Can Silicon Valley Repeal The Laws Of Economics?
The changes we’ve been seeing in the content industries is driven by some very basic economic forces: competition pushes the price of goods and services toward their marginal cost. There’s now lots of competition in markets for information goods, and the marginal cost of producing those items (i.e. distributing a copy of an already-produced song or article) is very close to zero. Therefore, we should expect that over time, the prices of those products would also fall, to the point where the price becomes zero and producers use those information goods as a way to sell other goods. And that’s exactly what we’ve been seeing over the last few years. Newspapers are dropping their paywalls and selling ads. Bloggers are giving away news and commentary as a way of building up their reputations. And we’re starting to see musicians give away more of their music as a way to build up a fan base for their concerts. These trends are driven by some pretty fundamental economic forces, and there’s not
