfrontierfrontier

For each level of the output of one good,theproduction possibility frontiershowsthe maximum amount of the other good that

can be produced.

Film output

F

oodo

utput

Productionpossibility

frontier


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The operation of marketsThe operation of markets

Market a shorthand expression for the

process by which

households decisions aboutconsumption of alternative goods firms decisions about what and

how to produce and workers decisions about how

much and for whom to work are all reconciled by adjustment of

prices


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Resource allocationResource allocation

Resource allocation is crucialfor a society

and is handled in differentways in different societies,e.g.:

Command economy

Mixed economy

Free market


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Market orientationMarket orientation

Cuba

China

Hungary

Sweden

UK

USA

Hong Kong

Commandeconomy

Freemarketeconomy


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Normative and PositiveNormative and PositiveEconomicsEconomics

Positive economics deals withobjective explanation e.g. if a tax is imposed on a good its

price will tend to rise

Normative economics offersprescriptions based on valuejudgements

e.g. a tax SHOULD be imposed ontobacco to discourage smoking


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Micro and MacroMicro and Macro

Microeconomics

offers a detailed treatment of

individual economic decisions about

particular commodities Macroeconomics

emphasizes the interactions in the

economy as a whole


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DefinisiDefinisi InformasiInformasi

Information is that property of data thatrepresents and measures effects ofprocessing of them.

Processing includes data transfer,

selection, structuring, reduction,conceptualization.

In that definition, data is taken asequivalent to physical recordedsymbols, exemplified by printedcharacters; by binary characters in

magnetic, punched or optical form; byspoken words; by images.

Whatever the physical form may be, itbecomes a recorded symbol when it isinterpreted as representing something.


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Proses dimaksud, selection, structuring,reduction, conceptualization,melibatkan teknologi teknologiinformasi

Proses juga melibatkan data transfer,melibatkan teknologi transfer teknologi komunikasi

Dengan definisi tersebut, dapat dipahami bahwa

domain Ekonomi Informasi adalah teknologiinformasi dan komunikasi (ICT).

Pemahaman DefinisiPemahaman Definisi


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Physical & Symbolic Processes &Physical & Symbolic Processes &EntitiesEntities

PROCESSESENTITIES Physical Symbolic

Physical

Agriculture

Manual LabourPersonal Services

Data Input

Data StorageData Output (e.g., Reports)

Symbolic

Sports

Performance Arts

Classroom lecturing

Intellectual Games

Writing & Composing

Programming& Mathematics


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Informasi dalamInformasi dalam SektorSektorPerekonomianPerekonomian


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Mengapa Kontribusi Sektor KominfoMengapa Kontribusi Sektor KominfoYang Dicatat BPS dlm PDB Kecil ?Yang Dicatat BPS dlm PDB Kecil ?

(

Produksi Pulsa

E i l f i f tiEconomic roles of information


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Economic roles of informationEconomic roles of information- 1- 1

The writings of the economists concerninginformation almost universally focus onits role in decision-making.

But information clearly is important inoperational management beyond use indecision-making. This role is supportedby management information systems.

Information is a result of environmentalscan to ensure that there is knowledge ofexternal reality in decision-making.

Information can serve as a substitute forphysical entities.


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Economic roles ofEconomic roles ofinformation- 2information- 2

Information is used to influence andpersuade.

Information is essential in education,serving the process of learning,

supplementing interaction with teachers,and providing (in books, media, anddatabases) much of the substance.

Information may be an educational objective

in itself, since among things to be learnedare the tools for access to and use ofinformation.

Information is the substance of culturalenrichment, entertainment, and

amusement.


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Economic roles of information-Economic roles of information-33

Information can be a product, a commodity something produced as a package.

Information can be a service. Indeed, themajority of business services (the

national economic account that includesconsulting) are information based.

Information can be a capital resource,especially for companies that produce

information products and services.


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General economic properties of informatGeneral economic properties of informat- 1- 1

While information is represented in physicalform, that form can be changed withoutchanging its content.

In contrast to physical goods, intellectual goodscan be created with limited physicalresources, and frequently as a by-product ofother operations.

Information is easily and cheaply transported.

The first copy represents most of the costs increation, and reproduction costs arerelatively small. As a result, it that can beproduced and distributed with minimaldepletion of physical resources.


