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> I get that is how capitalism works, but that logic doesn't make sense to me for digital goods. They are practically zero cost to distribute once they are manu

> I get that is how capitalism works, but that logic doesn't make sense to me for digital goods. They are practically zero cost to distribute once they are manufactured and your competition is people pirating them. If you're worried about audience size, lower the cost. You'll enable a lot more people to see a lot more movies. This echoes a drunk-blog that I wrote once, but basically I believe our current economic model no longer makes sense when talking about digital goods. We baked the manufacturing-cost of a product into each individual item, when it cost money to make an individual item. With digital goods, it only costs money to make the first item, every duplicate is essentially free. I think Kickstarter and the like are great examples of this, because they more accurately reflect how the costs actually influence the creation of the product.

dilemma 10y ago
The marginal cost of producing another unit of a digital good is close to zero. On the flip side, the cost of marketing that good is close to infinite.
- orbat 10y ago
  Producing copies of an already existing digital good is, for all intents and purposes, free. Creating the original most definitely is not, and that's the issue here
  - SixSigma 10y ago
    An hour of labour is, for all intents and purposes, also free or 200 kcals of food at the most.
    - randomdata 10y ago
      The difference is the opportunity cost. It's easy to see what other opportunities labour has, it's not easy to see what other opportunities copying bits has, especially in the household capacity. I certainly don't see anyone asking to use my residential bit-copying facilities in any meaningful capacity, but I do see people asking to use my time.
      - SixSigma 10y ago
        Your download server could be mining bitcoin and all those data centres are not free either.
        randomdata 10y ago
        Is the commodity hardware that people watch Netflix on really going to generate any money mining bitcoins? Or are they just going to rack up an expensive electricity bill?
      - CaptSpify 10y ago
        Additionally: I don't really have an "unused" amount of hours at the end of the day. I definitely have an "unused" amount of bit-copying capacity.
    - ssalazar 10y ago
      Not really. The cost of skilled labor is related to the amount of experience and training required to be able to perform that labor as well as the supply/demand for that labor. Unless all these software engineers pulling down $200/hr consulting are lying?
    - Retra 10y ago
      You've got to pay me more the 200kcals to make me not live my own life for an hour.
      - SixSigma 10y ago
        Until you have 0kcals available. The surfeit of labour is coming.
- CaptSpify 10y ago
  I would argue that it's so close to zero as it should be considered zero. As to your second point: Any cost could probably somehow be considered infinite: profit, insurance, warranty, etc. So I'm not sure what you mean by that?
  - dilemma 10y ago
    Since digital content is close to free to distribute (distinction, not free to produce) there is an ever expanding amount of content available, approaching infinity. To stand out in an infinite sea of content, the upper bound of what you would need to spend is an infinite amount on ads and marketing. This also works for products. The more a product or industry is commoditized, the more important marketing and branding becomes.
dublinben 10y ago
My two favorite models that reflect the digital reality are recurring patronage (Patreon, et al) that supports the ongoing work of a creator, or crowdfunded bounties (Unglue.it, Kickstarter, etc.) where the work is freely released once its production is paid for.
- VLM 10y ago
  There's also time preference. Kickstarter is huge, there is no "the" kickstarter model, but at least in physical board game and RPG dark corner of kickstarter, people get extremely unhappy if product shows up in retail before the backers get theirs delivered. A second aspect of time preference is original OP claims there's only two services or whatever all $5, but I assure you the market is much wider and there's $2 at redbox, "free" if you watch TV and don't mind editing and commercials, "free" and commercial free if you pay your annual amazon prime membership to cheap shipping, "free" if you have a public library card... Everything ends up free at the public library eventually, but it could take years and years. The theater portion of the industry doesn't handle this nearly as well as the distribution side. I have friends who have friends, etc, and somehow I got to see the very first public premier showing of Rogue One last December. Its a different experience seeing a new movie vs one where the spoilers are all over the internet, it was interesting. So you practically had to be in the mafia to get tickets, but aside from that financially my ticket cost exactly the same as a showing a month later. The theater, in an attempt to be "fair", is leaving a lot of money on the table. My son really wanted to see the movie and I think he would have been cool with $100 tickets because he's just so excited, not unreasonable to think the theater lost over $80 per seat that night. I'm sure 10% of the population is glad to pay 10x the cost for bragging rights or just being hyper-fans. The local theater is slowly getting a clue... they have in theater bars and restaurants so if you want to blow $50/person at a movie you certainly can in extreme luxury and gluttonous comfort. They need to get a clue faster. Also the culture where I am is, OK with alcohol whereas I can see in some areas the local culture would just lead to obnoxiousness and police calls, so there are cultural aspects.
PKop 10y ago
Doesn't this line of thinking lead to a race-to-the-bottom and an expectation from consumers that digital goods should basically be "free". Look at mobile apps. What is the end result for developers if digital goods are priced next to nothing? Just thinking out loud. I understand this can lead to increased sales, also that this refers more to "content" than apps.
