Mos Def Tries T-Shirt As An Album Business Model
from the cool dept
While some folks like to mock the business model examples we talk about by saying that the future is just in selling looooooooooooooooooottss of t-shirts, the truth is that while the models involve a bunch of different things, we shouldn’t mock the idea of using t-shirts as part of some models. It appears that Mos Def recognizes that. As a bunch of you have sent in, his latest album is being sold via t-shirt. That is, you can buy a t-shirt that will include the album artwork on the front, track listing on the back… and a code for a digital download. And even more impressive, he’s convinced Soundscan to count sales of the t-shirt as album sales. Another cool experiment.
Filed Under: business models, mos def, music, t-shirts
Comments on “Mos Def Tries T-Shirt As An Album Business Model”
Call me when he opens a miniputt.
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Dear Loki, God of mischief and humor, I will give you my left nut if a Mos Def Mini-Golf Course should be announced in the next two weeks…
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How about Mos Def’s Monster Mini Golf?
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Even better: Mos Def’s Monster Mini Golf and Edge Arcade.
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That was absolutely worth a real-life chuckle.
In the end, the t-shirt is just a placeholder for a shiny plastic disc – it’s still all about distribution, because you can’t download a t-shirt. It isn’t scarce or infinite, just avoiding the infinite, at least for a moment.
Too bad 10 minutes after they do on sale, the music will be all over the internet for free, rending the t-shirts as worthless.
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They’re not worthless T-shirts. If anything, they’re worth double to some people. No matter how you break it down, some people would buy a CD of a band they like, and some people will buy a T-shirt with cool graphics/or band. Put those together and you have a t-shirt/CD that is worth twice as much to some people. A damn good idea.
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If you’re correct, then there will be an extremely small number of tshirt sales. Hopefully, we the faithful reader will be given an update…
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well, put it this way – I don’t expect to see any more t-shirt sales than record sales would have normally been, except perhaps a short term media got ahold of it factor. I suspect this will lead to a short shelf life for the music as well, as stores won’t stock t-shirts forever.
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You really don’t get it, do you?
Many people actually do want the T-shirt in addition to the music. The music you can easily download off the internet, the T-shirt you can’t.
Discs, on the contrary, usually have very little purpose other than being a medium for the music. Nice artwork can help, but that can be scanned and transferred too. Surprisingly, even then, a few people do like to buy them for collecting’s sake alone. (There’s something cool about having racks and racks full of CDs)
People who like the music are more likely to want the T-shirt too. The T-shirt has extra value because of the music (which I expect many people will try out first anyway). It’s a pretty good idea, and I expect significantly more sales than if the album were just traditionally released.
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What is “many?” And, to the themes of longevity and scalability, I agree that this approach will probably boost sales of this album as a one-time shot. Given the relative novelty and unusual press, it will be extremely difficult to objectively measure what portion of sales were driven by press and novelty, versus those who wanted the t-shirt, versus those that wanted the t-shirt + album, versus those that just wanted the music.
But for what I suspect is the vaaaaaaaaaaaaaast majority of buyers, who just want the music, what happens when the t-shirt (or other merchandise) gimmick is commonplace and receives no press beyond the producer’s marketing budget? Basically, the merchandise aspect ceases to be a factor. I contend that it probably isn’t much of a factor now absent the novelty.
And this is not new, even in the bricks and mortar sense…were sales of Steve Martin’s record breaking album in the late 70’s enhanced because he included a “so long and thanks for the fishes” color glossy with the record, a novelty I still have? Doubtful. How about Styx laser-etching their Paradise Theater record? Doubtful. Merchandise novelties are nothing new…the difference is you used to get the physical media, too.
In the end, the t-shirt for most buyers settles back to just being a proxy for a little plastic disk. The desired “thing” is still a clean, legal copy of the music.
And remember, music is not an infinite good, just a scarce good infinitely distributed.
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What is “many?” And, to the themes of longevity and scalability, I agree that this approach will probably boost sales of this album as a one-time shot. Given the relative novelty and unusual press, it will be extremely difficult to objectively measure what portion of sales were driven by press and novelty, versus those who wanted the t-shirt, versus those that wanted the t-shirt + album, versus those that just wanted the music.
Right. So the next guy does something *different*. Why do you think the world is so short on ideas and people are so uncreative? How insulting.
And remember, music is not an infinite good, just a scarce good infinitely distributed.
Uh, no. It’s an infinite good.
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It’s why we enjoy reading you so much Mike. You go on about how price and value are not related (but almost every economist says they are), and then you get confused between distribution and product.
Music as a good (as opposed to you or I just plunking on a piano) is actually a very small amount of goods. There is a very, very limited number of decent / acceptable songs released each year. A single band can only make so many songs in a year, effectively making the goods (songs) very, very scarce.
Distribution is “infinite” (stupid term, try to download the bloodhound gang in china or similar countries), but it doesn’t stop the music itself from being a scarce commodity. At some point, the infinite distribution takes away from the artists, song writers, and record company’s ability to pay to make new music (the scarce good), and then all the infinite distribution doesn’t matter.