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General economic properties ofGeneral economic properties ofinformation - 2information - 2

There is an evident and directrelationship between physical goodsand the materials used in producingthem. One knows exactly how muchsteel is needed to produce a car. Butthere is no comparably directrelationship between any kind of good physical or symbolic and theinformation used in its production.

The value of research, marketinformation, or advertising isuncertain, at best probabilistic, andmuch of the value is potential ratherthan actual.


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There is a complex relationship betweenthe time of acquiring information andthe value of it. For some, the valuelies in immediacyyesterday's stockinformation may be worthless

tomorrow. For others, the value islikely to be received in the futurerather than the present.

Persons differ greatly in perceptions ofthe value of information, in kinds ofuse, in ability and willingness to use,in assessments of costs, and in abilityto pay. Typically the distribution ofuse of information is highly skewed,with small percentages of usersfrequent in their use and the great


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There are immense economies of scale.Combined with the value inaccumulation, this provides strongincentives for sharing information,especially since, once available, it can

be distributed cheaply, which makessharing easy.

Information is not consumed by beingused or transmitted to others. It canbe resold or given away with nodiminution of its content. Manypersons may possess and use thesame information, even at the sametime, without diminishing its value toothers. All these imply thatinformation is a public good.


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However, there is the need to invest in thecreation, production, and distribution ofinformation and that implies a wish to recoverthe investment. Furthermore, there may bevalue associated with exclusivity inknowledge, so there must be an incentive tomake it available to others. This implies thatinformation is a private good.

Most information products and services liesomewhere between pure private goods andpure public goods, and the same informationmay alternate as a public and private good atdifferent stages of information processingand distribution.


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Dengan adanya barang publik dan barangprivat, hak privat harus diseimbangkandengan hak menggunakan informatinya.Hak cipta adalah salah satu cara. Sebagaicontoh, di USA, salah satu klausulcopyright clause dari Konstitusi UnitedStates mewdahi keseimbangan ini : TheCongress shall have the powerto

promote the progress of science and theuseful arts by securing for limited timesto authors and inventors the exclusiverights to their respective writings anddiscoveries progress berimplikasi

penggunaan dan rights berimplikasiperlindungan.


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EkonomiEkonomisebagaisebagaiSistemSistemDapat digambarkan dengan Block Diagram sederhana

berikut :

PROSES/KEGIATAN

TANGIBLEOUTPUT

PERUMUSANSTRATEGI

INDIKATOR-INDIKATOR

STRATEGI

EKONOMI POSITIF

EKONOMI NORMATIF

ECONOMIC AGENT/PELAKU EKONOMI

AKUMULASIENDOWMENT

MOTIF /GOAL

INTANGIBLEOUTPUT

PERSEPSI

INITIALENDOWMENT


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The Circular Flow of Income andThe Circular Flow of Income andProductProduct


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Sub-Sub-sistemsistemdalamdalamEkonomiEkonomi

Pelaku Ekonomi : Rumahtangga, Perusahaan, Pemerintah.

Aktivitas / Proses :

Kegiatan Ekonomi : Konsumsi / Produksi

Perumusan Strategi & Kebijakan Sinyal Feedback :

Pengukuran & Perhitungan

Input / Output:

Input : Upah, sewa (Rumahtangga) / FaktorProduksi (Perusahaan), Pajak, Transfer(Pemerintah).

Output : Faktor Produksi (Rumahtangga), Sewa,Upah (Perusahaan), Subsidi, Transfer,Pelayanan (Pemerintah).


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Sub-Sub-sistemsistemdalamdalamEkonomiEkonomi

Input / Output Antara :Kebijakan : Alokasi, Distribusi,

Stabilisasi , dan Regulasi

Ukuran & Indikator-Indikator(agregat):

Rumahtangga : Upah, Konsumsi,Utility, dll

Perusahaan : Pendapatan, Biaya,Profit. dll

Pemerintah : Penerimaan,Pengeluaran, PDB, Unemployment,

Inflasi, Neraca Perdagangan, dll.


