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Book Review of Shapiro & Varian (1999)
'Information Rules: A Strategic Guide to the Network Economy'

Version of 11 December 1999

Book Review circulated among colleagues on 11 December 1999
written in SFO en route back from the USA to Australia

Roger Clarke **

? Xamax Consultancy Pty Ltd, 2025

This document is at http://rogerclarke.com/EC/BR-IR.html

Shapiro C. & Varian H.R. (1999) 'Information Rules: A Strategic Guide to the Network Economy' Harvard Business School Press, 1999

Promo site at https://www.inforules.com/

Economist book review at https://www.inforules.com/economist/review.html

Interview at https://www.themanager.com.au/archive/varian.htm

Summary

This is easily the most useful, committed, rape-and-plunder capitalist analysis to date. The authors are completely on the dark side, and have adopted straightforward corporatist values without reflecting on other side of the transaction, let alone the scope for hard-headed capitalism to be undermined and softened in the new context.

Comments

This extremely disappointing book is an absolute 'must' for your bookshelf.

If that seems like an oxymoron, let me explain ...

The book does for warrior-mentality Internet marketing what Nicolo Machiavelli's 'The Prince' did for political science, i.e. it provides a rational analytical basis.

The problem is its utterly committed one-sidedness. Loyalty is one-way: by the consumer to the marketer. Customers are acquired, much like any other raw material. Their purpose in corporate life is to be manipulated, through switching costs and lock-in.

Customers' attention is the marketer's stock-in-trade. It is to be traded for profit, and cross-leveraged with business partners. To express the idea in their own single-minded economist-speak, Shapiro and Varian are completely driven by supply-side thinking, and assume that demand is not only disorganised and powerless, but also that it will remain so. Their interests have almost no impact on the process, so they can be safely ignored.

Given that the book purports to provide breakthrough thinking about the new world of the 'network economy', it's remarkably embedded in the conventional marketing-as-conquest tradition. There are no inklings that the notions of broadcasting at, manipulating, and generally vanquishing the micro-competitors that are consumers might possibly be being challenged in the new context.

There is no evidence of any appreciation that the channel and media may be different, that I-consumer behaviour may be different (and might even cause changes in consumer behaviour when they use conventional channels and media), and may force a new balance in relationships. Indeed, such feminine concepts as relationship marketing, and permission-based marketing have no role to play in these authors' macho world-view.

Interactivity, participation, the prosumer concept, customer needs, need satisfaction, consumer alliances - they are all overlooked. Consumer rights and public policy issues might as well not exist. Regulation is merely a barrier to be overcome, and, of course, to be replaced by the chimera of 'self-regulation' wherever feasible. In short, the buyer and the buyer's needs are (at most) a constraint, and certainly not an objective.

If the book were to be discovered and reviewed by a moral philosopher (and one rather suspects that they may overlook it), there would be questions asked about the precepts on which it is based, and the complete absence of any notions of society, equity, community, or individual wellbeing. It is a remarkably amoral book, even for this publishing house. It provides a delightfully clear indication of the superficiality of the recent vogue in U.S. business schools for courses in that other great oxymoron of the decade: 'business ethics'.

While it's nice to see something more careful than the breathlessly revolutionary (and often simply wrong) hype of Kevin Kelly, the information economics put forward in this book belongs to Attila the Hun.

For a contrary analysis, see: The Willingness of Net-Consumers to Pay: A Lack-of-Progress Report

Author Affiliations

Roger Clarke is Principal of Xamax Consultancy Pty Ltd, Canberra. He is also a Visiting Professorial Fellow associated with UNSW Law & Justice, and a Visiting Professor in Computing in the College of Systems & Society at the Australian National University.

The content and infrastructure for these community service pages are provided by Roger Clarke through his consultancy company, Xamax. From the site's beginnings in August 1994 until February 2009, the infrastructure was provided by the Australian National University. During that time, the site accumulated close to 30 million hits. It had passed 80 million by the end of 2025. Sponsored by the Gallery, Bunhybee Grasslands, the extended Clarke Family, Knights of the Spatchcock and their drummer, and her Dr Nurse site

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Created: 4 October 2025 - Last Amended: 4 October 2025 by Roger Clarke
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