Portal Economics and Business Models

Abstract

In late 2005, the market capitalization of Google was the envy of every major media and telecom company. More than any other Web portal, Google had succeeded in benefiting from the superior economics inherent in digital interactive channel systems. At the core of Web portal success is a set of economic mechanisms, including, but not limited to rooted in how structure and competition have evolved in digital channel systems, which is discussed based on organizational theory in a separate article titled “Digital Interactive Channel Systems and Portals: Structure and Economics.” One subcategory of transaction cost, lower search cost, has played a particularly important role in the success of portal business models.