Trying To Explain The Economics Of Abundance In Two Minutes Or Less With A Whiteboard
from the well,-it's-something... dept
UPS recently asked us to create a series of three videos, where we try to explain some of the stuff we talk about here on Techdirt in under two minutes, using a white board. You can check out the first video here, where I attempt to give a quick visual explanation of the economics of abundance. It's a complicated topic -- so narrowing it down to less than a minute obviously involves simplifying some of the concepts greatly, but it should kick off a fun discussion.Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
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Filed Under: economics, economics of abundance
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Artists = scarcity
I believe this is important for the same reason it is important to not limit the number of business models you build around an artist, because people respond positively to choice. Traditional entertainment business has been about limiting choice to create demand. That makes sense to force people into parting with their money but can limit the amount people are willing to spend and certainly lowers the value of talent. Whereas I might be inclined to strictly budget my spending if I know I can only afford so much, if my spending power is unrestricted then the main driving force behind spending will be how much I like an artist.
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I knew it
Seriously, though, very good vid. Kudos to UPS for sponsoring it. (Sorry about my dog, guys.)
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Actually, since you have to buy those markers in a package of all colors, the real question is how many other colored markers are left behind...
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0
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Very cool
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Considering all the brains around here, it seems like such an easy concept, yet all we seem to get is arrogance.
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Well then, kindly direct Mike to the FTC standards that he has broken so that he can quickly fix the issue.
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Oh the Irony!
:-/
Seriously, though. This is a great video... I can't wait to see the other two.
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mike stoned?
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It's easy to copy stuff, so everyone will, so one should totally ignore creation costs and instead try to sell t-shirts to people who only want to rip off the content...
That didn't even take two minutes to write. (grin)
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I don't know if you can any more obvious by saying UPS helped produce the video even before you get into the main post content.
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At that point Mike should've drew a few more stick men to the left and went "...and here comes ASCAP to remind the band that cover tunes need a licensing fee....."
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Presentation
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Hahaha
No worries, though.
I'm a big fan.
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Well, good, we need more commercials like this. It's advertisement AS content. Nothing wrong with it.
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So basically if UPS did not disclose it it's a violation of law. If they do then it's an advertisement. No matter what promoting a veiwpoint that disagrees with you loses in your mind. Good thing others aren't subject to your broken logic.
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Music and movies are not an abundant resource, at least not at the quality levels the public expects. Pirated copies may be abundant, but that is a situation that even a first year business student knows is not supportable.
The other one hasn't stopped laughing yet. I will see if he has anything else to say tomorrow.
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Ha
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Glad I could amuse them.
Music and movies are not an abundant resource
Oops. Time to suggest they learn a bit of economics. If they think that's true, they should not have passed their econ class -- unless it was really, really basic level econ. Most first year econ courses these days at least spend some time on the concept of rivalrous and non-rivalrous goods. I'm surprised your friends went to school somewhere that doesn't cover such concepts (or perhaps they got their degrees before 1990 or so, when such concepts weren't quite as common in introductory economics (though, they were still covered in higher level econ).
Anyway, if they want some help with understanding abundance economics, please feel free to have them give me a call. It would be cheaper than their MBA degree.
Pirated copies may be abundant, but that is a situation that even a first year business student knows is not supportable.
You should talk to my first year business school econ professor who taught me this stuff. He disagrees.
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Although true in that there are a limited number of Music Albums/Songs and Movies, the ability to replicate said movies makes it an abundant resource. When a company has the ability to take a movie such as '300' and make it available to have an infinite number of copies then the movie itself is an abundant good; however the ability to see it in the theater once, twice, etc. is a limited good. Hopefully your MBA friends understand that simple explanation since they missed Mike's.
"Pirated copies may be abundant, but that is a situation that even a first year business student knows is not supportable."
Second, where in the video does Mike talk about Pirated copies? I thought he was talking about the ability of the companies themselves to release a digital form; for instance iTunes or did you forget that you can buy stuff through iTunes and the music could easily be free instead of charged. After all how much did you spend on that iPod or iPhone?
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I'm so glad Techdirt isn't all about copyright.
This first video is priceless and breaks down a complex situation to a first grade level.
Kudos.
Now the question I should ask is: Should I copy the file and host elsewhere or link back to Techdirt?
I'd at least ask the creator first before I simply just grab it.
:)
Looking forward to the next videos, which I hope expand on the "scarcity" side of the equation.
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Business model of the ads
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Just One Question...
Great video by the way.
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Fewer deliveries of tangible goods
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Seriously, if they keep giving away content like this, there's no way their business can survive. I'm pretty sure a poster above who knows a guy with a MBA can explain that to you, if he ever stops laughing.
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loved it
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Re: -- faulty misunderstanding on the part of the MBAs
But the music and movies THEMSELVES are.
Once recorded digitally, they cost NOTHING to reproduce. That makes them abundant by definition. The fact that others artificially restrict them doesn't prevent that.
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Mikey is a BS artist
BTW you are getting out of shape
Diet and exersise my friend
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You lost me somewhere in there.
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That's where the laughing sort of starts. Price is never set by the replication costs alone. The wide consumer user of and desire for music shows that demand isn't a declining line, but rather one that is constant and increasing. Price zero only occurs naturally where there is no actual demand.
"Pirated copies may be abundant, but that is a situation that even a first year business student knows is not supportable."
