What is the Internet Economy?

The Internet economy includes all business and commerce conducted through and within the infrastructure of the Internet. It has become a major underlying component of the global economy in a relatively short period of time. Since the very first dot-com business was born in 1985, the Internet economy has given rise to more than 80 million new dot-coms and established an entirely new way of doing business around the world. With information moving so quickly around the world, the way both consumers and companies do business has evolved.

Commercial websites fall into at least one of eight possible categories: search and portal, storage and infrastructure, information, entertainment, communication and social networking, ecommerce, brand and personal identity and crime. In most developed nations, almost every business has an online identity at the very minimum, even if it is not actually selling products online. This has made it possible not only for consumers to become more knowledgeable, but has also allowed businesses to reach a wider range of potential customers than ever before.

In 2010, it was estimated that the Internet economy had an annual global economic benefit of about $1.5 trillion US Dollars (USD). Much of the Internet economy consists of businesses selling goods or services to other businesses. In 2007, it was estimated that consumers purchasing from businesses accounted for less than 15 percent of the Internet economy.

As opposed to the traditional economy, the digital economy has transformed the way businesses operate. This is true in terms of distribution costs, communication, market segmentation and price. Electronic commerce not only has grown the global marketplace, it has fundamentally changed how businesses market and sell their products and how consumers shop and access services online. The Internet economy provides new platforms for business innovation, but also brings with it concerns about privacy, reliability and access. As the Internet economy continues to grow, new concerns and challenges are likely to arise.

The Internet has, in a short space of time, become fundamental to the global economy. More than 1 billion people worldwide use it, both at work and in their social lives; there are more than 6.7 billion people on Earth, which means that there are still a relatively limited number of people participating in the Internet economy. This number is increasing quickly, however, particularly in China. As Internet access from mobile devices increases, even more opportunities for growth in electronic business are likely to emerge.