5 ms·
"marginal cost of streaming OR downloading a song is effectively zero" - only if you don't consider royalties to be part of the marginal cost? What's weird to m
by dandelany 5y ago
"marginal cost of streaming OR downloading a song is effectively zero" - only if you don't consider royalties to be part of the marginal cost? What's weird to me is the seemingly pervasive idea that the cost of everything should be 100% directly related to its marginal cost + some small fixed percent. Things are priced based on what consumers will pay, which is related to how much value they derive from it.
Personally I'd be happy to pay $2 a month when I don't listen to much music and up to $30-40/month when I'm obsessed with album(s) and listening to them every day - how much that costs Spotify is somewhat irrelevant to me
- jrm4 5y agoNo, royalties are objectively not part of the marginal cost, by definition. Marginal cost refers to things that must be paid for before the thing is made. This isn't a "should," it's essentially a principle of "the science of economics" (which isn't always much of a science, but this one holds up pretty well over time.) The one that doesn't is the bit about "how much value they derive from it." All sorts of real-life experimentation/psychology, etc shows that people don't much know or understand or generally follow this thing of "a person develops a sense of how much something is worth to them and makes purchases accordingly," I mean, a moment's thought reveals that if this were true, advertising (and perhaps, google and facebook et als entire business models) wouldn't exist. I have idiosyncratic music preferences like you, but we much don't matter.