THE INTERNET/ECONOMIC IMPACTS IT HAS ON SOCIETY

The Internet and the Economic Impacts it has on Society

Dylan Perry

Stockton University

Internet and Society

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Abstract

This research paper will discuss the rapid growth of the internet, and how this directly

impacts the economy by using the examples of aspects that feel its direct impacts. These

include: productivity growth, the amount of users and convenience of retail, more

frequent bankruptcies of physical institutions, and how companies will change in the

future in order to carry out business

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The Internet and the Economic Impacts it has on Society

Since the creation of the internet, society has been asking a single question. A question

that has been asked in all creation: who/what is this for? The answer is not singular. It is through

research on the internet, itself, where one can look for the answers to the potential impacts of

whom the internet is for. The first step to answering the question is to break down its impacts on

varying areas of everyday life or more simply society. The aspect being discussed in this research

paper is the economy. Learning about how business and finances are impacted by technology,

mainly the internet can insure that we learn more about its overreaching impacts on society. The

key areas of the economy and the adjustments that have been made, because of the internet, are

as follows: Retail Convenience, Productivity Growth, and future potential growth and the

changing industry with technology. Below will expand and explore all of the above mentioned

topics in regards to- The Internet and the Economic Impacts it has on Society.

Retail Convenience

Now more than ever before our society is connected. Connected online, connected to one

another, and connected to businesses. We can now acquire whatever a heart might desire with a

click at the touch of our fingertips. Buying in todays world is done with a click. Gone are the

days are store hopping and long unsuccessful searching in retails across the nation. Thanks to the

internet buying is as convenient as ever. Convenience is key in the American society, and the

internet benefits both the business and the consumer in a Capitalist Economy. From a 2012

article from The Huffington Post the author describes just how often Americans use the internet:

According to Nielsen data, 274.2 million Americans were hooked up to the Internet in 2011
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(more than double the number with access in 2000) (Palis, 2012). She continues to describe

how connected we are on-the-go mobile, the internet is almost always at hand last year 117.6

Million people visited the Internet via a mobile device (Palis, 2012). With that many individuals

connected mobile the access to buying becomes infinite. See a commercial or advertisement for

an item you liked? With one search and touch on a mobile device that item can be yours.

Amazon is just one example of the many companies expanding and excelling on this concept.

With a subscription based package to their Amazon Prime system; a monthly or yearly fee can

offer you two-day shipping on all orders. For free! The ability to finance and successfully carry

out two-day free consumer shipping based on a yearly subscription is a genius model that has

been working out nicely for Amazon. So once a consumer makes the decision to buy online

Amazon is bringing that product to buyers doorsteps in just two days. As opposed to 7-10

standard mail shipping. In New York and Los Angeles Amazon is experimenting with two-hour

shipping. So in theory the amount of time of delivery of the desired goods can and will be less

the amount of time spent searching, considering, and deciding to buy the desired good or service.

That is peak convenience that American Consumers thrive on. Consumers buying things

conveniently leads to more buying and buying leads to a strong economy, supply and demand

etc... Online Retailing has caused other aspects of shopping to become dated incredibly quick.

For one example Cyber Monday has now taken over as the premier shopping day as opposed to

Black Friday. Shopping from the convenience and enjoyment of your home couch on a computer,

tablet, or mobile phone is much greater than standing in long lines and experiencing the

animalistic instincts that are shown on a day like Black Friday. Another example is the large

amount of institutions that have filed for bankruptcy in just the last few years. The cause

attributed to the internet of course. More elaborately the lack of need, or being too incovienet.
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Some examples of business models that have fallen victim to this are Spots Authority, and

most notably Blockbuster. Who needs a video store when you can just buy/stream a

movie or television show from the remote without having to even get up. Besides the

downfall of these specific companies the internets impact on convenience has benefited

the American Economy. From Palis, At present (2012), the Internet contributes more of

a percentage to Americas GDP than traditional industry sectors She continues, It

comprises about 5 percent or $252 of all retail. (Pilas, 2012) those statistics were from

2012. In 2016, just the length of a presidency later, the internet has developed and

reached even larger audiences around the globe. Not to mention Social Media and the

endless Marketing opportunities that come with it. Retailing and convenience are a key

contribution and impact the internet has on Economies.

Productivity Growth

Going off of the convenience that the internet brings to us one can assume that

with more convenience comes more ease, and the easier information is to find, the

easier tasks are to complete. Therefore, with tasks becoming easier to complete

one can assume an increase in productivity: The most important attribute of the

Internet also may be the most obvious: it can transmit information quickly,

conveniently, and inexpensively. (Rivlin, Litan, 2001). This is just another

impact that the internet has on our economy. From an old article by Rivlin and

Litan, The Internet has the potential to increase productivity growth in a variety
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of distinct, but mutually reinforcing ways. (Rivilin, Litan, 2001). This source is

interesting to see the growth predictions these researches had in the early ages of

the internet before the surrounding non-stop connectivity age we are currently in.

