3 ms·

Not a nitpick, beacuse the cost to enter the data by the user is also not zero (thus supply is not infite either). These are subtle but not trivial things to k

by 001sky 14y ago

Not a nitpick, beacuse the cost to enter the data by the user is also not zero (thus supply is not infite either). These are subtle but not trivial things to keep in mind, when dealling with massive scale (A billion users, ect.)

notatoad 14y ago
Those are costs, but they're not marginal costs. They have no bearing on the cost of each copy, nothing to do with scale.
- 001sky 14y ago
  Care to explain a bit more? On the face of it, I don't believe this can make sense. All costs scale, all costs are at some stage marginal. What are you proposing is the trigger or cause of incurrence?
  - esrauch 14y ago
    I think the case they are describing is where the marginal cost is highly nonlinear and the price delta between two reasonable values is so negligible that the marginal cost isn't meaningful. A 2MB file does not cost twice as much to email send to someone as a 1MB file; you aren't going switch to a different internet connection or email provider because of your file is twice as big. The first 1 byte is very expensive and every subsequent byte has no observable marginal cost until 20 orders of magnitude later.
    - 001sky 14y ago
      Appreciate your comment. I think I was unclear earlier in my post. Was not trying to talk about the supply of > undifferentiated bits per-se. Those are trivial to scale, in minor orders. The micro cost is in the acquisition of <unique> bit sets. In your example, its not the cost to send or replicate the e-mail with a 2 mb attachment. Its the cost to acquire, verify, etc the contetents of the 2mb file have any value. [1] You can't create more <valuable> data per-se by making X copies of the same data (in the sense of it having value for marketing/analytics). that is just monetizing existing data. ie, The marginal cost to relicate a set, provided it was given to you for free...just assumes away a non-trivial part of the equation....getting the data. At scales of 100m to a 1Billion...is not trivial or costless. Lastly, if you only have one set of data (say 5m users of data), that is a finite supply. You could have 2 sets (10m users). Thats not the same as having 2 copies of 1 set (of 5 million). A customer might pay per user for a lead, but wont pay twice for two copies of the same info. now, if somebody shows up with 100s million, it might impact supply/demand (depending on comparabilit/uniquenss). But those differences cannot be assumed away at zero cost, imho. Hope this make more sense, was not trying to argue just for the sake of it. ________________ [1] That scales with data entry, etc (if nothing else) at the origin (ie, this is a FB user cost == per user). Even if its non-cash its ~$0.85c per 15 minutes of time for a western eurpoean ABC1, back of the envelope. And that scales linearly.
      - esrauch 14y ago
        Thanks for the reply; I honestly am not sure about this situation in particular, I was mostly trying to explain how the statement about marginal costs can be true in any scenario. I didn't actually intend to say that the cost here is mainly bandwidth or X for any X. My point is more than it can be true that the marginal cost of anything can be so many orders of magnitude less than the non-marginal cost for certain ranges that it isn't worth considering. Data sets based on facebook profiles almost certainly come from people approving shady apps or someone set up a crawler in a way that is able to get a lot of information before being detected as a crawler. In either of those scenarios, the person who set it up effectively paid a flat upfront cost and ends up with X number of users, and there are no linear costs (no manual verification or paid data entry at any point). They cannot spend half as much time and get X/2 users or even maybe X/100 amount of information. In practice they could spend more time getting more users to give access to their random app, but the marginal cost function is just insanely nonlinear; its effectively 0 at some places and probably tends towards infinity an order of magnitude higher than that.
- TylerE 14y ago
  They're absolutely marginal costs, if you look at the right way. Takes more servers and fatter pipes to support 10,000 downloads a day rather than 500.
  - notatoad 14y ago
    For something like a list of a million user names and email addresses? You put it on pastebin and set up a script to email out links to it when you get a Paypal payment confirmed email. The only cost is to acquire the data, once that is done, there is zero cost. If you want to talk in totally abstract terms, digital goods in general tend to have marginal costs associated with them. In the context of this discussion, there is no supply and demand factor, there are no marginal costs, and there is no market force called scarcity.
    - 001sky 14y ago
      Let N=(1000 items of unique information) Let W= (2000 items of unique information) 2(N) does not yield W, regardless of cost to copy (N). To get W, you will need to do something more. This will not be cost-less. That's the more general case.
      - sirclueless 14y ago
        That's not what marginal cost means to a supplier. The question isn't whether it costs more to acquire 2000 email addresses than it does to acquire 1000 email addresses, the question is whether it costs more to distribute to twenty buyers than it does to distribute to ten. Thus, the cost of hosting is a marginal cost (probably zero in this world of pastebins and digital lockers). The fee taken by the payment processor is a marginal cost. The cost of finding twice as many emails is not.
        001sky 14y ago
        No, a "supplier" has to pay for all of his raw materials costs. That includes inventory costs as well as distribution. Of course you can always restrict your timeframe and assume away this cost (inventory as already incurred), but this is not true in the general sense. In particular, if this is true, by assumption, the there is a limited supply by deduction. If you increased your supply [of information bits, not duplicate bits], you would have to pay to incur inventory at that margin precisely. So you never have together zero marginal cost and unlimited supply, this makes no sense. notatoad 1 day ago | link I don't think that rule applies for digital goods where the cost of reproduction is zero. The supply is infinite. To sum, "the cost of reproduction" is <not> the cost of "supply", unless the supply is assumed fixed. Thus the second sentence does not follow per-se.

by 001sky 14y ago

notatoad 14y ago

Those are costs, but they're not marginal costs. They have no bearing on the cost of each copy, nothing to do with scale.

