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What is the marginal cost of a digital good? The cost to download it one more time? It seems like the marginal cost to produce one more copy of an existing digi
by jcrites 13y ago
What is the marginal cost of a digital good? The cost to download it one more time? It seems like the marginal cost to produce one more copy of an existing digital good is close to zero.
Books and music and other similar works certainly have a large fixed cost to produce: the opportunity cost of the creator's time; the technology or equipment involved. The producer might choose to market the work, which incurs further cost (but it's not marginal). However, once the work is created, can it really be said to have a marginal cost beyond the cost of digital distribution?
- hox 13y agoIn this particular case, the marginal cost for Amazon or Apple would be the per-sale licensing fee paid to the publisher. This is a cost set by the publishers, for sure, but it most definitely is a marginal cost in the eyes of the electronic distributor.
- msvan 13y agoThere is a marginal cost to Amazon. They're paying the publishers a certain amount for every copy sold. And if they're selling a copy for less than they bought it for, they are selling it below the marginal cost.