By now, it's no secret that the folks running the RIAA have no clue about basic economics, but that's no excuse for some of their more ridiculous claims. The latest, as pointed out on Digg, is that the RIAA has an information page where they try to convince you that the cost of a CD should be much, much higher than it is, and therefore you're getting a great deal. Commentator Ben Woods gives a quick run down of why the RIAA is out of their minds. Basically, they're claiming that based on basic consumer price index information (i.e., inflation) the price of the CD should have risen over the past few decades, rather than stayed more or less the same. This is really weak economics, and highlights why the recording industry continues to shoot itself in the foot. It shows that they either don't understand (or would prefer to ignore) the differences between decreasing marginal returns (of rivalrous goods) and increasing marginal returns (of non-rivalrous goods). Anyone in the tech industry knows that overtime products get cheaper, not more expensive -- but the recording industry wants to pretend that music is non-rivalrous and therefore should increase in cost over time, rather than decrease -- even as the actual costs of production, distribution, discovery and promotion have all gotten cheaper over time? Sorry, but economics doesn't work that way -- and it's safe to say that the RIAA isn't fooling very many people. Even worse, the RIAA is saying all this while failing to recognize the competitive market they're facing -- where people have a lot more choices for their entertainment dollar, which should drive down the price of CDs, rather than the other way around. If the industry can't even understand these basic facts, is it any wonder they continue to destroy the core of their business?
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