001sky 14y ago
Care to explain a bit more? On the face of it, I don't believe this can make sense. All costs scale, all costs are at some stage marginal. What are you proposing is the trigger or cause of incurrence?
- esrauch 14y ago
  I think the case they are describing is where the marginal cost is highly nonlinear and the price delta between two reasonable values is so negligible that the marginal cost isn't meaningful. A 2MB file does not cost twice as much to email send to someone as a 1MB file; you aren't going switch to a different internet connection or email provider because of your file is twice as big. The first 1 byte is very expensive and every subsequent byte has no observable marginal cost until 20 orders of magnitude later.
  - 001sky 14y ago
    Appreciate your comment. I think I was unclear earlier in my post. Was not trying to talk about the supply of > undifferentiated bits per-se. Those are trivial to scale, in minor orders. The micro cost is in the acquisition of <unique> bit sets. In your example, its not the cost to send or replicate the e-mail with a 2 mb attachment. Its the cost to acquire, verify, etc the contetents of the 2mb file have any value. [1] You can't create more <valuable> data per-se by making X copies of the same data (in the sense of it having value for marketing/analytics). that is just monetizing existing data. ie, The marginal cost to relicate a set, provided it was given to you for free...just assumes away a non-trivial part of the equation....getting the data. At scales of 100m to a 1Billion...is not trivial or costless. Lastly, if you only have one set of data (say 5m users of data), that is a finite supply. You could have 2 sets (10m users). Thats not the same as having 2 copies of 1 set (of 5 million). A customer might pay per user for a lead, but wont pay twice for two copies of the same info. now, if somebody shows up with 100s million, it might impact supply/demand (depending on comparabilit/uniquenss). But those differences cannot be assumed away at zero cost, imho. Hope this make more sense, was not trying to argue just for the sake of it. ________________ [1] That scales with data entry, etc (if nothing else) at the origin (ie, this is a FB user cost == per user). Even if its non-cash its ~$0.85c per 15 minutes of time for a western eurpoean ABC1, back of the envelope. And that scales linearly.
    - esrauch 14y ago
      Thanks for the reply; I honestly am not sure about this situation in particular, I was mostly trying to explain how the statement about marginal costs can be true in any scenario. I didn't actually intend to say that the cost here is mainly bandwidth or X for any X. My point is more than it can be true that the marginal cost of anything can be so many orders of magnitude less than the non-marginal cost for certain ranges that it isn't worth considering. Data sets based on facebook profiles almost certainly come from people approving shady apps or someone set up a crawler in a way that is able to get a lot of information before being detected as a crawler. In either of those scenarios, the person who set it up effectively paid a flat upfront cost and ends up with X number of users, and there are no linear costs (no manual verification or paid data entry at any point). They cannot spend half as much time and get X/2 users or even maybe X/100 amount of information. In practice they could spend more time getting more users to give access to their random app, but the marginal cost function is just insanely nonlinear; its effectively 0 at some places and probably tends towards infinity an order of magnitude higher than that.
TylerE 14y ago
They're absolutely marginal costs, if you look at the right way. Takes more servers and fatter pipes to support 10,000 downloads a day rather than 500.
- notatoad 14y ago
  For something like a list of a million user names and email addresses? You put it on pastebin and set up a script to email out links to it when you get a Paypal payment confirmed email. The only cost is to acquire the data, once that is done, there is zero cost. If you want to talk in totally abstract terms, digital goods in general tend to have marginal costs associated with them. In the context of this discussion, there is no supply and demand factor, there are no marginal costs, and there is no market force called scarcity.
  - 001sky 14y ago
    Let N=(1000 items of unique information) Let W= (2000 items of unique information) 2(N) does not yield W, regardless of cost to copy (N). To get W, you will need to do something more. This will not be cost-less. That's the more general case.
    - sirclueless 14y ago
      That's not what marginal cost means to a supplier. The question isn't whether it costs more to acquire 2000 email addresses than it does to acquire 1000 email addresses, the question is whether it costs more to distribute to twenty buyers than it does to distribute to ten. Thus, the cost of hosting is a marginal cost (probably zero in this world of pastebins and digital lockers). The fee taken by the payment processor is a marginal cost. The cost of finding twice as many emails is not.
      - 001sky 14y ago
        No, a "supplier" has to pay for all of his raw materials costs. That includes inventory costs as well as distribution. Of course you can always restrict your timeframe and assume away this cost (inventory as already incurred), but this is not true in the general sense. In particular, if this is true, by assumption, the there is a limited supply by deduction. If you increased your supply [of information bits, not duplicate bits], you would have to pay to incur inventory at that margin precisely. So you never have together zero marginal cost and unlimited supply, this makes no sense. notatoad 1 day ago | link I don't think that rule applies for digital goods where the cost of reproduction is zero. The supply is infinite. To sum, "the cost of reproduction" is <not> the cost of "supply", unless the supply is assumed fixed. Thus the second sentence does not follow per-se.