New Economy Business Models (Carr vs. Anderson)

Somewhere between Nick Carr's "Typology of Network Strategies" and Chris Anderson's "Four Kinds of Free" is the secret to understanding our new economy:

Carr's "Typology of Network Strategies":

1. Network effect


2. Data mining


3. Digital sharecropping, or "user-generated content"


4. Complements


5. Two-sided markets


6. Economies of scale, economies of scope, and experience

Anderson's "Four Kinds of Free":

1. Direct cross-subsidy (get one thing free, pay for another)


2. Ad-supported (third-party subsidizes second party)


3. "Freemium" (a few people subsidize everyone else)


4. "Gift economy" (people give away things for non-monetary rewards)

Of course, both Carr and Anderson are building on theories and business models previously articulated by many others. A few that come to mind:

• Carl Shapiro & Hal Varian, Information Rules: A Strategic Guide to the Network Economy (1999)


• Stan Liebowitz, Re-thinking the Network Economy (2002)


• Jeffrey H. Rohlfs, Bandwagon Effects in High-Technology Industries (2001)


• Oz Shy, The Economics of Network Industries (2001)


• Don Tapscott & Anthony Williams, Wikinomics: How Mass Collaboration Changes Everything (2006)