When we discuss the basic economics
having to do with infinite goods, sometimes the debates in the comments accuse me of promoting one "business model" over all others. The truth is quite different. The economics at work are fundamental. Price gets driven to marginal cost. The business models
that then result, however, are numerous and varied. The key is simply recognizing that the infinite good works as a resource, increasing the value of all sorts of scarce goods. Thus, you release the infinite goods widely, and sell scarce goods that are made more valuable. How you do that can take all different concepts into account. Just in the music space alone we see so many varied models, from Radiohead's name your own price
to Trent Reznor's tiered premium model
to Jill Sobule's tiered support model
to Maria Schneider's fan-supported production model
all the way to things like The String Cheese Incident setting up their own travel agency
to help fans follow them around for gigs. The key isn't a single business model. In fact, each of these individual business models might not work for any other artist. But all recognize the promotional power of the music in making something else much more valuable.
And we're seeing that show up in totally unexpected places as well. Take, for example, this recent post on Boing Boing about what's happened with a bunch of experimental video games
, developed originally as part of a Carnegie Mellon project. Each game was developed in 7 days and many are given away for free. However, now a company has taken those games and made t-shirts (yes, t-shirts) using images from some of the games. Even better, though, is that with each t-shirt, you get a copy of the video game itself, and the shirts are now for sale at Target. In other words, these games are helping to make the t-shirts more valuable, even though the games themselves are free. It's yet another example of understanding the difference between infinite and scarce goods and how to use one to make money from the other.