They go on to predict the internet will, significantly reduc(ing) the cost of many

transactions necessary to produce and distribute goods and services;

increase(inge)e management efficiency, especially by enabling firs to manage their

supply chains more efficiently and communicate more easily both within the firm and

with customers and partners, increasing consumer choice, convenience and satisfaction in

a variety of ways. (Rivilin, LItan, 2001). The internet today provides us with infinite

knowledge and capabilities unavailable to workers and small business owners and also

CEOs and Corporations in the past. Thanks to the internet,

Routine transactions, including making payments, processing and

transmitting financial information and maintaining records, can be handled

less expensively with web-based technology. Using Internet technology,

many firms, especially those in data-intensive industries such as financial

service and medical care, ca reduce their cost of production. (Rivlin, Litan,

2001)."

In simpler terms the internet is beneficial for everyone. As stated before retailing, buying,

and selling can only improve in the internet age. With the United States being a capitalist

economy the internet creates opportunities and the potential to achieve full capitalism.
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With certain areas of risk and problems of course but according to Rivlin and Litan, The

Internet could ring many markets closer to the economists textbook model of perfect

competition characterized by large numbers of buyers and sellers bidding in a market with

perfect information. the results should be lower profit margins, more efficient production,

and greater consumer satisfaction. (Rivlin and Litan, 2001). For an article written nearly

twenty years ago, the authors couldnt be more accurate. The rise in customer satisfaction

also has to do with the ability to rate goods and services online and on social media. Yelp! is

a service dedicated to users rating restraints in their respective local areas. So if your

traveling or on vacation and need to find a great place to eat? Yelp! can determine, by user

rating, which restaurants are the best, and the best for you. At this point every online retailor

has a comment section for its products where buyers can leave positive or if necessary

negative remarks towards a product. Some reviews are outliers to angry consumers, but for

the most part these reviews are helpful to purchasers. Social media is the gold mine for

opinions on just about anything. Businesses have now created their own business pages on

Facebook and Instagram where users can rate and comment on their positive or negative

experiences. The danger is these experiences can be blasted into the world for all to see and

witness at the same joining time. A bad experience that becomes viral can make or break a

business, but a successful marketing idea on social media can take a small business to the

next level. This is just another way the internet can impact our economy.
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Changing Industry

A third great thing about the internet and its impacts on the current economy are with

the vast amount of information it offers the ability to predicting and foresee the future of

where business is going. Retailers and business are using the internet not as a device but

more as a necessity. Mainly across all industries the internet is now involved and

incorporated into the business model in order to be relevant, sustainable, and a head of the

curve 1. From emarketer, The internet of things, (IoT), an interconnected ecosystem of

internet-enabled objects-devices, sensors, microprocessors, data hubs, networks, artificial

intelligence software and analytics programs-is already being used across the retail industry.

(eMarketer, 2016). As stated above the internet has become more a need more than a want:

Under constant pressure to drive sales, increase margins and cultivate repeat business,

retailers have been early movers with the IoT, at least by some accounts. (eMarketer, 2016).

This excerpt from James Manyika and Charles Roxburgh from Mckinsey Global Institute

also summarizes what is really going on in the economic world in the internet age: The

Internet is changing the way we work, socialize, create, and share information, and organize

the flow of people, ideas, and things around the globe. Yet the magnitude of this

transformation is still underappreciated. (Manyika, Roxburgh, 2011). The impacts of the

internet are in a way still under appreciated. We as a society have only begun to scratch the

surface of possible uses of the internet.

1. See Diagram 1
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Practically all the main everyday uses and activities done online, shopping, browsing,

searching, chatting, are all done on the surface web. The deep web is almost immeasurable in its

capacity. Although, it is reassuring to see the majority of businesses being up-to-date on the latest

internet technology. It is important for all aspects of business to be up-to-date. Another excerpt

from Mckinsey:

Governments, policy makers, and businesses must recognize and embrace the enormous

opportunities the Internet can create, even as they work to address the risks to security

and privacy the Internet brings. As the Internets evolution over the past two decades has

demonstrated, such work must include helping to nurture the development of a healthy

Internet ecosystem, one that boosts infrastructure and success, builds a competitive

environment that benefits users and lets innovators and entrepreneurs thrive, and nurtures

human capital Together these elements can maximize the continues impacted of the

Internet on economic growth and prosperity. (Manyika, Roxburgh, 2011).