- lmm 10y ago
  The thing is developers keep making apps, even when the price is so low. I suspect this will be even more true for more traditionally creative activities. There is enough writing being done for free (in terms of e.g. fanfiction) for a lifetime's reading, if only the recommendation engine was good enough. As movies get cheaper to make it will be the same for those too.
  - blacksmythe 10y ago
    Developers keep making apps, even when the price is so low. So far, the cost of people willing and able to build large, complex systems in teams keeps going up.
  - robryan 10y ago
    With apps the question is if what is being made is good enough? While there is no shortage of apps being put out there is certainly a lot of developers that have been driven away from the app ecosystem. You would be crazy these days to bet your future on being a indie app game developer.
- krapp 10y ago
  Realistically, digital goods should be "free." I pay my electric bill and the bill for my ISP, why should I pay for the bits on my hard drive or something to be reconfigured into an arbitrary state - everything of possible value related to it has already been paid for. That digital media is considered to have any monetary value at all makes less and less sense the more one thinks about it. It's possible the world should have thought twice about moving everything online and making everything digital, but it's too late now, and we're stuck with concocting elaborate fictions around digital media in order to keep people fed and keep the economies of the world functioning.
raverbashing 10y ago
While duplication is (almost) free, the current model do has some kind of price lowering as the "main costs" are paid. Cinema tickets are pretty much "the max" per person you end up paying. Then comes DVD/VOD (used to be VHSs). Then it eventually ends on some cable channel/bargain DVD bin
- CaptSpify 10y ago
  > the current model do has some kind of price lowering as the "main costs" are paid. I'm not sure I follow what you mean by this?
branchless 10y ago
Nope that's just a misconception on how prices are set. Prices are set by what the seller believes most people will pay. Why do you think housing is so expensive? Because land got more expensive to make? Because they forgot how to make bricks cheaply? Credit sets the ability to pay and this sets the price.
- dragonwriter 10y ago
  In a perfectly competitive market, competition, in the long run, drives the market price down to the marginal cost of production and the traded quantity to the level at which that price is also the maximum price the market will bear.
  - branchless 10y ago
    Yes when all the assumptions that hold in theory are in place, in reality I wonder. "Markets are never in equilibrium, thus don’t be fooled by prices, but consider quantities: The short side exerts power." http://www.globalresearch.ca/shifting-from-central-planning-to-a-decentralised-economy-do-we-need-central-banks/5568753 http://www.globalresearch.ca/shifting-from-central-planning-... In this situation none of the tenants hold. Information is not perfect, it's not a free market as only certain channels can provide the IP, prices are fluid. For the balancing of supply and demand supply would have to be finite. In a digital world it is in practice infinite. None of this guff works in the real world. Time to put all our econ 101 books onto a big boat, push it out to sea with a burning torch.
    - dragonwriter 10y ago
      I'm not disagreeing with that; I was pointing to what basic economic principle was at issue in the upthread claim. Clearly, the reality of digital goods markets underlines how distant reality is from ideal markets.
  - criddell 10y ago
    That's true, but only for fungible goods. If you don't want to pay $5 to rent a digital copy of Frozen for your kids, then you can go to archive.org and pick a movie to watch for free. Your kids might be disappointed though.
witty_username 10y ago
What is the current economic model? I'm assuming it's capitalism. How does the duplication of digital goods being free mean capitalism no longer makes sense? Kickstarter is essentially risky lending and charity (you put in money and possibly get rewards which may not be commensurate with the money you put in).
- CaptSpify 10y ago
  I'm not sure that we have a name for the economic model I'm thinking of. I think "capitalism" is too high-level or broad for the system I'm talking about. I'm thinking of the model that: Profit should be made up by charging more than the cost of duplication. I would argue that Kickstarter does the same thing as the current model, but has none of the same safeties in place. I agree it's not apples to oranges, but I think we could put those legal safeties in place.
  - witty_username 10y ago
    > I'm thinking of the model that: Profit should be made up by charging more than the cost of duplication. That's what we already do. Duplicating content without the copyright owner's permission is copyright infringement which is illegal. > I would argue that Kickstarter does the same thing as the current model, but has none of the same safeties in place. I agree it's not apples to oranges, but I think we could put those legal safeties in place. Corporate bonds are a relatively safe way to lend.
    - CaptSpify 10y ago
      > That's what we already do. Right. And that's the model that needs to change to reflect reality. > Duplicating content without the copyright owner's permission is copyright infringement which is illegal. Yes, but I don't see how that addresses my point? > Corporate bonds are a relatively safe way to lend. There are multiple safe ways to spend, my point is that spending up front more accurately reflects the costs in the current system.
      - 10y ago

dilemma 10y ago

The marginal cost of producing another unit of a digital good is close to zero. On the flip side, the cost of marketing that good is close to infinite.

