7 ms·

Your conclusion looks good, but I think you're misusing the term value. once created the value of a copy is pretty much zero It's not the value that approache

Your conclusion looks good, but I think you're misusing the term value. once created the value of a copy is pretty much zero It's not the value that approaches zero, it's the Marginal Cost of producing one more unit. It doesn't cost anything to reproduce it, but if people will pay higher, then there is value. When you have an economic moat (less competition) or a monopoly, you can capture some of this value. (Think Telsa selling software upgrades to improve car performance - zero Marginal Cost, but high value) In Perfect Competition, prices approach or hit the Marginal Cost. Other than that nitpicking, I agree with the rest of what you say. :-)

jmorrison 9y ago
Thinking out loud: (1) The nameless model of reality I think is implied by "marginal cost of production is zero" simplifies away some essential aspects of reality (as explained by the late, great, RIP Manny Lehman model of "software evolution"). As the article points out, bug fixes and updates of the existing copy are necessary (to wit, IoT botnets), and in this model one never speaks about the continuing cost to maintaining the zeroth copy. (2) The anticipated rejoinder to observation (1) is that, given the source, the end-users can do all maintenance, customization, and extension themselves. What we know about complexity (again, thanks, Manny) of any non-trivial application puts the lie to this. (3) The anticipated rejoinder to observation (2) is existence proofs such as the Linux kernel. My reply to this rejoinder is that Linux is largely corporate-supported as a complement to the supporters products/services.
- TheOtherHobbes 9y ago
  The initial cost of production is far from zero, as anyone who has spent more than few months (years) building a non-trivial application will tell you. As you say, updates/fixes also cost. So do marketing, web infrastructure and so on. It's usual in business to charge for utility and perceived value ("As much as the market can bear"), not for the cost of mechanical assembly/reproduction. OP is correct that Apple has created a new(ish) distribution model. It was a gold-rush for a year or three, but has become extremely unfavourable to new product development. But this has become a curation and discovery problem, not a distribution problem. Apple's 30% would be a lot more palatable if discovery and search worked better, if buyers could opt-in to a mailing list to support newsletters, cross-sales, and future sales, if sellers could set up trials - and so on. None of this is likely because the App Store is an example of the first law of aggregation - be the feudal landowner, not the peasant smallholder. The App Store is immensely profitable for Apple. The law of aggregation means that Apple has no serious incentive to make it better. The App Store won't change now. Eventually the entire platform will collapse and be replaced by a new technology in a new market space. But I wouldn't bet on that happening within five years, and possibly not within ten. (My best guess would be somewhere between those two.) Meanwhile it's still possible to do well selling app development as a service instead of apps as a product.
ue_ 9y ago
>but if people will pay higher, then there is value. It's important to note that this is a particular kind of value, a neo-classical definition. The Marxian one is independent of what people will pay for an item; for example, land, honor, titles of nobility etc. Have no value.
- wayn3 9y ago
  And thats why Russia is the lone remaining superpower. They have everything, nothing costs anything and their people are free to do as they please. Luckily, philosophers do not believe in the fact that their different ideas actually compete with each other.
  - ue_ 9y ago
    I'm not sure what point you are trying to make. Marx was describing a reproducible commodity economy, i.e most of what we have within capitalism, with his theory. Besides this, Russia is a capitalist country. My apologies if you weren't stating that it wasn't.
    - wayn3 9y ago
      And capitalism is a term coined by Marx to denounce the idea that in a free society, outliers naturally occur. I don't want to live in a country that is run exclusively by peasants. That happened, successfully, in russia. In the 1920s. And the result was not pretty. Sure, russia is "capitalist" now. Capitalist means absolutely nothing in terms of philosophy. Its just a word used by marxists to express their annoyance with a vague concept that results in the creation of value (and they obviously have no problem with value, but the returns should absolutely, entirely, end up in the hands of the peasants, not some hokey dokey CEO. That aside, russia was not "capitalist" for a long time, and still suffers the consequences. Specifically in the case of Russia, they have another big problem - which is the idea that they are still somehow the core of the USSR and have to restore that thing, instead of trying to fix their real issues. People seem to forget that there are janitors at microsoft who drive ferraris. They took stock options over vacation time.
bryanlarsen 9y ago
Consumers view "capturing the value" as "ripping them off". So while yes they may value the good at the price they're willing to pay, they view the "fair value" at much closer to the marginal cost.

