INFORMATION GAMES IN THE QUEST FOR MINDSHARE

Abstract

The rapid growth and great popularity of Internet sites that specialize in providing intangible services in the form of information and community services gives rise to new forms of competition. Information Web sites such as www.how2.com and community sites such as www.iVillage.com provide free "content" and rely on advertising and hosting revenues to generate income. The competition between content sites in the same market niche is intense and only a few companies are likely to survive. In this paper, we examine a number of competitive models or "information games" that provide insights into the nature of this competition. The models capture differences between the type and maturity of the markets and differences in the behavioral assumptions about the nature of consumer demand for content. While these markets often have a "winner-takes-all" nature, we find a number of situations in which more than one player can survive at equilibrium.