Until you can understand to seperate the shiny discs of internet distribution from the actual product (new music), you will have a hard time understanding why people keep getting upset at your ideas.
Actually, this Mos Def thing is really funny – fools will pay $60 for a t-shirt and a download, and the smart kids will just download it for free. The t-shirt ain’t worth $60! At some point, the general public figures it out,and you are back at square 1, with no money to pay to create the scarce good (new music).
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have you seen the prices of some t-shirts people wear nowadays?
for some reason, people buy expensive t-shirts ust because.. well, i really have no idea why, but some people just do…
i’m not saying that this particular idea will succeed, but i can see why it’s being tried.
people really do spend $50-100 on a t-shirt.
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Mike, this is one of those cases where you split hairs to seem right. As I said above, the novelty thing is not new, and I gave two ancient examples. So, clearly, I *know* that there are plenty of novelty merchandising (or other value-add….maybe services, a portion to charity, “free” software or content downloads, etc) ideas to work with. Why is this even a point? As for it being “insulting” well, maybe if you’re personalizing a dispassionate discussion about business “models” but that’s something most of us try to stay away from. Not trying to be patronizing, but seriously, it’s odd where you go sometimes.
And the whole infinite good thing is really shaky, though I know it’s been discussed endlessly here and, yes, I’ve read those discussions. My contention is that the good remains scarce. Let’s assume there is still only one version of Lenon’s “Imagine” that anyone wants, for example. That is the good. It never becomes infinite as there is only one recording of that one song that has the characteristics that the marketplace remembers and desires. This is not the Platonic Ideal of the song “Imagine” that can be replicated in many different forms (musack version, Mannheim Steamroller version, a version using the MIDI barks of dogs, etc) and still be identified as “Imagine.” It is, in fact, THE “Imagine.” Only one. Scarce. And legal copies of that good remain certainly something far less than infinite. That some people using some technology have made (presently illegal) copies of the single, scarce recording of that song does NOT mean that the good itself is ubiquitous, much less “infinite.” It does mean that it is being distributed in a way (largely illegal) that makes it more easily available at least to more affluent populations with access to the necessary technology. Saying it is ubiquitously or infinitely available would imply that most members of the marketplace (global music consumers) have the unfettered means to obtain a copy of this scarce, original song in a format which is of reasonable quality and can be played locally. (I would also tack on the nuance that for it to be truly infinite, the means of distribution and instantiations of that song that are received by the consumer need to be legal, else it’s just trafficking which will always be something less than ubiquitous.) All that said, the fact is that MOST music consumers DON’T have unfettered, easy access to obtain this one scarce song. Do “most” of the world’s music consumers – from Africa to the Americas, including all social classes who present spend some money on music – have unfettered access to this song? Doubtful. So, not only is the song scarce by its very nature – there can be only one, to quote Highlander – but the “infinite” distribution that may be available at some point in the future of humanity once technology is truly ubiquitous (not just affluent populations in technologically advanced nations) is hardly here now. And what is here is often (mostly?) illegal. Infinite good, why that’s just “insulting.” 🙂
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Mike makes the mistake with “infinite” goods mostly I think because he is trying to push a model, a concept – something that plays well on a blog and in presentations, but doesn’t particularly hold up well in the long run.
I liken the current situation to the inventing off the printing press. Before the printing press, books were rare. Each was a hand written copy, something that might take days or weeks to complete. For a new work to gain widespread distibution might have taken a lifetime or more.
Enter the printing press. Suddenly, a near “infinite” number of copies of the book can be made. For those observers use to books taking weeks to make, getting a copy of a book in a matter of hours or minutes would have been a revelation. It was so significantly cheaper to print books rather than hand copy them that effectively, it cost nothing!
Today, we look back at that moment in history, and we see the advance, but we also know that we have done much better since. Internet based distribution of music and movies doesn’t change the fact that only a certain number of each are made in a given year. There is no indication that there will be (or has been) a huge increase in the amount of money spent on music or movies, so the “efficiency” of this so called infinite distribution doesn’t appear to be a game changer, just a different way to play the same game.
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Let me say this: The current move of business model from shiny discs to online distribution is sort of like the move from a printing press to a photocopy machine. With photocopies, it became much easier for people to steal (oh, sorry, infringe) a copy of a work, yet it didn’t really kill the main industry, printing. It isn’t a quantum shift, just an additional tool.
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Comparing the printing press to the internet in terms of distribution is like comparing a bike to an airplane.
Perhaps there won’t be a huge increase in movie spent on music or movies, but even if its modest or even if there is no change at all, it’s already a win. Industry: same money; people: more music. Sounds like a positive balance to me.
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Mike, this is one of those cases where you split hairs to seem right. As I said above, the novelty thing is not new, and I gave two ancient examples. So, clearly, I *know* that there are plenty of novelty merchandising (or other value-add….maybe services, a portion to charity, “free” software or content downloads, etc) ideas to work with. Why is this even a point? As for it being “insulting” well, maybe if you’re personalizing a dispassionate discussion about business “models” but that’s something most of us try to stay away from. Not trying to be patronizing, but seriously, it’s odd where you go sometimes.
