The Information Rules talk about the challenges and threatens presented to companies competing in the new economy. Carl Shapiro and Harl Varian presented the economics principles of information and networks into practical business strategies using existing economics concepts. The authors used detailed case studies and the key economic principles to explain how to maximize value and to succeed in the information economy.

This book provide me several concepts to understand the economics of information goods, but the key takeaways from my reading are related to the following topics:

1) How to develop a value maximizing pricing strategies for information goods: The economics of information goods (high cost of production and low cost of reproduction), the importance of differentiate your product and to be the low cost producer, the ability to personalize the content of the product and the price for a specific consumer and the chance to collect data in real time are crucial to understand the how to maximize value selling information goods.

2) The importance to understand the implications of lock in and switching costs: Understanding all the implications of lock-in and switching costs is crucial for all players (suppliers and customers) in the information economy. As a customer the failure to understand the switching costs will let you vulnerable to opportunistic behavior by your supplier. As a supplier, switching costs are the key to valuing your installed base.

3) How to recognize and exploit the dynamics of positive feedback: The concept of positive feedback in the information economy means that the stronger get stronger because consumers value information goods that are widely used due to network externalities and demand-side economies of scale. So positive feedback is key to succeed in the information economy. Companies introducing new products and technologies face a fundamental trade-off between performance and compatibility in a attempt to get positive feedback for their products.