Classroom Companion: Business

 
Chapter 17 · Digital Markets

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17
E-commerce is online trading of all kinds of goods and services. This includes 
online shopping, online payment, transfer of funds, management of supply chains, 
and business-to-business exchange of data. E-commerce also includes the trading 
of network access and information services. To classify an activity as e-commerce, 
it must support some sort of digital payment system.
E-commerce markets have grown to constitute an important part of the global 
economy following the commercial success of the World Wide Web (WWW) in the 
early 1990s. Two important and distinct parts of e-commerce are the online mar-
kets for network access and the online markets for information services:
5
E-commerce markets are the business of selling goods and services over the 
Internet (see 
7
Sect. 
17.3
).
5
Network access markets are the business of providing access to the Internet and 
other communication networks (see 
7
Sect. 
17.4
).
5
Information service markets are the trade of content, applications, and informa-
tion on the Internet (see 
7
Sect. 
17.5
).
Note that not all activity performed online in digital markets is e-commerce. For 
instance, information services may be exchanged between provider and consumer 
free of charge. Such an exchange of digital goods is not e-commerce since there is 
no payment involved.
17.2 
 Stakeholders and Relationships in Digital Markets
.
Figure 
17.2
 shows the most important stakeholders involved in digital markets 
and the relationships between them. The network provider (NP) is the owner of the 
ICT infrastructure needed for online trading, encompassing fixed networks, mobile 
networks, Internet infrastructure, and storing and computing facilities. An infra-
structure provider owning a mobile network is sometimes referred to as a “cover-
age” operator. The Internet service provider (ISP) buys access to this infrastructure 
from the NP and resells it to the consumer (C) and the application service provider 
(ASP). The consumer may use these services directly to access the Internet, make 
phone calls, and send SMS. The ASP uses the infrastructure access purchased from 
the ISP to support the distribution of content, applications, and services that the 
ASP produces. The ASP may also buy copyrighted content from a content provider 
(CP) such as movies, music, and news articles. The ASP uses the input from the ISP 
and the content provider to offer digital services and applications to the consumer.
Examples of types of services offered by ASPs are online music streaming (e.g., 
Spotify and Tidal), online video streaming (e.g., Netflix and HBO), digital newspa-
pers (e.g., The New York Times and Financial Times), online banking (e.g., HSBC 
and Nordea), cloud storage (e.g., Dropbox and Google Drive), and social media 
services (e.g., Twitter and Facebook). Many of the applications and services offered 
by the ASP are free of charge for the consumer, for example, Google’s search 
engine, Wikipedia, and Facebook. The ASP providing these applications must 
acquire revenues from other sources than the consumers. Normally, the consumer