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MACROECONOMICS TOPICSMACROECONOMICS TOPICS

of INFORM ATIONof INFORM ATION


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MakroekonomiMakroekonomi((daridari))InformasiInformasi

Makroekonomi (dari) Informasi berkaitandengan peranan langsungnya dalampertumbuhan ekonomi, yang tercermin daripertumbuhan PDB, arus modal, nilaiperdagangan, dll.

Y = C+I+G+X-M

Output = Consumption + Investment +GovernmentSpending + Export - Import

Juga terkait dengan peranan tidak-langsungnyaterhadap perekonomian nasional, dengankontribusinya terhadap efektivitas tenagakerja, bersama-sama dengan faktor teknologilainnya

Y = f(K,L,A)=

Output = fungsi(Kapital,Labor,TechnologyProgress)


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National Policy:Economic ValuesNational Policy:Economic Values

Better workforce, better trained andmore capable of dealing withproblems.

Better product planning and marketing,based on more knowledge aboutconsumer needs.

Better engineering, based on availabilityand use of scientific and technicalinformation.

Better economic data, leading toimproved investment decisions andallocation of resources.

Better management from improved

communication and decision-making.


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National Policy:Economic BarriersNational Policy:Economic Barriers

Costs are incurred in acquiringinformation.

It is likely that the return is over thelong term, while the expenditure is

made immediately. Except for the information industries

themselves, information is notdirectly productive.

Rarely are results clearly attributable tothe information on which they werebased.

Accounting practice treats, informationas an overhead expense, subject to

cost-cutting.


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Economic PoliciesEconomic Policies

General Economic Policies Encourage entrepreneurship Shift from low technology to high

technology Shift from production of physical goods to

information goods

Develop the Information Economy Encourage effective use of information in

business Provide incentives for information

industries Develop information skills

Management of Information Enterprises Establish technical information skills Develop information support staff skills


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MACROECONOMICSMACROECONOMICS

DATA SAMPLESDATA SAMPLES


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Macroeconomic Data Sample :Macroeconomic Data Sample :

Income to providers of informationIncome to providers of information

The revenues for the informationindustries in the United States in1990 and 1998, as percentages

of gross national product andabsolute dollars, are shown thefollowing tables (StatisticalAbstract of the United States, 1993,2000)

Of special importance is thesteady year by year increase, forthe past decade, in expendituresfor Business Services,reflecting growing use ofinformation in the economy.


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Macroeconomic data sample :Macroeconomic data sample :Revenues for the information industries in the UnitedRevenues for the information industries in the United

States in 1990 and 1998States in 1990 and 1998((percentages of gross national product and billions of dollars)percentages of gross national product and billions of dollars)

INFORMATION

INDUSTRIES

U.S. Data for 1990 U.S. Data for

1998

TransactionIndustries 4.9% $274 B 7.1% $629 B

Hardware and SoftwareIndustries

3.4% 190 B 7.6% 665 B

Production & Distribution

Industries

14.0% 783 B 17.7% 1,545 B

Total for Information

Industries

22.3% 1,147 B 32.4% 2,839 B

Gross National Product 100.0% $5,600 B 100.0% $8,750 B


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Revenues for the Production & Distribution IndustriesRevenues for the Production & Distribution Industries

in the United States in 1990 and 1998in the United States in 1990 and 1998((percentages of gross national product and billions ofpercentages of gross national product and billions of

dollars)dollars)PRODUCTION &DISTRIBUTION

U.S. Data for 1990 U.S. Data for 1998

Book Publishing 0.3% $15 B 0.3% $29 B

Journal Publishing 0.3% 15 B 0.3% 30 B

Entertainment 3.2% 180 B 3.8% 330 B

Formal Education 7.0% 392 B 6.9% 601 B

University Research &Development

0.4% 21 B 0.3% 27 B

Business Services 2.9% 160 B 6.0% 528 B

TOTAL 14.0% $783 B 17.7% $1,545 B


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UNDERLYING TELECOM INFRA-STRUCTUREUNDERLYING TELECOM INFRA-STRUCTURE

