Don’t Believe the E-Hype

7 February 2007 at 3:48 pm 1 comment

| Peter Klein |

Tom Hazlett, writing in Monday’s Financial Times, brings the wiki crowd back to earth. Noting the excitement over user-generated content, club goods, and the electronic commons, Tom warns:

Overhype about the emerging markets is good clean fun when confined to mindless text-messaging. There is an undeniable “wow” factor. But there is also a madness to the e-crowd. Whenever a trend is spotted that captures the fancy of the zeitgeist, it is formulated as a linear trajectory, and shot into orbit. All cross traffic is banned. Call it “asymmetric triumphalism.”

This fits nicely with some of our own recurring themes: little is new under the sun (1, 2), “open” doesn’t always beat “closed” (1, 2), etc. Indeed, as Tom points out:

“Open” networks have evolved, and Time dutifully touts the success of Linux -– the open-source operating system mocked by Microsoft critics during the company’s US antitrust trial but now heralded as a bona fide competitive rival.

But iPod/iTunes is a proprietary platform that has magically restored order to the music download business while creating the iconic consumer electronics product of the 21st Century. Similarly, electronic games are driving explosive growth in entertainment software and broadband markets, riding on the backs of three consoles that are “open” only to the software licensed by their makers — Sony, Microsoft, or Nintendo.

The point is not that “closed” beats “open,” but that capitalism accommodates both.

My former colleague George Selgin, known for his dry sense of humor, used to say that a lot of thinking and writing on e-commerce, e-learning, e-etc. could be summarized in one word: “e-gnorance.”

Entry filed under: - Klein -, Institutions, Management Theory, Nothing New under the Sun.

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1 Comment Add your own

  • 1. TRUTH ON THE MARKET » Hazlett on the Madness of e-Crowds  |  7 February 2007 at 7:38 pm

    […] read online all week and has been getting some attention across the blogosphere (see, e.g., here and here) and I’m happy to contribute by posting Hazlett’s characteristically powerful […]

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