Introduction to Digital Economy Practice Flashcards

Comprehensive vocabulary flashcards covering the key definitions and concepts from Chapters 1-7 of the Introduction to Digital Economy lecture, including e-commerce, big data economics, and digital regulation.

Digital Economy

An economy built on digital technologies, particularly ICT, that enables the creation, distribution, and trading of goods and services. It encompasses all economic activity relying on inputs including information, knowledge, networks, and data.

ICT (Information and Communication Technology)

The broad category of technology—including the internet, smartphones, computers, apps, and streaming—that enables the creation, storage, and exchange of digital information; the foundational infrastructure of the digital economy.

Disruptive Innovation

A process where a new product or technology enters the market and displaces established players. Example: digital photography disrupted and eventually destroyed the film business of Kodak.

Network Effects

A phenomenon where a product or service becomes more valuable as more people use it. Example: Facebook becomes more valuable for every existing user as more users join.

Digitization

The process of converting analog information like physical books or tape recordings into digital format consisting of bits: $0s$ and $1s$. It enables infinite reproduction and global distribution at near-zero cost.

Automation

The use of technology to perform tasks previously done by humans without human intervention. Examples include algorithmic trading, chatbots, and autonomous vehicles.

Platform Economy

A sub-economy where businesses create digital platforms that connect two or more user groups, such as Uber connecting drivers and riders or Airbnb connecting hosts and guests.

Network Economy

A sub-economy where the value of products and services is derived primarily from network effects; the larger the network, the greater the value for participants.

Data Economy

A sub-economy where data is the primary source of economic value. Firms collect, analyse, and sell data, such as Amazon using purchase data to generate product recommendations.

Attention Economy

A sub-economy where human attention is the scarce resource being traded; digital platforms monetize users' attention through advertising.

Sharing Economy

A sub-economy based on sharing access to goods and services, typically facilitated by a digital platform like Airbnb for rooms or Grab for rides.

Abundance Economy

A sub-economy characterized by goods available in near-unlimited quantities at near-zero marginal cost, such as digital music.

Content

Information expressed through speech, writing, or visual representation; the primary product delivered over digital channels.

Media

The channels through which content is delivered to audiences, ranging from traditional (TV, radio) to digital (websites, streaming platforms, apps).

Digital Content

Content produced, distributed, and consumed in digital format, including video, music, articles, podcasts, games, and images delivered via the internet.

Mobile-First

A design and strategy approach where digital products are primarily built for smartphone users rather than desktop users, critical in developing regions.

Digital Piracy

The illegal reproduction, distribution, or use of copyrighted digital content without the rights holder's permission, such as illegal music downloads or cracked software.

Big Tech

The largest and most dominant technology companies, typically referring to Apple, Google (Alphabet), Amazon, Meta (Facebook), and Microsoft.

Business Ecosystem

A concept introduced by James F. Moore in $1993$ describing a company as part of an interconnected network of organizations that co-evolve, compete, and cooperate simultaneously.

ICT Infrastructure

The foundational layer of the digital ecosystem including ISPs, network providers, fibre cables, mobile networks, satellite systems, and data storage facilities.

Application Service Provider (ASP)

A company that provides software applications and digital services over the internet, typically through a marketplace or platform like YouTube or TikTok.

Content Provider (CP)

An individual or organization that creates the content delivered through digital applications, such as YouTube creators or Netflix production studios.

Cloud Computing

The delivery of computing services—including servers, storage, and databases—over the internet on a pay-per-use basis, eliminating the need for owned IT infrastructure.

IaaS (Infrastructure as a Service)

A cloud model where the provider rents virtualized infrastructure like servers and storage to clients, such as Amazon Web Services (AWS).

PaaS (Platform as a Service)

A cloud model providing a complete development and deployment environment where developers build applications without managing underlying infrastructure, such as Google App Engine.

SaaS (Software as a Service)

A cloud model where software is hosted in the cloud and accessed via subscription without installation, such as Google Classroom or Microsoft 365.

XaaS (Everything as a Service)

An umbrella term for delivery of anything as a cloud-based service, encompassing IaaS, PaaS, SaaS, and emerging models like Data-as-a-Service.

Consumer Adoption

The process by which new users begin using a product; the rate of adoption triggers network effects that accelerate market dominance.

Digital Divide

The gap between populations that have reliable access to ICT and digital skills and those that do not, existing between and within countries.

Digital Good

An intangible product that is networked, virtual, has economic or psychological value, and possesses zero or near-zero marginal cost, such as a song on Spotify.

Digital Service

An intangible service delivered electronically that facilitates interactions or access to digital goods. They are consumed as delivered and cannot be stored or transferred.

Zero Marginal Cost

The economic property where producing one additional unit (copy) of a digital product costs essentially nothing, fundamentally changing pricing and competition.

Fixed Cost

Costs that do not change regardless of quantity produced. In the digital economy, these are high for creating the initial product (e.g., developing software).

Economies of Scale

The reduction in average cost per unit as production scale increases. In digital markets, this is extreme as more users lower the average cost per user.

Rival Good

A good whose consumption by one person reduces its availability for others. Most physical goods are rival.

