Markets in the Internet/Smartphone Age

Capitalism is associated with what is famously called “creative destruction”: something new comes up and makes an industry that may have existed for decades or even centuries obsolete. Such things happened gradually in earlier times; but the Internet accelerated the speed of such changes; and now the smartphone makes it happen at warp speed.

Surprisingly, creative destruction doesn’t always move money from an old way to a new one. Sometimes, the need remains and yet capitalism eliminates any way to make any money from it at all! Surprised? Isn’t capitalism all about finding ways to make money, not eliminate them?

An example would help. Venture capitalists call the Free model of the Internet as “creating a zero billion dollar business”. Remember the encyclopedia Britannica? Wikipedia replaced it; was free; and now the encyclopedia industry cannot make money! Google Maps did the same thing to the map industry.

The Internet/smartphone combo creates ways for even individuals (not just companies) to make money. Sure, the coordinators/facilitators for such things are still companies, but they enable individuals to find someone to sell to thereby allowing them to make money. Uber and OLX.in are just two such examples. The OLX ad exemplifies this perfectly. It starts with the wife telling her hubby (as he is going to office) that she wants new stuff for the house, to which he scoffs, “Where’s the money?” So she uses her “Sell phone” to take pics of the household stuff, (it is implied that she posted them online on OLX.in), sells them and has the money, all before her hubby returns home in the evening!

My guess is that by the time the Internet/smartphone combo is done, it would have changed the market landscape to make it virtually unrecognizable; on the same scale as the Agricultural and Industrial Revolutions.