Digital Darwinism
by Evan I. Schwartz
Business Survival Tactics for the New Economy
Book Review by Greg Ellis
E-commerce has accelerated economic evolution to internet speed, and Digital Darwinism, by Evan Schwartz, proposes seven business strategies for survival in this fast-paced new economy. Backed by numerous and colorful business cases and anecdotes, the strategies offered are insightful as they combine “new” economic realities unique to e-commerce with “old” or traditional branding and marketing principles. “New” Many of Schwartz’s strategies leverage the new economics of the Web, such as network effects and increasing returns. He suggests employing dynamic pricing models to grow primary demand and sell distressed inventory and/or providing electronic intermediation services. Such models are subject to network effects, making them more valuable as more users join the “network.” The positive feedback loops generated by network effects are only possible in business sectors subject to increasing-returns, which carry negligible incremental costs, such as the digital realm of e-commerce. Of particular interest is Schwartz’s discussion of the unique opportunity to create value through bundling digital products on the Web. In explaining this strategy, Schwartz combines increasing returns and traditional portfolio theories. He shows that digital products can be combined into bundles and sold at a single price such that the bundle will yield higher returns than selling the products individually. Digital products, much like securities, can be added to a portfolio of offerings at nearly zero incremental cost.	By combining digital products with perceived values that are uncorrelated, or, ideally, negatively correlated, a diversified bundle can be created that reduces the risk of selling nothing and increases returns. This is done much in the same way that portfolio of securities is diversified to eliminate business risk and increase returns. “Old” While Digital Darwinism employs these largely e-commerce-unique concepts, the book also relies heavily upon traditional branding and marketing principles, namely selling solutions and creating value. The book’s strategies, such as “Build a Brand That Stands for Solving Problems” and “Add New Value to Transactions Between Buyers and Sellers,” illustrate how old-economy marketing tactics stilly apply. Even Shwartz’s digital-product bundling strategy stresses creating “valuable bundles.” Clearly, these concepts are not unique to the new economy. Digital Darwinism provides many insights into the new evolutionary drivers at work in the web economy. However, perhaps the most critical insight provided is that survival requires not only understanding and leveraging new economic realities, but also pursuing traditional strategies of providing solutions and creating value. As consumers, that is something we can all agree is a good thing.