I found it quite insulting to the creative nature of content creators that you seemed to think their creativity was so limited that they would run out of such ideas. I don’t see that as personalizing.
And the whole infinite good thing is really shaky, though I know it’s been discussed endlessly here and, yes, I’ve read those discussions. My contention is that the good remains scarce.
You’re wrong. I don’t mean to be harsh, but you are wrong. Being an infinite good has nothing to do with the law. It’s the simple factual economic nature of a good: is it non-rivalrous and non-excludable? Yes? Is the marginal cost of making a copy zero? Yes? Then you’ve got an infinite good.
This is not the Platonic Ideal of the song “Imagine” that can be replicated in many different forms (musack version, Mannheim Steamroller version, a version using the MIDI barks of dogs, etc) and still be identified as “Imagine.” It is, in fact, THE “Imagine.” Only one. Scarce.
Ah, I see. You do not understand what we are talking about (despite claiming to have read the discussions). The question is whether or not the COPY has a marginal cost of zero. That’s all. In fact, what you discuss — the muzack version or the Mannheim Steamroller version — are NOT infinite. Those are scarce because there’s a marginal cost above zero to CREATE those. Of course, once they are created, the marginal cost is zero for *those* songs.
And legal copies of that good remain certainly something far less than infinite. That some people using some technology have made (presently illegal) copies of the single, scarce recording of that song does NOT mean that the good itself is ubiquitous, much less “infinite.”
I did not say it becomes *ubiquitous*. I said it is, in economic terms, an infinite good. This is factual. It is not up for debate. Is the marginal cost of making a copy zero? It’s infinite. Period. There’s nothing to debate here.
Saying it is ubiquitously or infinitely available
I did NOT say it was infinitely *available*. I said it was an infinite good.
I see where you have become mistaken. You think we are saying something we are not. I am saying that if the marginal cost of reproduction is zero, then the good has the ability to reproduced infinitely, and the economically efficient outcome (i.e., the best outcome net for society) is for it to then be available infinitely. And the point is that, in such a scenario, that is where the economics heads… and that tends not to be a bad thing. It tends to be a great thing, because while it may decrease the price on product A, it tends to make the overall MARKET significantly bigger. The job you have, as the maker of product A is to figure out where that increase in market comes from, and try to capture that.
We appear to be arguing about two different things. And I apologize, but it appears you have totally misunderstood what we have said, and confused an “infinite good” with “infinite availability.”
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“Is the marginal cost of making a copy zero?”
Error. The marginal cost is not zero. However, the cost is hidden in other people’s internet bills, the cost of the computers, the networks, and all those other things. Most people pay between $40 and $100 a month for the internet, so anything that comes from it isn’t free, that would be like saying your cable TV is somehow free because you aren’t paying for individual programs. If you put out enough volume, the marginal costs get lower, but they are never zero.
Shifted costs don’t make anything infinite. They just make it harder to end users to see what they are paying and how the wrong people end up with the money.
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Error. The marginal cost is not zero. However, the cost is hidden in other people’s internet bills, the cost of the computers, the networks, and all those other things. Most people pay between $40 and $100 a month for the internet, so anything that comes from it isn’t free, that would be like saying your cable TV is somehow free because you aren’t paying for individual programs. If you put out enough volume, the marginal costs get lower, but they are never zero.
Those are fixed costs. Please learn the difference between a marginal cost and a fixed cost and why it matters.
What I said remains absolutely true. The marginal cost is FACTUALLY zero. There are fixed costs, indeed, but if you learned a little economics you’d learn why that doesn’t matter to the marginal cost (or to why it’s an infinite good).
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Mike, I love when you talk about economics, because you choose to put things where you feel they should be, and not where they are in reality.
Fixed costs would be the costs of production of unit 1. Everything up to unit 1 is a fixed cost. Everything that comes into the process of making copies is a marginal cost. A good example would be the old style masters used to make vinyl records – you can only make so many copies off of them before you have to trash them – so their costs have to be worked into the over per unit cost.
Online, the costs of bandwidth, while often hidden from the end user, is still a marginal cost. Because of the nature of P2P networks, some of that cost is eaten up by other users. But in the end, you only have so much pipe to use each money, and the portion spent downloading music is an expense towards making copies, thus a marginal cost.
A good example would be the guy who gets a second internet service into his home solely for downloading. He downloads 100 movies each month, and pays $100 for internet service. Thus, his marginal costs per copy are $1. His copy isn’t free.
If he then copies them onto a blank DVD, which cost him 30 cents, then his marginal cost per copy drops to 65 cents per copy, assuming he kept a copy on his PC. If he removed it, his cost per copy was $1.30.
I know you hate this stuff, and it kicks the crap out of the “FREE!” universe, but it is reality. People are still paying to download copies of things. It isn’t free. Until we are all getting the internet for nothing, then there is marginal costs to making copies.
Please, go back to see your professors and have a chat about it. It makes for an interesting discussion.
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Mike, I love when you talk about economics, because you choose to put things where you feel they should be, and not where they are in reality.
Um. No. I know my economics. What becomes clear here, however, is that you do not.