The way legislation is passed and cities and countries are governed will also change in the future

thanks to the internet. This is both exciting and something countries should be weary of. For

example, When regulators start trying to constrain the Internet lets be aware of its enormous

and ever-increasing economic and social impact. The Internet is an economic powerhouse that

drives U.S. competitiveness and productivity. (Quelch, 2009). The Internets power is even felt

in elections: Social Networks and the easy connections they facilitate are transforming social

life and have helped to elect a president. (Quelch, 2009). Quelch from hbwk.hbs.edu is referring

to Barack Obamas election as he had a strong knowledge and used the ever growing
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Facebook as a method to reach out to young voters, as his opponent John McCain was not as

internet savey. The power of the new social and economic culture invented, because the

internet, is a something that must never be ignored.

Advertising

A key aspect of business is Marketing. To market is to advertise and the best new effect

means of advertising is the internet. Not newspapers. Not radio. Not television. The internet.

In order to advertise on the internet, we have to change the rules that have been set in place

in Marketing 101. No longer are Marketing students taught to strictly follow the 4 Ps of

Marketing; Product, Price, Place and Promotion. Now in the internet age it is important to

understand the 4 Cs(!) of Marketing; Consumer, Cost, Convenience, and Communication.

The way things are advertised on TV, Paper, and Radio is commonly clever placement of the

products. Perhaps there is humor involved, but the core message is you need to buy this item

and here is why. Advertising on the internet is different in part thanks to social media. In

order for an ad to be successful it almost always correlates to the advertisement to go viral.

Viral is when a video or short clip is viewed hundreds of thousands of times over a short

period of time causing it to become a trend. These trends lead to a short and sometimes

sustainable surge in purchasing. Another way advertisements to be constructed on the

internet is that video ads need to be short. Attention span of todays young buyers are

extremely less than those of previous generations. Advertising is just another one of the

many ways the internet is impactful on the economy. Other ways as discussed by Quelch in

his 2009 piece are employment,

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The internet employs 1.2 million people directly to conduct advertising and

commerce, build and maintain the infrastructure, and facilitate its use. Each

Internet job supports approximately 1.54 additional jobs elsewhere in the

economy, fro a total of 3.05 million, or roughly 2 percent, of employed

Americans. ( Quelch, 2009), and also leisure activities, At work and at leisure,

about 190 million people in the United States spend on average, 68 hours a month

on the Internet. A conservative valuation of this time is an estimated $680 billion.

(Quelch, 2009).

That study was conducted in 2009. One can only imagine how much larger the impacts

and projected money and time have increased in almost a decade since this study. With

that many users the audience is much, much larger than any audience who previously

subscripted to local, and national newspapers, and with the exception of large national

television events like say the Super Bowl, a much larger audience than Television. With

more time spent online, there is more time and opportunity to advertise. This is

something marketers of today need and must take advantage of. With ads a constant non-

stop within our leisure time, and Social Media browsing, and the convenience of

purchasing products and having them delivered and received the impacts the internet has

on the economy are almost endless.

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Conclusion

In conclusion, based on the above information it is very apparent about the

large, overreaching effects the internet has on the economy. Based on my research it is

obvious that the internet is all around us and will continue to grow. Its impacts will

change the way business is done today and in furture generations to come. The

internet will influence economies within the boundaries of Retail Convince,

Productivity Growth, The Changing Industry, and Advertising mixed with Social

Media. The amount of leauisre time spent online is surely going to lead to an

advantage to advertisers and companies alike. The interest affects on the economy

even have been felt in Washington helping campaigns and senators and congressmen

win elections. The United States as a Capitalist Economy will also greatly benefit

from competition and the many resources available thanks to the internet. Based on all

of the information and research stated above this is how: The Internet will influence

and impact the Economy.

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References
o "How Is the Internet of Things Changing Retail? - EMarketer." EMarketer. N.p.,
11 Apr. 2016. Web. 01 Dec. 2016.

o Palis, Courteney. "Internet Economy: How Essential Is The Internet To The U.S.?
(INFOGRAPHIC)." The Huffington Post. TheHuffingtonPost.com, 20 Mar. 2012. Web. 01
Dec. 2016.

o Quelch, John. "Quantifying the Economic Impact of the Internet." HBS Working Knowledge.
N.p., 17 Aug. 2009. Web. 01 Dec. 2016.

o Rivlin, Alice M., and Robert E. Litan. "The Economy and the Internet: What Lies Ahead?"
o Brookings. N.p., 28 July 2016. Web. 01 Dec. 2016.

o Roxburgh, James Manyika Charles. "The Great Transformer: The Impact of the Internet on
Economic Growth and Prosperity." McKinsey & Company. N.p., Oct. 2011. Web. 01 Dec.
2016.
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Diagram 1

https://www.emarketer.com/Article/How-Internet-of-Things-Changing-Retail/1013799