What are the differences between a conventional economy and the information economy?

Also, how come info on the internet is often free but in the offline world with books and such then information is paid for?|||In the convential economy you have to spend money to create a physical product, while in the information economy there isn't a physical product.





In the conventional economy it's a lot easier to determine the cost to produce your products because the cost of the resources that it takes to produce your products are widely known. For example, if there were no more trees you would expect the price of a printed book to skyrocket due to the shortage of paper. It's all tied to what we can produce from physical resources.





In the information economy your resources are electonic bits. There is an unlimited supply of those in the world. But an electronic book will never be free - how would a publisher stay in business then? So the worth of a product in the information economy is tied to much different factors. Often times, a product is artifically made scarce so the producer can make the price higher. iTunes is a great example of this. If you don't allow customers to make copies of mp3's, you can limit the number of mp3's available for a particular song. This artificial scarcity drives up the price for an mp3 of that song, even though it didn't cost the publisher anything more to make it.