Fixed costs would be the costs of production of unit 1. Everything up to unit 1 is a fixed cost. Everything that comes into the process of making copies is a marginal cost.
Uh, no. You simply do not understand marginal cost. Marginal cost is the incremental cost from making one more. It is NOT everything that comes into the process of making one more.
Online, the costs of bandwidth, while often hidden from the end user, is still a marginal cost.
Fixed, not marginal. There’s nothing to say here other than that you are wrong, and have clearly never learned the most basic economics.
A good example would be the guy who gets a second internet service into his home solely for downloading. He downloads 100 movies each month, and pays $100 for internet service. Thus, his marginal costs per copy are $1. His copy isn’t free.
Nope. The marginal cost is zero. The fixed cost is $100. The *average* cost is $1. Marginal cost is not average cost.
I mean, come on. This is stuff they teach in like the first week (maybe second week if you’re in the slow lane).
If he then copies them onto a blank DVD, which cost him 30 cents, then his marginal cost per copy drops to 65 cents per copy, assuming he kept a copy on his PC. If he removed it, his cost per copy was $1.30.
Heh. Adding an additional expense cannot decrease marginal cost.
Here, take a lesson:
http://hspm.sph.sc.edu/COURSES/ECON/Cost/Cost.html
Seriously. Perhaps it will help. Let’s start with the definition of marginal cost:
“Marginal cost is the difference in total cost between one rate of output and another.”
So in your little example, what’s the difference in TOTAL cost between downloading 99 movies and 100 movies? It’s $0. The total cost has not changed, hence the marginal cost has not changed.
Econ 101. Sign up. Join the 20th century.
I know you hate this stuff, and it kicks the crap out of the “FREE!” universe, but it is reality. People are still paying to download copies of things. It isn’t free. Until we are all getting the internet for nothing, then there is marginal costs to making copies.
I don’t hate this stuff. I love economics. I find it amusing that you are so incredibly wrong.
Have you ever taken an econ class? Honestly now…
Please, go back to see your professors and have a chat about it. It makes for an interesting discussion.
Actually I talk to my old econ profs all the time about this stuff. Who do you think taught me these things?
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Mike, geez…
“Fixed costs would be the costs of production of unit 1. Everything up to unit 1 is a fixed cost. Everything that comes into the process of making copies is a marginal cost.
Uh, no. You simply do not understand marginal cost. Marginal cost is the incremental cost from making one more. It is NOT everything that comes into the process of making one more.
Online, the costs of bandwidth, while often hidden from the end user, is still a marginal cost.
Fixed, not marginal. There’s nothing to say here other than that you are wrong, and have clearly never learned the most basic economics.”
Okay, now, I will for sake of argument use the Wikipedia definition, okay? It’s simple, and everyone on here can go read it themselves:
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. It is the cost of producing one more unit of a good.[1] Mathematically, the marginal cost (MC) function is expressed as the first derivative of the total cost (TC) function with respect to quantity (Q). Note that the marginal cost may change with volume, and so at each level of production, the marginal cost is the cost of the next unit produced.
Thus, if no copies are made via the internet, there is no additional cost. You want to make a single copy, you need $100 of internet connection to do it. If all you do in a single month on the internet is download one song, the song cost you $100. If you didn’t download and didn’t use the internet (and therefore disconnect it) it would cost you nothing. Thus, the internet (and bandwidth) is a marginal cost.
You are taking stuff that is required not to produce the original but only to produce copies and claiming it is a fixed cost – it is not, it is a marginal cost of copying. That marginal cost decreases with volume, but it is there. Go over your bandwidth, and your marginal costs go up. Need more disc space, have to buy a new hard drive or more CDs to burn? Marginal cost.
It’s not difficult. I know it doesn’t agree with your view of the universe, because you are trying to push the idea that it all costs nothing. But someone is paying for the connectivity, someone is paying for the bandwidth, and those are all costs that go up based on volume – thus, there are marginal costs for distributing music.
Did I ever take an econ class? I dunno, let me go check my grades and see if economics was in there. I do know I was taught to pay attention to the small costs that add up, you know, those little things that come in on every unit of production, that are often shrugged off or ignored in theoretical discussions, but that absolutely kill you in the real world. You have worked in the real world, right? Ever mass produce something? Ever run a production line? Ever do review the costs at the end of a cycle?
Book learning != reality
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Dude. You’re wrong, Mike is right. Take it from another guy with an honors econ degree.
You really don’t fundamentally understand what a marginal cost is, nor the importance of the concept to this debate. You make your arguments, which are wrong, and you cite Wikipedia, which was correct, and you aren’t aware that you don’t actually understand what is written at the wiki.
You repeatedly confuse marginal cost and average cost. Perhaps it is because MC is a derivative? Many people have trouble with calculus, and that may include you. I know this from the movie Stand and Deliver.
You create a scenario:
“A good example would be the guy who gets a second internet service into his home solely for downloading. He downloads 100 movies each month, and pays $100 for internet service. Thus, his marginal costs per copy are $1. His copy isn’t free.”