C E N T E R S N U M B E RE M P L O YI N C O M EE X P E N DC A P I T A L'9 8 U S A G E

P r in c ip a l P r o v id e r s 5 5 3 K $ 1 1 7 B $ 8 8 B $ 2 9 B 2 2 B m in

O t h e r P r o v id e r s $ 7 9 B $ 6 9 B $ 1 0 B

T o t a l $ 1 9 6 B $ 1 5 7 B $ 3 9 B

A T & T S tr u c tu r e

1 R e g io n a l C e n t e r s 1 0

2 S e c t io n a l C e n t e r s 5 2

3 P r im a r y C e n t e r s 1 6 8

4 T o l l C e n te r s 9 3 3

5 E n d U s e r S e r v ic e s 1 8 8 0 3


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DISTRIBUTION OF TELECOM USE & INCOMEDISTRIBUTION OF TELECOM USE & INCOME

T Y P E O F S E R V IC E U S E R S A V E R A G E C O S T

P E R U S E R

T O T A L

L o c a l S e r v i c e , R e s i d e n t ia l1 0 1 M $ 1 9 .5 4 /m o n t h $ 1 9 .7 3 B

L o c a l S e r v ic e , B u s in e s s 4 6 M $ 4 1 .7 7 /m o n t h $ 1 9 .2 1 B

L o n g-D is t a n c e $ 8 1 .6 7 B

N e t w o r k A c c e s s $ 3 4 .9 6 B

C e l lu la r P h o n e $ 2 1 .0 4 B

O th e r In c o m e S o u r ce s $ 3 2 . 3 5 B

T o t a l $ 2 0 8 .9 6 B


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STRUCTURE OF THE INTERNETSTRUCTURE OF THE INTERNET

L E V E L O F A C C E S SN U M B E R E M P L O Y E X P E N D A C C E S S O P E R A T I O NC A P IT A L

B ack bon es 39 1 K $3 5 .00B $2 6 .0 0B $9.00B

D om ain S ervers 85 0 K 2 35 K $4 2 .50B $ 23 .5 0 $ 19 .00B

S ervice P rovid ers 13 M 1 30 K $1 9 .60B $ 14 .7 0 $ 4.90B

H osts 26 MIn stitutio na l U sers 70 M $ 30 .3 4B

In divid ual U sers 70 M $4.6 6B $2.80B

T ota l $9 7 .10B $ 35 .0 0B $6 4 .2 0B $ 35 .70B


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The Growth of the InternetThe Growth of the Internet

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

Jan98

Jul98

Jan99

Ju l99

Jan00

Jul00

Jan01

Jul01

Jan02

MillionsofInternetSites

World-wide Hosts World-wide Level 4

Generic & US Hosts Generic & US Level 4

O ther Country Hosts O ther Country Level 4


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Domain Survey Data for January 2001Domain Survey Data for January 2001

Jan 2001 PRIMARY DOMAINS Hosts Level 2 Level 3 Level 4

Jan 2001 WORLD-WIDE 109.6 2.7 29.1 77.7

Jan 2001 TOTAL Generic & US 80.6 2.2 23.3 55.1

Jan 2001 .com Commercial 36.4 1.9 10.9 23.6

Jan 2001 .net Networks 30.9 0.2 8.6 22.1

Jan 2001 .edu Academic 7.1 2.4 4.8

Jan 2001 .org Non-Profit 2.3 2.3

Jan 2001 .gov Government 1.8 0.2 1.7

Jan 2001 .mil US 1.3 0.2 1.0 0.1

Jan 2001 .us US 0.8 0.0 0.3 0.5

Jan 2001 Other Countries 29.0 0.5 5.8 22.7


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Domain Survey Data for January 2002Domain Survey Data for January 2002

Jan 2002 PRIMARY DOMAINS Hosts Level 2 Level 3 Level 4

Jan 2002 WORLD-WIDE 147.3 2.9 36.0 108.5

Jan 2002 TOTAL Generic & US 106.2 2.3 28.8 75.1

Jan 2002 .com Commercial 47.8 0.2 11.9 35.6

Jan 2002 .net Networks 44.5 1.9 12.8 29.9

Jan 2002 .edu Academic 7.8 0.0 2.6 5.1

Jan 2002 .org Non-Profit 1.3 0.2 1.0 0.1

Jan 2002 .gov Government 0.8 0.0 0.3 0.5

Jan 2002 .mil US 2.1 0.0 0.0 2.1

Jan 2002 .us US 1.9 0.0 0.2 1.7

Jan 2002 Other Countries 41.2 0.6 7.2 33.4


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Grow th in Use of Internet, United States