Second, where in the video does Mike talk about Pirated copies? I thought he was talking about the ability of the companies themselves to release a digital form;
Since the cost of Itunes is more than zero, I look at the only place where music has zero cost: Piracy and other giveaways. Itunes doesn't enter into a discussion of zero cost music.
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Wow. Are you sure the MBAs were not laughing at you? Apparently you don't know what a demand curve is. Perhaps you have your graph upside down?
"Since the cost of Itunes is more than zero, I look at the only place where music has zero cost: Piracy and other giveaways. Itunes doesn't enter into a discussion of zero cost music."
You either confuse cost with price or neglect the fact that the only costs iTunes has that aren't artificially imposed by IP rights, are those that file sharing provides for free. Such as bandwidth.
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Price is never set by the replication costs alone.
Price in a competitive market tends toward marginal cost. In the case of digital content, zero, or so close as to not matter.
The wide consumer user of and desire for music shows that demand isn't a declining line, but rather one that is constant and increasing.
I'm thinking you didn't pay close attention to the chart. That was quantity vs. price, not quantity vs. time. As price goes up, quantity demanded goes down.
Price zero only occurs naturally where there is no actual demand.
Zero price occurs in two cases: zero demand, and infinite supply (think of air).
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Since the cost of Itunes is more than zero, I look at the only place where music has zero cost: Piracy and other giveaways.
There are musicians giving away their music for free, so this part is false too.
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...Or when supply approaches infinity.
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Re: Mikey is a BS artist
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Re: Just One Question...
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I've always liked this song
BTW, it's called "Such Great Hights", check it out.
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You are dead wrong here. An infinite supply has the exact same effect as zero demand. Because digital copies can be produced on the fly for no cost, the supply is not just effectively infinite; it IS infinite. Infinity divided by anything is still infinity, so demand is not longer an issue.
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none of it is somehow "influenced" by UPS.
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Re: I've always liked this song
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Re: none of it is somehow "influenced" by UPS.
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By standing too closely to the subject and focusing on a single piece of standard economic theory, you can miss the slightly bigger picture just out of your peripheral vision. Once you step back, you can see that the only thing that is infinite is the hype.
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You are confusing two different issues. I'm pretty sure I've explained this to you in the past, so I'm not sure why you are still confusing them. The market for a single song is different from the market for all songs. I don't see why you keep confusing those things.
But a single song, once completed is infinite. You admit that when you say the bytes are infinite. Good. We're getting somewhere.
And you're right that there are only so many new songs and new albums. Each of which is scarce until created. That's a good thing... because remember to make these business models work, we're looking for scarcities.
Your problem is you seem to think these two things are the same thing.
You are wrong. Again.
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Ladies and gents, I do believe we've found our you-know-what in a hurry!
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If I spend 10 hours to bake a decent pizza and $15 on ingredients, and you spend 20 minutes and $10 on ingredients to bake your decent pizza, at what price can we each sell our pizzas to hungry customers? Answer: we will both sell our pizza at the market value, NOT at our costs.
Welcome to remedial econ.
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Wow. Just wow.
Price IS set by the replication costs alone in competitive markets. You are dead wrong on that point.
"demand isn't a declining line, but rather one that is constant and increasing"
What? Demand IS a declining line, having a negative relation ship to Price. You are absolutely wrong about the simplest of economics. Bonus clueless points for calling a curve both "constant and increasing".
"Price zero only occurs naturally where there is no actual demand"
You don't get to just make up rules that sound good to you. In competitive markets, Price=Supply=MC=MR. The supply curve is a flat line at zero price. If MC=O, then price equals zero at any level of demand. Demand can shift up or shift down, it still intersects S at zero.
I appreciate that this bit of fact seems difficult for some, and can see that you are the type who just doesn't seem to get it.
Sure, trust your MBA friends if you must. Sounds like they are drunk to me, what with all the laughing and lack of any sense. But note that Mike has an econ undergrad, gets his theories vetted by top econ professors, and also has his own crappy MBA from an Ivy League school. I have my econ degree from a top school in Canada. Believe me, we're not dealing with cutting edge, fourth-year or graduate-level wacky econ theory here. This is first or second year, basic material. You need to consider that you may be wrong.
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Re: Mikey is a BS artist
One is ad hominem, cruel and irrelevant.
The other is wrong.
Anger management, my friend.
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zero price
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zero price?
In fact, I would agree that a good can be abundant, even when its price is not zero, as long as it is low enough that everyone can afford all the quantity they want.
Greetings,
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zero price?
In fact, I would agree that a good can be abundant, even when its price is not zero, as long as it is low enough that everyone can afford all the quantity they want.
Greetings,
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Re: zero price?
You can have price less than zero (i.e., you can pay people to take your product). The Q axis need not be the zero point.
In fact, I would agree that a good can be abundant, even when its price is not zero, as long as it is low enough that everyone can afford all the quantity they want.
Except, in such a market the incentive is for someone else (a competitor) to come in and offer it cheaper. And cheaper. Until someone offers it for free.
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nice theory but ...
I am interested in recordings: YES
I am interested in related merchandise: NO
I am interested in live shows: yes but my wife is not so we go very rarely, so in practical terms this is a NO.
Net result: with recordings costing $0, music artists will get $0 from my wallet.
This is a reality your theory seem to ignore.
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Re: Re: I've always liked this song
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Re: nice theory but ...
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