June 1996

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The Three Laws of the Cyber-Economy

by Michel Bauwens

The Internet phenomena is profoundly puzzling to the traditional business world. As the network frenzy increases, and the so-called anarchic nature of this new meta-medium starts to influence our cultural, political and economic practices, many of the established business commentators keep wishing that it will all go away, and that the anomalous practices on the Internet, such practices of freely giving away information and software, are just a temporary phenomenon. The commentators that had been predicting the death of the Internet for so many years are now predicting the death of the Web.

I argue here that these "anomalous" business practices are not transitory, but comprise the new way things are being done in the online world.

Let me expand on precisely how the Internet is changing the business paradigms. Let's look more closely at what I call the three laws of the cyber-economy:

  1. -- Law 1: The Price of Information Will Tend Towards Zero

  2. Law 2: The Price of Communication Will Tend Towards Zero

  3. Law 3: The Price of Transactions Will Tend Towards Zero


For an introduction into the world of cyber-business, see the Cybrarians Guide to Cyber-Marketing.

Michel Bauwens ( is former information manager at BP Nutrition where he developed one of the first working virtual information centers (1990-1993), for which he was elected European Information Professional of the Year. After creating the first European newstand magazine about the digital revolution (the dutch-language Wave), he now assists companies and organizations in their migration to electronic environments as a professional Internet consultant and cyber-marketeer.

Copyright © 1996 by Michel Bauwens. All Rights Reserved.

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