The common wisdom of record labels and publishing houses alike is that the redistribution of infinite goods – digital music files, say, or ebooks – will be the doom of the industry: if no one needs to pay for the end product, the end product will eventually disappear, as will the jobs that currently create said product.
Now, that seems logical enough, doesn’t it? But that’s because we’re used to thinking in terms of artificial scarcity. Jon Renaut has sat down and written out an analogy to explain why he thinks the conventional wisdom about infinite goods is wrong… and it’s based on the replicators from Star Trek.
A better analogy [for the music or publishing industry] would be if the replicator only made tomatoes. You could have as many tomatoes as you wanted, they’d always be perfect and delicious, and they’d always be free. This would put tomato farmers out of business. But these tomato farmers could likely start growing something else instead. And what happens to the rest of the economy? Pizza and pasta restaurants suddenly find that a major ingredient in many of their dishes just became free. Now, for the same dish, they can charge less, or buy higher quality ingredients, or make more profit. And if you’re a really talented cook specializing in tomatoes? Your skills are now in very high demand.
And there is still a demand for the people who bring the tomatoes from the replicator to your table. There is still a demand for the person who stews and cans the tomatoes, or dices and seasons them. And all the other food items, the ones that aren’t in infitnite supply, still need people to produce, process, and distribute them.
This is what’s happening in the music industry, and starting to happen in the publishing industry. Some parts of the industries are finding their functions obsolete. Instead of looking at the money they could save with electronic distribution, and what good use they could put that money to, the industry is seeking new laws and regulations to limit the infinite supply so business can continue as usual.
Even if every single song, book, and movie was distributed digitally for free, there would still be a need for the music, publishing, and movie industries. There would still be demand for editors, producers, marketers, and all sorts of other services that these industries have always provided.
As is discussed in the comments, the analogy doesn’t hold for other non-infinite goods – medicines, for example. But for goods that can be duplicated endlessly without degrading, there’s plenty of opportunity to build value-adding business models around the free stuff. [via TechDirt]