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The Cost of an Item

The truth that the internet is waiting for the mass market to finally understand is that information by its replicable nature cannot be made subject to a price. We will pay for hard goods and guarantees of service, but the information contained within cannot be taxed.

Objects derive their price from the resources and effort required to produce not one item, but many such items.

Question: how much resources does it take to produce 100 items? How much resources does it then take to produce 10,000 such items?

If the item is a shoe, it will take the resources to produce the fibres, plastic, cotton, process and transform them and make the shoes, along with labour and shipping (I discount advertising costs as this is not part of the production/delivery of the goods). A hundred shoes will cost X to produce; ten thousand will cost arithmetically more – say arbitrarily 100*X.

If the item is a space at a rock concert, that space is guaranteed for a certain time period. After that to replicate again, the band must be re-booked and the venue setup anew, with any energy, facilities and staffing costs being consumed again. If the venue takes one hundred people at N dollars per ticket, then two hundred tickets necessitate two concerts, at least doubling the resources required, and their associated costs come in.

If the item is a piece of information, then by its very nature it is able to be transferred without necessarily being damaged or consumed during that process. This was the marvel of the printing press – instead of months to make a copy of a book via scribes, the book could be printed a thousand times over, identical and cheap, in a day. The Internet is much the same, only that the copying does not remain in-house anymore, and concerns much more than just books. It has gone wild. The same amount of resources is required to produce one item as is to produce infinitely more. If you spread the cost of the resources over the number of items produced, this means that the shoe and the rock concert maintain a steady price over replication or repetition, whereas the digitizable information sees its cost go to zero.

We are consumers. Consumers of food, of gas, of natural resources, of time, of services, and of space in time, in performances. Once consumed, these cannot be retrieved and consumed again.

We are also users – users of music, of software, of books, of information in general. Once used it can be used again and again, over and over. The medium may be consumed in the end, but the information itself can be copied.

Information is never consumed, it is merely observed, used. The original copy of a piece of information is never lost when a copy is made, unless deliberately erased. Attempting to place market rules of the physical world on the digital world is, and will always be, futile. Information can generally retain its attribution, as a part of the information itself, but ownership is volatile and rejectable.

The costs for producing a digitizable piece of information must be re-distributed to associated goods or services/guarantees. Spending resources on anti-piracy measures and lawsuits will always be a drain on resources, not a revenue saver.

The truth that the Internet is waiting for the Mass Market to realize is that there is no such thing as “digital goods” to be mass-marketed.

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