Open Access News

News from the open access movement

Saturday, November 03, 2007

Supply and demand in a world without scarcity

Glyn Moody interviewed Mike Masnick in The Guardian, November 1, 2007.  Masnick is the author of Techdirt.  The conversation focuses on music, movies, and news, but how far do Masnick's observations transfer to research literature?  Excerpt:

...One of the hallmarks of Techdirt is your series about the economics of goods that can be copied infinitely, like digital music. What's the background to this interest?

In business school, there was one class taught by an economics professor who did a lot of research within the open source world and the economics at play. I remember a lot of people taking that class thinking this was a crazy economist talking nonsense, and then as you start to work through the economics it began to occur to me, he was right.

Could you summarise your ideas in this area?

The basic concept is simply that the traditional economics of supply and demand don't disappear when you have a product that is infinitely available. Economics traditionally has been about resource allocation in the presence of scarcity. The realisation here is that it doesn't break down, it's just that you need to understand what it means when a product is infinitely available, and that tends to be that the price is going to get driven to zero. The trick then is recognising what other things that infinite good makes more valuable....

All this is fine in theory, but how are we going to get there in practice?

What starts to happen is you see more stories of organisations that do successfully embrace the new. And from that, you get a bigger set of case studies that prove to others in that industry like, oh wait, there is a way to embrace this, make people happy and still make money - and perhaps make even more money....