orbat 10y ago
Producing copies of an already existing digital good is, for all intents and purposes, free. Creating the original most definitely is not, and that's the issue here
- SixSigma 10y ago
  An hour of labour is, for all intents and purposes, also free or 200 kcals of food at the most.
  - randomdata 10y ago
    The difference is the opportunity cost. It's easy to see what other opportunities labour has, it's not easy to see what other opportunities copying bits has, especially in the household capacity. I certainly don't see anyone asking to use my residential bit-copying facilities in any meaningful capacity, but I do see people asking to use my time.
    - SixSigma 10y ago
      Your download server could be mining bitcoin and all those data centres are not free either.
      - randomdata 10y ago
        Is the commodity hardware that people watch Netflix on really going to generate any money mining bitcoins? Or are they just going to rack up an expensive electricity bill?
    - CaptSpify 10y ago
      Additionally: I don't really have an "unused" amount of hours at the end of the day. I definitely have an "unused" amount of bit-copying capacity.
  - ssalazar 10y ago
    Not really. The cost of skilled labor is related to the amount of experience and training required to be able to perform that labor as well as the supply/demand for that labor. Unless all these software engineers pulling down $200/hr consulting are lying?
  - Retra 10y ago
    You've got to pay me more the 200kcals to make me not live my own life for an hour.
    - SixSigma 10y ago
      Until you have 0kcals available. The surfeit of labour is coming.
CaptSpify 10y ago
I would argue that it's so close to zero as it should be considered zero. As to your second point: Any cost could probably somehow be considered infinite: profit, insurance, warranty, etc. So I'm not sure what you mean by that?
- dilemma 10y ago
  Since digital content is close to free to distribute (distinction, not free to produce) there is an ever expanding amount of content available, approaching infinity. To stand out in an infinite sea of content, the upper bound of what you would need to spend is an infinite amount on ads and marketing. This also works for products. The more a product or industry is commoditized, the more important marketing and branding becomes.

dublinben 10y ago

My two favorite models that reflect the digital reality are recurring patronage (Patreon, et al) that supports the ongoing work of a creator, or crowdfunded bounties (Unglue.it, Kickstarter, etc.) where the work is freely released once its production is paid for.

VLM 10y ago
There's also time preference. Kickstarter is huge, there is no "the" kickstarter model, but at least in physical board game and RPG dark corner of kickstarter, people get extremely unhappy if product shows up in retail before the backers get theirs delivered. A second aspect of time preference is original OP claims there's only two services or whatever all $5, but I assure you the market is much wider and there's $2 at redbox, "free" if you watch TV and don't mind editing and commercials, "free" and commercial free if you pay your annual amazon prime membership to cheap shipping, "free" if you have a public library card... Everything ends up free at the public library eventually, but it could take years and years. The theater portion of the industry doesn't handle this nearly as well as the distribution side. I have friends who have friends, etc, and somehow I got to see the very first public premier showing of Rogue One last December. Its a different experience seeing a new movie vs one where the spoilers are all over the internet, it was interesting. So you practically had to be in the mafia to get tickets, but aside from that financially my ticket cost exactly the same as a showing a month later. The theater, in an attempt to be "fair", is leaving a lot of money on the table. My son really wanted to see the movie and I think he would have been cool with $100 tickets because he's just so excited, not unreasonable to think the theater lost over $80 per seat that night. I'm sure 10% of the population is glad to pay 10x the cost for bragging rights or just being hyper-fans. The local theater is slowly getting a clue... they have in theater bars and restaurants so if you want to blow $50/person at a movie you certainly can in extreme luxury and gluttonous comfort. They need to get a clue faster. Also the culture where I am is, OK with alcohol whereas I can see in some areas the local culture would just lead to obnoxiousness and police calls, so there are cultural aspects.

