

The Consumer Web is Deflationary - byrneseyeview
http://www.digital-dd.com/the-growth-of-the-internet-and-the-happy-recession/

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patio11
I think just about everything in this article is accurate, but that it
ultimately doesn't matter, because the particular class of goods that are
subject to this is rounding error on an economic sector which, if you compared
it to e.g. fixed income securities, would resemble a pimple on the nose of a
particular emperor depicted on one coin of the vast horde that a dragon sleeps
on.

Here's an interesting experiment for you: guess what portion of the US economy
is video games, movies, music, and consumer Internet services put together.
Now graph that against "Of the last 20 people you talked to, how many are
white men between the ages of 12 and 24?" I think that graph shows a markedly
upward slope. I also think that it does not asymptotically approach the right
answer.

You could do a spiritually similar experiment with, e.g., cosmetics/beauty
aids, wedding services, etc and young ladies. Or healthcare, if you're looking
for a gigantic underestimation.

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ippisl
Fulfilling psychological and social needs are a huge part of the consumer
economy. bigger houses , branded cars and brands in general , going to pubs
and restaurants and vacations , everything that has to do with design.And
entertainment. all those are there to fulfill psychological and social needs.

The web offers a cheap alternative , that's rapidly improving(google+ hangouts
for example), for fulfilling psychological and social needs.

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msluyter
I believe Tyler Cohen's "The Great Stagnation" arrives at a similar
conclusion, but I'd like to see hard numbers. In regard to entertainment, it'd
be interesting to see a nomalized total $/hr comparison of various activities.
For example, compare a standard movie in a theater to playing Dragon Age.
That'd be roughly $15/hr (adding popcorn) vs. (120 hrs game play / ~60$ for
the game) ~$.50/hr. That seems impressive, but .50/hr is still much higher
than the 0$/hr that free broadcast television offers. I'd be curious to know
how all these different types of media consumption shake out in the long run.

~~~
byrneseyeview
That's a really good question. I have no idea what the ad revenue per hour of
TV watched would look like, but Quora might know:

[http://www.quora.com/What-are-some-typical-ad-revenues-
per-p...](http://www.quora.com/What-are-some-typical-ad-revenues-per-person-
per-hour-of-television-watched-for-different-categories-of-shows)

(Edit: I came up with a very rough estimate of $.20 of ad revenue per person-
hour of TV time. I have no idea how accurate that might be.)

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gwern
That seems to be the same number Kevin Kelly provides for TV:
[http://www.kk.org/thetechnium/archives/2011/03/your_attentio...](http://www.kk.org/thetechnium/archives/2011/03/your_attention.php)

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T_S_
I agree with most of the article. However the author suggests that the net
reduces the ability for sellers to price discriminate. I think it helps both
sides, and the outcome is in doubt. On the one hand it enables faster and
broader flow of price information, but on the other hand it reduces the
anonymity of the buyer. I think what we will see is an arms race between
buyers sharing information and sellers creating all sorts of ways to
individually vary the discount they need to offer.

~~~
ippisl
In order to vary the discount without making customers angry you have to
change the product , not only the price. For many products , that's pretty
difficult to do.

~~~
T_S_
Maybe, but then again, loyalty cards with tiered rewards do that. Making
customers do work to signal their price point does it (e.g. coupon clipping).
Bundling can do it too. Essentially, sellers have to add complexity to keep
the discrimination going. Meanwhile consumers have little supercomputers to
help undo the complexity. Hence the arms race analogy.

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praptak
It seems that it sucks if your retirement portfolio consists of the industries
being undercut and you need things like medical care. AirNurse, CrowdDoctor &
99medicines are unlikely to drive med prices down.

~~~
ippisl
There are disruptive innovations in healthcare. You can use medical tourism
and save a lot. There are other.

But disruptive innovations are usually pretty slow. they take a decade or
more.

Just invest carefully.

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nhaehnle
The interesting thing about this is that pretty much every point in the
article can be read as: the internet changes consumer markets to be more like
the idealized markets in economics textbooks.

Just a random observation, but it might be something for serious economists to
look into.

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richcollins
_cheap social status_ is an oxymoron (social status is zero sum) unless the
status is perceived instead of real.

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lcargill99
I have a significant bias from reading "Overcoming Bias" by Robin Hanson. His
"math" is to attribute to status-seeking anything where there's a ... demand
curve that doesn't make sense. It's all relative. So "cheap social status"
might be substituting working on open source instead of accruing your first
billion. It's cheap- _er_ , but still not cheap.

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abstractbill
_The web offers cheap social status_

That is a very interesting observation. I wonder if it will make most people
happier in the long term.

~~~
ippisl
From a 2008 European study of 18000 people: "people that are connected to the
Internet are considerably more satisfied with their lives.”

[http://www.virtualhappiness.org/2008/02/wellbeing-and-
intern...](http://www.virtualhappiness.org/2008/02/wellbeing-and-internet-
access/)

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lcargill99
It would be completely and totally awesome if _all_ status were relegated to
the Web. I would estimate the probability of that at at around 0.1%. People
who were denied status on the Web would try to find some other means.

