As a first approximation, we could define output as the number of consumers reached with a given volume of information. For example, consider a specific comparison between the Web and newspapers. Let us use 1 million subscriber-page-days (1 mspd) as our unit of measurement. That is, we look at the cost of reaching 1 million subscribers with one page of information for one day. My reading of the Standard Rate and Data Services media guide is that a full-page advertisement in a newspaper with a circulation of 1 million costs about $60,000 for one day. Thus, in a newspaper, 1 mspd costs $60,000.
On the Web, because the Internet provider industry is not yet mature, costs vary by choice of provider. See The Internet Letter (July, 1994). However, one of the providers that appears to be near the median in terms of cost charges $900 per year for what would appear to be more than a full page in a newspaper. If we take it that there are 1 million "subscribers" (Mosaic users), then the cost of 1 mspd on the Web is $900/365, or about two dollars and fifty cents. This is less that five thousandths of one percent of the cost of 1 mspd in a newspaper.
The million subscriber-page-day concept still does not cover some important facets of communication. One facet is called customization: different users need different information. For example, if the only information that a customer needs from a mortgage company in order to decide to apply for an adjustable-rate mortgage (ARM) is an interest rate quote, then the mortgage company's information system does not need to do anything other than respond to requests with interest rate quotes. On the other hand, if one customer needs a rate quote, another customer would like to know whether he or she can qualify to buy a particular home, and a third would like historical information to help compare adjustable-rate mortgages linked to different indexes, this requires a customized information system.
A second facet is interactivity. Interactive communication may be needed in order for the seller to understand the consumer's needs. More importantly, interactive communication is needed to process a transaction.
Other facets to consider include:
It will help to have in mind a list of alternative media:
broadcast media salesperson telephone with salesperson automated telephone response system print media proprietary networks and online services other Internet protocols (e-mail, gopher) WWW
Broadcast media can communicate to many people, but these media cannot offer customization nor receive information to process transactions. Also, the 60-second spot is not suited to convey a high volume of information.
Sales persons can convey diverse information and process transactions, but a single sales person can work with only one customer at a time. The telephone can be used to communicate either a lot of customized information to one person (with a salesperson) or a little bit of homogeneous information to a lot of people (with an automated response system).
Print media can convey a higher volume of information than broadcast media, but the cost of reaching a large audience may be higher. Also, information in print media can become outdated easily.
Until recently, most products and services required at least two media for marketing: an advertising medium, such as broadast or print media, to disseminate information to a broad audience; and an interactive medium, such as a sales person or a telephone, to process transactions.
Computer networks are unique among media in that they combine interactivity with low marginal cost of making the information accessible to an additional user. This allows computer networks to serve both as a vehicle for broad dissemination of product information and as a vehicle to process transactions. This is the first time in history that a single medium has possessed this capability.
Within the computer network category, the older Internet protocols include electronic mail, ftp, and Gopher. An e-mail infobot, Gopher, or an ftp site can provide a high volume of information to a large audience. However, these are like telephone response systems in that complex, diverse requirements for customized information are difficult to meet. The proprietary information services, to the extent that their interfaces rely on menus and text, are similar to Gopher and suffer from the same limitations.
Regular e-mail (as opposed to an infobot) is like the telephone with a salesperson, in that it can provide customization but without the potential for cost saving that an automated system provides. That is, a salesperson needs to respond individually to each individual request for information.
WWW is the first computer network protocol to accomodate customization. While many people point to graphics as the factor that differentiates the Web from other protocols, it would be a mistake to under-estimate the importance of hypertext linking in providing flexibility. It is important to recognize the freedom hyptertext brings compared even with Gopher, which gives only either/or choices: up/down; menu/document. In the mortgage banking example used above, one can easily set up a Web server so that a screen to apply for an ARM can be reached from either a screen with mortgage rates, a screen with a qualification calculator, or a screen with plots of historical data. Menus and mailbots do not lend themselves to this sort of application.
To summarize, the World Wide Web appears to have the following properties:
From a seller's point of view, WWW is low cost in every dimension. However, from the consumer's point of view the cost is high. Part of this problem is temporary--the fact that reliable, easy-to-install Mosaic and TCP/IP are not yet available to individual home users. A more durable issue is that the consumer, faced with an ocean of information, may confront the problem of "water everywhere but nary a drop to drink." An important issue for the Web will be what it will cost the consumer in terms of time to find information.
go to next section implications of the cost function