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Armchair Economists, Please Stay Home October 4, 2007

Posted by David Card in Media.

Michael Arrington posts in TechCrunch

    …simple economic theory dictates that the price of music, like its marginal cost, must also fall to zero…When the industry finally capitulates and realizes that they can no longer charge a meaningful amount of money for digital recorded music, a lot of good things can happen. First, other revenue sources can and will be exploited, particularly live music, merchandise and limited edition physical copies of music…Second, artists and labels will stop thinking of digital music as a source of revenue and start thinking about it as a way to market their real products.

By this remarkably oversimplified analysis, software, filmed entertainment, soda at McDonalds, and the classic example, high-end perfume, should all be free. What, pray tell, are the “real products” that will support those industries? Very few bands can make a living off of touring and T-shirts. Oh, that’s it, advertising. I bet Arrington listens to a lot of commercial radio…

Intellectual property, it wants to be free!

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