The Madness of the Digital Economy

At a Blu-Ray factory (likely somewhere across the Pacific Ocean), a copy of The Peanuts Movie is manufactured, boxed and shipped to the U.S. From there, it is purchased, transported and manually loaded into a Redbox kiosk.

I rented this Blu-Ray movie at Redbox using their iOS app, reserving the movie for pick-up later in the afternoon. My total cost: $2.

In an alternate universe, it seems, I could have rented the movie using Amazon Video. In this scenario, the digital copy of the movie would be stored on an Amazon server and delivered via the internet. Total cost: $5.99.

It seems like we have yet to price the digital economy accurately. Scarcity is a thing of the past as the only limit to selling digital goods is bandwidth and computing power. As the cost of computing cycles and bandwidth approaches zero, we should see digital prices decline.

Considering that some paperbacks cost 60% of their digital kin, I think it may be some time before the publishing and movie industries are disrupted like the music industry over the past twenty years.

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