At 01:55 PM 3/21/98 -0800, Michael wrote:
>The idea of a zero marginal cost of information [in the sense that once
>produced it costs little to reproduce] is an old one. Marx discussed the
>discovery of the binomial theorem, which once discussed cost nothing to
reuse.
>In an earlier book, I emphasized the point that many manufactured goods are
>becoming, like information, trivial marginal costs goods. The physical cost
>of producing a computer is small. Our retail cost is mostly payments for
>intellectual property and the overhead of the distribution system.
>Books cost virtually nothing to produce. We even send the publishers disks
>that eliminate the cost of typesetting, yet prices skyrocket.
Michael,
I'm a little unclear on what the point is of arguing that information is a
zero marginal cost item. Yes, it's true that books don't cost a lot to
physically produce, but so what? As Doug just pointed out, this is not an
industry with fat, juicy profit margins (which is one of the reasons why
the book publishing world is engaging in suicidal behavior in order to try
to make the same kind of profit margins that other businesses do). While
the cost of producing another book are relatively small, the cost of
distribution--storing it in a warehouse, shipping it to a bookstore,
putting it back in a warehouse when the bookstore sends back half their
copies, etc.--is substantial. Add to that the cost of a book's
advance--which is basically a gamble on the number of books a publisher
thinks will sell--and you're talking real money. Even without a huge
advance, if a publisher prints 300,000 copies of a book and only sells
30,000, it's gonna cost them an arm and a leg. So while it's technically
true that books are close-to-zero marginal cost items, it doesn't tell you
very much. Am I missing something here?
Incidentally, I'd argue that the same is somewhat true for software.
Distribution may not cost much, esp. if it's via the Internet, but if you
hope to have many people use it, you have to provide at least a minimal
level of service, and that gets expensive real fast (unless, of course,
you're in a Unix environment, in which case you can decide to not provide
any service and screw any hapless people who aren't hackers).
Anders Schneiderman
Progressive Communications