Wrong. Once he gets that service, his marginal costs per movie that month are nil. Above, you skillfully calculated Average Cost, then clumsily misnamed it MC. Ask yourself this, if he had decided, after your example, to download a 101th movie, would his ISP charge him $1 or $0? MC is the cost for *the next* unit of production.
I know it may be hard, but please consider the option that you may be wrong here. Seriously, just imagine for a bit that we’re not just Internet bloggers and dickheads, and that instead we are serious, educated, smart people with solid foundations in econ. Then, even if you are just as qualified as us, you may want to take this ‘peer review’ seriously and check your facts.
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Fine and dandy, except that the cost of bandwidth is directly related to the copying, not the producing. Average Cost includes everything on the production side, I am only looking at costs incurred to make a copy.
No copies, no cost. There is also a limit to the number of copies possible for that price. Think of it as similar to the costs of plastic to make a CD – you buy it by the bundle, and if you use one scoop or all of it, the cost is the same – but there is a limit to the number of copies made. In effect, it’s like a negative mould for making a record – you can only make so many off of it, after that, the next copy is VERY expensive (because you had to do make a new mould).
When you share a file, there is expense of each one – some bandwidth used here, some bandwidth used there. You don’t see it because you are paying a flat fee, but the ISPs who are paying by the gig (or tera) for bandwidth see it. The marginal costs only APPEAR to be zero because you aren’t paying it as you do it.
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Fine and dandy, except that the cost of bandwidth is directly related to the copying, not the producing. Average Cost includes everything on the production side, I am only looking at costs incurred to make a copy.
You are looking at the AVERAGE cost of making a copy, not the marginal cost.
I’m not sure how many times this needs to be explained to you.
No copies, no cost. There is also a limit to the number of copies possible for that price. Think of it as similar to the costs of plastic to make a CD – you buy it by the bundle, and if you use one scoop or all of it, the cost is the same – but there is a limit to the number of copies made. In effect, it’s like a negative mould for making a record – you can only make so many off of it, after that, the next copy is VERY expensive (because you had to do make a new mould).
Right. This actually proves our point. You really ought to learn some economics.
That expensive *next* copy is the marginal cost of that next copy. But the marginal cost of the other copies is much lower. Marginal cost is everything in economics.
Your inability to understand that is funny, but hardly compelling as a counterpoint.
When you share a file, there is expense of each one – some bandwidth used here, some bandwidth used there. You don’t see it because you are paying a flat fee, but the ISPs who are paying by the gig (or tera) for bandwidth see it. The marginal costs only APPEAR to be zero because you aren’t paying it as you do it.
Again, you are confused and extremely wrong. The marginal costs ARE zero. Not “appear to be.” They are. Fact. No argument. No discussion. You are flat out, 100%, laughably, wrong. And it has been shown to you over and over again.
And what do you do? You once again pretend that average cost means marginal cost.
You’re not helping your case.
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“That expensive *next* copy is the marginal cost of that next copy. But the marginal cost of the other copies is much lower. Marginal cost is everything in economics.”
I understand it completely – but what you are trying to do is hide average marginal costs (the costs of making copies) by writing off every expense as a fixed cost, when it is not.
I did the economics thing a long time ago. I guess what they taught you is like the “new math”, because normally you aren’t allowed to bunch of a marginal cost and magically make it disappear – because you don’t get to choose WHICH copy you use for your calculations.
Fix costs: things like the machines to make the copies, initial setup costs, one time non-recurring costs to make the copies. Marginal costs: the material used in the copy, including and not limited to a ratio of the materials consumed in the process (electricity, dies, etc).
As a side note, there is always marginal costs in making a copy. Data doesn’t move for free – it is just hidden in other places, and for the most part the transport is “stolen” from others. The only reason there is no apparent costs is because P2P hides it’s bandwidth usage in a bigger overall pile.
But hey, keep going in fantasy land. It’s fun to read.
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I understand it completely – but what you are trying to do is hide average marginal costs (the costs of making copies) by writing off every expense as a fixed cost, when it is not.
Holy crap. AVERAGE marginal cost is meaningless.
MARGINAL COST is what matters.
I’m not trying to hide everything. A fixed cost is a fixed cost. A marginal cost is a marginal cost. An average cost is an average cost.
In these posts, you have shown that you don’t understand ANY OF THEM because every time you’ve tried, you’ve gotten it completely backwards.
I did the economics thing a long time ago. I guess what they taught you is like the “new math”, because normally you aren’t allowed to bunch of a marginal cost and magically make it disappear – because you don’t get to choose WHICH copy you use for your calculations.
Heh. It’s not the “new math” and unless you’ve been alive since when my grandfather took economics, you should have learned this too.
Look, this isn’t debatable. You’re getting the economics wrong. I’m not choosing “which copy” to use for the calculation. I’m ACCURATELY describing the marginal cost.
As a side note, there is always marginal costs in making a copy. Data doesn’t move for free – it is just hidden in other places, and for the most part the transport is “stolen” from others. The only reason there is no apparent costs is because P2P hides it’s bandwidth usage in a bigger overall pile.
My goodness. You claim you understand it completely and then you get confused about the difference between average cost and marginal cost again.
