Arnold Kling

Lessons in Internet Economics

Arnold Kling, Great Questions of Economics
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Tim O'Reilly offers some lessons on media economics in the age of the Internet.

Our current distribution systems for books, music, and movies are skewed heavily in favor of the "haves" against the "have nots." A few high-profile products receive the bulk of the promotional budget and are distributed in large quantities; the majority depend, in the words of Tennessee Williams' character Blanche DuBois, "on the kindness of strangers."

Lowering the barriers to entry in distribution, and the continuous availability of the entire catalog rather than just the most popular works, is good for artists, since it gives them a chance to build their own reputation and visibility...

Services like Kazaa flourish in the absence of competitive alternatives. I confidently predict that once the music industry provides a service that provides access to all the same songs, freedom from onerous copy-restriction, more accurate metadata and other added value, there will be hundreds of millions of paying subscribers...

Why would you pay for a song that you could get for free? For the same reason that you will buy a book that you could borrow from the public library or buy a DVD of a movie that you could watch on television or rent for the weekend. Convenience, ease-of-use, selection, ability to find what you want, and for enthusiasts, the sheer pleasure of owning something you treasure.

Discussion Question. How do O'Reilly's views on the economics of media compare to those expressed in my Edge Power article discussed in the post below this one?

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