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Sorry, I just don't buy the 'new economy' argument yet. The marginal
pricing issue has little relevance to an entertainment product that
derives its revenue from advertising, like YHOO. It is an issue of fads,
combined with the difficulty of evaluating the value of net advertising.
More people on EBAY is only to my advantage if there are more sellers,
and I am a buyer. More buyers means more people competing against me,
and that's bad. And the success of Windows had little to do with the
ability to swap files- - it had to do with the economic benefit to
business buyers of the 'Wintel' system, where box makers were competing
with each other to provide the most cost effective box, over the
exclusivity of Apple, where you had to buy an expensive box to get the
OS.
It is far from clear that the advertising/data mining based business
model can make any money in the long term. If it can't, a lot of stock
market value vanishes. EBAY's intermediation model has a reasonable shot
of succeeding if it can maintain a good balance between buyers and
sellers.
JMHO
DanG
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