You are either one of the most thickheaded people out there, or you’re just being a jackass for the fun of being a jackass.
Neither makes you look good.
Learn some economics. I (and others) tried to give you a basic lesson. You flunked. Go learn somewhere else, but please stop posting here. It makes you look like a fool.
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Keep going Mike – all you are showing is that you are trying to hide marginal costs (costs related to producing additional copies) as “fixed costs”.
“Holy crap. AVERAGE marginal cost is meaningless.”
Not at all, wake up! If you have a cost that is required every 25th copy (say a new master to press a disc) it isn’t a fixed cost – it’s a marginal cost that must be averaged over those 25 discs. You can’t look at disc 26 as having a huge marginal cost and disc 27 as being free, it isn’t logical. Thus, there is a marginal cost, but it is averaged over a few units.
However, and this is important: If you only needed 1 master to press an unlimited number of discs, then it becomes a fixed cost. Essentially, marginal costs is any cost required to produce that next copy (including short life masters)
Every online copy has marginal costs – those marginal costs are HIDDEN because of the methods used to transmit the copy – but someone is paying for bandwidth, the stuff ain’t free. To say it is free is a massive lie, it’s just a marginal cost that people aren’t seeing.
Most importantly, the way you discuss marginal costs without discussing averaged fixed costs per unit makes it appear that music (example) is free. it isn’t. Worse, every stolen / infringing / borrowed copy that impacts sales raises the overall averaged fixed cost per copy. So if you go from the potential of 100,000 sales, and lose half of them because of file sharing (ask U2 about that), then the averaged fixed costs per unit double.
“Learn some economics. I (and others) tried to give you a basic lesson. You flunked. Go learn somewhere else, but please stop posting here. It makes you look like a fool.”
Mike, I learned economics probably before you were even a gleam in your father’s eye. I also learned to watch out for gurus with a fancy message and a slippery way of hiding the facts. Keep going – you can’t get rid of me with a dismissive wave of your hands.
Re: Re: Re:17 Re:
I’m not dismissing you with the wave of a hand. I am telling you are wrong and you look like a fool. Not only that but I, and others, spent time trying to teach you a very basic concept of economics that you seem totally unable to comprehend.
You are making a fool of yourself.
Go. Call up any econ professor and tell them your theory of marginal cost. Then come back and admit that you were wrong.
Re: Re: Re:18 Re:
Nothing to admit – I checked already.
The problem is that marginal costs are often grouped as “fixed recurring” costs in the process of making copies. But if you have something that wears out every so often in the process (master disks) that has to be replaced, then each use of that master to make a copy creates a marginal cost.
Further, the bandwidth used to move your “infinite” music is also a cost item. There is a marginal cost attached to passing copies over the internet, we just don’t get billed for them directly in a way that is easy to relate to the copy. So it appears to be free, but it isn’t. Unless of course you are using Masnick Infinite Bandwidth (TM). Then everything in the world is free.
Re: Re: Re:19 Re:
Further, the bandwidth used to move your “infinite” music is also a cost item. There is a marginal cost attached to passing copies over the internet, we just don’t get billed for them directly in a way that is easy to relate to the copy. So it appears to be free, but it isn’t.
One last time, and them I’m done:
If you don’t get billed for it, there IS NO MARGINAL COST. THE TOTAL COST REMAINS THE SAME, hence the marginal cost is zero.
This has been stated half a dozen times above. And you still don’t get it.
You fail.
Re: Re: Re:19 Re:
Dude,
You’re killing us. You just don’t understand. I was an undergrad econ tutor at Cornell, and I did run into a few students like you. Sometimes people just don’t get it. The econ dept. wasn’t paying me to teach students “Masnick’s Theories”, but they paid me to teach enough micro-economics to pass the class. Mike, nor I, didn’t invent our opinions of Marginal Cost. We learned them. They are not theory, or even a social science, they are mathematical rule.
Do you understand that MC is a derivative of TC? Do you understand that when you take a first order derivative, constants go to zero? Constants have no effect on the “rate of change” of an equation, thus are zeroed out. This is not “Masnick wishful thinking”, it’s @#$@# calculus. Sorry if this is over your head.
“each use of that master to make a copy creates a marginal cost.”
No, my good man. No, it doesn’t. You are, once again, clumsily talking about average cost.
And Mike lost his grip when you used the term “AVERAGE marginal cost”. So you really don’t understand how that term makes no sense whatsoever? Average is the antithesis of Marginal. Average is to Marginal as Communal is to Individual. They are very #$%$% different. This is why Mike says you are making a fool of yourself. You are saying black is white, and arguing it to the bitter end.
You don’t get it. And you are frustrating because you don’t get it that you don’t get it.
Please, just try to trust me for a minute. If you put 100 economists in a room and asked them the cause of the recession, you’d have 100 different opinions. If you asked them if YOU are right about MC, you would have unanimous consensus that you are wrong. In this case, it is not a matter of opinion.
Wikipedia disagrees with you. Two honors economics grads from good schools disagree with you. The hyperlink that Mike sent you disagrees with you. But you feel you have “Nothing to admit – I checked already.” You, sir, are the epitome of stubborn.