0.0

50.0

100.0

150.0

200.0

250.0

300.0

1997 1998 1999 2000

Years

MillionsofUsers

Total Number of Users Users w ith Access from Home

Users w ith Access from Work Users in 30 Days from Home

Users in 30 Days from Work


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M ICROECONOM ICS TOPICSM ICROECONOM ICS TOPICS

of INFORM ATIONof INFORM ATION

Th M i i F d t


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The M icro-econom ics Funda m entThe M icro-econom ics Funda m ent

microeconomicsThe branch of economics thatexamines the functioning of individualindustries and the behavior of individual

decision-making unitsthat is, business firmsand households.

MICROECONOMICS AND MACROECONOMICS

macroeconomicsThe branch of economics thatexamines the economic behavior of

aggregatesincome, employment, output,and so onon a national scale.

Microeconomics looks at the individual unitthe household, the firm, the industry. Itsees and examines the trees. Macroeconomics looks at the whole, the aggregate. Itsees and analyzes the forest.

THE DIVERSE FIELDS OF ECONOMICSTHE DIVERSE FIELDS OF ECONOMICS


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THE DIVERSE FIELDS OF ECONOMICSTHE DIVERSE FIELDS OF ECONOMICS

TABLE : Examples of Microeconomic and Macroeconomic Concerns

DIVISION OFECONOMICS PRODUCTION PRICES INCOME

EMPLOYMENT

Microeconomics Production/output inindividual industries andbusinessesSales ProjectionHow much the

bandwidth.How many carsHow many telephone

set / modems

Price of individualgoods and services

Price of hostingPrice of downloaded

contentsCollocation TariffVPN rents

Distribution ofincome andwealth

Wages in the

cellular operatorMinimum wageExecutive salariesPoverty

Employment byindividual businessesand industries

Jobs in the content

provider.Number of employeesin a firm

Number ofaccountants

Macroeconomics National

production/output

Total sector outputGross domestic

productGrowth of output

Aggregate price level

Consumer pricesProducer pricesRate of inflation

National income

Total wages andsalaries

Total corporateprofits

Employment and

unemployment inthe economy

Total number of jobsUnemployment rate


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The Micro-economics TopicsThe Micro-economics Topicsof Informationof Information

The costs of informationThe values of information in use

Pricing of InformationCompetition


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The costs of informationThe costs of information

Costs occur in the following stages of informationproduction and distribution:

Information must be created, by generation andprocessing of data; these are authoring functions.

It must be assessed for publish-ability; these are editorial

functions.It must be processed for the generation of a master; these

are composition functions.

Products and/or services will be produced.

The products and services will be marketed.They will be distributed.


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Matrix of Processes-Entities forMatrix of Processes-Entities forCostsCosts

ProcessesEntities

Physical SymbolicPhysical Production

Distribution

Marketing

Symbolic Composition Creation

Editorial


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Capital Costs and Delivery CostsCapital Costs and Delivery Costs

The costs for authoring, editorial, andcomposition will be treated as capitalinvestments;

The costs for production, marketing, anddistribution as delivery costs. In practice, thecosts of authoring usually are borne byauthors, compensated for by royalties andthus part of the costs of sales for the

publishers.


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Means for DistributionMeans for Distribution

Today, three forms of distribution need to berecognized:

Printed and film,

Magnetic tapes (VHS-VCR) and optical disks

(CD-ROM and DVD)Electronic.

For the first two, distribution is by acombination of wholesale distributors, retail

outlets, and libraries. For electronic, bytelevision (broadcast, cable, and satellite) andthe Internet.

R l ti I t fR l ti I t f


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Relative Importance ofRelative Importance ofMeans for DistributionMeans for Distribution

The following table provides a qualitative assessment ofthe relative importance of the three means fordistribution.

Primary means that the form is the initial means for

distribution, the major source of income, and thebasis for recovering most if not all of the capitalinvestment; secondary means the form is asignificant alternative means for distribution;tertiary means that the form is speculative, with

income still too small to be significant; blank meansthe form is of no substantial significance.


