How the Internet Became Commercial: Innovation, Privatization, and the Birth of a New Network

by Shane Greenstein

Overview

In less than a decade, the Internet went from being a series of loosely connected networks used by universities and the military to the powerful commercial engine it is today. This book describes how many of the key innovations that made this possible came from entrepreneurs and iconoclasts who were outside the mainstream—and how the commercialization of the Internet was by no means a foregone conclusion at its outset.

Shane Greenstein traces the evolution of the Internet from government ownership to privatization to the commercial Internet we know today. This is a story of innovation from the edges. Greenstein shows how mainstream service providers that had traditionally been leaders in the old-market economy became threatened by innovations from industry outsiders who saw economic opportunities where others didn't—and how these mainstream firms had no choice but to innovate themselves. New models were tried: some succeeded, some failed. Commercial markets turned innovations into valuable products and services as the Internet evolved in those markets. New business processes had to be created from scratch as a network originally intended for research and military defense had to deal with network interconnectivity, the needs of commercial users, and a host of challenges with implementing innovative new services.

How the Internet Became Commercial demonstrates how, without any central authority, a unique and vibrant interplay between government and private industry transformed the Internet.

Product Details

ISBN-13:	9780691178394
Publisher:	Princeton University Press
Publication date:	09/26/2017
Series:	The Kauffman Foundation Series on Innovation and Entrepreneurship , #18
Edition description:	Reprint
Pages:	488
Product dimensions:	6.00(w) x 9.20(h) x 1.20(d)

About the Author

Shane Greenstein is the Martin Marshall Professor of Business Administration and codirector of the program on the economics of digitization at the National Bureau of Economic Research. His books include Diamonds Are Forever, Computers Are Not and Standards and Public Policy.

Table of Contents

INTRODUCTION 1

1 Ubiquitous Clicks and How It All Started 3

THE TRANSITION 31

2 The White House Did Not Call 33

3 Honest Policy Wonks 65

4 A Taste of Champaign 97

5 Unleashing Commercial Iconoclasts 130

THE BLOSSOMING 157

6 How Not to Start a Gold Rush 159

7 Platforms at the Core and Periphery 187

8 Overcoming Two Conundrums 215

9 Virulent Word of Mouse 243

10 Capital Deepening and Complements 272

EXPLORATION AND RENEWAL 301

11 Bill Votes with a Veto 303

12 Internet Exceptionalism Runs Rampant 335

13 The Paradox of the Prevailing View 365

14 The High Cost of a Cheap Lesson in Wireless Access 392

EPILOGUE 417

15 Enabling Innovation from the Edges 419

Acknowledgments 443

References 447

Index 465

What People are Saying About This

From the Publisher

"In this important book, Greenstein draws on economics, business history, and the history of technology to tell a story of disruption on a grand scale. He shows how outsiders to the information and communications technology establishment brought the Internet from its techie origins to its current role as an economic growth engine."—Timothy Bresnahan, Stanford University

"With this engaging account of the Internet's origins and innovative explosion, Shane Greenstein cements his claim as the foremost economic historian of digital technology. An essential read for all who want to understand the miracle of our lifetime."—Joshua Gans, University of Toronto

"Greenstein offers a powerful and lucid account of the way the Internet's exceptional growth arose from unexceptional economic forces.How the Internet Became Commercialis a foundational read for anyone wanting to understand the origins and dynamics of the mainstream Internet."—Jonathan Zittrain, Harvard Law School

"The Internet and its applications are transforming business and commerce. There is no economist on the planet who has done more to document its economic origins, evolution, and implications than Shane Greenstein. This book should be required reading for any serious student of the topic."—Erik Brynjolfsson, director of the MIT Initiative on the Digital Economy and coauthor of The Second Machine Age

"The Internet has affected our lives profoundly over the past quarter-century. Yet far too often, its features are taken as given, without understanding the genesis of this critical innovation. Shane Greenstein's book lucidly illustrates the key decisions behind today's Internet, and offers lessons for innovation policy more generally."—Josh Lerner, Harvard Business School

"Greenstein has written one of the most important books available about how the Internet came into existence, commercialized, and became so important in American life. It will be the standard work on the subject for many years. It is also a great read."—James W. Cortada, author of The Essential Manager: How to Thrive in the Global Information Jungle

"This book starts at the moment when most histories of the Internet end, providing a comprehensive and engaging explanation of how an academically oriented research network transformed so quickly and completely into the commercial infrastructure of the early twenty-first century."—Nathan L. Ensmenger, author of The Computer Boys Take Over: Computers, Programmers, and the Politics of Technical Expertise

Editorial Reviews

Co-Winner of the 2016 Schumpeter Prize Competition, International Joseph A. Schumpeter Society

From the Publisher

"[A] detailed history of the Internet."

Foreign Affairs

"Immensely informative."

Philadelphia Inquirer

2015-09-02
Creative destruction meets destructive creation in this economic-historical study of the Internet and its privatization. The libertarian dream may be to privatize all government services, but that ignores the fact that in many instances, it is government funding that underlies the invention of useful technologies—home-scaled air conditioners, for instance, or aluminum cookware. Greenstein (Chair, Information Technology/Kellogg School of Management, Northwestern Univ.; co-editor: Economic Analysis of the Digital Economy, 2015, etc.) distinguishes invention from innovation as separate processes, innovation, as he writes, being "the act of turning invention into something useful." It was government initiative that brought a network of computers into being, a mix of private and public innovation that made it into the Internet, thanks in part to the work of government engineer Stephen Wolff, who "made an educated guess that the costs for universities and researchers could be lower if private providers supplied services" that helped the backbone network talk to individual machines, sharing the infrastructure among potentially innumerable constituents. Greenstein concentrates on the 1990s, looking closely at such issues as the browser wars—he concludes that Bill Gates was right to worry about the rise of non-Microsoft Internet gateways—and the origins of the dot-com bubble at the end of the decade. Though he conveys much information through the vehicle of carefully developed case studies on matters such as the divestiture of AT&T and its relationship to the birth of the Internet and the role of federal funding of the research that would give rise to Google, the author is a resolutely academic writer ("accommodating heterogeneous deployment overlapped with the economic benefit" is a characteristic formulation); it helps to have some background in both communications and economics to fully appreciate his arguments. General readers will prefer books such as John Markoff's What the Dormouse Said (2005) and Stephen Levy's Hackers (1985), though Greenstein notes that his focus—on innovation, not invention—is different from theirs. A welcome, well-conceived contribution to the history of technology.

Kirkus Reviews