CPSC 155a, Fall 2001 FINAL EXAM E-Commerce, Doing Business on the Internet Page 1 of 7 Final Exam December 18, 2001 Instructions: Answer exactly 12 of the following 14 questions. Do not answer more than 12. If you answer more than 12, the first 12 answers in your blue books will be graded, and the rest will be ignored. Note that 12 questions worth eight points each add up to 96 points. Everyone gets four points for free. Please remember to put your name and e-mail address on the cover of your blue book(s). Question 1: Open Source / Free Software (a) (4 Points) For a computer program to satisfy the Free Software Foundation's definition of “free software,” users of this program must be free to do four things with it. What are these “four freedoms?” (b) (2 Points) True or false: Copylefted source code cannot be sold. (c) (2 Points) Give two examples of “open-source” programs that are widely used. Question 2: Copyright Law (a) (4 Points) What is the First Sale Rule, and why might it be less effective as a means of regulating digital objects such as software and MP3 files than it is as a means of regulating physically embodied works such as books and CDs? (b) (2 Points) True or false: In order to be guilty of violating the Digital Millennium Copyright Act, one has to be guilty of copyright infringement. (c) (2 Points) What is the (possibly fatal) flaw in the following argument? “It is illegal to distribute copyright material protected by a TPS that effectively prevents copying, because, under the Fair-Use Doctrine of US copyright law, I have a right to make copies for certain purposes.”CPSC 155a, Fall 2001 FINAL EXAM E-Commerce, Doing Business on the Internet Page 2 of 7 Question 3: Internet Architecture (a) (4 Points) What are the four major layers of the Internet architecture, and what is the order of these layers? By “what is the order,” I mean which is the “lowest” layer, which is built directly “on top of” the lowest, which is built directly on top of the second-lowest, and which is built directly on top of the third-lowest? (b) (2 Points) The architectural principle of layering is a key enabler of e-commerce because: i. Technical innovation and commercial deployment of new products and services can take place on each layer independently, without overall network redesign. ii. It prevents abuse of monopoly. iii. It prevents misuse of personal information that is collected in the course of web-retail transactions. iv. None of the above. (c) (2 Points) Give an example of a company whose initial success demonstrates the power of the Internet architecture. Question 4: B2C Commerce (a) (2 Points) One of the main reasons that first-generation B2C commerce seemed so promising was that it held out the hope of significantly lower prices for consumers. Why was it widely believed that online retailers could offer significantly lower prices than B&M retailers and still be profitable? (b) (2 Points) True or false: Customers of successful online retailers typically experience significant switching costs. (c) (2 Points) True or false: B2C companies are more dependent on massively scalable and continuously available operations systems than C2C companies. (d) (2 Points) Which of the following strategies currently seems most promising for B2C e-commerce? i. Diversification into more low-margin products ii. Expansion into international markets iii. Multi-channel retailing iv. Increased advertisingCPSC 155a, Fall 2001 FINAL EXAM E-Commerce, Doing Business on the Internet Page 3 of 7 Question 5: Information Economy (a) (3 points) What are “network effects?” (b) (3 points) What is “bundling?” (c) (2 points) The following strategies and tools are commonly used by information businesses: differential pricing, versioning, technical-protection measures (e.g., encryption), legal-protection measures (e.g., copyright), branding, and sale of complementary products. Which property of information products do all of these strategies and tools address? i. High fixed costs and low marginal costs ii. The need for standardization iii. The need for cross-platform compatibility iv. All of the above Question 6: Peer Production (a) (2 Points) Give an example of peer production that predates the Internet. (b) (2 Points) Give two Internet-based companies whose business models involve “leveraging peer production.” (c) (2 Points) Whether peer production is an effective way of accomplishing a particular task depends on the task’s: i. modularity. ii. granularity. iii. cost of integration. iv. all of the above (d) (2 Points) Two necessary preconditions for Benkler’s vision of peer production are: i. strong property rights and corporate hierarchies. ii. information security and digital identity. iii. low-cost communication and low-cost access to information. iv. strong property rights and free markets.CPSC 155a, Fall 2001 FINAL EXAM E-Commerce, Doing Business on the Internet Page 4 of 7 Question 7: Privacy (a) (4 points) According to Lessig, there are four major ways in which “privacy is protected in real space.” What are they? (b) (2 points) P3P provides: i. a machine-readable format in which privacy policies can be encoded. ii. enforcement mechanisms that ensure that web retailers comply with their posted privacy policies. iii. enforcement mechanisms that ensure that web retailers comply with the OECD Fair Information Principles. iv. a mechanism for customers to use web-retail services anonymously. (c) (2 points) The purchase by DoubleClick of Abacus Direct was viewed as a serious privacy threat. Which key aspect of online data collection triggered this controversy? i. Data are often collected silently. ii. Users are not always given meaningful choices about data collection. iii. Data collected by web retailers is often used to create “obnoxious” targeted ads. iv. Data collected from many different sources can be merged; in particular, data collected online can be merged with data about users’ “real space” lives. Question 8: Miscellaneous I (a) (2 Points) Give one advantage and one disadvantage of the widespread use of cookies. (b) (2 points) Give two inherent difficulties with online ads. (c) (2 Points) Yahoo's main sources of revenue are: i. subscription
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