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Relative Importance ofRelative Importance ofMeans for DistributionMeans for Distribution

Form s of D istribution

Types of Information

Printed/Film

Magnetic /Optical

Television/Internet

B ook s Prim ary T ertiary T ertiaryScholarly Journals Prim ary T ertiary SecondarySoftw are Prim ary SecondaryD atabases Secondary Prim aryM otion Pictures Prim ary Secondary SecondaryT elevision Secondary Prim ary


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Capital InvestmentsCapital Investments

For distributors and retail outlets, capitalinvestments are primarily in physical plant,though there will be some in inventory.

Those for libraries are in physical buildingsand equipment, but most significantly in theircollections and associated technicalprocessing.


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Delivery CostsDelivery Costs

Delivery costs for distributors, retail outlets,and libraries are largely for staff. (For allretail establishments in 1997, capitalexpenditures represented about 20% of total

costs and staff, 80%.)For the Internet, capital investments are in

hardware and software for processing andcommunication. Delivery costs are for staff

and communication access charges.


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Internet Costs are Uncertain - 1Internet Costs are Uncertain - 1

First, costs occur at several points communication services, network backbones,

domain servers, service providers, and userfacilities.

Second, costs for network access are largelyindependent of actual use, being connection

charges related to bandwidth and reflectinganticipated demand.


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Third, the rate of growth of the Internet is sorapid that data on one component ofoperations, reported at one point in time,cannot be compared with data for anothercomponent, reported at another point in time.

Fourth, there are mixtures of fundingpublic,institutional, advertising, and individual users

and many of the costs are subsidized,buried in other accounting categories.


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Fifth, many of the costs are borne by the usersinstead of by the producers and/ordistributors. The costs of local storage andprinting are borne by the user, and they are

not negligible. Users spend time in accessing,downloading, and managing the digital files.


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MICROECONOMICSMICROECONOMICS

DATA SAMPLESDATA SAMPLES

Micro economics ofMicro economics of


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Micro-economics ofMicro-economics ofBook PublishingBook Publishing

Estimates can be made of the costsfor print-form distribution. Thefollowing table simplifies and

generalizes from data reported byDessauer (1981), Bingley (1966)and Machlup (1962), showing costsof print-form distribution aspercentages of list price. Data arenot available to make comparableestimates for CD-ROM or Internetdistribution, and sales ofelectronic books are stillminiscule.


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Distribution of Book Publishing CostsDistribution of Book Publishing Costs

Royalties 10%

Capital costs 30%

Editorial 5%

Composition 25%Delivery Costs 30%

Production 14%

Distribution 16%

Discount 30%


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P d i & Di ib i F iP d ti &Di t ib ti F ti


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Production & Distribution FunctionsProduction & Distribution Functions

The functions in production are thosenecessary for a marketable,distributable productprinted,bound and warehoused.

Books must be marketed anddistributed. In practice, thesefunctions are shared between thepublisher and the seller ordistributor, with the former

primarily responsible for promotionand the latter for selling. The costsfor the seller or distributor arecovered through a discount,

typically in the order of 30 per cent

Micro economics ofMicro economics of


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Micro-economics ofMicro-economics ofScholarly J ournal PublishingScholarly J ournal Publishing

Again, estimates can be made of the costsfor print-form distribution. The followingsummarizes and simplifies detailedestimates of functional costs King andTenopir (1998):

Note that the composition costs aresubstantially greater than for books,reflecting the more complex nature ofscholarly journal publication. Note that

there are no costs for royalties (sincefew scholarly journals pay the authors)or for discounts to distributors (sincesubscriptions are handled by thepublishers),

Distribution ofDistribution of


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Distribution ofDistribution ofScholarly J ournal Publishing CostsScholarly J ournal Publishing Costs

Capital costs 61%Editorial 32%

Composition 29%Delivery Costs 39%

Production 26%

Distribution 13%


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Databases and Digital LibrariesDatabases and Digital Libraries

Databases and digital librariesinclude digitized text, numericaldata files, images, referencedatabases, and bibliographic

catalogs. They have become, through the

Internet, a widespread means ofelectronic publication.

d i &di ib i f bP d ti &di t ib ti fD t b


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Production & distribution of DatabasesProduction & distribution of Databasesand Digital Librariesand Digital Libraries

There are no data on which to

estimate the distribution ofcosts between capital anddelivery functions.

