Instead of a "one size fits all" model, the web offers a "market of one" ... [powered by] suggestions of things to buy based on your previous purchases, or on purchases of customers like you.Back in 2000, Amazon got slammed (e.g. ) for an experiment with differential pricing, but Hal appears to be predicting differential pricing will rise again.
Not only content, but prices may also be personalized, leading to various forms of differential pricing ... [But] the ability of firms to extract surplus [may be] quite limited when consumers are sophisticated ... [And] perfect price description and free entry ... pushes profits to zero, conferring all benefits to the customers.
The same sort of personalization can occur in advertising ... Google and Yahoo ... [already] allow users to specify their areas of interest and then see ads related to those interests. It is also relatively common for advertisers ... to show ads based on previous responses of users to related ads.
The paper also talks briefly about how experimentation changes how companies make decisions ("when experiments are cheap, they are likely provide more reliable answers than opinions"), data mining, online advertising, legal contracts that use computer monitoring to enforce their terms, and cloud computing. The paper is from the 2010 Ely Lecture at the American Economics Association and video of the talk is available.