Because information-based businesses are becoming increasingly crucial to our commercial and social lives, inefficiencies in the information marketplace are becoming less tolerable. For example, today's information industry is characterized by the following:

• significant waste of economic and ecological resources—Consider, for example, the production and distribution of bulky newspapers. A single Sunday printing of the New York Times consumes sixteen acres of forest, and the typical customer discards most of the paper unread.

• inadequate matching of information content with the needs of the recipients—An example of this is the average large city–phone customer who uses only a handful of the million-plus numbers available in the local phone directories.

• severe time and place constraints on information access and availability—For example, with prescheduled broadcasts of television and radio programs, it is safe to assume that a large portion of the target market is excluded from the audience.

• cumbersome and expensive physical infrastructures for information distribution—Examples of these are books, movies, videotapes, and software.

• inefficient information distribution—Today, the publishing business can be described as mostly comprised of middlemen who command high margins but add little value. For example, Hollywood studios today only realize 25 to 30 percent of the receipts from video rentals. Seventy percent of the cost of movies goes to distribution and advertising. Book authors receive barely 10 to 15 percent of what customers pay for their product. CD–ROM producers typically spend 60 to 70 percent of retail revenues on wholesale and retail margins.