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The hot dog stand will be motivated to keep the store open (i.e., allowing it to make its bills, and generate zero economic profit) to keep the profitable rent
by gburt 15y ago
The hot dog stand will be motivated to keep the store open (i.e., allowing it to make its bills, and generate zero economic profit) to keep the profitable rent behavior viable though. So we can expect Spotify to make just enough to be satisfied continuing along as a viable business, no?
- CoffeeDregs 15y agoThis is called the "normal profit" and, yes, there will be a set of businesses that earn the normal profit. What people are discovering is that the "normal profit" for a music business is not "oh-mi-god-Facebook-is-a-natural-monopoly!"-sized, but rather "oh-mi-god-the-content-owners-have-all-of-the-negotiating-power"-sized. Ironically, this gets re-discovered about every 5 years...
- robryan 15y agoIt's also possible that they only need to make just enough to convince other future companies to invest in going down the same path, so they can bleed investor capitol until they suffer the same fate but in doing so prop up the short term profits of the record industry.