Dented Reality Notes

A patent is a legal document granting the sole rights of an invention to its inventor. Once patented, the inventor controls the use, distribution, duplication and sale of their invention.

Patents are a point of hot content on the Internet, where companies have patented things such as double-clicking with a mouse and the use of cookies to store personal information; technologies which are crucial to much of the operation of computers and online transactions.

Copyright refers to the legal right to reproduce, musical, dramatic, artistic and other literary works. Copyright is normally attributed to the author/composer/creator of the original work, however it can also be sold, transferred or passed on to another party, particularly an agent of some kind.

Copyright infringement carries heavy legal penalties, and is currently very active within the field of illegal music trade.

This section provided a number of interesting readings looking both at business ethics and morality, and virtual corporations. I have looked at Virtual Corporations in the glossary section for this unit, so I will talk more about ethical business operations, the nature of ethical business, morals in business and whether we should indeed expect corporations to act ethically.

Grace and Cohen attempted to provide at least a framework of a definition for ethics, which proves to be a very grey and subjective area, despite its apparent universality. They provide the following general guidelines for ethics:

• Moral opinions should be impartial, and take into account their effects on others, rather than focussing entirely upon one's self.
• Ethical opinions should be defendable through reasoning. They cannot be based on emotions or biases.
• Moral opinions guide ones actions through evaluation and decision, based upon foresight as to the consequences of a certain path of action.

I thought that Goodpaster and Matthews provided the more interesting discussion of business ethics and the different views and approaches to the issue in regards to business, while the pieces from Grace/Cohen and What is a Corporation from Boylan (Ed.) provided a good background and further, grounded discussion. Of particular interest in the piece by Goodpaster and Matthews was their distinction between 3 approaches to, or views on, the ethical nature of business:

• The Invisible Hand: Based entirely upon economical and financial considerations, inheriting meaning from the Economic sense of the word, where the 'invisible hand' of the market controls the actions of those within it. Under this view corporations are required to pursue profit and revenue, and only consider anything else insofar as it affects those goals.
• The Hand of Government: In this view, political and legal processes and systems will affect the operations of a corporation, requiring them to act in accordance with the greater good in order to continue operating at all.
• The Hand of Management: Proposed by the authors, this approach suggests that the management of a corporation may indeed be capable of making their own ethical decisions in relation to the operation of their company, which would obviously also factor in financial and management-related issues simultaneously.

In Coulson and Kantamneni's essay titled Virtual Corporations: The Promise and the Peril, they look at what a virtual corporation is, how it operates and the benefits and problems related to operating as a virtual corporation. They use Byrne's definition of a VC as "The VC is a partnership of companies that team up quickly to exploit fast changing opportunities. The partnership however is temporary so once the objectives of the VC are achieved, the relationship is changed or dissolved."

So in essence, the VC is virtual because there is no one, specific entity which can be pinpointed as labelled as an actor in the sense that a business may normally be a party in a transaction. In the case of a VC, a collection of corporations may act as a single unit, and yet have no legal or binding contract which holds them together. Under this arrangement, they have more freedom to come and go than they do in a conventional business agreement, however the entire success of VC's, according to a collection of sources cited, are "networking, excellence, opportunism or entrepreneurial orientation, trust and borderlessness."

Their discussion about the primary focus of VCs being in virtual products was interesting, and raises the question about whether VCs are anything new, or if they are merely the required business format for dealing with a new type of product (i.e. virtual corporation for virtual products, as per 'normal' corporation for 'normal' products).

Since only 1 reading was really available for this topic, and I honestly didn't think it provided a particularly good representation of government's invovlement or influence in e-commerce, I thought I'd just do a bit of a brainstorm and review of how governments can affect the operations of e-commerce and those that operate online.

Following are a few of the ways that I can see governments directly affecting e-commerce, and any related resources that I know of which may be useful in exploring that avenue further:

• Taxation: Governments control company and sales taxes within their respective states/countries, but what happens when a company is operating in one location, but effectively selling in another? Which tax applies? Do both? Do either?
• Regulation: Certain types of operations (especially adult entertainment and gambling) may be legal in one country, and illegal in another. With the global reach of the Internet, how can (or do) governments enforce the legalities of municipality? What if a company is registered in one location, operates on a technical level from another location, and then transacts with people worldwide? Where are they liable?
• Grants and Subsidies: If a government chooses to offer grants or subsidies to promote online business, how do they decide who to offer them to? Is it beneficial to provide benefits to a company operating within a country, if their sales are exclusively international? How about a company that operates from overseas, but directly services local residents?

Although there are no doubt specific resources available for specific governments, potentially more useful are those that try to provide a holistic look at the issue, since we are, after all, dealing with a system which affects the world. With that in mind, the following resources provide a wealth of links and direct information about the above topics:

E-Commerce Taxation Links

A huge collection of information put together by Annette Nellen of San Jose State University. Contains legislation applicable in US States, some of her own analyses on the topic, reports from government and commercial bodies and background information on conducting business online - an excellent resource.

E-Commerce Tax News

A news site focussing on all things which relate to tax that affects e-commerce. Offers email updates and appears to have been running since 2000.

International Taxation of Ecommerce

This site offers a wealth of links and updates related to taxation of online commerce around the world. It provides a series of 'rulings' relating to the application of certain laws, most specifically in the US.

Getting a Grant for a Website in the UK

The name for this page says it all. It provides a collection of links to external resources which may be of assistance for individuals or companies seeking grants in the UK.