PKop 10y ago

Doesn't this line of thinking lead to a race-to-the-bottom and an expectation from consumers that digital goods should basically be "free". Look at mobile apps. What is the end result for developers if digital goods are priced next to nothing? Just thinking out loud. I understand this can lead to increased sales, also that this refers more to "content" than apps.

lmm 10y ago
The thing is developers keep making apps, even when the price is so low. I suspect this will be even more true for more traditionally creative activities. There is enough writing being done for free (in terms of e.g. fanfiction) for a lifetime's reading, if only the recommendation engine was good enough. As movies get cheaper to make it will be the same for those too.
- blacksmythe 10y ago
  Developers keep making apps, even when the price is so low. So far, the cost of people willing and able to build large, complex systems in teams keeps going up.
- robryan 10y ago
  With apps the question is if what is being made is good enough? While there is no shortage of apps being put out there is certainly a lot of developers that have been driven away from the app ecosystem. You would be crazy these days to bet your future on being a indie app game developer.
krapp 10y ago
Realistically, digital goods should be "free." I pay my electric bill and the bill for my ISP, why should I pay for the bits on my hard drive or something to be reconfigured into an arbitrary state - everything of possible value related to it has already been paid for. That digital media is considered to have any monetary value at all makes less and less sense the more one thinks about it. It's possible the world should have thought twice about moving everything online and making everything digital, but it's too late now, and we're stuck with concocting elaborate fictions around digital media in order to keep people fed and keep the economies of the world functioning.

raverbashing 10y ago

While duplication is (almost) free, the current model do has some kind of price lowering as the "main costs" are paid. Cinema tickets are pretty much "the max" per person you end up paying. Then comes DVD/VOD (used to be VHSs). Then it eventually ends on some cable channel/bargain DVD bin

CaptSpify 10y ago
> the current model do has some kind of price lowering as the "main costs" are paid. I'm not sure I follow what you mean by this?

branchless 10y ago

Nope that's just a misconception on how prices are set. Prices are set by what the seller believes most people will pay. Why do you think housing is so expensive? Because land got more expensive to make? Because they forgot how to make bricks cheaply? Credit sets the ability to pay and this sets the price.

dragonwriter 10y ago
In a perfectly competitive market, competition, in the long run, drives the market price down to the marginal cost of production and the traded quantity to the level at which that price is also the maximum price the market will bear.
- branchless 10y ago
  Yes when all the assumptions that hold in theory are in place, in reality I wonder. "Markets are never in equilibrium, thus don’t be fooled by prices, but consider quantities: The short side exerts power." http://www.globalresearch.ca/shifting-from-central-planning-to-a-decentralised-economy-do-we-need-central-banks/5568753 http://www.globalresearch.ca/shifting-from-central-planning-... In this situation none of the tenants hold. Information is not perfect, it's not a free market as only certain channels can provide the IP, prices are fluid. For the balancing of supply and demand supply would have to be finite. In a digital world it is in practice infinite. None of this guff works in the real world. Time to put all our econ 101 books onto a big boat, push it out to sea with a burning torch.
  - dragonwriter 10y ago
    I'm not disagreeing with that; I was pointing to what basic economic principle was at issue in the upthread claim. Clearly, the reality of digital goods markets underlines how distant reality is from ideal markets.
- criddell 10y ago
  That's true, but only for fungible goods. If you don't want to pay $5 to rent a digital copy of Frozen for your kids, then you can go to archive.org and pick a movie to watch for free. Your kids might be disappointed though.

witty_username 10y ago

What is the current economic model? I'm assuming it's capitalism. How does the duplication of digital goods being free mean capitalism no longer makes sense? Kickstarter is essentially risky lending and charity (you put in money and possibly get rewards which may not be commensurate with the money you put in).

CaptSpify 10y ago
I'm not sure that we have a name for the economic model I'm thinking of. I think "capitalism" is too high-level or broad for the system I'm talking about. I'm thinking of the model that: Profit should be made up by charging more than the cost of duplication. I would argue that Kickstarter does the same thing as the current model, but has none of the same safeties in place. I agree it's not apples to oranges, but I think we could put those legal safeties in place.
- witty_username 10y ago
  > I'm thinking of the model that: Profit should be made up by charging more than the cost of duplication. That's what we already do. Duplicating content without the copyright owner's permission is copyright infringement which is illegal. > I would argue that Kickstarter does the same thing as the current model, but has none of the same safeties in place. I agree it's not apples to oranges, but I think we could put those legal safeties in place. Corporate bonds are a relatively safe way to lend.
  - CaptSpify 10y ago
    > That's what we already do. Right. And that's the model that needs to change to reflect reality. > Duplicating content without the copyright owner's permission is copyright infringement which is illegal. Yes, but I don't see how that addresses my point? > Corporate bonds are a relatively safe way to lend. There are multiple safe ways to spend, my point is that spending up front more accurately reflects the costs in the current system.
    - 10y ago