Re: Re: Re:11 Re:
another point. You say:
“That marginal cost decreases with volume, but it is there.”
Wrong. You’re talking about Average Cost again. AC often decreases with volume (but not always).
MC and volume share a complicated relationship that depends on a variety of factors.
Re: Re: Re:11 Re:
another point. In your scenario you say:
“Thus, the internet (and bandwidth) is a marginal cost.”
Wrong. You have just described a Variable Cost. It is variable because from month to month you can choose to incur it or not.
But you’ve stumbled upon being right in this way: for the first movie the guy downloads, that $100 IS a marginal cost for that single movie. But for movies 2-100 it is not. It is already a “sunk cost”. After movie 1, every movie has a bandwidth MC of 0 for the guy you describe.
If you still think I’m wrong, consider what I say in the paragraph above in light of the Wikipedia quote you got:
“In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. It is the cost of producing one more unit of a good.”
When your guy changed from 0 to 1 movie, he needed to spend $100 for the ISP, when he changed quantity from 1 to 2, he needed to spend nothing. The change in total cost from 1 to 2 was zero. MC = 0.
I think I’ve made it pretty clear. Is this explanation working for anyone?
Re: Re: Re:9 Re:
A good example would be the guy who gets a second internet service into his home solely for downloading. He downloads 100 movies each month, and pays $100 for internet service. Thus, his marginal costs per copy are $1. His copy isn’t free.
wow, my cable bill is $90 a month (basic cable which i never watch, but have to have to get internet access), that means i am spending $90 a month for downloading thousands of movies, songs, books, articles, tv shows, audio books, and games. plus $90 for bank transactions, reading news, web comics, communications (email, im, irc, vetrillo, skype, facebook), telephone service (on top of the $12 a month my voip accounts cost me!!!), and remote access to work…
oh, and i bought plane tickets to defcon, that’s an extra $90 the internet cost me.
jesus christ, using the internet has cost me like $20,000 dollars this month!!!
and i haven’t factored in the rest of the folks that live with me using the same internet access and spending commensurate amounts of money!!! there’s 5 of us in the house, that’s like $100,000 per month!!!
no wonder the RIAA charges millions for filesharing a few songs, i had no idea that bandwidth cost so much!!!
i am going home right now and setting fire to all my computers!!!
if only everyone had your powerful grasp of economics, we could save trillions of dollars.
Re: Re: Re:5 Re:
And the whole infinite good thing is really shaky, though I know it’s been discussed endlessly here and, yes, I’ve read those discussions. My contention is that the good remains scarce.
you confuse creating content with distributing it. the CD was a method of distribution. digital distribution costs practically nothing if you host it yourself and literally nothing if you use peer to peer file sharing apps like bittorrent.
BT has no effect on the price of content creation. HOWEVER, since the value of content was often determined based on physical copies sold (via distribution), BT does affect the way that the value of content is perceived.
other technologies like the affordable audio and video equipment, editing tools and PCs will drive down the cost of content creation, making it possible to generate content of increasing quality (editing becomes easier to do) in less time (the editing process takes less time) for less money (lower costs mean it’s easier to turn a profit).
Let’s assume there is still only one version of Lenon’s “Imagine” that anyone wants, for example.
that is a rather large assumption. why not also assume that everyone in the free world will wake up tomorrow and hate computers, digital media players, and the internet? that would create a huge demand for CDs and DVDs and we could all go back to the good old days of the 80’s.
It never becomes infinite as there is only one recording of that one song that has the characteristics that the marketplace remembers and desires.
it’s just bits. once you own a computer and a connection for said computer to a network of other computers, copying and moving bits costs nothing. why would people pay for something that costs nothing to duplicate and deliver?
Scarce. And legal copies of that good remain certainly something far less than infinite. That some people using some technology have made (presently illegal) copies of the single, scarce recording of that song does NOT mean that the good itself is ubiquitous, much less “infinite.”
yes it is ubiquitous. it’s out there right now, high quality, for free, and there is nothing that can be done to stop it. if you want to make money off “imagine” you need to find a way that doesn’t involve selling the actual song because anyone who is interested in owning the song already has it, or will have it not long after they have learned about its existence.
It does mean that it is being distributed in a way (largely illegal) that makes it more easily available at least to more affluent populations with access to the necessary technology.
and who cares if it’s legal or not? people get what they want regardless of morality, legality, or even survivability. this is why people smoke, drink, do drugs, and carry guns even though they kill people every day. if you think you can stop or control what people want to do, you are sadly mistaken.
Saying it is ubiquitously or infinitely available would imply that most members of the marketplace (global music consumers) have the unfettered means to obtain a copy of this scarce, original song in a format which is of reasonable quality and can be played locally.
we’re already there partner. every year the PC drops in price, every year mobile phones become more powerful and push more and more features down to the level of the free phone, and every year wireless technologies of all kinds become more prevalent and powerful.
you don’t need access to the internet to pirate stuff. the warez scene predates commercial access to the internet by about 20 years. wikipedia DVDs are available via torrent for electronic classrooms that will never see direct access to the internet. the XO laptop connects to other laptops via wireless mesh for one reason alone: easy transfer of files.
portable hard drives crossed the terabyte threshold years ago and there is no easier way to move the billboard top 100 from 1955 to 2005 than on a 40 gig hard drive.
in three years’ time, taiwanese netbooks will be more prevalent in the third world than the ak47 and cause as much if not more revolution, and a dime store prepaid phone will have more features than your iphone 3g. call it an iBurner.