jmorrison 9y ago

Thinking out loud: (1) The nameless model of reality I think is implied by "marginal cost of production is zero" simplifies away some essential aspects of reality (as explained by the late, great, RIP Manny Lehman model of "software evolution"). As the article points out, bug fixes and updates of the existing copy are necessary (to wit, IoT botnets), and in this model one never speaks about the continuing cost to maintaining the zeroth copy. (2) The anticipated rejoinder to observation (1) is that, given the source, the end-users can do all maintenance, customization, and extension themselves. What we know about complexity (again, thanks, Manny) of any non-trivial application puts the lie to this. (3) The anticipated rejoinder to observation (2) is existence proofs such as the Linux kernel. My reply to this rejoinder is that Linux is largely corporate-supported as a complement to the supporters products/services.

TheOtherHobbes 9y ago
The initial cost of production is far from zero, as anyone who has spent more than few months (years) building a non-trivial application will tell you. As you say, updates/fixes also cost. So do marketing, web infrastructure and so on. It's usual in business to charge for utility and perceived value ("As much as the market can bear"), not for the cost of mechanical assembly/reproduction. OP is correct that Apple has created a new(ish) distribution model. It was a gold-rush for a year or three, but has become extremely unfavourable to new product development. But this has become a curation and discovery problem, not a distribution problem. Apple's 30% would be a lot more palatable if discovery and search worked better, if buyers could opt-in to a mailing list to support newsletters, cross-sales, and future sales, if sellers could set up trials - and so on. None of this is likely because the App Store is an example of the first law of aggregation - be the feudal landowner, not the peasant smallholder. The App Store is immensely profitable for Apple. The law of aggregation means that Apple has no serious incentive to make it better. The App Store won't change now. Eventually the entire platform will collapse and be replaced by a new technology in a new market space. But I wouldn't bet on that happening within five years, and possibly not within ten. (My best guess would be somewhere between those two.) Meanwhile it's still possible to do well selling app development as a service instead of apps as a product.

ue_ 9y ago

>but if people will pay higher, then there is value. It's important to note that this is a particular kind of value, a neo-classical definition. The Marxian one is independent of what people will pay for an item; for example, land, honor, titles of nobility etc. Have no value.

wayn3 9y ago
And thats why Russia is the lone remaining superpower. They have everything, nothing costs anything and their people are free to do as they please. Luckily, philosophers do not believe in the fact that their different ideas actually compete with each other.
- ue_ 9y ago
  I'm not sure what point you are trying to make. Marx was describing a reproducible commodity economy, i.e most of what we have within capitalism, with his theory. Besides this, Russia is a capitalist country. My apologies if you weren't stating that it wasn't.
  - wayn3 9y ago
    And capitalism is a term coined by Marx to denounce the idea that in a free society, outliers naturally occur. I don't want to live in a country that is run exclusively by peasants. That happened, successfully, in russia. In the 1920s. And the result was not pretty. Sure, russia is "capitalist" now. Capitalist means absolutely nothing in terms of philosophy. Its just a word used by marxists to express their annoyance with a vague concept that results in the creation of value (and they obviously have no problem with value, but the returns should absolutely, entirely, end up in the hands of the peasants, not some hokey dokey CEO. That aside, russia was not "capitalist" for a long time, and still suffers the consequences. Specifically in the case of Russia, they have another big problem - which is the idea that they are still somehow the core of the USSR and have to restore that thing, instead of trying to fix their real issues. People seem to forget that there are janitors at microsoft who drive ferraris. They took stock options over vacation time.

bryanlarsen 9y ago

Consumers view "capturing the value" as "ripping them off". So while yes they may value the good at the price they're willing to pay, they view the "fair value" at much closer to the marginal cost.