Costs of use ofCosts of use of


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Costs of use ofCosts of use ofDatabases and Digital LibrariesDatabases and Digital Libraries

Beyond the costs of the producer anddistributor, there will be costs incurredby users or by informationintermediaries reference librarians,

brokers or information entrepreneurs. In King (1983), the direct costs of

searching a reference database wereestimated to be as shown in the

following chart.


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Costs of Searching a Data BaseCosts of Searching a Data Base

1978 1985Royalties $20 $38

Computer $50 $35Telecom $10 $5

The royalties represent the payment s to the database

producers to cover their capital investment and costs in

storage and delivery. The other costs, including that for the

intermediary, are for delivery.

Micro-economics ofMicro-economics of


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Micro-economics ofMicro-economics ofMovies and TelevisionMovies and Television

Vogel (1986) provides pictures of thedistribution of costs at break-even asfollows:

1978 1985

Royalties $20 $38

Computer $50 $35

Telecom $10 $5


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VALUE OF INFORMATION IN USEVALUE OF INFORMATION IN USE

h l f i f i i


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The values of information in useThe values of information in use

Value of information to individuals

Value of information services toprofessionals

Value of information in commerceand industry


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Value of information to individuals -1Value of information to individuals -1

The value of cultural enrichment,entertainment and amusement asuses of information is

demonstrated by the willingnessof people to pay for them. Motionpictures, television, theatre andthe arts, sportsthese are all

major, multi-billion-dollarindustries, supported both byconsumers of them and byadvertisers.

l f i f i i di id l 2


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Value of information to individuals - 2Value of information to individuals - 2

The other major individual use ofinformation is for education andpersonal development. StatisticalAbstracts of the United States

reported in 2000 that the totalexpenditure in 1998 for formaleducation, both public and privateat all levels, was $601 billion.

Thus, expenditures for formaleducation represent about 7 percent of the gross national product(GNP).

V l f i f i i di id l 3


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Beyond that are those for industrialtraining. Research Institute ofAmerica reported that more than$30 billion was spent in 1986

(about 0.7% of the GNP) for formalemployee training but that anadditional $180 billion was spentfor on-the-job training. Fortune

(1993: 62-64) uses the figure of$30 billion as the magnitude offormal industrial training programsin 1993.

l f i f i i di id lV l f i f ti t i di id l 4


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The American Society for Trainingand Development (ASTD 1999)reported that expenditures forformal employee training in 1995

were $55.3 billion (again about0.7% of the GNP). Consistently forthe past decade, hours for informalon-the-job training have been

from two to three times that forformal training (StatisticalAbstracts 2000).

Culturalenrichment,entertainmentandCulturalenrichment,entertainmentand


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Cultural enrichment, entertainment andCultural enrichment, entertainment andamusementamusement

Hours per

person/year

Expenditures

($ millions)

Television 1,511 $21,600

Radio 1,196 5,900Newspapers 200 19,500

Records & Tapes 190 6,900

Magazines 135 9,000

Leisure books 70 4,100

Movies 11 3,000

Spectator sports 10 2,300

Cultural events 4 1,300

Miscellaneous 25 7,500

Total 3,352 $82,000

V l f i f ti t f i lV l f i f ti t f i l


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Value of information to professionalsValue of information to professionals

It has been estimated that professionals spendnearly 60 per cent of their time communicatingand working with information (Carroll and King1985). They incur costs in obtaining informationand in using it, but it has been estimated thatthe direct benefits to them are as much as tentimes those costs. More important than directbenefits, though, are increases in productivitymeasured by results produced (reports,management publications, research plans andproposals, presentations, consultations and

substantive advice).

Valueof information inValueof information in


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Value of information inValue of information incommerce and industrycommerce and industry

In view of the importance of informationto business, a business plan shouldidentify the role of information insupport of the business objectives, so

that any potential investor can assessthe extent to which it has beenrecognized. Information is importantfor support of product research anddevelopment, for access to finance,

for marketing, for knowledge ofgovernment regulations, for use ofindustry standards, for managementof personnel. The returns toprofitability from investment in

information are real and large.


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THE ENDTHE END

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