Editor’s Introduction 10(3)

Vladimir Zwass
International Journal of Electronic Commerce,
Volume 10, Number 3, Spring 2006, pp. 5.

Abstract: No field of digital production has been undergoing as dramatic a transformation as that of music. The Schumpeterian notion of creative destruction appears to have been named in anticipation of the liberation of music from the existing supply chains. Since any liberation is not only “from” but also “into” another form of governance, this transformation requires close analysis, and the potential outcomes have to be studied and prepared for, if only as possible scenarios. This is particularly so because other digital goods, such as movies or electronic books, will be next. Jesse C. Bockstedt, Robert J. Kauffman, and Frederick J. Riggins use multiple theoretical perspectives to analyze the structural changes taking place in the music industry owing to the digital distribution of its products and the effects these changes may be foreseen to have on participants in the industry’s value chain. Based on this analysis, the authors suggest strategies that traditional and newly emerging participants in the emerging value chains can use to cope with-or take advantage of-the epoch-making change. Specific methodological suggestions for further research are accompanied by practical management-oriented recommendations. Both of these are to a great extent applicable to those who will be affected by the next wave of digitization of their products. Some of the suggestions for a closer, model-driven study of the digital music market are implemented in the next paper, by Yanbin Tu and Min Lu. Combining analytics with empirics, the authors study the effectiveness of four methods of digital music sampling. With negligible costs of production and distribution, sampling is widely deployed to market digital products. The authors offer results regarding the general effects of digital music sampling. They discover that the sampling method now in wide use is the worst of the methods studied, and suggest the best choice among the four methods, depending on contingencies. They also propose a novel sampling method with superior characteristics. The Web has enabled consumer-to-consumer (C2C) markets, most notably, presence of eBay. These markets, however, experience-by some measures-the highest incidence of fraud, primarily due to information asymmetry. Xia Zhao, Fang Fang, and Andrew B. Whinston propose a mechanism of on-line mediation services and study its effects via economic modeling. They demonstrate that a properly designed mediation mechanism would positively affect the operation of C2C marketplaces, enhancing the currently available (and subject to gaming) reputation schemes. They also show how an on-line mediation service can be implemented as a business model. The role of existing reputation systems in reducing on-line auction fraud is studied by Dawn G. Gregg and Judy E. Scott. Using data generated by that great on-line auction laboratory, eBay, the authors show that the rate of fraud as revealed by reputation systems is much higher than reported by eBay, and that recent negative feedback is a better predictor of fraud than overall reputational score. The accumulated user reputations are a high barrier to entry for any potential competitor of eBay. However, the results offered by these authors amplify the usefulness of the mediation service proposed in the preceding work. The study of consumer clickstream behavior underlies Web site designs, marketing strategies, on-line advertising prices, and other Web-based initiatives. Pawel J. Kalczynski, Sylvain Senecal, and Jacques Nantel show how clickstreams can be used to predict a navigating potential consumer’s completion of a task, such as a purchase or an information search. An interesting application of graph theory, the work can find practical use in designing a Web site more conducive to task completion or in real-time interventions in an ongoing task flagged as not headed for completion.