Consumer Benefit from Use of the Internet

By Fiona Scott Morton [27]

The Internet is one of the most important innovations of the 20th century. While Internet penetration has beengrowing rapidly in the United States and other industrialized countries, and there are many studies focused on its growth, there is still much work to be done to under- stand and measure the benefits of the Internet to the consumer. Consumers take time to learn how to use any new technol- ogy, so the way people are using the Internet changes over time. New consumers are continually discovering the Internet, so the mix of skills and demands among users is changing. Also, in order for the Internet to become useful to ordinary consumers, complementary innovations had to take place, such as in the area of business models.

This innovation has been occurring at a great pace, so that now there are many busi- nesses designed to sell products, services, or information that people want to buy or access online. Business model innovation, technological innovation, and learning on the part of consumers imply that the effect of the Internet in 2005 is quite different than it was five or ten years ago. Lastly, quantifying the benefits of the Internet for consumers is particularly difficult because many of the benefits accruing to consumers from using the Internet are extremely hard to measure. Some consumer ben- efits are more amenable to measurement, and research has been done on those topics.

Internet growth has been astonishing over the last ten years. In 1995, only about 7 percent of the adult American population had Inter- net access.3 By 2005 that number had increased to 67 percent.4 About 70-75 percent of the population has an e-mail address.5 Until recent years, Internet accessfrom home was through a relatively slow dial-up modem, making it time-consuming and difficult to do anything com- plex online, such as shop. Now the penetration of broadband Internet access at home in the U.S. is up to 55.5 percent, and many more consumers, 80 percent, have access to high speed Internet connections at work. The pace of broadband growth in 2004 was an incredible 36 per cent. While this torrid pace of growth is almost certain to diminish, it is nevertheless clear that consumers are enthusiastically adopting this new technology.

Maintaining and increasing the consumer benefits from use of the Internet is an important policy goal. There are not many threats to consumers' ability to capture the gains from Internet utilization. The Internet is creating huge value for consumer in the USA and around the world. While there are some costs to using the Internet, primarily spam and the threat of fraud or identity theft, in the main the Interner appears to be a new tool which consumers can use to great economic benefit.

While the Internet has the potentional benefit to everyone, some consumers gain disproportionately. Consumers who face time pressure during a normal working day, consumers who are in the minority in terms of ethnicity, tastes, or hobbies, and consumers with high search cost for any reason will particulary benefit from use of the Internet. Overall, the technological innovation of the Internet and the associated business model innovation are delivering substantial benefits to consumers.

Assignments

1. What is the general idea of this text?

2. Do you use Internet as a consumer?

3. Have you ever made purchases via Internet?

4. Can you name benefits for sellers from the use of the Internet?

5. Have you ever faced with a fraud in the Internet?

6. What are your personal benefits of using Internet?

7. Name cons of the using Internet as a consumer.

8. Do Internet shops replace real shops? Explain.

9. Describe the chart showing enterprises selling online.

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