YCombinator creator Paul Graham is the latest "deep thinker" to grasp the deeper economic meaning of infinite goods
: they can't be sold. In fact, Graham recognizes that there's never
been a real content business. It's always
been about selling the scarcity:
Almost every form of publishing has been organized as if the medium was what they were selling, and the content was irrelevant. Book publishers, for example, set prices based on the cost of producing and distributing books. They treat the words printed in the book the same way a textile manufacturer treats the patterns printed on its fabrics.
Economically, the print media are in the business of marking up paper. We can all imagine an old-style editor getting a scoop and saying "this will sell a lot of papers!" Cross out that final S and you're describing their business model. The reason they make less money now is that people don't need as much paper.
He goes on to explore how this applies to music, movies, books, newspapers and software. From there, he comes to the same conclusion many of us have been discussing for years:
What happens to publishing if you can't sell content? You have two choices: give it away and make money from it indirectly, or find ways to embody it in things people will pay for.
The first is probably the future of most current media. Give music away and make money from concerts and t-shirts. Publish articles for free and make money from one of a dozen permutations of advertising. Both publishers and investors are down on advertising at the moment, but it has more potential than they realize.
I'm not claiming that potential will be realized by the existing players. The optimal ways to make money from the written word probably require different words written by different people.
Good stuff and worth reading the whole thing, though I think he misses one key important ingredient. If you take a step back and look at the overall economics of such markets, you quickly realize how much bigger
they get when you free the content from the constraints and scarcity of physical media. This is the hardest part for some people to see, at times, but the key to recognizing it is realizing that the content itself is a resource, rather than a final product, and you've just increased the availability and massively decreased the cost of that resource -- and you can then use it (for free!) to make many other things more valuable. That, in a nutshell, is the most exciting part about freeing up digital content.