Archive for June 7th, 2012

The phenomenon of Internet has emerged as a revolutionizing factor for the world economy in the past few years. This revolution has created a parallel economy named ‘Internet Economy’. This kind of economy functions through the use of World Wide Web (WWW) as a platform. The speed of information-transfer and ease of access to a large number of customers are the major benefits offered by the Internet.

Benefits and Limitation of Internet EconomyInternet Economy

A recent study analyzing South Africa’s Internet economy showed that Internet usage in this country increased in a sustained manner. Arthur Goldstuck, the MD of World Wide Worx confirmed this research and indicated that future of Internet economy is bright. Many of us would think that the amount spent in creating infrastructure (13.5 billion rands) for Internet would outdo the other costs in this field. However, corporate companies are spending far more money on maintaining a presence on the Internet. One would be surprised to know that the amount spent on internet access and maintaining a presence alone in South Africa is 2.9 billion rands.

Just like the South African economy, the economy of UK too benefits a lot from the Internet. The contribution of Internet to Britain’s economy is 8.3%. The retailing done in Britain through Internet is far greater than that of other economies of the world. As per the reports of year 2010, the Internet Economy of Britain was worth 121 billion pounds. These details were revealed through a research conducted by the Boston Consulting Group (BCG). UK’s web economy is expected to grow at a rate of 11% till the year 2016. It would make the total value of this economy to be 221 billion pounds. E-commerce is growing at a staggering rate of 30%, which promises a bright future for this field. Let’s hope the Internet helps in recovery process of global slowdown to some extent.

However, all is not well with this form of economy. In recent times, the occurrence of certain events has highlighted that the onlineeconomy too has its sets of limitations. The public offering by Facebook received a lukewarm response. The stock market failure of this corporate entity has proved that everything cannot go right for even popular and bigger corporations. So what are the main challenges that lie ahead of the progress of Internet economy? The crucial factor or impediment that blocks the growth of this economy is that most of the services are offered for free. There are many free services available for the online consumer to enjoy. However, paid services are not that popular. This way, it has created a culture where users have access to cheap fun that doesn’t cost them much. This is not an ideal situation for the growth of online economy. It is the main reason why Facebook is popular among users but doesn’t possess the right mechanism to make money on the Internet.

The Internet economy is still in its budding stages. It will need more time to have an effect on the global economy as a whole. Overtime, people would find some effective methods for monetizing the online content and develop business models that deliver.