Arnold Kling  

Moore's Law for Storage

Economists' Assumptions... Housing P/E's...

Tyler Cowen points to a historical timeline of the cost of data storage on hard disk drives.

According to the timeline, the cost fell below $100 per megabyte in May of 1984. It fell below $1 per megabyte ten years later, meaning that it fell by a factor of 100 over that period. That means that storage capacity per dollar increased at a 58 percent annual rate.

Ten years later, the cost was $1.15 per gigabyte, meaning that the cost had fallen by nearly a factor of 1000. That means that storage capacity per dollar increased at slightly more than 100 percent per year.

In my view, this changes the way that the music industry should work. However, the changes have taken place so rapidly that the economy has not yet adapted.

Update: See also Brad DeLong's post on this topic.

For Discussion. What other industries ought to change in response to the reduction in storage cost?

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COMMENTS (2 to date)
Brad Hutchings writes:

Arnold, in your TCS article, you write:

The music consumer would be paying flat fees for unlimited use. When you obtain a stereo with music installed, you pay a one-time fee embedded in the cost of the stereo. When you subscribe to a music service, you pay an annual fee for unlimited use of the service. I think that most music-lovers would gladly pay these modest flat fees in order to save on CD purchases and to enjoy the convenience of listening to whatever music they want whenever they want to listen.

Steve Jobs disagrees. He says that customers want to own their music, and thinks that the all-you-can-eat subscription models are doomed to niche status.

I think the most significant development in music today is unbundling albums. Where the costs of storage and transport come in is the potential size of makeup of things like the iTMS catalog. Lately, I have noticed that many popular artists will offer "exlusive" live songs to iTMS. So as a customer, I can get a different version of a song I like that is a little more stage, a little less studio. New, unknown artists can get a song or two on iTMS (using one of many small labels that cater to new artists and play on iTMS) without having to record and produce a complete album.

Anyway, to your question... You might think that search engines should change when we can store the equivalent on the whole WWW circa 1997-ish on $5K worth of today's storage (give or take a year and a cost factor of 4). Google recognized the economic opportunity of stringing together a bunch of cheap boxes with big hard drives 5 years ago. The tough part is organizing all the stuff you can store in a way that makes it feasible to find what you want quickly. The state of the art in this favors centralization of data -- think Google ranking, other people's playlists, blogshares, and other social constructs that can't be created on all the private data you'll store on your 200 petabyte iPod in 5 years.

Brad Hutchings writes:

Lovely... that quote was only supposed to be 1 paragraph. Plain text starts with "Steve Jobs". Sorry 'bout that.

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