The Electronic Commerce Directive (UK)

"Online selling and advertising is subject to the laws of the UK if the trader is established in the UK". This page provides details of the regulations related to online business within the UK.

Throughout the readings in this topic, different approaches and angles to e-business were discussed in depth. The strategies discussed were mainly applicable to the planning stages of embarking upon e-business ventures, but some points (particularly those raised in Morath's "success @ e-business") were also suitable guidance for ongoing operations.

Discussions of particular interest were those pertaining to;

• Identifying your value proposition as an e-business (and Unique Selling Points - USPs) and how to get those points across to potential customers.
• Targetting a very specific niche, then growing the company quickly. Morath repeatedly used the expression "Get Big Fast" like it was a strategy in itself, without really explaining how to proceed down this path.
• Competitive Analysis and review, discussing the importance of knowing who (if anyone) holds current market share, who will try to take it, and how they will do it.
• Risk identification and mitigation; especially defending against attacks on your customers from competing companies.

Small ("The Entrepreneurial web: First, think like an e-business", 2000) relied heavily upon the often-touted mantra of the early dot-com days that 'the little guy is faster and more dynamic than the big corporates, and therefore can compete aggressively.' At some points in this piece, I thought that this argument was used too heavily, without really describing how a smaller company or group would be able to make use of their size and flexibility to adequately compete. Even though it may well be true; why is it true, and how does it work?

Combined, the three readings provide a good collection of ideas for planning and defining a new e-business, or e-business offering for an existing corporate. Although perhaps a little light on specifics and details, the general ideas are in there and serve to get the planner thinking at the very least.

A business model is the framework within with a business operates and transacts. It describes the way in which the business intends to make its profits, and transact with other entities.

Rappa defines a business model as "the method of doing business by which a company can sustain itself -- that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain."

Value-adding is a process whereby a company can create additional benefits to a customer on top of an existing product or service which is most likely homogenous with other offerings in the market. Value-adding is a way for one company to distinguish themselves from other companies by providing something above and beyond the based offering.

As an example of value-adding, an online news provider might allow customers to receive email updates related to topics of interest, providing a distinctive service above and beyond the simple offering of news headlines on a website.

In Topic 1.3, we look at business models in the e-commerce sphere, specifically looking at defining what business models are, how they apply to online business, and some specific examples which are common amongst businesses transacting online. Rappa's Managing The Digital Enterprise: Business Models provides an excellent summary of the main business models which are popular online, giving examples of companies using each model and describing it briefly and succinctly.

Before describing a variety of online business models and providing examples for each, Rappa first defines a business model as "the method of doing business by which a company can sustain itself -- that is, generate revenue." So basically, a business model describes the way that a company plans to operate, with the general intention of creating revenue for itself to insure its continued operation.

Discussion around business models on the Internet often involves mention of the similarities and differences between 'traditional' business models and those which are in effect online. Interestingly, most business models in use online have their direct, offline equivalents, with only a few being entirely new to the digital world. The most notable new business model to come of online business is what Rappa calls the 'Bit Vendor', which he describes as a Merchant-based business which "deals strictly in digital products and services and, in its purest form, conducts both sales and distribution over the web."

As mentioned previously, a business model should describe how a business intends to operate, and make a profit. This information is critical to the success of a business, because profit is obviously an important goal in most business ventures, and is a solid measure of success. Having a solid business model which provides adequate guidance and direction for the management of a company means that a general direction for the company will always exist, and will provide a means to plan for the future, act in the present, and measure previous performance. This framework will be invaluable in the continued operation of the business.

Internet media business is unique because it transacts entirely within the Internet, trading media (words, sounds, music, video - 'content') via the Internet for some sort of payment, whether it be direct (through payments) or indirect (through exposure to advertising or revealing demographic information). The 'content' is traded in electronic format, allowing it to be delivered immediately via the Internet.

Despite being a new type of commerce, traditional sales and business models still apply within Internet media business. Modles such as a direct retail sale (i.e. retail sale of music, only on the Internet it can be by single tracks instead of albums) exist, as do subscription-based services (particularly adult entertainment and online news). These offerings are easier to manage and deliver online, but essentially it is the same process.

Salkever discusses an interesting 'competition' going on between the New York Times and the Wall Street Journal. These two major news sources have chosen fundamentally different models to financially support their operations. The New York Times gives away the majority of their content, relying on complex and detailed advertising systems to support the costs, while the Wall Street Journal charges a subscription fee for most of their news, ensuring that anyone who is getting their content, is paying for it.

The 'competition' is a prime example of the free vs fee debate, and with major players such as WSJ and NYT going head to head over it, the outcome will likely have a lasting impact on the industry.

On the other hand, Schwarz discusses the importance of pleasing your audience and giving them something to stay at your site for. He points out that "[p]eople are looking for more than just information when they go online. They treat the Web as a place in which they can interact with other people." This is an important consideration for businesses, and one which is driving the continued push for 'online communities' around commercial websites. The other important point that Schwarz makes is that "[c]ontrary to what some people believe, the Web is not a mass medium. It's a niche medium, a personal medium, and an interactive medium."

Schwarz's discussion continues to cover the ideas of creating a pleasing experience for users in an attempt to keep them coming back, and to generate profits. He talks about PointCast as a personalised news delivery service, delivering the news media, customised to a user's preferences, directly to them, thus making the process of getting the news much less tedious and time-consuming.