Non-Rival Good

A good that can be consumed by unlimited people simultaneously without being depleted. Digital goods, like YouTube videos, are typically non-rival.

Excludable Good

A good from which users can be excluded, often via paywalls. Example: Netflix requires a subscription to access content.

Non-Excludable Good

A good from which no one can be excluded from benefiting even if they do not pay, such as street lighting or national defence.

Public Good

A good that is both non-rival and non-excludable, such as clean air or, as some argue, the open internet.

Club Good

A good that is non-rival but excludable, meaning many can use it simultaneously but access is restricted to those who pay, like Netflix content.

Commoditisation

The process where identical digital goods from different providers compete only on price, occurs when products lose differentiation.

Transaction Costs

The costs of making an economic exchange beyond the price itself, categorized into Search and Information, Bargaining, and Policing and Enforcement costs.

Bundling

A strategy where multiple digital products are sold together as a package, often at a lower combined price, such as the Microsoft Office Suite.

Price Discrimination

Charging different prices to different customers for the same digital good based on willingness to pay, such as regional pricing or student discounts.

Freemium

A revenue model offering a basic version of a product for free while requiring a paid subscription for advanced features. Example: Spotify.

Subscription Model

A revenue model where users pay a recurring fee (monthly/annual) for continued access to a product, such as Netflix or Adobe Creative Cloud.

Digital Advertising

A revenue model where platforms offer free access but earn money by displaying ads; advertisers pay based on impressions, clicks, or conversions.

Long Tail

An economic concept by Chris Anderson describing how digital distribution allows sellers to profit from many niche products rather than just a few hits.

E-Commerce

Electronic Commerce; the buying and selling of goods and services over the internet, including online retail and electronic payments.

B2C (Business to Consumer)

An e-commerce model where businesses sell directly to individual consumers, such as Amazon, Shopee, or Lazada.

B2B (Business to Business)

An e-commerce model involving transactions between businesses, such as Alibaba (wholesale) or SAP software solutions.

C2C (Consumer to Consumer)

An e-commerce model where individual consumers buy and sell directly to each other via platforms like eBay or Facebook Marketplace.

Digital Marketplace

An online platform connecting multiple buyers and sellers; the platform facilitates transactions without owning the goods, earning through commissions.

Electronic Payment

A digital method for transferring money for goods without physical cash, essential for e-commerce. Examples include PayPal, ABA Pay, and mobile wallets.

Logistics

The planning and control of the movement/storage of goods; in e-commerce, last-mile delivery is the most challenging and costly component.

Network Externality

The effect one user has on the value of a product for others; positive externalities occur when platform value increases as participants grow.

Big Data

Extremely large and complex datasets characterized by the $3 V's$: Volume, Variety, and Velocity. In $2024$, about $402.74\,million\,terabytes$ were generated daily.

Volume

The first V of Big Data, referring to the massive scale of data generated, making traditional databases inadequate.

Variety

The second V of Big Data, referring to diverse formats: Structured, Semi-Structured, and Unstructured data.

Velocity

The third V of Big Data, referring to the speed at which data is generated and must be processed, such as in real-time financial trading.

Structured Data

Data organized in a predefined format like rows and columns in a database; example: sales transaction records.

Semi-Structured Data

Data with organizational properties like tags but no strict tabular structure, such as JSON files or emails.

Unstructured Data

Data with no predefined format, comprising the majority of global data. Examples: videos, social media posts, and images.

Data Mining

The process of discovering patterns and insights within large datasets through four steps: Data Collection, Data Cleaning, Data Analysis, and Data Interpretation.

Data Broker

A company that collects, aggregates, and analyzes personal data from various sources to sell to third parties, often raising privacy concerns.

Predictive Analytics

The use of historical data and machine learning to forecast future outcomes, such as Netflix predicting content preferences.

Data Privacy

The right of individuals to control how their personal data is collected, stored, and used by organizations.

GDPR (General Data Protection Regulation)

An EU legal framework regulating personal data; in $2023$, Meta was fined $1.2\,billion\,euros$ for violations related to this regulation.

Regulation

Government intervention in a market to shape outcomes; it addresses monopoly, data privacy, taxation, content, and infrastructure access in the digital economy.

Cyberlibertarianism

A philosophy arguing that the internet should be free from government regulation to foster innovation and freedom.

Cyber-Paternalism

A philosophy arguing that governments must regulate the internet to protect users and ensure fairness, noting that physical infrastructure is within national jurisdiction.

Lessig's Four Modalities

A framework identifying four forces regulating behavior online: (1) Legal (laws), (2) Market (economic incentives), (3) Technology (architecture/code), and (4) Society/Norms (cultural values).

Digital Rights Management (DRM)

Technological controls embedded in digital content to restrict copying, sharing, or access, representing the Technology modality of regulation.

Net Neutrality

The principle that ISPs must treat all internet traffic equally without discriminating by user, platform, or content type.

Intellectual Property (IP)

Legal rights protecting creations of the mind, such as copyright, patents, and trademarks, which are challenged by the non-rival nature of digital goods.

Pathetic Dot Theory

Lawrence Lessig's metaphor describing how an individual in cyberspace is constrained by all four modalities of regulation simultaneously.