Measuring the internet economy

In spite of the excitement and optimism surrounding the Internet Economy, few comprehensive efforts have successfully measured the economic growth and jobs created by this emerging economy. Estimates of the dollar volume of Web-based business are often based on the consideration of fifty or one hundred pure Internet-based companies, and can seriously underestimate the size of Internet based transactions. Further, electronic transactions are only one component of the Internet Economy, which should also include infrastructure related activities. A foundation for metrics and measurement is the key to understanding and analyzing issues involving this Internet Economy.

The Internet Economy Indicators, developed at the Center for Research on Electronic Commerce at the Graduate School of Business, the University of Texas at Austin, and sponsored by Cisco Systems, seek to fill this void by providing a foundation for conceptualizing and measuring the various components of the Internet Economy. These indicators—the Internet Economy Revenues Indicator and the Internet Economy Jobs Indicator—are built on an analysis of four layers of the Internet Economy. In contrast to previous electronic commerce studies that focused on Web- based transactions, these Internet Economy Indicators are based on the premise that the level of Internet commerce activity hinges on the underlying Internet infrastructure and applications, as well as on the presence of electronic intermediaries to facilitate interactions between buyers and sellers. Accordingly, the Internet Economy Indicators divide the Internet Economy into four distinct but related layers: Internet infrastructure, Internet applications, Internet intermediaries and Internet-based transactions.