(I would also tack on the nuance that for it to be truly infinite, the means of distribution and instantiations of that song that are received by the consumer need to be legal, else it’s just trafficking which will always be something less than ubiquitous.)
right, legality is a big concern when you cross international borders. that’s why so many asian and african countries produce their own AIDS medications using the same formula found on merk’s patent and merk hasn’t seen a dime.
the fact is that MOST music consumers DON’T have unfettered, easy access to obtain this one scarce song. Do “most” of the world’s music consumers – from Africa to the Americas, including all social classes who present spend some money on music – have unfettered access to this song? Doubtful.
that assumption is living on borrowed time. counting on the digital divide to prop up the physical media business, is a suckers’ bet. it’s just a matter of education and cheap hardware (mostly the latter, rather than the former) before the third world learns from the trial and error of the first world.
search google images for the shenzhen electronics market, it makes akihabara look like a kiosk at a mall in montana. trade agreements keep a lot of those parts out of europe and north america, but there is not much keeping that stuff out of india, south america, and africa.
we are already seeing hacking attempts and phishing scams coming from africa, so it’s just a matter of time before the hackers there make use of those computers that vista and leopard have sent to american and european landfills and cheap gear from china to start the third world’s own information revolution.
not only is the song scarce by its very nature – there can be only one, to quote Highlander – but the “infinite” distribution that may be available at some point in the future of humanity once technology is truly ubiquitous (not just affluent populations in technologically advanced nations) is hardly here now. And what is here is often (mostly?) illegal. Infinite good, why that’s just “insulting.” 🙂
you talk like this sort of thing is decades away. it may already be here and now, and at best it’s only a couple of years off. NOW is the time to change models and retool corporate organizations. a global economic downturn is only going to make “regular” people more inclined to stop spending on traditional media and rely more on freely distributed materials.
Re: Re: Re:6 Re:
@Chris – have to admit, this reply is very thought-provoking. Thanks for taking the time.
Tips for selling t-shirts:
1. Make sure that the graphic on the shirt is something that people will want to wear actually wear in public, without feeling like a douchebag.
2. Don’t put album art on the front of the shirt, and track listing on the back of the shirt, unless you are selling to high school kids.
Re: Re:
Mos Def is a hip-hop artist, so his primary demographic is actually expected to be rather young (read: T-shirt wearing) people. Hint 2 fulfilled.
I also see the cover itself is rather tasteful, so teens won’t avoid it lest schools and parents get outraged (although sometimes that’s exactly what they want to do). Hint 1 also fulfilled.
I agree that bundling music with T-shirts would very likely not work for, say, classical music, where the primary demographic (middle-aged to old people) probably won’t wear T-shirts at all. That said, I would personally love a T-shirt about J.S. Bach, and I’m in my mid twenties.
Woohoo
$60 for a T-Shirt even with “free” music it’s to expensive.
I think I’ll pass grab my towel and catch a ride with the Vogon Destructor Fleet.
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Excuse me, mister retailer...
…I’d like to return this Mos Def album; it doesn’t fit me.
Cue AD in 3 .. 2 .. 1
t-shirts and physical media
My company made a documentary on comic Charles Nelson Reilly a couple of years ago and have been giving away free DVD’s of the film with T-Shirts for months to great success (at least, by indie film standards)at cnr’s website (CharlesNelsonReilly.com). I can tell you when we were just selling the t-shirts at the site we didn’t sell many. We also couldn’t get any distributors interested in releasing the film, despite it getting great reviews. So we threw them together and sales took off. Not sure how to break down who wants the movie vs. the t-shirt, but i am starting to think that the future of independent film is in selling t-shirts as well. 🙂
How many t-shirts and at what price?
I did a blog post on this subject last month.
http://brandsplusmusic.blogspot.com/2009/05/can-you-sell-10000-t-shirts-annually.html
I suggested that if you are in the band/t-shirt business, you’d probably want to be able to sell 10,000 $20 t-shirts a year to make a go of it.
So is it better to aim for the $60 a shirt business?
Cool Idea
Yet another cool Idea to add to my business plan …. big ole GRIN…. Thanks Floor64 …
This place is a wonderful resource … some times there are some real gems here….
Heres whats being added
entry/note 178) To replace album sales in a digital age use solid non informational items, Tee shirts, posters, etc. when you buy the digital Album in its entirety you receive your choice of promotional material or points toward future purchases.
179) (re 178) points (Digital Dollars) for large item purchases (concert tickets, leather jackets, clothing, etc)
One to one between points and dollars, points never expire.
Cool idea for a great album
If anyone was wondering the new Mos Def album was awesome. Even if his music isn’t quite your thing you might actually find this particular album good.
Just FYI
All in all you have to say it’s sort of an original idea.