mortslim;424436 Wrote: > If you sell a service below your costs (this is hypothetical as I have > no idea what Napster's costs are) then you are not going to make up for > it by increasing the volume of sales, or even by mooching sales from > Rhapsody. In the case of selling a service or an electronic product, the costs don't scale up directly with the volume of sales. For example, if you are selling software, the engineering costs stay relatively the same regardless of whether you sell a thousand copies or a million. It's quite possible that Napster could become more profitable just by increasing the number of subscribers to reach a critical mass, even if the average revenue per subscriber drops.
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